back to article President Biden to issue executive order on chip shortages as under-pressure silicon world begs for help

President Joe Biden intends to sign an executive order to tackle the shortage of chips, as the semiconductor world's top brass urged the Democrat to fund efforts to build more fabrication plants in the United States. Chip manufacturers are struggling to meet global demand for components during the COVID-19 pandemic. Fabs were …

  1. mark l 2 Silver badge

    Why should US tax payers money be spent on aiding Intel, AMD, Qualcomm etc build new US fabs when these are companies worth billions so shouldn't need state aid. Giving them grants or tax cuts just makes their shareholders more money.

    1. Brewster's Angle Grinder Silver badge

      Trickle down my arse.

      I was about to have the same rant. The free market fundamentalists are classic bullies. When they're doing well, everybody should stand on their own laurels and government should be as small as possible.

      But as soon things get tough, they're straight to government crying, "Pay for our R&D; subsidise our factories. It'll create jobs for all those people we've told you not to look after and who we said we'd create jobs for if you just cut our taxes (although, in reality, we used the cash to fund a share buyback so our directors' options became more valuable). BTW, did we say that last bit out loud?"

      1. Chris G Silver badge

        Re: Trickle down my arse.

        Would those free market fundamentalists be the same ones who outsourced manufacturing to competing countries in the name of profit?

        "We screwed up but we don't want to dig into our own money piles when the government can just print some more for us."

      2. sanmigueelbeer Silver badge

        Re: Trickle down my arse.

        subsidise our factories

        What "factories"?

        Presently, Foxconn's Mount Pleasant, Wisconsin factory is still an empty building. It is more-or-less a facade.

      3. fwthinks

        Re: Trickle down my arse.

        Never understood subsidies / grants / tax rebates etc - that is just giving money away in the hope that you may get something back indirectly via other forms of taxation - this does not work very well in lots of cases.

        If a company was to receive money from another private business, they would offer shares/profit/return on investment. So I am surprised that more governments don't do the same, but just put conditions on the investment. If it doesn't work out, then the government will not be any worse of than grants, but if successful, the government will get their money back directly.

        In this case, I would see setting up a joint venture as a good opportunity - equal risk / reward. However I suspect that is against free-marketeers ideals - can't have nationalization can we.

      4. Adam Foxton
        FAIL

        Re: Trickle down my arse.

        Oh, absolutely. The Free Market lot are absolutely the ones calling for Government intervention.

        They might CLAIM to be fans of the free market, but have a look at all the Government market manipulation that they already enjoy and you can see that they're really not all that into it. This is Corporatism, not Capitalism.

    2. Warm Braw Silver badge

      If you can be sure that you will have access to secure supplies of critical technology and see no problems with your potential enemies having unfettered, or even preferential, access to the same, then it would clearly be a waste of money.

      Looking at it from the other end of the telescope, it's precisely why (apart from the economic benefit) other countries might find themselves offering state aid to similar industries.

      The US is probably just about still in a position where it can reassert some control over its technology supply chain. Whether it's worth doing, given the loss of control over much of the rest of it, is not clear.

      1. Jellied Eel Silver badge

        The US is probably just about still in a position where it can reassert some control over its technology supply chain. Whether it's worth doing, given the loss of control over much of the rest of it, is not clear.

        But.. but.. Free Market! And making America great chips again!

        Or, even though Executive Orders sound great, in practice there are a few snags. Like the US semiconductor industry happily offshored much of it's fabrication years ago. So how the US could persuade it's own industry to bring those plants, jobs and revenues back home. I guess there are some policy levers, like tax breaks, subsidies, sanctions etc that could be done, or undone. But not sure how given some of the practicalities would end up at State-level, ie which State gets bungs to attract plants. And then there's other snags, or benefits. Like how to tempt youngsters to take on $100K+ debt to study & supply skills needed to feed fab plants.

        And as I understand it, one of the reasons why there are component shortages is that fab plants follow the money and have switched production lines to chips with the best profit margins. So producing the chips that are wanted means dangling $$$. Or there's some legislation intended for war-time production priorities as was used to get Covid stuff supplied, but can't force that on operations outside the US. And fab plants cost billions, and can't be built overnight.

        Or, given the shortages seem to be impacting automakers, look again at whether cars have become too complex, and ways to potentially simplify design so fewer components are needed.. Which automakers have been doing, but that also puts them in competition with all the computer and IoT producers.

        1. Anonymous Coward
          Anonymous Coward

          I wonder...

          There are maybe 2 other drivers?

