back to article US senators propose $22bn fund for new fabs on American soil because making stuff is better than designing stuff

A bipartisan group of US lawmakers has proposed doling out $22bn to have chipmakers build new factories on American soil. The bill, proposed by Republican Senator John Cornyn and Democratic Senator Mark Warner, would authorise the Department of Defense to use funding under the Defense Production Act to "establish and enhance a …

  1. You aint sin me, roit
    Trollface

    Damn socialists

    And their unfair government subsidies!

    1. alain williams Silver badge

      Re: Damn socialists

      This is why it is being done through the Defense Department as, presumably, they hope to skate around WTO rules which provide for exceptions on the grounds of national security.

    2. codejunky Silver badge

      Re: Damn socialists

      @You aint sin me, roit

      Is it subsidies or tax breaks? They are very different things. Not taxing progress is a tax break and it sounds like that is what is proposed (quick glance I might be wrong) for people to make such factories. A subsidy is the gov picking a winner and throwing money at them.

    3. HildyJ Silver badge
      Devil

      Re: Damn socialists

      Socialism is good as long as rich executives and investors get the money.

      It's only when commoners ask for crumbs that it becomes evil.

    4. toejam

      Re: Damn socialists

      The difference between a fair and unfair subsidy comes down to who can apply for it. If it was open to any chip maker foreign or domestic, then it is fair. If it was only open to local businesses, then it is unfair.

    5. EagleZ28

      Re: Damn socialists

      Don't worry about the "unfair government subsidies".

      Within 5 years, the US will have another "progressive EPA" who will put the fab out of business with some old or new regulation... just as they did before. My guess is that it'll have something to do with "using too much water". Second guess is that it'll have something to do with carbon, cap-and-trade, and greenhouse gases caused by the massive amount of electricity the fab will need to use.

  2. IGotOut Silver badge

    Remind me which country...

    ...gets pissy over government subsidies?

    Bombardier case anyone?

  3. Steve Todd
    WTF?

    $22bn Won’t go far?

    Firstly it’s not just $22bn, you’ve forgotten the 40% tax credit on top of that.

    Secondly it needs to be more than matched by manufacturers, so something like 3 or 4 factories equipped for 14nm or better production.

    Thirdly you don’t need a vast number of factories to turn out more than enough chips for the whole of the USA. There are only about a dozen or so fabs in the world that are currently able to manage 14nm or better, so something like 20-30% of world capacity.

    1. hammarbtyp Silver badge

      Re: $22bn Won’t go far?

      Add the pork barrel expenses, and soon you are talking real money

    2. DS999

      Re: $22bn Won’t go far?

      TSMC's $12 billion factory, if devoted entirely to making chips for ONLY the iPhone, could only supply 75% of Apple's needs even if every chip worked perfectly (yield is never 100%)

      It is also going to be at least four years out of date by the time it is built, since it is targeting the process TSMC is currently ramping into mass production (5nm) even though it will be started in 2021 and couldn't be in production any earlier than 2024.

      The number of wafers consumed for memory & flash is a lot higher than that consumed for CPUs, ASICs, etc. so this wouldn't come even remotely close to meeting US demand. Most likely it'll end up being a giveaway to Intel and Micron, and won't induce other big players like TSMC or Samsung to increase their investment in the US.

  4. Anonymous Coward
    Anonymous Coward

    It's not the building or the hardware ..

    .. it's the people.

    This all moved to China because capable people are cheaper there (not to mention the semi-capable, but I digress). I am not sure they will be able to compete other than by sticking the National Security tag on this, and that is before the usual idiots start talking about adding backdoors to their chippery.

    Given that anything based on Intel is already slowed down by the need to keep those backdoors closed, I don't think that it will be easy to gain that sort of trust other than by openness - which won't happen.

    I don't have a good feeling about this one.

    1. Yet Another Anonymous coward Silver badge

      Re: It's not the building or the hardware ..

      The people aren't a major part of the cost of a chip fab and the skilled people you need to run one aren't that much cheaper in Shenzhen than in Toadsuck Arkansas.

      The products will still be made in china because that is labour intensive, it's just that the chips will be shipped from USA rather than Taiwan.

      For TMSC this is a great move, they get a fab built for free - assuming their tax accountants are any good. They get a captive market with infinitely deep pockets - US military/govt/etc required to buy made in america "Freedom chips" from TMSC at whatever premium they want to charge

      Any threat/boycot/law suit aimed at TMSC from anybody in the world becomes a threat to America.

      1. martinusher Silver badge

        Re: It's not the building or the hardware ..

