[HN Gopher] Tech giants join call for funding U.S. chip production
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Tech giants join call for funding U.S. chip production
Author : tareqak
Score : 305 points
Date : 2021-05-11 18:23 UTC (4 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| godelmachine wrote:
| If this truly comes to fruition, it would be a prime mover in
| displacing Chinese global hegemony and stave off its bullish
| nature.
|
| China maintains economic well being by donating the chip market
| and also the supply chains.
|
| The Quad has emerged to dislocate Chinese tyranny in the Indo-
| Pacific, and US chip takeover will be one of the last strokes in
| China's downfall.
| dang wrote:
| This crosses into nationalistic flamewar. We don't want that on
| HN, regardless of $nation. It leads to predictable, nasty
| discussion that kills the curious conversation which this site
| is supposed to be for.
|
| https://news.ycombinator.com/newsguidelines.html
| qntty wrote:
| The demand to always be curious and never angry is itself a
| limitation on the natural unfolding of curiosity. Sometimes
| the most interesting questions can only be asked by people
| who are aware of their own anger and the mutual anger of
| others around them.
| dang wrote:
| I would question that a bit, but it's an empirical question
| that one could talk about. I don't think we've ever asked
| people not to get angry, though - that would be asking not
| to be human. The request is to not allow it to drive one
| into internet comments in a predictable way. That's also a
| lot to ask, but at least it's doable.
|
| Can anger lead one to explore and learn things that
| wouldn't have happened without the anger? Sure it can, and
| comments coming from that place are more likely to be on
| topic here. But that's already a later stage of a pretty
| complex process. I'm talking about the split-second moment
| that we all experience when a flash of anger first arises,
| where we're reacting adversely to something we've heard
| before and are propelled to respond immediately with
| something we've said before. A _lot_ of internet comments,
| including HN comments, are generated in that state, and
| they aren 't distinguished by curiosity.
| seieste wrote:
| > But economics works on incentives.
|
| > The economics don't line up.
|
| Suppose you're Google. You know what's cheaper than investing
| $100m in a new chip manufacturing company? Lobbying for the
| government to invest $100m in the chip manufacturing company.
|
| This is why "the economics don't line up", and "the incentives
| don't align". No shareholder would want you to do the financially
| irresponsible thing of investing in a risky, capital-intensive
| venture when governments can do that for you.
|
| As a result, companies have the incentive to invest in lobbying
| rather than actually fund the chip production themselves.
| Essentially the companies believe that chip production will
| result in $X/yr, but investing in it themselves would be $Y/yr,
| whereas they could just invest in lobbying for $Z/yr, where $Z <<
| $Y.
| zitterbewegung wrote:
| ROI of investing the money vs Lobbying is ~ $100 to $1
|
| [1] https://www.bloomberg.com/news/articles/2021-04-23/google-
| am...
| syrrim wrote:
| Ummm if the government does the investing they get all the
| returns. If google does the investing they get the returns. If
| they are lobbying rather than investing, this suggests they
| think the ROI would be negative.
| Mountain_Skies wrote:
| That's not how government funding of sports stadiums work,
| why would fabs be any different?
| syrrim wrote:
| >Usually, the local government owns the stadium, while the
| team and its ownership control the revenues. This
| arrangement leaves taxpayers on the hook for maintaining
| the stadium year after year, team or not.
|
| From here: https://www.johnlocke.org/policy-
| position/publicly-funded-st...
|
| The problem for sports stadiums seems to be a monopsony
| relationship. That wouldn't be true for a fab, which can
| sell to anyone.
|
| It seems like this relationship is desirable because a
| sports team can't benefit from all the profit they
| generate, for example at restaurants near the sports
| stadium, whereas the city can, by taxing those businesses.
| I suppose there might be an equivalent relationship with
| respect to a fab, but I'm not sure what it is.
| majormajor wrote:
| I'm not sure I see the problem, government is for these cases
| where every player individually has a cheaper option for the
| short term, but one that might not be as good for the
| city/state/country overall. I don't want Google to spend a
| hundred million dollars on chip production for just themselves
| that would add to the price of their products - but not their
| competitors - and also not help out the broader market
| situation... it's not in my interest for every company to go
| their own way here, either.
| tedivm wrote:
| Investments and funding can come in a variety of packages, some
| better or worse than others. Even something as simple as the
| government providing or backing loans can go a long way. The
| Energy Department's loan program has helped speed up investment
| in solar and has turned a profit- making it easier for production
| to move to the US doesn't always mean "giving" money away.
|
| I guess my point here is that the devil is in the details, and an
| organization as large as the US Government has a lot of different
| options for incentivizing or assisting in starting up new
| industries.
|
| https://www.csmonitor.com/Business/In-Gear/2016/1017/Solyndr...
| throwaway4good wrote:
| Looks like the military industrial complex is about to be
| expanded with the semiconductor industry.
| Minor49er wrote:
| About to be? They have been involved for the last 30 years. The
| most public of these was their backdooring of the Clipper chip
| in the mid-90s
|
| https://www.cryptomuseum.com/crypto/usa/clipper.htm
| axiosgunnar wrote:
| @dang,
|
| > All: this thread got a flash flood of angry-predictable-obvious
| comments. Please don't post those! They're really bad for this
| site. The issue with such points isn't that they're wrong, it's
| that they're not interesting. Nothing predictable and obvious is.
| We want interesting conversation here, and that comes from
| curiosity. If you're feeling agitation rather than curiosity,
| please wait until that polarity flips.
|
| > The interesting things in a story like this are any diffs from
| what one would have expected.
|
| >https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
|
| > It's a significant move, so there must be interesting diffs.
| But sometimes one has to hunt for those, or at least wait for
| them to occur to one. That sort of waiting is key to getting good
| HN discussion, which is reflective rather than reflexive.
|
| > https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
|
| What "flash flood of angry-predictable-obvious comments" are you
| talking about? What would an "obvious" reaction to this news be?
| I understand if the news was something along the lines "startup
| incubator for black girls goes live" or something, where you have
| a divide roughly amongst the line of "let's help the
| underpriviledged" and "we should see beyond race and gender".
|
| But this news? Could you at least point me to some examples?
| qntty wrote:
| The ideology of the tech elite is to see themselves as cool,
| detached, rational observers of the world. So when people feel
| regular human emotions in response to things, they need some
| way to deride them for it.
| dang wrote:
| That's a misunderstanding. We're just trying to have an
| internet forum that doesn't suck in tedious and predictable
| ways. People come to HN for relief from that, in the hope of
| finding something that's a little more interesting. If they
| come here and see people yelling the same angry, recycled
| points over and over again, that's obviously not interesting.