          1. Bitcoin pricing driving GPU demand

          2. AMD is generally ahead of Intel in CPUs, hence much higher demand for TSMC to make them.

          Bear in mind some AMD CPUs use a 14nm? interconnect IC so the success of their CPUs is probably putting pressure on TSMC's 7nm, 10nm, and 14nm fabs.

          1. Jellied Eel Silver badge

            Re: I wonder...

            Bear in mind some AMD CPUs use a 14nm? interconnect IC so the success of their CPUs is probably putting pressure on TSMC's 7nm, 10nm, and 14nm fabs.

            Yep, I guess it's a combination of fab plants switching processing to the most lucrative parts, so if a shift to <14nm means less capacity to produce generic 14nm parts for 'glue' chips supporting processors. I still remember an ancient training course I went on for SNA, where the trainer pointed out Ford drove a lot of SNA's requirements.. And was also the world's largest consumer of CPUs for ECU's and other functions. And now cars are far more complex & chip-hungry, 'needing' commodity components like Ethernet, WiFi, 3/4/5G stuff as well as logic to drive multiple LCDs instead of good'ol analogue displays.

            1. EnviableOne Silver badge

              Re: I wonder...

              the interconnects are on 7nm, the compute units are on 5nm on the Zen2+

              but the zen3s are all on 5nm

          2. Anonymous Coward
            Anonymous Coward

            Re: I wonder...

            "Bear in mind some AMD CPUs use a 14nm? interconnect IC so the success of their CPUs is probably putting pressure on TSMC's 7nm, 10nm, and 14nm fabs."

            TSMC has 12nm/16nm lines and 7nm lines for high power chips - 5nm high power is coming as Apple use the low power variant that lacks the transistor density and ability to scale power usage to higher levels.

            Realistically, there are no constraints on 12nm/14nm products as they are in separate TSMC fabs (Fabs 12 and 14) while 7nm is in Fab 15.

            7nm is constrained by lithography equipment and fabs (TSMC have around 66% of current installed capacity due to greater investment than Samsung and Intel adopting new process nodes first BUT struggling with 10nm). On top of that, there are reports that a key component for sub-10nm products are experiencing severe shortages (ABF - https://www.ajinomoto.com/innovation/action/buildupfilm). which are unlikely to be addressed in 2021 even if more fabrication capacity comes on-line.

            Intel failing to deliver a good sub-10nm pushes the problem onto TSMC/Samsung because there aren't any other serious alternatives (i.e. the other sub-10nm produce a few thousand wafers per month versus Samsung and TSMC producing thousands per hour).

            Add in COVID and the shipping issues it has caused (maybe Brexit too, but other factors are dominating that at present), demand from cryptomining, games consoles, GPU's, CPU's, 5G and mobile phones and 2021 looks like rising prices and capacity constraints all round.

          3. eldakka Silver badge

            Re: I wonder...

            2. AMD is generally ahead of Intel in CPUs, hence much higher demand for TSMC to make them.

            Intel (just like everyone else - TSMC, Samsung, and the smaller foundries) is selling all the chips it can make. It (Intel) doesn't have an oversupply, all its fabs are working at full capacity (barring any that might be involved in technology upgrades, such as 14nm->10nm etc.), none are sitting idle.

            This is not an Intel vs AMD thing (I'm on the AMD side of that fence for context), it's an absolute chip-supply issue (whether fabs, substrate, packaging - there were some issues with ceramic packaging supply for example).

            Bear in mind some AMD CPUs use a 14nm? interconnect IC so the success of their CPUs is probably putting pressure on TSMC's 7nm, 10nm, and 14nm fabs.
            You're thinking of the I/O die, and yes that is built on 14nm. TSMC doesn't make the I/O chip on AMDs MCMs. Global Foundries makes those as part of AMD's contractual requirements (the Wafer Supply Agreement) as a result of the spinoff of GF from AMD, AMD has to purchase a certain number of wafers from GF, so it uses them for their I/O chips.

          4. Aitor 1 Silver badge

            Re: I wonder...

            The issies is there are essentially two main players in foundries, so a duopoly closely followed by intel.

        2. John Brown (no body) Silver badge

          "So how the US could persuade it's own industry to bring those plants, jobs and revenues back home."

          Well, the people crying for this are, from the article, the Semiconductor Industry Association. I would have thought the big US manufactures are members, so as so many others have pointed out, they only have themselves to blame and only they can do anything about it.

      2. fajensen

        see no problems with your potential enemies having unfettered, or even preferential, access to the same

        Maybe a revolutionary policy of "Think Again" before making ever more enemies, would help to create fewer problems with supply lines and stuff?

        The world is no longer impressed by the petulant refusals to honour agreements, and the threats, bullying, sanctions and regime changes, and it is putting it's own interests first in routing around it.