        I suppose the choice of Arizona -- the Phoenix metro area, in other words -- is due to it having a history of semiconductor design and fabrication so there's already a skills base to draw on. But that skills base is already employed and this place is probably one of the most awful places to live in the US -- its a vast metro area with inadequate infrastructure and a climate that has to be experienced to be believed (especially in summer).

        1. StudeJeff

          Re: It's not the building or the hardware ..

          While it's summer climate is... less than ideal it's a much nicer place to live then Detroit or Baltimore.

        2. toejam

          Re: It's not the building or the hardware ..

          This. The Phoenix metro tech industry dates back to the 1940s when defense contractors like Motorola set up shop. Intel, Western Design Center, Microchip Technology, Orbital, General Dynamics, and a host of other chip designers operate out of the metro.

          And while the summer heat is brutal, the cost of living is half of similar metro areas in California. Other than its lackluster mass transit, the infrastructure is fairly comparable, if not superior in some ways (weather and fire related power outages are extremely rare, traffic is better).

          That said, it is a cultural desert in addition to a literal one. It suffers from the same issues of urban sprawl as southern California. And the state's politics are complex and mired between urban progressives, rural libertarians, Mormon conservatives, senior/retiree/pensioner conservatives, left-leaning Hispanics, and rural bohemians. The state is slowly moving towards the left as the demographics change, but it is probably a good 20 years behind states like Colorado in that regard.

  5. codejunky Silver badge

    Meh

    If the US wants to try and bring back low value jobs its up to them. It should make some people happy, particularly people who like to complain the UK doesnt do any manufacturing (which is wrong) as I assume they will argue we should do the same.

    What is worth more? The chip or knowing how the chip works and the R&D to improve on it?

    1. Arthur the cat Silver badge

      Re: Meh

      If the US wants to try and bring back low value jobs its up to them.

      Just how many people work at a fab anyway, and what skill level(s) are needed? I've never managed to find any information on this in spite of much Googling.

      1. Carrawaystick

        Re: Meh

        theres 10,000 at the intel fab in Ireland, and another 1600 to come when the new fab ther is built

      2. vtcodger Silver badge

        Re: Meh

        What sort of people work at a fab? All sorts apparently. Two or three decades ago IBM's semiconductor fab in Vermont was the largest manufacturing facility in New England in terms of people employed. Everything from highly skilled chip designers down to high-school drop outs trundling materials around the (vast) factory. Problem was, it wasn't profitable. IBM ended up paying Global Foundries a couple of billion dollars to take the plant, its staff, and a bunch of future obligations related to the facility off their hands.

        1. EagleZ28

          Re: Meh

          VTCodger -

          I don't know the specifics of IBM's sale of that foundry...

          1) it may have been due to a temporary market glut in the type/tech of chips which that foundry was capable of producing...

          2) It might also/instead have been that the particular foundry used an older technology which was "on its last legs" before becoming completely obsolete

          3) The plant's staff would definitely have been union, probably well/highly paid.

    2. Jellied Eel Silver badge

      Re: Freedom Fries!

      A chip in the hand is worth 2 sitting on a dock in a Chinese port. Plus of course politics. So embargoing stuff to China because Huawei's undercutting/outperforming US companies because those companies offshored technology to China.. Who naturally took those ideas (ok, and sometimes IP), ran with it and are now capable of producing native kit. It's been fascinating watching the evolution of homegrown Chinese tech. Initial versions were a bit clunky, design wise, now they're as good if not better than Western stuff.

      Which is unsuprising given it's what Japan did post-WW2, and China's been heavily investing in education & has a rather large population pool. Plus Asian companies typically value education highly, so simple population distribution rules means there should be a lot of educated Chinese in the 95% who can design stuff, not just manufacture/assemble it.

      Then the combination of trade wars + Covid has perhaps provided a wake-up call and US politicians have realised that it might just be a good thing to increase US capacity, both in the manufacturing and R&D sense.. Which is a start, but needs combining with more than just component manufacturing. Especially encouraging US kids (or Western kids in general) to study those difficult STEM subjects, not plan a career as social media influencers. I still remember a video from probably a decade or more ago where a US University pointed out that there were no US citizens studying its optical physics course.

      But that's perhaps something politicians can address, especially given record unemployment at the moment. Crazy idea, but given the stonkingly high cost of US (and other bits of the West) university courses, it might be a really Good Thing(tm) to subsidise STEM and key skills.

      1. Yet Another Anonymous coward Silver badge

        Re: Freedom Fries!