| It isn't because of emotion per se, and the idea that the
| people operating this site have any sort of anti-emotional
| ideology is far off base. I don't identify with that any more
| than I imagine you do.
| dang wrote:
| > What "flash flood of angry-predictable-obvious comments" are
| you talking about?
|
| They're collapsed at the bottom of the page now. Before that,
| they _were_ the page.
|
| Downweighting low-quality generic subthreads is one of the key
| things moderators do here to try to improve the quality of the
| threads--which unfortunately tends to go to the lowest common
| denominator by default.
|
| p.s. "@dang" is a no-op. I only saw your question by accident.
| Please follow the site guidelines and send such questions to
| hn@ycombinator.com instead
| (https://news.ycombinator.com/newsguidelines.html).
| lvs wrote:
| Hm, it certainly looks a lot like "improve the quality of the
| threads" == suppress industry critique.
| dang wrote:
| "Industry critique" fills virtually every HN thread. With
| suppression like that, who needs amplifiers?
|
| Most people who see a moderation decision they dislike leap
| straight to the idea that the moderators secretly hold
| $VIEW, ignoring (or not noticing) all the moderation
| decisions going the opposite way. In reality, we just don't
| care-- I don't have words to describe how profoundly we
| don't care about commenter opinions. All that was
| sandblasted out of my brain years ago. The weariness that
| arises at the thought of caring about commenter opinions is
| enough to make me want to lie on the floor for a week.
|
| The only thing I care about is trying to prevent this place
| from plunging to the bottom of the internet barrel, and
| that only because it's my job. That's the true answer, by
| the way, to all the accusations of $BIAS that people fire
| from all directions every day: existential weariness has
| destroyed the ability to care. It turns out that's a decent
| proxy for neutrality. Not perfect, of course, but enough as
| a first pass filter.
| raspasov wrote:
| If it's not for dang, this place would turn into a 4chan.
| Thank you, dang!
| lvs wrote:
| No doubt a thankless job, but your claims to being
| unbiased are obviously going to be faced with skepticism
| when you label industry critique as "predictable" or
| "mean" and censor it. It's your perception that it fills
| every thread, but my perception is that the industry
| cheerleading in this community is wildly untethered. I
| think you probably wouldn't deny that your goal is to
| stem generalized negativity, based on the bias that
| negativity is bad and positivity is good "for
| discussion." It's not as if that bias has no consequence.
|
| If you were being consistent about this, by the way,
| you'd be censoring the banal security and bug sanctimony
| that dominates every thread on that topic. A buffer
| overrun? Good heavens! An unsalted pw hash? Fetch my
| inhaler!
| dang wrote:
| It's not possible to be consistent because it's
| physically not possible to read everything, or even
| close.
|
| I'm sure you're right that there are tropes of reaction
| in particular areas that deserve to get moderated by the
| same principles (of avoiding repetition etc.) and I don't
| doubt that you see some of them more clearly than I do.
| If you want to help with that, you could let us know when
| you see them, particularly when they're sitting at the
| top of a thread, choking out more interesting discussion.
| Downweighting those is probably the single biggest thing
| we can do to help discussion quality.
|
| I wouldn't use the word "negative" - that covers way too
| many things. We're not trying to exclude negativity.
| We're trying to prevent certain common forms of it from
| dominating. I don't think it's so hard to understand why
| --this place would cease to be interesting if they did
| dominate. Thoughtful critique is always welcome, and we
| don't label that "predictable" because it isn't.
|
| Re "industry cheerleading in this community is wildly
| untethered" - such perceptions are conditioned by the
| passions of the perceiver. That is by far the most
| consistent phenomenon I've observed on HN; nothing else
| comes close. If you had opposite passions, you'd have
| opposite perceptions. The data set has more than enough
| data points to satisfy all of these.
| [deleted]
| brokencode wrote:
| I think the government just needs to change incentives so that
| companies stop offshoring everything. Tariffs are much maligned
| for increasing costs for consumers, but that seems like the most
| efficient way for getting companies to make stuff here.
|
| Instead of corporate welfare like these rich companies clearly
| want, why don't we take the tariff money and use that to fund
| regular welfare, such as some of the programs Biden is
| suggesting.
|
| Or maybe we could just take all the tariff money and divide it
| equally amongst all citizens? That should offset the tariff for
| the average person, while still allowing us to get companies to
| figure out the problem for themselves.
|
| That approach can be extended to taxes on pollution as well.
| Capitalism does work, and we need to recognize that, but it has
| to be guided and regulated appropriately, or it gets really
| greedy really fast.
| qntty wrote:
| > Some of the world's biggest chip buyers, including Apple Inc,
| Microsoft Corp and Alphabet Inc's Google, are joining top chip-
| makers such as Intel Corp to create a new lobbying group to press
| for government chip manufacturing subsidies.
|
| > "Government should refrain from intervening as industry works
| to correct the current supply-demand imbalance causing the
| shortage," the group said.
|
| What do they think "intervening" means?
| toss1 wrote:
| I'm all for having both govt and private structures to support
| on-shore manufacturing. The outsourcing of the USA's
| manufacturing core is a strategic blunder of historic scale.
| While we thought we were exploiting cheap Chinese labor, the CCP
| was actually thinking in 5-, 100- and 500-year plans to exploit
| our quarterly-profits myopia. and we fell for it.
|
| But here, I find it particularly ironic that these companies want
| all the protection of govt regs like Section 230, insulating them
| from responsibility of content they host and platform, but now
| want the govt to step in, far too late, and fix the shortage that
| is harming them.
|
| They are all "libertarian" scolds about govt interference, until
| they could use some.
|
| Since they collectively have something on the scale of more money
| than the USG, and they think the USG is a waste of time, they
| should implement such a consortium themselves.
|
| I say that not merely out of annoyance at the hypocrisy, but I
| really think that such a consortium of FAANG, Intel MS, Tesla,
| Micron, and others could much more rapidly and effectively setup
| such an innovative chip fab co-op or some other structure, and
| could really kick ass in global manufacturing.
|
| If they really believe their patter, they should just do it.
|
| The best time was 10 years ago, the second best time is now.
| varispeed wrote:
| Why not look at why companies prefer to build fabs in
| dictatorships, authoritarian regimes or other unstable places
| instead of just throwing tax payer money at it? To me it looks
| like they take high taxes from everyone and use that money to pay
| companies to stay in the country? Doesn't that sound like neo-
| communism?
