There is no clever way around a shortage.
There is no clever way around a shortage.
T he tech industry’s biggest players gathered in Chapel Hill, N.C., earlier this month for the G20 Innovation Ministerial to talk trade, technology, and the global economy. One topic almost certainly came up around remarks from Nvidia’s Jensen Huang and OpenAI’s Sam Altman: memory chips.
Most Americans — myself included — don’t think much about the memory chip inside practically every smartphone, laptop, car, and home appliance they own. These tiny components are more than storage; they facilitate the retrieval and use of data in modern devices — everything from your photos, your music, the navigation information in your car — and the price has quadrupled in the past year.
AI infrastructure buildout is demanding more and more memory. The few players that make these parts are already selling everything they can produce, and building a new plant to increase production takes years. Faced with limited options, companies are now shifting these costs onto consumers, building them into the price of a car, laptop, and washing machine.
Companies squeezed by the supply of memory chips are looking to find new sources — often from the wrong places. This summer, Apple reportedly approached two chip companies backed by the Chinese government — firms built to undercut American and U.S.-allied chipmakers. Buying from Chinese state-owned companies advances China’s efforts to supplant American chipmakers, and it leaves our products dependent on a supply Beijing controls.
Washington reacted fast. A bipartisan group of senators sent a letter to Tim Cook asking Apple to rule out procurement from both companies. This was the right move — once a Chinese part gets into an Apple product, it’s a slippery slope before devices sold all over the world become reliant on China. However, simply telling Apple “no” does not put a single additional chip on the market. The ongoing shortage has already contributed to Apple raising prices on Macs and iPads by $100+.
The shortage is what sent Apple to those suppliers in the first place, and the shortage is still an issue. Representatives John Moolenaar and George Whitesides made that point in their own letter to Commerce Secretary Howard Lutnick, and it amounts to this: There is no clever way around a shortage. Somebody has to make more chips, and it had better be us.
The good news is that it is already happening. SK Hynix and Samsung have committed billions to new plants in Indiana, Texas, and South Korea. Micron, an American company, has also announced a new factory in New York. Those plants will employ thousands of Americans, and each facility puts more memory on the market.
The question is whether Washington will let it work.
Commerce Secretary Lutnick says a broad semiconductor tariff is coming, with a simple rule: Build here, and you don’t pay. I am no fan of tariffs — they raise prices, and high prices are part of the problem we are trying to solve. But if this new levy is coming either way, the fine print will decide if it helps or makes things worse. Does a plant count when a company breaks ground, or not until chips ship years from now? Does building in Indiana exempt what a company makes elsewhere while its American plant comes online? Get those answers right, and the tariff speeds new supply. Get them wrong, and it strains the very companies trying to address the shortage.
As I’ve long said, American trade policy should reward those who align with U.S. interests. Right now, it’s doing the opposite. Our allies face regulatory uncertainty in Washington that stalls the investment we say we want, while Chinese chipmakers continue to build with government support.
Japan and South Korea sent ministers to Chapel Hill this month. Their countries have committed $550 billion and $350 billion, respectively, to the U.S. economy. Keeping that investment on track requires a continued focus on pro-growth policies, like those enacted through the One Big Beautiful Bill and its Working Families Tax Cuts.
Washington is right to resist Chinese memory suppliers on national-security grounds, but stiff-arming the trusted companies already building here is bad for prices, jobs, and growth. The fastest way to address this crisis is to ensure that policy does not get in the way of the companies building plants in Indiana, Texas, New York, and South Korea, doing what the market is telling them to do: Build.