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The computer chip shortage, which has disrupted supplies of everything from automobiles to wheelchair accessories, is pushing Congress to take big steps in helping America鈥檚 high-tech industry.

Congress has already passed legislation to encourage semiconductor firms to build chip fabrication facilities, or fabs, in the United States. It has not yet authorized the funding. Not for the first time, the nation is poised to dramatically pump up funding for scientific research and, more controversially, help high-tech companies to meet an international challenge.

鈥淩ather than a sea change, we鈥檙e on another wave,鈥� says John Alic, an author and visiting scholar at Arizona State University鈥檚 Consortium for Science Policy and Outcomes.聽

The wave wouldn鈥檛 solve the chip shortage. The current mismatch between constrained supply and soaring demand will likely be over, perhaps by next year and almost certainly before any federal incentives make a meaningful contribution. But they could induce a big leap in domestic production, possibly making future chip shortages less acute. And, politically speaking, the current shortage is so visible to car buyers and other consumers who have seen soaring prices and huge delays in product shipments, that Congress is eager to act.

鈥淭he continuing impact of the chip shortage 鈥� epitomized most recently in the news that GM will be forced to idle plants across North America 鈥� speaks to the urgency of passing bipartisan legislation,鈥� said U.S. Sen. Mark Warner, a Virginia Democrat and champion of the Creating Helpful Incentives to Produce Semiconductors Act, or CHIPS. Funding more U.S. production won鈥檛 solve things overnight, he said, but 鈥渢he longer we wait, the worse this supply chain crunch will become.鈥�

If Congress funds CHIPS and passes two other bills now before it聽鈥� the Innovation and Competition Act and energy demonstration projects in the new infrastructure bill聽鈥� it would represent a big shift toward more of the collaborative efforts between government and industry known as industrial policy.

鈥淭here is a shift,鈥� says William Bonvillian, a lecturer at the Massachusetts Institute of Technology and author of a on the subject for the Information Technology and Innovation Foundation, a Washington think tank. 鈥淭here is a sense that the U.S. faces major technology challenges and that our longstanding basic-research-only approach, outside of defense, is not working. It鈥檚 not giving us the technological leadership that we need.鈥�

Rising urgency in Congress

The U.S. semiconductor industry remains a leading designer of chips. But it has fallen behind in their manufacture. Nominally, the competition is from the Taiwan Semiconductor Manufacturing Co. and South Korea鈥檚 Samsung, which have moved ahead of U.S.-based Intel in producing the smallest and most advanced semiconductors. But the real threat, at least in the eyes of many in Congress, is China. Although it remains far behind in state-of-the-art fabrication, it is throwing huge resources in the sector to catch up.

Traditionally, the U.S. has used a hands-off approach with civilian industry and technology development. Republicans and many economists oppose industrial policy, because governments have not proved very adept at picking high-tech winners. But in the face of a strategic challenge, they have supported more federal intervention beyond the funding of basic scientific research.

In the 1980s, it was Japan, whose chipmakers were taking over the memory chip industry. Two Republican administrations supported various efforts to boost corporate research and development and funded a private-public partnership, called Sematech, to help U.S. semiconductor equipment manufacturers regain the lead over Japan.

Today, it鈥檚 China. Bipartisan majorities in Congress have supported the $53 billion CHIPS Act, which would offer a 40% investment tax credit to companies that build chip fabrication facilities in the U.S. The act also authorizes the Defense Department to conduct research and development, workforce training, testing, and evaluation for chip-related programs, projects, and activities. The act also calls for the government to act as a customer for the domestic semiconductor industry. (The military, which already uses these methods, is the exception to America鈥檚 aversion to industrial policy and has maintained the U.S. lead in military technology, sometimes expensively so.)

鈥淚t does make sense to try and put us in a position where we are going to be more competitive economically,鈥� says Mike Watson, associate director of Hudson Institute鈥檚 Center for the Future of Liberal Society in Washington. But 鈥淚鈥檓 not a fan of a lot of that. ... A concern about trying to throw a bunch of money into research and development right now is that as these numbers get larger and larger, our ability to actually meaningfully track anything that we鈥檙e doing starts to go down.鈥�

If CHIPS Act funding is approved on the order of $50 billion, the U.S. could see 19 fabs built domestically by the end of the decade, more than double the nine that would be built if the status quo prevails, according to a a year ago.

One bill, 10 sectors of innovation

The Innovation and Competition Act, which is being hashed out by House and Senate conferees, represents another step toward a more coherent commercial industrial policy. The broad Senate version would expand the National Science Foundation, which currently funds basic research, into an organization that鈥檚 also dedicated to aiding development in 10 areas, including artificial intelligence, quantum computing, and other advanced technology. The House version of the legislation is much narrower in scope.聽

One of the challenges of industrial policy is that what鈥檚 implemented by one administration can be undone by another. The most enduring programs are those with broad constituencies, argues Andrew Schrank, a professor of international and public affairs at Brown University in Providence, Rhode Island.聽

In perhaps the earliest example of American industrial policy, President George Washington made sure the U.S. Navy鈥檚 first six frigates were built in six different ports, bolstering their local economies and at the same time broadening political support for the program. Successful modern iterations of industrial policy have done the same thing, says Mr. Schrank. The Manufacturing Extension Partnerships, authorized in 1988, are mandated to operate in all 50 states and Puerto Rico, helping small and midsize manufacturers adopt new techniques and new technologies.聽

By focusing exclusively on smaller companies and conducting performance reviews, the program also insulates itself politically from criticism that it鈥檚 a corporate giveaway. A real danger of the CHIPS Act is that the largest tech companies will try to make sure federal funds flow to them.

鈥淚 worry that a relatively small number of very, very powerful manufacturing firms, electronics firms, and chip firms can capture this thing,鈥� says Mr. Schrank. 鈥淲e need this industrial policy to pay attention to the little guy, partly for economic and moral reasons, but partly for political reasons.鈥� That might well ensure its longevity.

Editor's note: An update has been made to correct the name of Mike Watson.