| dhduusheff wrote:
| Couldn't disagree more. We throw tons of money at people who
| contribute nothing, I've no problem seeing that much money
| allocated to something worthwhile even if the profits aren't
| public. The value is the security and the supply chain, it's
| still more then what we get for helping dregs.
| fighterpilot wrote:
| Then stop giving money to dregs. Yet more government excess is
| not the solution, even if this case of spending is slightly
| less bad than most of the others.
| dhduusheff wrote:
| I would if the money wasn't taken forcefully through my
| taxes. It's hardly excess for one of the most important
| assets a country can have right now and it beats the hell out
| of seeing the money go to yet another useless social welfare
| program for fuckups.
| fighterpilot wrote:
| Both of those things are wasteful and harmful government
| excesses. Handouts just take the cake between the two
| dang wrote:
| Please don't use HN for ideological battle and please don't
| create accounts to break the site guidelines.
|
| https://news.ycombinator.com/newsguidelines.html
|
| We detached this subthread from
| https://news.ycombinator.com/item?id=27122390.
| dageshi wrote:
| I feel like in about 4 years time there's going to be a massive
| bust in chip prices from massive oversupply based on the plans
| for chip manufacture around the world?
| resonantjacket5 wrote:
| I agree, there's going to be a massive oversupply of chips. If
| the US, EU, China, and also the current chip producers all
| increase output that's way too many chips.
|
| I recently watched a youtube video predicting a semiconductor
| bust that https://www.youtube.com/watch?v=Z7QkIECEkVc, though I
| don't quite understand if the differing say <7nm versus mid
| range 14~28 nm chips will have differing oversupply in the
| future.
| vmception wrote:
| Okay, cool. We can get back on track then instead of randomly
| pointing fingers at resellers and miners.
| dageshi wrote:
| You have a point for sure I'm not going to complain if it
| actually makes graphics cards available.
| andrewclunn wrote:
| With the CCp constantly threatening to invade Taiwan, there's a
| decent supply chain and security justification for this.
| alexnewman wrote:
| This is a much better investment than more f22
| awkward wrote:
| And it blows the f35 out of the water.
| bob1029 wrote:
| I think this is a healthy perspective. Certainly, the F22
| becomes quite a challenging thing to build if all chip supplies
| dry up. Priorities finally seem to be adjusting accordingly.
| bobcostas55 wrote:
| When the 3060s are flying off the shelves at $1000+ and AMD
| raised their prices by 50% over the previous generation, why the
| fuck is there any need for government funding? It's an obscenely
| profitable business.
| kingsuper20 wrote:
| We can call the effort 'Sematech'.
| jriley wrote:
| This coalition seems to want both research and physical
| infrastructure across many process nodes. Fabs are expensive, so
| I hope Assembly-Test-Mark-Pack gets a look too. Not sure what
| happens to research IP sourced from domestic investment, or how
| this doesn't overlap existing defense supply chain efforts.
|
| From their letter: "Manufacturing incentives funded by Congress
| should focus on filling key gaps in our domestic semiconductor
| ecosystem and cover the full range of semiconductor technologies
| and process nodes - from legacy to leading-edge - relied on by
| industry, the military, and critical infrastructure."
|
| So... give us your semiconductor ecosystem gap analysis, SIAC :)
|
| Source: Former semiconductor analyst / planner when domestic fabs
| went out of style.
| xeromal wrote:
| This was kind of expected due to the shutdowns required by most
| countries during the chaos of COVID. Of course we need our
| infrastructure to be more robust, but no use crying over spilt
| milk.
| toomuchtodo wrote:
| There have been calls for some time to treat semiconductor
| manufacturing as in the interest of national security. The
| funding and policy isn't onerous to do so, and "never let a
| crisis go to waste." Something similar was already done for
| rare earths [1].
|
| [1]
| https://www.google.com/search?q=rare+earth+us+national+secur...
| xeromal wrote:
| That's not an incorrect way of thinking! If we need it to be
| effective for self-defense and existence, it probably needs
| to be protected as such.
| toomuchtodo wrote:
| For sure. It's clear that in many cases (from pandemic
| experience), resiliency and supply readiness should be
| prioritized above cost efficiency.
| Nasrudith wrote:
| I would call it technically correct but useless only
| because of how ill defined and exploitable national
| security is as a notion to bypass all objections by turning
| everything into an existential threat. Everything is in
| some degree important to national security - entertainment
| is a matter of national security because bored soldiers are
| less vigilant.
| aksss wrote:
| Something similar was "thought of" for rare earths but I
| don't think anything practical has come of that yet. Opening
| new mines in the US is not a process I'd call quick. It's
| more in the "I'll believe it when I see it" column. You think
| getting a pipeline across the Midwest is difficult? Just try
| strip-mining in Alaska.
|
| But yeah, if the government is serious about securing supply
| chains, then it's not enough to have semiconductor
| manufacturing here, one also needs to be able to source the
| inputs closer to home (quartz, etc).
|
| And I'm not even sure it requires government to directly fund
| the manufacturing/mining - it would be enough if government
| took a "not-hostile" attitude towards the environmental and
| engineering approvals, and then incentivized domestic
| sourcing.
| livueta wrote:
| I'd have thought the same as you, though I very recently
| heard some hopeful news on that front:
| https://www.marketplace.org/2021/04/30/the-u-s-is-trying-
| to-...
|
| The relevant part is kind of buried but tl;dr: new mines do
| take a while (but are in the works). Luckily, there are old
| mines that can be productively restarted:
|
| > "Our mission as a company is to restore the full supply
| chain," said James Litinsky, CEO of MP Materials, the new
| owner of the U.S.'s only rare-earth mine, located in
| Mountain Pass, in California's Mojave Desert.
|
| > "We are probably further ahead than people realize."
|
| > MP Materials restarted the mine in 2017; the previous
| owner, Molycorp had declared bankruptcy a few years prior.
|
| > "It was mismanaged for some time," Litinsky said.
| Mountain Pass' reserves are particularly rich in rare
| earths and now supply, in unpurified form, 15% of the rare
| earths consumed globally each year.
| coliveira wrote:
| It is funny that the US intelligentsia complains about China as
| being dominated by government, but there is nothing really big
| done in the US without huge costs for American tax payers,
| frequently without any retribution. This is clearly the next
| step: the US corporations created the "big enemy" China by
| exporting jobs there during the last 40 years, now they want the
| same taxpayers to pay for rebuilding the US industrial base that
| they destroyed, because they're afraid of the competition. It is
| really a con business.
