NCPA - National Center for Policy Analysis


June 23, 1997

Some 61 top executives of Silicon Valley firms have joined together for the purpose of eliminating government subsidies to high-tech organizations and other corporations. They argue that the subsidies do a lot of damage and are unfair. They subsidize the rich, generate unfair competition, sums spent outweigh benefits received, and whole industries are damaged or destroyed.

Here are some examples critics cite to back up those charges:

  • Over the past eight years, the federal government has given $800 million to 14 semiconductor companies that today make $800 million in profits every month -- and the companies don't even have to pay the taxpayers back.
  • While C-Cube Microsystems Inc. lost money for years trying to perfect technologies for digital television and small-dish satellites, it woke up one morning to find it had a $1.2 billion rival in LSI Logic -- funded by the Commerce Department's Advanced Technology Program.
  • Vitesse Semiconductor makes specialty wafer chips for $175 to $1,000 each here on earth -- leading it to question why a $500 million NASA program is making the same type chips in space at a cost of $1 million each, a figure it hopes will eventually go down to $10,000 each.
  • After the European Union years ago put a stiff 14 percent tariff on semiconductor chips to hasten growth of its own industry, the continent's entire computer industry was decimated -- and the semiconductor industry wound up losing market share anyway.

Source: T.J. Rodgers (president and CEO of Cypress Semiconductor Corp.), "America's Corporations Should Swear Off Pork," Wall Street Journal, June 23, 1997.


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