        >it might be a really Good Thing(tm) to subsidise STEM and key skills.

        Subsidise edukation? that sounds like socialism

        1. Jellied Eel Silver badge

          Re: Freedom Fries!

          Ah, well.. such is politics. On which note-

          https://www.cnbc.com/2020/06/10/thousands-of-scientists-go-on-strike-to-protest-systemic-racism-stem.html

          People on social media are spreading word about the strike with the hashtags #ShutDownAcademia, #ShutDownSTEM and #Strike4BlackLives.

          Ok, so it was only for a day, and raises interesting questions, like why some minorities are underrepresented. Then how to encourage more to train in STEM subjects. The issue of academic racism is also perhaps a bit ironic given the academics create the environment they're striking about. But without minorities starting their careers at the base of the academic pyramid, they're not going to rise up the ranks.

      2. Anonymous Coward
        Anonymous Coward

        Re: Freedom Fries!

        A chip in the hand is worth 2 sitting on a dock in a Chinese port.

        I like that one :)

        Plus of course politics. So embargoing stuff to China because Huawei's undercutting/outperforming US companies because those companies offshored technology to China.. Who naturally took those ideas (ok, and sometimes IP), ran with it and are now capable of producing native kit. It's been fascinating watching the evolution of homegrown Chinese tech. Initial versions were a bit clunky, design wise, now they're as good if not better than Western stuff.

        Hmm, that doesn't seem to be the case here. Huawei's 5G kit outperforms US gear, which suggests Huawei has developed *better* gear - plain copying would only produce the same performance, possibly at a lower price. In addition, all the code reviews (that, incidentally, fully failed to show any alleged backdoors) did not throw up IP violations either, so what IP did they copy then?

        I'm fully onboard with the the notion that China often engages in proletarian shopping when it comes to IP, but exactly that appears to be absent from this particular saga. They have smart people too..

        1. Jellied Eel Silver badge

          Re: Freedom Fries!

          Hmm, that doesn't seem to be the case here. Huawei's 5G kit outperforms US gear, which suggests Huawei has developed *better* gear - plain copying would only produce the same performance, possibly at a lower price. In addition, all the code reviews (that, incidentally, fully failed to show any alleged backdoors) did not throw up IP violations either, so what IP did they copy then?

          I think people might be hard pressed to name any 5G RAN kit. As for IP & innovation, I guess an example could be original Huawei routers with a.. very similar OS to Cisco's IOS. Which can get into legal vs illegal copying or reverse engineering, and Texas. I mean patent laws. Or Huawei's optical kit compared to some US versions, ie Cisco bought in their 15454 boxes, then dropped them because they struggled to sell them when bigger/faster/cheaper kit was available from non-US companies.. Even when those were often assembled using US components.

          Or on that theme, Cisco & Juniper competing to make ever bigger (and clunkier) routers as the market was shifting switched networks & Ethernet.. And all the more ironic given Cisco kind of invented MPLS by way of tag switching.. And now Chinese companies are investing more in R&D than many US, and are more involved in standards setting. Never trust a 'tech' company where their marketing budget exceeds their R&D.

          Which circles back to the 5G problem. If there were competitive US products, carriers would evaluate them & might buy them to mitigate supply risks. No amount of posturing will make those boxes appear, but interventions to support STEM education, R&D and manufacturing would help.. Eventually. Especially when there's record unemployment and deep recessions looming.

    3. Wellyboot Silver badge

      Re: Meh

      >>>bring back low value jobs<<<

      They may be low value but they are still real jobs putting spending money into pockets that otherwise may struggle to find stable employment and it's stable employent that allows people to improve their lot in life.

      1. Yet Another Anonymous coward Silver badge

        Re: Meh

        > but they are still real jobs putting spending money into pockets

        Although they may, if history is any guide, be taking $Bn out of local school, police, fire etc budgets to pay for it.

        I think that imaginary Foxcon plant looked like costing $1.5M/job before it all collapsed

    4. Timto

      Re: Meh

      Since China is stealing all the IP on the planet, we need both

      The PPE/Testing problems recently show what happens when there is a worldwide shortgage and you are entirely reliant on imports.

      You need manufacturing of all types in every country even if it's just on a small scale, because it's a lot easier to scale up a small plant than it is to start one from scratch where none exists.

      1. Anonymous Coward
        Anonymous Coward

        Re: Meh

        Since China is stealing all the IP on the planet

        I'd be very careful fully believing US propaganda. US companies are quite good at that too, even from their own. Look up "Microsoft stacker" for a simple example.