| smithza wrote:
| A cynical take... considering how short-sighted public corps
| are with quarterly shareholder valuations, this is an
| unintended side-effect at best. At worst, it could be that your
| comment "the US corporations created the 'big enemy' China" was
| intentional.
| protomyth wrote:
| How about you spend some of that cash hoard and do it yourself? I
| would rather the government start dealing with cyber attacks
| because that's going to affect the east coast something fierce if
| this crap keeps going.
|
| If the government gives money then it better talk to these
| companies about where their items are produced.
| base698 wrote:
| The money printers are going full bore. Why not get it for
| free?
| pwdisswordfish8 wrote:
| I've said it before: there's _lots_ of low-hanging fruit in
| semiconductor manufacturing. Even ignoring the present
| shortage, it 's been the case for a while that there are gains
| to be had for a competent tech giant with deep enough pockets
| to take on manufacturing themselves.
|
| Too many outsiders tend to err on giving the benefit of the
| doubt, thinking that there's some sort of Chesterton's fence
| (you can see this in the comments here), but it's just not
| true. So much of what causes delays that I've seen firsthand
| comes down to unbelievably inefficient business processes plus
| the less-than-stellar pool of candidates that the industry
| overwhelmingly prefers to hire from.
| RobRivera wrote:
| never spend your own money when you can convince the government
| its in national interest and thus worthwhile for tax dollars!
|
| ~Montgomery Burns...probably
| riku_iki wrote:
| > How about you spend some of that cash hoard and do it
| yourself?
|
| Because they are for-profit entities with shareholders interest
| as top priority, and it is much more profitable to use
| TSMC/Samsung for them. With subsidies, the situation may
| change.
| zepto wrote:
| The reason these items are not produced at home is _because_ of
| government policies.
|
| I agree that they should be the ones to invest in these fabs,
| but it also makes sense for the government to make sure that is
| an internationally competitive move for them to make, rather
| than forcing them to pour water uphill.
| cryptofistMonk wrote:
| > The reason these items are not produced at home is because
| of government policies.
|
| Which policies? I believe you, genuinely curious
| zepto wrote:
| Trade deals, plus subsidies by other governments are the
| general categories.
| cryptofistMonk wrote:
| Right. Other governments are always going to subsidize
| though (unless you work that into the trade deals I
| suppose).
|
| Obviously any barriers to the success of US fabs should
| be removed, but it's not clear if there's a market for
| more expensive US chips - if there were, you'd think
| someone would build it without the need for a subsidy
| zepto wrote:
| > Other governments are always going to subsidize though
| (unless you work that into the trade deals I suppose).
|
| Often trade deals do include agreements about subsidies.
|
| > it's not clear if there's a market for more expensive
| US chips - if there were, you'd think someone would build
| it without the need for a subsidy
|
| They wouldn't _be_ more expensive with the subsidy.
| cryptofistMonk wrote:
| > Often trade deals do include agreements about
| subsidies.
|
| Yes but it's complicated when you're dealing with China
| where the govt is heavily involved in many "private" cos
| zepto wrote:
| Agreed
| kovacs wrote:
| My exact reaction as well. Or how about all that money used for
| stock buy backs over the last decade? Intel especially. It's
| been mismanaged and now it's putting its hand out for
| government money while having spent billions on stock buy
| backs. No more but of course it'll happen because the politics
| of it. Socialism for the rich and corporations, capitalism for
| the rest of us.
| toast0 wrote:
| Stock buy backs are just more tax efficient dividends for
| investors. If the company is suffering from mismanagement,
| dividends are good, because it returns capital to investors
| rather than letting managment destroy it.
|
| Intel has been building fab capacity pretty much always, it's
| just that their 10nm process doesn't work as intended, and
| they haven't really been able to fix it, so their development
| is stalled and their production numbers aren't great and they
| haven't been able to stop making processors at 14nm to do
| other things with those fabs. So far, I think we've been
| hearing of delays on their 7nm node as well, so no good news
| there.
|
| That said, if there's a market for a 14nm or more fab in the
| US, Intel has shown they can build that, but they'd probably
| prefer to spend their money getting 7nm to work than building
| an old tech fab; spending other people's money on a new 14nm
| (or whatever) fab in the US is still good for Intel though,
| so it's no wonder they'd put their hand out to do that.
| kovacs wrote:
| Stock buybacks end up being nothing other than a transfer
| of wealth from taxpayers to shareholders because anytime
| something happens the government steps in bails them out
| because they're too big. Now everyone knows that so there's
| no incentive for companies to act responsibly. The fact
| that it's now accepted and normalized is incredibly
| disheartening to say the least. No government subsidies.
| Let the capitalists figure it out. Otherwise let's just
| nationalize everything instead of privatizing profits and
| socializing losses.
| quercusa wrote:
| I can't imagine Andy Grove would have supported that.
| endisneigh wrote:
| If the US government subsidizes them they should also make their
| services cheaper for US companies.
|
| Hah - one can hope. But really, is there a chance that could
| happen? I'm not sure if there's any precedent.
| fmakunbound wrote:
| Why would firms like TSMC be members of this lobbying group?
| https://www.chipsinamerica.org/about/
| Covzire wrote:
| Possibly hedging their bets. If China invades and conquers
| Taiwan, presumably the heads of TSMC would be able to flee to
| America and keep a chunk of their investments.
| kube-system wrote:
| TSMC is currently headquartered on land which is:
|
| * undergoing a drought and they're having to truck in water to
| sustain their operations.
|
| * claimed by a powerful country different than the one
| currently controlling it.
|
| Sounds like a lot of risk that they probably would otherwise
| not want.
| volkl48 wrote:
| TSMC is planning to spend $12bn in the next decade on the fab
| they're building in Arizona (which I believe has some level of
| US government subsidy). I am sure they would be quite happy to
| get further government $$$ for their operations.
|
| (TSMC also owns WaferTech and their US fab in Washington
| state).
| SXX wrote:
| TMSC would be the one of companies building / operating fabs.
| You can argue it's against Taiwan interests, but again they
| gonna have more leverage if they own US fabs.
| hindsightbias wrote:
| Been 34 years since Sematech and all that 80's industry bailout.
| Just switch out Japan for China.
|
| https://en.wikipedia.org/wiki/SEMATECH
| lsllc wrote:
| Dupe from earlier today:
|
| https://news.ycombinator.com/item?id=27116601
| dang wrote:
| On HN, it only counts as a dupe if the previous submission got
| significant attention. This is in the FAQ:
| https://news.ycombinator.com/newsfaq.html. Lots of past
| explanation here too:
| https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
| lsllc wrote:
| Didn't know that! I always search for links before submitting
| and many times I've seen a previous submission with little to
| no traction (and then subsequently not posted it to avoid
| dupes).
