While one can't deny Grove's possible bias, the rebuttal seems to miss that his primary point is that technologies evolve, so that today's "low-value" manufacturing expertise often leads to tomorrow's breakthrough technology. In other words, Grove is also arguing for the next great industry, not
necessarily to protect the establishment (admittedly, it would likely have this effect as well). His point is that Asia will be better positioned to evolve and create such technologies, to the US' detriment.
I'm no economist, so I won't pass judgment on his protectionist recommendations. However, Grove's point on the unforeseen evolution of markets seems valid given the history of computing and is only glossed over in Mr. Chafkin's response.