        1. Timto

          Re: Meh

          The difference is that you can sue microsoft. When China releases a new chip to replace ARM and pays no licensing, there will be nothing they can do.

      2. codejunky Silver badge

        Re: Meh

        @Timto

        "The PPE/Testing problems recently show what happens when there is a worldwide shortgage and you are entirely reliant on imports."

        Interestingly this seems to be a self inflicted issue as far as the UK and US is concerned. Both insisted on central control of testing which of course limits the amount that can be done. We had companies offering to make protective gear except public health England added bureaucracy to it which stopped the provision of protective gear.

        In the US's case the federally mandated initial tests even turned out to be contaminated anyway and so were of no use.

    5. EagleZ28

      Re: Meh

      "What is worth more?"

      I'll answer that with a question...

      If you can't get the chips which you design manufactured... then what use is being able to design them?

    6. EagleZ28

      Re: Meh

      "Low value jobs"

      It's an error to assume that these jobs are low value.

      Some will be, of that I have little doubt, but many will be skilled technical jobs, and some will be skilled professional jobs... EE's, chemists, and so on. There'll be jobs for robotics people to program the robots, CAD/CAM people to do the layouts, and so on.

      Secondly, the lowest jobs will still likely provide a potential PATH to promotion and gaining new skills of real value, as opposed to, for example, "flipping burgers" or "dispensing" Starbucks' coffee.

      1. codejunky Silver badge

        Re: Meh

        @EagleZ28

        "It's an error to assume that these jobs are low value."

        The typical excuse to offshore these things to China was to cut costs considerably. Jobs that are low pay and can be done in a cheaper country and lower paid being attractive to companies.

        It is that which makes them low value as their pay and economic value will be low. I am not commenting outside the economic value just to be clear.

        In my opinion bringing back the low value jobs does have knock on effects. The argument for a higher minimum wage for example will remove these jobs anyway. And we have to accept a slowing down of taking people out of actual poverty globally.

        1. EagleZ28

          Re: Meh

          Codejunky -

          The direct cost of the employees' wages/salaries aren't the only costs of labor...

          In the US, there's also the cost Social Security which the employer must match, which adds about 8% to his/her salary... and then there is the additional cost of medical/health insurance... and other benefits such as 401k, and so on.

          THEN there are other costs... such as regulatory compliance.

          I was directly in involved in the PCB industry back in the 90's... and remember that chips are useless without PCB's... and I watched as Bill Clinton's EPA destroyed almost the entire US PCB industry... with a new regulation which required what were (at the time, and allegedly) impossible to meet levels of allowable emission of copper in their waste-water.

          At the time, a number of very large makers of PCB"s were in the process of building entirely NEW plants, and they and others were also expanding EXISTING plants. When the EPA went through their final required review procedures (which *appeared* to have only been done *because* those reviews were required by law, as part of their economic impact review), those companies abandoned not only the new plants, but the plans to upgrade existing plants... and built them in China instead.

          The only difference was the NEW regulation.

          This is how a bureaucrat destroys an entire industry, costs the nation many millions of dollars in tax revenue, more in unemployment insurance paid out, destroys critical national defense infrastructure, and yet more in income taxes paid by the FORMER employees... all while a "Rhodes Scholar" sits in a somewhat round office and diddles an intern with a cigar.

          It also didn't just put the US PCB manufacturers out of business, or drive them offshore... it also put their suppliers out of business or offshore.

        2. EagleZ28

          Re: Meh

          Codejunky -

          Adding a bit more to my previous post...

          Some jobs can be easily considered "low value", if all you're considering is salary/wages and income taxes... and even if you consider the *corporate* income taxes...

          There are less obvious ones, though...

          Loss of a major employer can completely wreck a local economy. It can wreck entire towns/cities, and not just the small cities. It can wreck *every* employer... or service... who depends on those people having jobs, and their children...

          Take 50% of a school's children away, and you might as well close the school, because the remaining townspeople can't afford to pay twice as much... especially when half of them have also been laid off due to half of the town leaving to some other place to find work.

          Then, you have other things that can suffer drastically, even catastrophically... like... wafer and chip fabs use a *lot* of electricity. PCB plants use a lot of water. Take those customers away, and those utility companies are forced to lay people, raise rates to the remainder of their customers, or both... and things like this then wreck that area's ability to *ever* recover by attracting new/replacement businesses.

          What might be low value to a nation, might mean life or death to towns and cities...

  6. ThatOne Silver badge

    Unlikely to succeed

    Most likely just another pork barrel.