| dang wrote:
| Thanks for searching first! If it's a good article and
| hasn't had attention yet, we certainly hope you will post
| it - that's why we allow reposts, to give good articles
| multiple cracks at the bat.
| ksec wrote:
| Is this for US companies only? I mean if all they want is Fabs in
| US surely the funding should be available for TSMC as well?
|
| Otherwise why should TSMC invest billions in US while having US
| government handing out money to American companies competing
| against TSMC with their own money?
| s_dev wrote:
| >Otherwise why should TSMC invest billions in US
|
| I don't want to seem politically ignorant but isn't the entire
| existence of Taiwan is simply dependent on the US wanting it to
| exist. If the US didn't provide billions in defense -- TMSC
| would be a Chinese FAB pretty fast. I see your point but I'd
| imagine the extra layer of geopolitics is propping up this odd
| situation.
| colinmhayes wrote:
| TSMC would blow their fabs up if China invaded. China might
| not mind though since some the us government has forced TSMC
| to not sell to some Chinese companies. Probably would be good
| for their semi industry.
| turbinerneiter wrote:
| 1. Set up off shore tax havens to not pay tax
|
| 2. Lobby government for subsidies
|
| 3. Laugh all the way to the off shore bank
| vmception wrote:
| protip: the funds are in on-shore banks under offshore business
| names. this isn't controversial, just something many don't
| understand as readily available and commonplace.
| xgulfie wrote:
| Protip: Just because something is legal doesn't mean it's
| ethical or good
| vmception wrote:
| I didn't make any statement on that and you are assuming
| that the lack of signaling means acceptance.
|
| I said onshore banks open accounts for many entity types
| that are not limited to just humans or just businesses from
| the 50 states.
|
| The prior poster assumed a bank in another country was
| necessary, which can be very difficult to open and maintain
| for a US citizen owner of an offshore company.
| throwaway4good wrote:
| The EU and US each spending billions to subsidize semiconductor
| fabs on their soil. Let's pray the Chinese don't figure out EUVL
| and crack the bottom of the market.
| diegocg wrote:
| > Some of the world's biggest chip buyers, including Apple Inc,
| Microsoft Corp and Alphabet Inc's Google, are joining top chip-
| makers such as Intel Corp
|
| > to create a new lobbying group to press for government chip
| manufacturing subsidies
|
| None of those companies need subsidies.
| meowkit wrote:
| Obviously they don't _need_ subsidies.
|
| But economics works on incentives. Problem is these incentives
| are discontinuous and can change on a dime. You can accelerate
| a change by aligning incentives.
|
| Chip manufacturing is important for products, but its also a
| security risk. The government should put up support to
| incentivize these companies to redirect capital towards US
| manufacturing. Otherwise the incentives for these companies are
| not going to align on a timeframe that is acceptable to
| employees and shareholders.
|
| Now we can make all kinds of normative claims about how this
| should play out, but I honestly don't have the energy to
| entertain that kind of conversation anymore.
| [deleted]
| _zamorano_ wrote:
| If they thought the risk of building a fav and launching a
| business was reasonable, they'd already have.
|
| They acknowledge the importance of the issue, but are not
| willing to take risks in a difficult an foreign (to them)
| business.
|
| So, mostly worthless words.
| zepto wrote:
| Their international competitors have subsidies. If the
| government doesn't match that then you are asking these
| companies to pour water uphill.
| amelius wrote:
| I'm ok with subsidies if they open up their designs.
|
| Commoditize your complement. To some approximation and with few
| exceptions, hardware is everybody's complement.
| monkeydust wrote:
| Subsidise chips based on RISC V architecture?
| lumost wrote:
| why? even if they open the designs the CapEx requirements for
| modern chip making leaves it in the realm of megacaps and
| governments.
| lkbm wrote:
| In terms of fairness to these companies, yeah. They're rich and
| it sucks to give them our tax dollars.
|
| But in terms of maintaining the competitiveness and security of
| the US, seems like they do.
|
| As a rule, I don't care if giving someone money is fair. I care
| about whether it causes a general increase in the welfare of
| our society.
|
| Even as a non-recipient of these subsidies, I might be better
| off if they existed if they reduce risk to the supply chain I'm
| downstream of as a consumer. If it's unfair to me but makes me
| better off, I'm not going to cry over the unfairness.
|
| (Maybe tariffs on imported chips are a better solution, but I
| suspect that's more politically fraught, and solutions that
| work are better than solutions that don't.)
| pixelatedindex wrote:
| > As a rule, I don't care if giving someone money is fair.
|
| Sure
|
| > I care about whether it causes a general increase in the
| welfare of our society.
|
| But by what metric do you measure that? There has been a tech
| boom in the last couple of decades but the inequality divide
| has been growing day by day.
| jimmont wrote:
| The Fed could possibly buy TSM and provide loan and grants to
| TSMC to accelerate their plant in Phoenix. I don't know how much
| that would impact the projected 2024 start of operations.
| https://www.bizjournals.com/phoenix/news/2021/03/02/taiwan-s...
| This is an especially good position for Taiwan right now. Also
| worth noting the concerns around available labor to staff the
| operation
| https://www.bizjournals.com/phoenix/news/2021/03/02/taiwan-s...
| as much of the US lacks effective infrastructure.
| [deleted]
| elzbardico wrote:
| Well, couldn't they stop the buybacks for a little while and
| invest their bazillion dollars of cash themselves?
| fvv wrote:
| 50b would be better spent founding Taiwan entering un and it's
| emancipation ,and going explicitly to defend them along with Eu
| instead of wasting money for Intel buybacks, 50b in that industry
| is nothing, America and free world need Taiwan independence ( and
| i'm saying that not because Taiwanese ,i'm European but Europe is
| weak in those geopolitics play and need us for sure)
|
| Globalization is inevitable , resistance is futile, in 300y we
| will have the world finally united and democrat with some due
| exception
| dang wrote:
| All: this thread got a flash flood of angry-predictable-obvious
| comments. Please don't post those! They're really bad for this
| site. (Edit: if you want to see the comments I'm talking about,
| they're collapsed at the bottom of the page now. Before that,
| they _were_ the page.)
|
| The issue with such points isn't that they're wrong, it's that
| they're not interesting. Nothing predictable and obvious is. We
| want interesting conversation here, and that comes from
| curiosity. If you're feeling agitation rather than curiosity,
| please wait until that polarity flips.