    3. Mark192

      mark I 2 asked "Why should US tax payers money be spent on aiding [etc]"

      It is not about the jobs created directly, it's about building up an industry where choosing America becomes the logical choice for other manufacturers, because they've got the skilled and trained workforce and myriad other companies supporting the supply chain and providing all the widgets and doodads needed to set up and support a production line.

      1. Gary Stewart

        Re: building up industry

        " it's about building up an industry where choosing America becomes the logical choice for other manufacturers, because they've got the skilled and trained workforce and myriad other companies supporting the supply chain and providing all the widgets and doodads needed to set up and support a production line"

        I actually go back far enough (mid 70's) to remember when that was already true. Even back then the offshoring had already started with a vast majority of the IC's where I worked being assembled in Malaysia. Somehow, as a young man just starting in electronics I knew that wasn't a good idea. Where we are now is a direct consequence of the direction set by the "leaders" in business and government. Fix it, but use your own damn money. That, among other things are what profits are for.

        1. Old Used Programmer Silver badge

          Re: building up industry

          It goes back farther than that. Companies that needed core memory off-shored, and moved from country to country, always seeking the lowest labor cost for threading wires through ferrite cores.

        2. low_resolution_foxxes Silver badge

          Re: building up industry

          Yes it's interesting that a significant number of key tech patents held by US tech companies are due to expire in the next few years. The move to low cost manufacturing regions has hit them hard and there is an element of keeping domestic manufacturing while the US-China trade wars continue. Imagine if China really took the huff at some of the recent measures, banning exports for example?

        3. Anonymous Coward
          Anonymous Coward

          Re: building up industry

          I would argue the problems began in the 1990's. IC manufacturing became more specialised with each process node shrink and in the 90's jumped from being in the millions to run a small fab in-house to requiring hundreds of millions and even second-hand equipment being outside the purchasing power of most companies.

          At which point we saw consolidation and the development of leading edge lithography machines shrink from four suppliers (ASML/Canon/Nokia/Ultratek) in the 1990s to one (ASML) by the late noughties as the costs forced the IC manufacturers to share lithography development costs that quickly run into the billions.

          Can the US government fix this? Sort of - they can continue to invest in TSMC to provide some diversity to US production away from Intel. But thats a 2022+ plan - subsidies in 2021 are unlikely to help Intel fix its production issues but may ensure it has money to invest in future generations as their lenders have reportedly got nervous about how much they are spending with no real payback yet on 10nm (~US$100bn for 6 fabs - but most of there revenue is coming from 14nm fabs not 10nm plus they will have a "hole" for future production of chipsets/flash/networking/etc if they can't get usable sub-14nm that isn't the premium node when the competition will likely have a lot of available 7nm capacity that has paid for itself already).

      2. Woodnag

        Jobs?

        The shortage is simply becuase customers, such as suppliers of modules to carmakers (tier 1s and 2s), cancelled orders last year because CV19. Now there's an upside, and suddenly it's the semi industries' fault that there's no inventory. No forecast, no build.

        1. Roland6 Silver badge

          Re: Jobs?

          >The shortage is simply becuase customers, such as suppliers of modules to carmakers (tier 1s and 2s), cancelled orders last year because CV19.

          The suppliersof modules cancelled because the car manufacturers, operating to Just-in-Time, reduced production and cancelled their orders for modules...

          Interestingly, the shortage of chips the car industry is talking about isn't a real shortage as demand for new cars is still down and given forecasts for when things might "get back to normal", it is looking like it will be 2022 before the car industry sees any real up turn in demand...

          1. Anonymous Coward
            Anonymous Coward

            Re: Jobs?

            "modules cancelled because the car manufacturers, operating to Just-in-Time, reduced production and cancelled their orders for modules..."

            For at least one manufacturer, this is not the case. We issued forecasts, placed orders, and confirmed orders all within the agreed upon leadtimes. Our suppliers still let us down.

            Anon, because publicly traded auto companies like this info to come out only through official channels (though I think we've already made public announcements about this) .

            1. Anonymous Coward
              Anonymous Coward

              Re: Jobs?

              >For at least one manufacturer, this is not the case.

              Look on the positive side as this reduction in production is the motor industries contribution to combating: climate change, withdrawing support for conflict resources and resource depletion...

          2. eldakka Silver badge

            Re: Jobs?

            Interestingly, the shortage of chips the car industry is talking about isn't a real shortage as demand for new cars is still down and given forecasts for when things might "get back to normal", it is looking like it will be 2022 before the car industry sees any real up turn in demand...
            That's only partially correct. Yes, the forecasts don't show a significant uptick in demand until 2022. But that doesn't mean there isn't a shortage in chips for vehicles. The vehicle manufacturers went too far in their reduction in chip orders, they cut too deeply. There is, globally, about US$31billion in unfilled car orders due to a lack of chips to fulfil those car production orders.

