| The Economist was founded 182 years ago to further the cause of free trade. But even we acknowledge that some goods are special—and few more so than semiconductor chips. Entire industries depend on them. Weapons systems are built around them. And in the contest between America and China to dominate artificial intelligence they could be the difference between victory and defeat.
Less understood is that chips also pose a fiendish test for proponents of industrial policy. Their manufacture is a marvel of specialisation, complexity and globalisation. Under those conditions, intervening in markets is prone to fail. What is America to do?
Our cover leader this week begins with the parable of Intel. Despite lavish subsidies, America’s chipmaking champion is in grave trouble. An attempt to attract world-beating TSMC to spread from its base in Taiwan is faring better. However, although stronger chipmaking at home will make America more resilient, vital parts of the supply chain will continue to exist abroad. What’s more, TSMC’s factories in Taiwan will remain the single source of the best semiconductors for years to come. With something as important as chips, even the world’s biggest economy cannot afford to shut itself off from the world. | 
