In Other Words
Multi Multi Billion dollar rich companies wait for handouts from the less welloff.
The US semiconductor industry has sent an open letter to President Biden [PDF] asking for support in domestic semiconductor research and manufacturing, arguing the sector's importance to national security and the country's tech dominance demand it. The letter urged the Biden Administration to fully fund the CHIPS (Creating …
Well, handouts from the employed who are paying taxes. If jobs are created as a result, then you could also view it as a handout to the unemployed. Some of whom then become employed, and will have to pay taxes.
IMO this kind of program can be beneficial if done right - as opposed to old school "pork barrel" politics.
But will it? that's an open question...!
Supply and Demand. If there is a Demand for Semiconductors, companies will be building or extending factories to Supply them.
Let's stick with the Government investing money in things that won't happen automatically. Research, Education, Healthcare - there're lots of things that badly need Government money... Bailing out poor long-term planning in US industry isn't high on that list.
In other words - US companies (like Intel) who chose to use profits to pay shareholder dividends rather than invest in R&D now want the US taxpayers to pay for their R&D. Intel let TSMC get in front by not being prepared to invest in the expensive tools like EUV equipment until AMD overtook them in performance.
To get a firm to the point where it can compete with TSMC at 7nm and below will require a huge and continuing investment ($100B+ initially then multiple billions per year for newer equipment), highly skilled (expensive) staff and a long startup delay (multi year delays on some EUV equipment) and all with no certainty of making a good profit.
Global Foundries gave up on advanced nodes (10nm and below) because the costs exceeded the revenue that they could get from them - what makes the US semiconductor industry think that they can now do better ? This is just the industry trying to get big handouts from the US government.
I have my doubts about the need for the spending as it is not clear how it would help the US. Also, I am suspicious of industries asking for handouts 'just because'. But I have real doubts that our 'Fearful Leader' will support this and his policy is more pro CCP than the Orange Man.
Foxconn hoodwinked both the state and Trump. People were forced out of their homes yet... where are the jobs?
The current trend is for this sort of industry to get sweetheart deals from Texas... Guaranteed power is a big plus for this sort of industry. Texas is a basket case because of the GOP not wanting to prepare for winter.
If I was looking for a place to site a plant then it should be right next to a very large Hydro plant (with guarantees on supply) and well away from bushfires and earthquakes.
Suddenly building a very, very large hydro dam on the lower Potomac (below DC) seems like a good idea. After all, the area was a swamp and Trumpo didn't drain it now did he?
"We had fabs. We didn't invest in them because it was cheaper to let the Chinese invest in their fabs while we sold out all our workers for an extra dime.
But we're not happy with the Chinese anymore 'cause the American government is on a tirade about a "trade imbalance" despite all the trillions of profit the US makes from the deals.
So could you please saddle the taxpayer with the bills for us to build yet a third time, but this time locally with automation so we don't need staff?"
Well said. It is just another example of the government only being able to make people poorer. Cheap work gets outsourced for a reason, we can earn more doing nicer work. The gov giving money to build fabs in the US has to be taken from someone (the tax payer) and so knackering the trade and charging tax payers is a double whammy.
While I like to rebel against the system, there is a certain logic about reducing tax barriers on R&D and building infrastructure. Especially if it is considered a national requirement.
There are different ways to tax companies, many governments are moving to sin/consumption taxes because they are harder to avoid, but you could imagine that a govt yelling at industry to invest in domestic infrastructure, might get the response "if I spend $10bn on several new factories, I'll need to pay the govt 40% in taxes and it'll take 4 years before we start making money" which becomes a much harder project to approve. Much better to have low R&D taxes and raise taxes on things they will consume when the factory starts production.
I see both sides of the coin, those CEO salaries are insane BTW?!? Are they run by technical leaders who were excellent, or generic beancounters who setup tax efficient structures?
First they outsource production to Asia because it's cheaper, now they want money infusion to "bring production back to American soil". Why it is not on American soil in the first place? I swear, I start to like Trump's approach: "Bring the production home or pay the import dues!"
I suppose it depends on whether or not you view the US being able to completely own its own processes and manufacturing for 7nm and smaller chips as being strategic. Then there is the question of whether or not it can be done economically in the face of cheaper competitors without government help. Of course Intel will hold out their hands and say yes to the first and no to the second. Getting at the truth is going to be harder but I get the impression the whole investor model is holding some US sectors back at the moment. Strategically, perhaps it this the US government should be addressing.
I don't think semiconductors can be classified as non-strategic any more. Far too much depends on them. Yes, that means staying on the forefront like the 7nm node now.
The question is how to structure the taxes or subsidies that doesn't result in the CEO getting a bigger yacht so they can have a place to keep their small yacht and the taxpayer getting the short end of the deal
That is probably correct but these billion dollar companies making billions of profit chose to shift their manufacturing to the Far East because it was cheaper, enabling them to make more profit.
The reason it was cheaper was due to much lower overheads;
Staff working conditions
Health and safety
Consumers got cheaper products and happily turned a blind eye to what was going on. Shareholders were happy as both revenues and profits increased.
Now those same companies want Government incentives to repatriate manufacturing.
"Now those same companies want Government incentives to repatriate manufacturing."
I expect its more to do with needing those incentives to be able to repatriate manufacturing. All those things you list are true and are costs imposed on the company. And all of them are government inflicted (right or wrong).
I expect leaps in automation to create these items if it is repatriated. The work is just too expensive for the developed world.
> expect leaps in automation to create these items if it is repatriated. The work is just too expensive for the developed world.
You really think you can build advanced 5nm semiconductors with automated machines - rather than using cheap below minimum wage 3rd world labour ?
@Yet Another Anonymous coward
"You really think you can build advanced 5nm semiconductors with automated machines - rather than using cheap below minimum wage 3rd world labour ?"
I have no idea. I didnt think you could flip burgers without a minimum wage high school leaver flipping it but its been made because the cost of labour increased. But if a labour intensive job can be done cheaper then it will be considering the increased salaries in the US vs 3rd world.
The problem is the value of the work is less than minimum wage. The value of the work is less than all those other niceties listed by hoola. And because it is done this way a bunch of people have employment in countries that need it and the knock on effect of having these various chips generate more value and employment world wide.
Doesn't the US semiconductor industry do this every 10-15 years? They run crying to Uncle Sam that they need assistance only the Federal Government can provide. Yeah, I think I've seen this movie before. ISTR RAM going from $30/Meg to like $120/Meg in the early 90's because somebody complained and suddenly we had to have big sanctions against the Korean memory manufacturers. Yeah, maybe they deserved it (they were actually dumping, iirc), but still, that only really hurt those of us building and upgrading computers, the Korean corps probably don't even show it as a blip in their balance books anymore, and obviously it didn't fix things for the American semiconductor industry.