So you think that the tax code should be wielded as either a weapon or a means to manipulate decision-making? That's fine, and you're not alone. I disagree that it's the least bad form of coercion. I think there are better ways of accomplishing these goals and that the tax system should be as neutral as possible so that decisions are made for economic reasons and not tax reasons. Many economists agree with this notion, and it's certainly not my idea. Who doesn't agree with this? Politicians.
I'm not a free-for-all free-market proponent. I'm all for the regulation of industries (the best form of which is eliminating tort reform and allowing bad actors to pay the consequences for their actions with their pocketbook - but good old-fashioned regulation through federal and state agencies is also great). I'm also in support of propping up industries (such as your semiconductor example) through some form of subsidy which can take the form of loans, govt. contracts, etc. The tax code doesn't have to be involved in these things (although refundable tax credits can be a reasonable use of it), and its use in this manner is exactly why it's a monster full of loopholes, contradictions, and general nonsense. It's also one of the major reasons semiconductors were being built overseas in the first place - that's one problem with trying to use it for coercion, you almost always have unintended consequences. Politicians love it more than anything else because Americans don't understand it and they can use it to benefit their donors and/or punish their enemies. These are essentially the only ways the tax code is utilized anymore, even when they're dressed up as a subsidy or otherwise, and both types of uses are rife with corruption. The insanity that is the varying rates for different types of capital income is a prime example of just how bunged up the system is. Most notably, our tax code encourages debt over equity financing, which is just fucking stupid on its face and a big part of the economic woes we've seen over the last fifteen years.
A completely tax-neutral system is not feasible (needed coercion should come in the form of refundable tax credits rather than deductions), but this notion should underpin any tax reform discussion, in my opinion. It would result in a more transparent, approachable, and navigable tax system that would streamline economic decisions and ultimately further stabilize our economic system - which has become shockingly fragile in the last few decades thanks in large part to our tax code.