            This is entirely a problem of the vehicle manufacturers own making. They got their forecasts wrong, and now are blaming everybody else for their own forcasting problems. It's not like chips are physically large items that would take up massive storage space if they are unused. So they could have kept some stock in storage to meet a spike in demand to cover the 3-month leadtime for ordering new chips. But no, the vehicle manufacturers don't want to keep any excess inventory, and they want their new chips now.

      3. Boris the Cockroach Silver badge

        Skilled workers

        ahhh you mean expensive workers,

        because you cant take a burger flipper for example out of the grill on Friday and have him being able to produce chips on Monday.

        You will have to train them,, and thats before even building any fabs.

        All of which takes money, which the companies wont spend in the US because to build a fab in a 3rd world country, and staff it at 3rd world wages with 3rd world contracts(12hr shifts Mon-Sat anyone?) is a lot cheaper than having to comply with health and safety, working hours things, and enviromental controls too

        1. Anonymous Coward
          Anonymous Coward

          Re: Skilled workers

          @BorisTC

          Taiwan and Korea are no longer 3rd world countries with 3rd world wages.

          I haven't looked into the history of TSMC, but suspect it was originally funded by the government of Taiwan R.O.C. And that's why the place is no longer a 3rd world country.

          1. Roland6 Silver badge

            Re: Skilled workers

            >but suspect it was originally funded by the government of Taiwan R.O.C.

            Japan (pension funds) was for several decades a big investor in the asia pacific region, so may also have contributed.

      4. gratou

        Oh we screwrd up offshoring and pocketed the savings for years, now please give us more money so we can undo the totally unexpected damages this off shoring policy caused.

        1. Anonymous Coward
          Anonymous Coward

          It's more complex than just "its all offshoring fault".

          Intel has screwed all of their customers from not having leading edge products at the moment so the US is left dependent on others.

          While Intel did offshore some of its manufacturing, it also drove a lot of US competitors out of business or acquired them.

          And in terms of offshoring, getting regulatory approval to build fabs is both expensive and difficult - moving from manufacturing to design-only was sometimes the only option. As US society benefitted from IC manufacturing, sending the polluting manufacturing overseas seemed to be an easy fix.

      5. fajensen

        ... choosing America becomes the logical choice for other manufacturers ...

        That was how it was during the Cold War, when America had to out-bargin the USSR. But, Today, gorged on Power, America sufferes from "Late Empire Dementia": No pie on the planet is too small or insignificant for some colonial taskmaster to stick their fat fingers into!

        Besides, restoring logic to America, that would as a minimum mean taking the cray-cray out of especially the State Department and America in general, and then America would just not be the Exceptional / Indispensable Nation it believes it is, any longer.

        As it is, we furriners never know what the hell America will do even next week, certainly not next year, and absolutely Everything, except bombing brown people, is thrown to the winds with every President.

        Thus the logical choice is: Don't depend on America!

    4. Roland6 Silver badge

      Agree, why should US tax payers money be spent on aiding US companies specifically Intel, AMD, Qualcomm etc build new US fabs when these are companies are the ones that have failed to build fabs in the US, preferring instead to off-shore production....

      1. Alex Stuart

        Ultimately us consumers must take most of the blame for this. We like cheap things more than we like ethically sourced products.

        If AMD had tried selling CPUs that were more expensive and less performant than Intel's but 'made in America' they would have gone bankrupt. Not a case of 'preferring' but 'need to stay in business'.

    5. DS999 Silver badge

      An executive order can't spend taxpayer money, only congress can

      At best it can reallocate it - and even then it is subject to a lot of restrictions. So you don't have to worry about Biden issuing an order like "committing $20 billion in subsidies for building fabs in the US" because it can't happen.

      Possibly we might see are some requirements about the US government requiring that some certain percentage of various product categories it buys have chips fabbed in the US. Though just about everything in this regard in the PC/server would essentially act as a subsidy to Intel.

      Most likely we'll see something about DoD purchases. That's a huge bucket of money that's guaranteed to be spent year after year, easiest for the government to justify on national security grounds, and will allow market forces to dictate things.

      1. martinusher Silver badge

        Re: An executive order can't spend taxpayer money, only congress can

        Defense semiconductors may be expensive but they are also by their nature not the latest generation products. So we'd be subsidizing manufacturers for building obsolete plants.