|
| The interesting things in a story like this are any diffs from
| what one would have expected.
|
| https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
|
| It's a significant move, so there must be interesting diffs. But
| sometimes one has to hunt for those, or at least wait for them to
| occur to one. That sort of waiting is key to getting good HN
| discussion, which is reflective rather than reflexive.
|
| https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
| sremani wrote:
| This is what bringing back supply chain looks like. I am not
| against it. What is happening is not great, but you know the
| whole necessary evil thing.. this is it.
|
| This will start with Tech, but will extend to other domains.
| dylan604 wrote:
| Will extend, or already has extended?
|
| The gas pipeline shut down is currently showing this to be an
| issue for refined fuel. The hurricane that squatted on top of
| Houston a couple of years ago also shows that to be true as
| well. We also saw that in toilet paper as well.
| century19 wrote:
| Couldn't this be a positive long term benefit of Corona? A push
| back against globalisation and more domestic production in each
| region of the world.
| colinmhayes wrote:
| Globalization is a good thing. It is directly responsible for
| the almost complete elimination of global poverty.
| toomuchredbull wrote:
| It has been great for the global poor. Terrible for the
| western middle class.
| XGeneral wrote:
| > A push back against globalisation and more domestic
| production in each region of the world.
|
| There are many countries that have always wanted to be self
| reliant but the powers be can't allow it. Coz it's sets a bad
| example that countries can exist without certain giants. I
| don't think they are about to allow that
| Nasrudith wrote:
| For damned good reason. "Self reliant" countries tend to
| behave like complete assholes internationally even by the
| standards of Realpolitik. North Korea is one of the most
| Autarkous nations on earth.
|
| The "victimized by a conspiracy" anthromorphization is also
| deeply wrong. They cannot be oppressed - they do not have
| rights.
|
| Governments are fundamentally made of coercion. Without it
| they are an empty pile of words, a rules card for poker when
| the deck is being used for blackjack or building houses of
| cards. The coercion may be used to support rights like "not
| being murdered" but granting it rights to further human
| rights is like trying to increase a number by multiplying a
| negative number by a grearer than one positive number.
|
| To sum it up if you apply the "corporation as a sociopath"
| conception governments are basically so alien to be cthulu.
| Corporations are at least made of people essentially, at
| least until the first AI run no human owner corporation is
| founded.
| alexgmcm wrote:
| Isn't it a net benefit to everyone if each country pursues its
| comparative advantage though?
|
| I don't see why becoming some sort of Juche state would help
| anyone.
| chrischen wrote:
| Globalization has benefits too, like preventing world war due
| to heavy interdependencies.
| paganel wrote:
| The same discourse was made before WW1, and we all know how
| that turned out. As far as I could tell the world was even
| more globalised back then, at least for the elites.
| sofixa wrote:
| > As far as I could tell the world was even more globalised
| back then
|
| It was not. How could it be? Cheap and fast long range
| transportation, the Internet, mass
| consumerism,interconnected financial systems...
|
| What could possibly make you think the world was more
| globalised in the 1910s than 2020s?
|
| And yes, many people said a war is impossible due to the
| globalisation. I guess what they missed was telling it to
| the people in charge ( many of whom,like the Kaiser and
| Tsar didn't want a war, but felt pressured and like it was
| inevitable).
| inglor_cz wrote:
| European economies were fairly integrated, though. Not as
| much as today, but enough that the war caused a massive
| disruption to everyone involved.
|
| Europe of 1914 was actually much more liberal than people
| tend to think. With the exception of Russia and Turkey,
| which required passports from visitors, you could travel
| passport-free around the entire Europe, settle down and
| work wherever you wanted.
|
| There were many railway lines crossing the borders and
| cargo flows among countries were fairly heavy. The social
| elite was used to sending their kids abroad to study
| languages and spending vacations in fashionable foreign
| resorts.
| paganel wrote:
| > What could possibly make you think the world was more
| globalised in the 1910s than 2020s?
|
| For example borders were a lot more porous in the late
| 1800s - early 1900s compared to the 2020s, Ellis Island
| could have never happened today, when you have children
| from El Salvador or Guatemala kept in cages for basically
| doing the same thing that children from Calabria or
| Sicily were doing back then.
| mywittyname wrote:
| > Intel Corp to create a new lobbying group to press for
| government chip manufacturing subsidies.
|
| Assholes. They don't _need_ subsidies to produce chips
| competitively in America (since they already do) and Intel is one
| of the reasons the industry is so reliant on TSMC.
|
| I'd much rather see this money go to founding a domestic TSMC
| competitor than to Intel. Or even to TSMC to have them build
| plants in North America.
|
| Fabless design is here to stay, so it behooves the country (and
| world) to have enough designless fabricators to ensure sufficient
| manufacturing capacity.
| fmakunbound wrote:
| TSMC is a member of this Semiconductors in America Coalition
| lobbying group already, apparently
| https://www.chipsinamerica.org/about/
| blt wrote:
| Yes, let's subsidize a domestic TSMC competitor and pay for it
| by increasing corporate tax rates / closing loopholes. This is
| not a snarky comment btw.
| jaggederest wrote:
| It's in the same order of magnitude as the interstate highway
| system, as long as the chips are sold fairly, I think it
| counts as infrastructure.
| einpoklum wrote:
| US corporations have recently been given a corporate revenue tax
| cut, from 35% to 21% (and beyond this they apparently enjoy a
| bunch of loopholes bringing their taxes much further down).
| Surely that is more than enough for them to be able to bankroll
| chip fabrication in the US - individually or together.
|
| Isn't this simply an attempt at "double-dipping"?
|
| "Please subsidize us! The humongous corporate income tax
| deduction you gave us is not nearly enough!"
| cde-v wrote:
| How ballsy for a bunch of corps that barely pay taxes to ask for
| government subsidies.
| vmception wrote:
| I mean you only need to get one agency head, or one head of
| state / cabinet member, or the majority of congress who votes
| in unison right now to agree, once
| pjc50 wrote:
| Pay them a small chunk of that billions in campaign
| contributions, and it's easy.
| vmception wrote:
| Yeah we are talking about 5 figures if that
|
| 7 figures max
| tenebrisalietum wrote:
| Everyone who works there should be already paying income taxes.
| Why the double taxation?
| pjc50 wrote:
| How much tax did Bezos pay on his fortune? Not income tax but
| capital gains, and probably not as much as you'd expect.
