No, but the government can shoulder a larger risk than what the private sector may tolerate.

There's all kinds of examples, but aerospace is a classic one. There would be no airline industry or commercial space industry if the government wasn't willing to bear a disproportionate amount of the risk when these industries were nascent. There just wasn't enough market demand to incentivize the private sector to do so on their own. So the govt sets up an incentive structure that brings the risk to a level where the private sector is willing to partake. The government is also generally more tolerant of longer-term scenarios than the private sector.

No one is saying the government should start producing chips, but they can offer financial incentives to encourage chip manufacturers to build fabs here instead of overseas.

I think that your experience with COVID tests would depend strongly on which country are you in, and which government you are talking about.