    6. bombastic bob Silver badge
      Devil

      something worth considering, the RELAXATION of environmental and other (similar) restrictions, which is always a MAJOR impediment to new construction of things _LIKE_ FAB plants. It's cheaper to off-shore your pollution, yeah.

      I do not know if 'Benedict' (Biden} would actually DO this, but I might have to give him a "slow clap" if he does something MAGA-worthy.

    7. charlieboywoof

      its called..........................

      ....................... socialism. Billions and billions of big tech worth, but you will be made poorer.

  2. Doctor Syntax Silver badge

    "The move comes as leaders from top chip companies urged President Biden to step up efforts to invest in home-fabbed semiconductors for national security reasons."

    Probably the cheapest option would be to offer their CEOs and board memberss a mirror each and an instruction to look carefully at what they see in it. It might be necessary to ad an instruction as to which side to look at.

    1. A.P. Veening Silver badge

      Probably the cheapest option would be to offer their CEOs and board memberss a mirror each and an instruction to look carefully at what they see in it. It might be necessary to ad an instruction as to which side to look at.

      Ouch, that's got too/to*) smart ;)

      *)Take your pick, both are applicable

  3. Duncan Macdonald Silver badge

    To little - far too late

    To develop a foundry business with parity with TSMC or Samsung will require an initial investment of $100 billion or more and ongoing costs of multiple billions per year - and a huge wait for equipment (multi year backorders for EUV equipment for example) and a supply of highly trained (and paid) technical staff.

    AMD abandoned its semiconductor manufacturing business as it could not afford the cost of keeping up with the leading edge.

    Intel by refusing to invest the required billions in EUV equipment etc has fallen well behind TSMC - the money that should have kept them competitive was spent in shareholder dividends.

    I do not see any US company (even with US government backing) being able to match TSMC in the next decade. Given that policies (and tax breaks etc) change from one administration to the next , the chance of the required sustained investment being achieved is near zero.

    TSMC is also far too big to easily buy - its market cap is over $580 billion

    1. a_yank_lurker Silver badge

      Re: To little - far too late

      If the Ferals wish to spend the money they could build up the US fab industry but it will require many years much like the Apollo program to do. I doubt they have willingness to make that kind of effort.

    2. Anonymous Coward
      Anonymous Coward

      Re: To little - far too late

      > Intel by refusing to invest the required billions in EUV equipment

      They have made the investment, but by a combination of over-ambition and complacency tried to do too much all at once*, but not in a hurry - resulting in the delays we're seeing now.

      i.e. they _are_ lagging, but not for the reason you might think (e.g. Intel 10nm transistor density is claimed to be similar to TSMC 7nm - but that doesn't help because TSMC are _already_ on 5nm).

      * basically akin to the way they hurt themselves with Pentium 4, which led to the tick-tock model.

    3. low_resolution_foxxes Silver badge

      Re: To little - far too late

      I think TSMC is considering a new Texas fab.

    4. Anonymous Coward
      Anonymous Coward

      Re: To little - far too late

      "Intel by refusing to invest the required billions in EUV equipment etc has fallen well behind TSMC - the money that should have kept them competitive was spent in shareholder dividends."

      This isn't accurate - Intel had a big lead in leading edge ASML equipment. Only the first generation EUV kit wasn't that great. Once the teething issues were resolved, it was TSMC's turn to get equipment from ASML and that meant they caught up. Intel should have still had the advantage at this point but they doubled down on 14nm fabs to cover the short term and waited for more ASML kit. When they had parity with TSMC from an equipment perspective, their 10nm was still failing to deliver at required performance or quality levels. TSMC took a risk and invested in new fabs and lithography equipment leaving them with around 66% of currently installed EUV-capable equipment although that will have dropped to under 50% by the end of 2021 as Intels 7nm fabs (hopefully) start to produce products.

      The big issue with leading edge fab capacity is that it takes around a year to finance and order equipment/get approval to build a fab and then 18 months to build it fit it out with equipment (ASML capacity allowing) and 6 months to get products shipping. Intels issues in 2021 are from complacency/being unwilling to acknowledge problems with 10nm in 2017/2018. These were compounded by TSMC doubling down on investment which lengthened queues for equipment.

  4. CrackedNoggin

    The goal is valid - it makes more sense to spend a trillion on fabs outside of China and closer to the US than it does to lend(=spend) yet another trillion on further inflating the stock market (and that never made sense). If the US, and the west in general depend completely upon the CCP, then it is obligatory for the CCP to leverage that advantage, invade Taiwan, and other horrible stuff. Rather than moan incessantly about the evilness of it all, it is better to patch the vulnerabilities before the worst happens, and if the worst does happen anyway, to at least be ready for it.