| dahfizz wrote:
| If you want the Bezos's of the world to pay more tax, then
| lobby for that directly. Using the corporate tax as a proxy
| for "screw rich people" is distortionary and ineffective.
| etcet wrote:
| Do corporations pay tax on their payroll? I'm not
| understanding what's being doubly taxed here.
| ajosh wrote:
| Actually, they do. You pay half of the payroll tax and the
| company pays the other half. This is payroll tax and not
| income tax, that is Social Security and Medicaid. This is
| why if you're self employed, there is a self employment
| tax.
|
| That said, I think that the parent is making a different
| point. I think the parent's point is that if the owners and
| employees of a company are paying taxes, then taxing the
| profit of a company taxes twice, once for the profit and
| then again for the income that comes from the dividend.
| [deleted]
| riversflow wrote:
| Because they are freed from the liability of the business's
| actions by way of the state allowing liability limiting
| corporate entities to exist. When the business assumes
| liability from the owners, it also assumes tax
| responsibility. If you don't want to pay corporate taxes,
| don't form a corporation.
| jvanderbot wrote:
| Well, TSMC had 2020 revenue in the 30 giga-$ range. Even a few 3%
| sales tax on that revenue would pay for a 5 giga-$ investment in
| 5 years. (or a few F-35's / year)
|
| That's grossly optimistic numbers, given US labor costs, startup
| costs, etc, but it's also potentially a reasonable investment
| that would be sustained by domestic and international purchases
| (one would hope).
| fsn4dN69ey wrote:
| TSMC (Taiwan Semiconductor Manufacturing Corporation) is a
| foreign company that operates entirely overseas - why would the
| US have authority to tax them? If anything I'd imagine they'd
| be against this proposal.
| jvanderbot wrote:
| Sorry, I wasn't clear. I meant that "A US-led TSMC-like
| foundry (since we're talking about funding a US chip
| production facility) would be a good source of tax income
| that might justify a federal startup investment."
| fsn4dN69ey wrote:
| Ahhhh, makes sense. Also, after reading further, it appears
| I was wrong - TSMC has some operations in the US including
| some in Arizona - plus their interest in maintaining
| friendly terms with the US in order to preserve the
| existence of Taiwan is also an angle.
|
| What still worries me is that ramp up time for fabs like
| these are on the scale of years - if we assume a fab
| started right now, we'll be making semiconductors in ~2
| years at the earliest (very optimistic)? It seems like the
| root of the issue seems to be the inventory tax and
| accounting rules - perhaps an exception for the
| semiconductor industry would help rather than even a single
| domestic fab (which could be impacted by natural disasters
| as well).
| jvanderbot wrote:
| Well, we dumped a lot of money into the F-35 to fill a
| perceived strategic gap in fighter jets that had not yet
| arrived. This was many years before we actually received
| such a jet. This kind of long-term investment of lots of
| money for (arguably) public good is what federal
| governments are _for_, in my mind.
|
| A 250M$ - 1G$ investment / year is big, but if it's self-
| sustaining in a couple years, that's a huge win.
| fuzzer37 wrote:
| What is a giga-buck?
| jedberg wrote:
| 1 billion.
| jvanderbot wrote:
| ... dollars :)
| Traster wrote:
| The problem with this governmental intervention is that you can't
| have it both ways. These companies want the governmetn to step in
| to hlp them with their problems, but let's take a look - are they
| going to contribute back once the government has intervened? What
| are they _really_ proposing, a 20% revenue tax on consumer
| products that are sold with these new US sourced chips? No. Of
| course not. God forbid they actually pay taxes to fund the
| government services they 're asking for.
| paulddraper wrote:
| > God forbid they actually pay taxes to fund the government
| services they're asking for.
|
| That unironically makes complete sense.
|
| If they were going to pay taxes to fund the subsidy, why have
| the subsidy in the first place?
|
| (My conclusion: don't subsidize, don't pick winners and
| losers.)
| Covzire wrote:
| Just to play devil's advocate, what would the world look like
| had there been massive investment 5-10 years ago? The benefits
| would probably have been a chip shortage that wasn't and we'd
| be free to complain about other things.
| pjc50 wrote:
| Unless they put the fab in Texas and it went offline with all
| the other fabs in the power outages? Or went bankrupt, like
| the previous "let's onshore an important piece of high tech"
| plan, Solyndra?
|
| If it was started 5-10 years ago, would it have survived the
| change of administrations?
| instafail wrote:
| In this world, obviously, we would be complaining about the
| government subsidising unprofitable chip factories with
| billions of tax credits. Since we wouldn't have a chip supply
| crisis, we wouldn't know what its like to have one :D
| antonzabirko wrote:
| I would take a chip shortage over subsidizing them.
| FpUser wrote:
| Apple and the likes need more chips to make more money and they
| have big coffers. Instead of public subsidizing those fat cats
| let them take care of that pesky money issue. They can afford it.
| andutu wrote:
| People mention how building new fabs in the U.S would be a
| worthwhile yet extremely costly and risky investment that require
| a monumental undertaking that could only be done through massive
| tech firms and the U.S government.
|
| What I don't see mentioned too often is promoting chip design.
| Compared to building a fab, making a startup that simply designs
| chips should be straightforward but through my initial research
| into it, that's not the case. Tech cos like Google and Amazon
| have already begun endeavors into in-house fabless chip design
| through ex.: TPU and Graviton, but hardware startups seem to be
| few and far between (there are a few like SciFive and Cerebras,
| but it's not like they are exactly ubiquitous).
|
| In part it has to due with the huge complexity of modern day
| chips and the fact that if any new startup wants to be
| competitive it requires hiring talent with deep and niche
| industry experience.
|
| I think what's more of an issue is accessibility for newcomers
| into the space. From what I've read, the top 3 EDA companies
| control the vast majority of their market and license their tools
| for hundreds of thousands of dollars. These tools aren't
| accessible to the majority of students and most likely fledgling
| startups. I know these tools are extremely complex, but it always
| stuck me as odd how IDEs like VS Code and the ones made by
| JetBrains are free or are priced so that the vast majority of
| developers (whether as individuals or as companies)can afford it,
| while the top of the line EDA tools are only accessible by
| established players. I know there is an open source effort to
| change this, but there's a long way to catch up.
|
| Maybe things will change. AMD started out reverse engineering
| Intel chips and now are beating Intel in most metrics. Hopefully
| hardware becomes more hyped over time just as machine learning
| and software startups have.
| sbeller wrote:
| > but hardware startups seem to be few and far
|
| back then I used to watch all the videos of
| https://millcomputing.com/docs/belt/ as that seemed promising,
| but they seem to be stuck in the hardware production and
| writing a compiler for that architecture.
