The alternative is to be dependent on the rest of the world for chips.
The market decided that the most efficient transaction is to offshore all of this infrastructure to geopolitically-compromised areas and pray that China never does what every other emerging power in the history of geopolitics has done.
The actual alternative would be to publicly admit the failure of very loosely regulated free markets and regulate the chip industry instead, but apparently the charade must be kept alive at all costs (to the taxpayers).
> The market chose wrong.
Oh no, the market chose right, but what the "market" wants doesn't align with what the nation requires.
The market chose what it could based on the conditions that exist. Make is easier to people to open new businesses and expand existing ones, and people will do so. Creating hostile environments and then choosing who gets free money to overcome those difficulties is not much of a market.
They throw their weight around to influence geopolitics.
EDIT:
There really does seem to have been this mindset in the 80s and 90s regarding China that they were going to liberalize once we shipped them a bunch of our industry and IP. You can only really believe that would happen if two things are true:
1) You have a woeful misunderstanding of Chinese politics
2) You think that the West, and the US in particular, have some sort of magic that will invariably keep us ahead of the Chinese. Maybe it was racism, maybe it was underestimating the power of collectivism, but there were people who really saw China as nothing more than a workforce that would happily do whatever Western companies wanted them to do, while providing absolutely no competition, forever and ever.
These handouts need to stop.