    Many comments here rightly point out the risk of simply funneling more money into earnings or inflated stock prices with no real result, and that's a valid point. Can it be avoided? Perhaps existing tax breaks can be refactored to reflect long term needs. For example, shift away from 'general' capital gains tax breaks to focus on strategic needs.

    1. Roland6 Silver badge

      >The goal is valid

      Kind of.

      Actually what is required is to reduce supply dependency on TSMC, just as happened with Intel and AMD.

      Given the sums of money and multi-year investment involved the US might wish to talk with the rest-of-the-world; and be prepared for the out-of-field solution - suspect Iran might have the right mix of skills etc. to host a fab plant...

      1. Anonymous Coward
        Anonymous Coward

        "suspect Iran might have the right mix of skills etc. to host a fab plant..."

        Surely China is a better option than Iran - you already have the manufacturing infrastructure and avoid issues with international shipping to those manufacturing destinations.

        Admittedly neither helps if the President decides to add significant tariffs...

  5. Anonymous Coward
    Anonymous Coward

    Who knew this would happen? You outsource in the name of profits and decimate your own production capabilities. Why not divert some of that profit back into R&D and production rather than asking for government hand outs? Spending public money (tax cuts are taking this money) on corporations while giving the people that actually pay it nothing seems very wrong in my mind. Who knew the democrats would continue republicans ways?

    1. Blank Reg Silver badge

      The problem is that there is no reason for any of these companies to move production to the US. They will go where they will make the biggest profit. If you want them to do otherwise then you have to make it worth it for them.

      1. FILE_ID.DIZ

        And therein lies the rub.

        John Q Public might be on the hook to "home grow" IC manufacturing because the "government demands and shall compensate for it".

        If no governmental forces force themselves upon the "free market", I suppose prices would rise (considerably) and possibly make production in the mainland (USA) profitable again.

        Given pure capitalism, scarcity naturally leads to a price rise, so bonus nachos to all? Except that people don't like to have to directly pay more for something. Apparently its better if that's buried under layers of debt and dismal wages.

      2. gratou

        Or you have to regulate.

    2. John Brown (no body) Silver badge

      "Who knew the democrats would continue republicans ways?"

      Bipartisan (and that word itself is damning of US politics in and of itself) agreement and policies is a real thing. There are always going to be policies, possibly the majority, which both/all parties agree with. The problems almost always occur in the implementation and details of the policies. But US politics is so wildly polarised now, and seemingly getting more so, political speeches to the masses seem to concentrate more on how everything the "demon" on the other side of the aisle does is, by definition, wrong and bad for the country. The reality is, behind closed doors, they agree on a lot more than you might think but the political showmanship disallows them showing this in public.

      1. 45RPM Silver badge

        It's a pity that they can't show sanity in public - but your statement that "they agree on a lot more than you might think" and are prepared to work in a bipartisan manner for the common good does give me hope. So thank you.

        I guess, from the evidence, that this happens more on the 'small' things (i.e. the here and now things that affect people today or tomorrow - like RomneyCare (or, as it was rebranded, ObamaCare)) rather than on the big things - like climate change or impeachments, where there's too much at stake reputationally, and it's too much in the public eye. But then there's a wildcard like Trump, who goes nuts - and rips up treaties and legislation from both sides of the house, just because it didn't have his name on it.

        I wonder if sealed ballots would help in the house - at the moment, I imagine that many politicians are scared of voting as their conscience dictates because their voting record can be examined. But perhaps it would just make matters worse.

        What a mess.

  6. msobkow Silver badge

    In all seriousness, what is the difference between the US government "investing" say, a billion dollars into such infrastructure, and the Chinese government having done the same to launch their fab plants, other than the fact the US used to HAVE fab plants of their own until the profiteers offshored all the work for the sake of a nickel?

    It is no one's fault but the stock market and the profit-at-any-cost mentality that led to this embarrassing situation.

    And now the people who sold off their own facilities for their own profit want the *taxpayer* to foot the bill for rebuilding what they destroyed.

    Perfectly rational. Have something, destroy it. Rebuild somewhere else for profit, and then demand that someone else pay for you to rebuild local 'cause now you're in a snit with where you built the infrastructure the second time.

    Keystone Kops on an international scale...

    1. guyr

      the US used to HAVE fab plants of their own

      This is the point people need to acknowledge. All the major semiconductor companies - IBM, Intel, AMD, etc - did their manufacturing in the US.All those plants actually still exist, and are churning out chips today, but not the latest and greatest. Why? State-of-the-art chip manufacturing is not for the faint of heart. TSMC's current 7 nm fab cost $10 B, and the next one is estimated to cost $20 B. For comparison, AMD had a great year in 2020, with a net income of $2.4B, but that included a one-time income tax benefit of $1.3B, so more like $1.1B, which is still great for AMD, which had lost money for 15 years straight.