    Even if they actually managed to build 1-2 factories with that money, those factories would only be able to build high-end, big-profit products. There is a reason all factories have been moved to cheaper countries, and are constantly shuffled around as people over there progressively get smart and ask for adequate pay.

    So they'll probably build a factory and run it as long as the subventions finance it, then it will be sold to some "acquaintance" and turn into a tax-financed mall...

    1. Yet Another Anonymous coward Silver badge

      Re: Unlikely to succeed

      I imagine their accountants are looking very carefully at this.

      Fabs cost a lot of money and take a long time to build. It's not like a warehouse where you can run it for 11 months until the subsidy runs out.

      TMSC are going to need either a 10year commitment for tax breaks and govt orders, ie from the next 2-3 administrations, or pick a state where they know can buy the legislature.

      1. J. Cook Silver badge

        Re: Unlikely to succeed

        Yep; that's why it's being built in arizona.

  7. Pascal Monett Silver badge
    Coat

    An understandable choice

    Now what I am waiting for is the agonizing over budget issues, when choosing chips Made In America will mean they cost 50% more than the same chips made in Taiwan.

    Those will be entertaining discussions.

  8. idiottaxpayerhere previously ishtiaq/theghostdeejay

    "Quote"

    "While Texas has been a leader in manufacturing this technology and the US leads the world in chip design".

    Has the U.S. not heard of ARM?

    Cheers… Ishy

    1. Yet Another Anonymous coward Silver badge

      Re: "Quote"

      > US leads the world in chip design".

      And they don't even have prawn cocktail flavor

  9. Doctor Syntax Silver badge

    Could it be that the concept of second sourcing is making a comeback?

  10. Anonymous Coward
    Anonymous Coward

    It’s about national security

    It probably actually is about national security. The world’s most advanced military needs the most advanced chips. As Intel falls behind, the leading nodes today are being produced by TSMC and Samsung off US soil. Now what happens if WW3 breaks out and the US military losses access to its supply of cutting edge chips? Enough said.

    1. StudeJeff

      Re: It’s about national security

      Intel may be falling behind (but it would be a mistake to count it out), but AMD is also an American company and it does make chips here in the US.

      1. ThatOne Silver badge
        Devil

        Re: It’s about national security

        > but AMD

        Intel will prevent this. They can't afford clients getting used to other manufacturers...

    2. MachDiamond Silver badge

      Re: It’s about national security

      "Now what happens if WW3 breaks out and the US military losses access to its supply of cutting edge chips? Enough said."

      With SARS-cov-2, some US "defense contractors" have been unable to fulfill deliveries due to parts being manufactured in Mexico at shut down plants.

      The most advanced electronics aren't required for the military, They can already visit death and destruction anywhere efficiently enough with decades old designs. Many "advanced battlefield systems" are an Achilles heel. Troops get trained to rely on them too much and they can be prone to going offline leaving grunts bluescreened. It's really hard to bork a compass and map as easily as it is to interfere with GPS signals.

  11. MachDiamond Silver badge

    It's not the investment

    Fabs started getting built outside the US due to US ITAR laws that fell way behind technology. Companies weren't going to invest billions in the next level technology only to have the US government tell them they can't export the chips due to national security issues. Easy enough solved, they set up fabs in Asia where export was promoted rather than restricted.

    While the highest paid jobs are at the design level, the bulk of jobs are at the manufacturing level. It's a distinct advantage to be a company that has their own fab. It allows better insight between design and what can be made. Learning machining and welder made me a much better engineer. I had previously just sent things out to have them made like a fabless chip maker would do.

    It's a great big world and advanced electronics on the leading edge are accomplished by global companies. If one country is going to pass laws that inhibit profits, these companies will go elsewhere.

  12. StargateSg7 Bronze badge

    This US already obsolete and OUT OF DATE!

    We built our own fab IN CANADA for just a few hundred million and it does 280nm GaAs/GaN combine CPU/GPU/DSP/Array Processing super-chips at 128-bits wide at 60 GHz and soon TWO TERAHERTZ clock speeds ....AND.... it's fully ITAR-free! so the USA can go stick it up it's arse as WE designed and built it ALL here in Canada with ONLY Canadians! Even the CHIP FAB's design, CAD/CAM/FEA/CAE software, chip manufacturing hardware, multi-beam etchers, steppers, QA systems and all packaging itself is all-Canadian designed and built IN Canada by Canadians!

    Who the heck wants to do 64-bit CMOS when we have 60 GHz GaAs at 128-bits wide? 128-bit at 475 TeraFLOPS in a single chip! WE WIN!

    V

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