      So, how does a company who makes $1.1B in their best year afford a $20B manufacturing plant every 10 years? It can't, math doesn't work out. AMD outsourced manufacturing to TSMC for its latest chips because it had no other choice, not because it just wanted to make a couple more bucks. Building those chips on their existing (last-generation ) production line would have been unsuccessful - too big, too much heat. And they didn't have the time or money to build a new current-gen fab.

      So, how does TSMC do it? Government subsidies and indirect government support (tax breaks, low interest loans, etc.) TSMC can easily get that $20B loan and go 10 years showing little or no profit. No US company can do that. So how do we fix this? I'm not an economist or a miracle worker, but I doubt we can mass-hypnotize American investors to accept zero profit in their investments for 10 years at a time. So, off the top of my head, I'd say we need to reorganize how massive investments can be made while still showing profits. Public funding? Accelerated tax write-offs? Smarter minds than mine need to think about that.

      1. katrinab Silver badge
        Meh

        Re: the US used to HAVE fab plants of their own

        "I doubt we can mass-hypnotize American investors to accept zero profit in their investments for 10 years at a time"

        Talk to Amazon. They managed it. It is making a profit now, but it took a long time to get there.

        1. Anonymous Coward
          Anonymous Coward

          Re: the US used to HAVE fab plants of their own

          Amazon convinced shareholders to accept increases in share price while growing on the basis that at some point it would become dominant. The American dream - an effective monopoly.

      2. Duncan Macdonald Silver badge

        Re: the US used to HAVE fab plants of their own

        TSMC is now large enough and with big enough earnings that it can finance the $20B fab without needing a loan (their earnings were $17.6 billion for the last year).

        1. Anonymous Coward
          Anonymous Coward

          Re: the US used to HAVE fab plants of their own

          I think you are being optimistic - not even TSMC or Intel are large enough to finance $20bn fabs without investors. TSMC/Intel have rarely done single fabs - usually they will do pairs so that doubles that investment and there is likely significant R&D investment/supplier capacity investment that goes alongside the headline figure.

          Which is where the US government stepping in can help.

        2. fajensen

          Re: the US used to HAVE fab plants of their own

          It would be straigt-up stupid to not finance the $20B - due to ZIRP policies driving The Market to eagerly buying up any kind of thrash paper, sometimes to even lower interests than government issued bonds.

      3. Ken Hagan Gold badge

        Re: the US used to HAVE fab plants of their own

        $20bn? Pah! We build railways that cost more than that.

    2. John Brown (no body) Silver badge

      "In all seriousness, what is the difference between the US government "investing" say, a billion dollars into such infrastructure, and the Chinese government having done the same to launch their fab plants,"

      Primarily, the election cycle. US policy flips to whatever plays with the voters every four years, two of which are the campaign season. China plans for decades and sticks to their plans, maybe with some tweaking in the interim.

      On the same note, US investors want a quick buck and instant profit on any investments. Few are prepared to wait years on an ROI.

    3. Anonymous Coward
      Anonymous Coward

      "In all seriousness, what is the difference between the US government "investing" say, a billion dollars into such infrastructure"

      You are likely to be out an order of magnitude - i.e. $10bn rather than $1bn and then there is likely to be more money requested in the future to keep it going.

      The real question is how many bleeding edge fabs does the world need and who will support them if they fail to deliver the next generation? Why is that the question? Look at the semiconductor manufacturers that are still in business in the US BUT are 3+ generations behind TSMC. ON Semiconductor (formerly National/Fairchild), NXP (formerly Freescale/Motorola), Infeon, Micron, Global Foundries, Texas Instruments, Analog Devices, Tower (formerly Jazz/Conxenant/Rockwell) etc.

  7. Binraider Silver badge

    AHH the politics at play. On one hand - grants to Intel etc means they make more for shareholders. True. As the grants are conditional on bringing jobs back from Asia - classic protectionism. A policy I note that the previous administration was very loudly espousing (though not doing much about).

    Truth of the matter is that the dependency on the Eastern fabs is now so severe other western industries cannot keep up. The only way to persuade manufacturing to come home then, is either high taxes on imports which doesn't correct the supply chain issue OR to set up manufacturers at home.

    If you think Intel and others care where they choose to make their chips beyond where's cheapest, then you don't get how business works.

    Subsidies are crap but the alternatives are worse. All fairly simple.

  8. six_tymes

    something trump already tried, but since the media convinced everyone to HATE him no one listened. maybe the 47 year career politician do nothing plagiarizer president will get lucky, after all, everyone loves liars.

    1. Binraider Silver badge

      By having the diplomatic skill of a wet burglar alarm, nobody listened to Trump. There were occasionally good ideas hidden in the tangled mess of garbage he spewed while muddying international opinion even more of the US.

      All I’m saying is that had he had this thing called ‘tact’ then some of those good ideas might have actually gone somewhere. Protectionism is; by and large, a large chunk of what the anti-globalisation brigade want; reduce reliance on third parties, bring jobs “home” etc. Popular messages for both the left and right wing actually. You might even call them moderate views.

      Forcing the hand of semiconductor fabs is recognition that we’ve thrown far too much to China and/or the obvious invasion target that is Taiwan. Reducing exposure to that (improbable, but non-zero) risk is probably a good idea by and large. Also, as semicon manufacturers have realised demand is outstripping supply and people will pay ANYTHING to get one, there’s a risk brewing of a 70’s style economic collapse spewed by semicons. Similar to how oil prices mysteriously rose under direction of OPEC. Definitely a risk worth cutting off early.

  9. sreynolds Silver badge

    These are the risks of just in fucking time

    What the fuck? Why not just start printing money Obama did and start giving it to your silicon valley buddies.

    Or is there a secret communist agenda going on here? I really don't get it. If the companies made poor decisions and are affected by a "pandemic," just like rest of us then they should plan for it and/or accept the risk.

    How many people are going to die if a Tesla cannot have its 4 high end GPUs? Probably minus some number, due in part to the number of fatal incidents involved using the self driving feature.

    There was a sign that the production manager used to have, "Poor planning on your part doesn't constitute and emergency on mine"/

  10. Pascal Monett Silver badge

    "urges the Democrat to fund efforts"

    I thought this was the USA, the country that frowns on government intervention.

    Oh, right. Money. Nobody frowns on getting that.

    1. Anonymous Coward
      Anonymous Coward

      Re: "urges the Democrat to fund efforts"

      Socialise the costs and privatise the profits.

      And have the people argue over the evils of socialism/communism while corporates wallow in the subsidies and tax breaks.

  11. TVU

    "They called upon the Biden administration to provide grants and tax credits to build new semiconductor fabs as well as increased spending to fund scientific research in the States"

    ^ And not before time too!

  12. Danny Boyd

    If only...

    ... executive orders could produce chips (instead of just increasing the world entropy), the life would be much simpler.

  13. Anonymous Coward
    Anonymous Coward

    Who is the 12%?

    It's not Intel. Most of their stuff is made in Malaysia or Israel.

    1. Anonymous Coward
      Anonymous Coward

      Re: Who is the 12%?

      Malaysia only does assembly for Intel.

      Fabs are in the US (approx. 50% of capacity but varies based on refurbs/decommissioning/production ramps) with the rest in Ireland/Israel and some NAND manufacturing in China.

    2. confused and dazed

      Re: Who is the 12%?

      Micron, Infineon, TI, Global Foundries ....

  14. Cuddles Silver badge

    How will it help?

    I was under the impression that executive orders were generally made for things that need to happen quickly without lots of faffing around in multiple parts of a parliament, or where a single, decisive voice is thought to be needed. That's why they tend to be things related (or at least claimed so) to national security. On the other hand, chip fabs take many years to plan and build, involving long-term planning and negotiations on the part of many different parties. So what exactly is an executive order supposed to achive here? "We need more chip fabs immediately. Make it so!" "OK, just give us 15 years and $20 billion and we'll make a start asking people if they might be interested in setting up a committee to discuss starting the planning."

  15. J.G.Harston Silver badge

    Not enough tea, read headline as executive orders chips and eggs.

  16. This post has been deleted by a moderator

    1. 45RPM Silver badge

      I thought you said you were going, never to return? I mean, I don't mind you trolling your way around here, you're quite a cute and precious little Troll, but you did say that you weren't coming back. I know it's unreasonable of me to expect you to be any more trustworthy than the rest of your far right ilk, but one should learn to keep ones promises…

      Given your language, I'm surprised that you understand some of the longer words here anyway - you know, the ones with more than one syllable.

  17. confused and dazed

    Too Late ?

    Seems to me that the US have lost Si process leadership. 2nd place is a terrible place to be, as you need to spend almost as much on R&D and lose all the price gouging opportunities. Re-gaining #1 is going to be a hideously expensive proposition, and how long for ? ..... can we really go much beyond 3nm ?? I know we've said this for a long time but really there are fundamental limits nor far away now.

    Maybe advanced packaging techniques and interconnect would generate more bang for buck .....

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