| cedilla wrote:
| Wealthiest entities on Earth lobbies government for handouts.
|
| I'm not even being snarky, this is just a lobby group trying to
| socialize costs to avoid spending their own money. Explicitly:
| "Government should refrain from intervening as industry works to
| correct the current supply-demand imbalance causing the
| shortage,". The industry is not stripped for cash at all, so if
| the government is not expected to steer, why should it put up the
| people's money?
| yrgulation wrote:
| The worst part is that they might get such handouts. I don't
| understand how, given their mighty fortunes, they haven't
| achieved 99.9% automation to keep costs as low as in cheap
| labour countries. If anything I think the EU, US and UK should
| subsidise research in achieving near full automation. Sucks for
| low skilled labour but they've already been fucked when jobs
| were moved overseas.
| cedilla wrote:
| If I understand the situation correctly, the current
| president is already willing to enact such a law. The
| lobbying seems to be about pressuring congress into actually
| passing it. Fair enough, everyone is entitled to lobby for
| their interests. What I take umbrage with is that they want
| to turn subsidies into handouts.
|
| It's beyond ironic to call for subsidies but then label
| oversight as "intervening". Subsidies are interventions.
| Without a government plan and oversight they are just
| legalized corruption.
| rebuilder wrote:
| This is just the PR spiel we're seeing. What they're really
| saying is the usual: Local cost is too high to be competitive,
| subsidize or lose jobs. It's a naked power play (or pragmatic
| statement of fact, depending on your viewpoint). They're just
| framing it in a way they think will fit the current,
| protectionist mood.
| markkat wrote:
| These industries squeezed the blood out of US suppliers to
| compete on cost. I don't think a correct solution is the
| government building capacity and supply chains.
|
| IMHO a more sustainable strategy is the government taxing the
| environmental and human rights externalities of off-shore
| production.
| elzbardico wrote:
| Yes, and this not only because of fiscal reasons, but because
| it is the ethical thing to do.
| Siira wrote:
| It's ethical how? By making rich Americans even richer, and
| removing one of the few ways developing countries can enter
| the global market?
| Hypx_ wrote:
| This type of government/corporate collaboration is similar to
| how other traditional industries like autos, oil & gas, steel,
| etc., usually operate. That's because the capital cost of
| building factories and supply chains exceed the private
| sector's ability to tolerate the risk of such investments. And
| a big reason why the risk is so high is because the business is
| both unpredictable and low margin.
|
| This has never been an issue in the semiconductor industry
| until now. Demand was always increasing and margins have been
| high enough to allow them to self-fund. If semiconductor
| companies now need subsidies to expand then we are probably
| past the "exponential growth" era of semiconductors.
| Technological gains will be much slower and much more
| consistent with traditional industries rather one that what
| we're use to.
| tpmx wrote:
| 1. I suspect that you don't realize that Taiwan is a (to many)
| surprisingly first-world place. "environmental and human rights
| externalities" is not a very large issue in this context. It's
| not like mainland China/PRC.
|
| 2. I think both e.g. US and EU should have their own chip-
| manufacturing infrastructure. We need more robustness at a
| global scale in this area.
|
| 3. Taiwan needs (and deserves) US/EU support. TSMC has turned
| into a geopolitical play - it seems like Taiwan feels like they
| need it to avoid a PRC invasion.
| Dah00n wrote:
| Taiwan needs support yes, but the US isn't helping. Poking
| China by sending warships to patrol its borders makes us the
| bad guys. If China did what we do we would have WW3
| instantly.
| christkv wrote:
| The us is navigating international waters that China is
| trying to claim as theirs in fact they claim territorial
| waters from all their neighbors international treaties be
| damned. Thus they are in conflict with everyone around
| them.
| vkou wrote:
| This sounds great, as long as all the organizations putting money
| in get commensurate equity in return.
|
| If not, that's going to be a hard pass from me.
| ohashi wrote:
| If the US tax payer gets a significant stake in the chip fab
| venture, I would be OK with this. We want to secure national
| security via chip manufacturing and you want billions of dollars?
| Give us some upside.
|
| I don't want to hear it creates jobs, it generates blah blah
| blah, a real equity stake and possibly repayment of the capital.
| Creating jobs should be a happy by-product of subsidizing an
| industry that is probably more well capitalized than any other in
| existence.
|
| According to (https://startupanz.com/5-tech-giants-
| hold-588b-cash-reserves...) Amazon, Apple, Google, and Microsoft
| had 526 billion dollars between the four of them in cash
| reserves. They have over half a TRILLION dollars in cash. If this
| were life or death, they could afford anything.
|
| But the calculus is offload risk onto the tax payer (despite
| being a shareholder directly in all those companies or indirectly
| via mutual funds/etfs), I don't want to be left holding the bag
| with no upside beyond the general sentiment of 'national security
| was secured' while private companies reap all the benefits.
| eecc wrote:
| Good point, see: https://marianamazzucato.com/books/the-
| entrepreneurial-state
| 1vuio0pswjnm7 wrote:
| "If this were life or death, they could afford anything."
|
| Including buying off politicians. That amount of cash can
| finance an enormous amount of campaigning.
| alexc05 wrote:
| I mean, in theory _taxes_ are that significant stake, but of
| course in practice it doesn 't really work like that.
| Justsignedup wrote:
| up side is similar to what we see with vaccine manufacturing.
| When we need it, we have access to it. When we don't need it,
| we can sell it.
|
| With good regulation and unionization this can lead to great
| wealth distribution in the US along with worldwide economic
| power.
| [deleted]
| azinman2 wrote:
| Government subsidies protecting industries rarely pay off in a
| peaceful world to the entire country. I personally get nothing
| out of Chevron getting tax breaks. However, if those incentives
| meant supply was harder to disrupt, and in a war time the
| country has better access to fuel, then it does seem like a
| worthwhile trade off.
|
| In this case, the risk is that China literally takes over (one
| way or another) the vast majority of supply of semiconductors
| to specifically harm western companies (or countries in a war
| setting). In that scenario, are you still worried about unequal
| kick backs or are you happy that the nation has access to the
| chips it needs for industry and defense?
| coliveira wrote:
| The ones who should be very worried and willing to pay for
| this "protection" are exactly the huge companies that have a
| lot in stake. It is completely absurd that they still want to
| reach for the taxpayer to pay for protecting their
| monopolies.
| Dah00n wrote:
| In a war scenario with China it doesn't matter since no chips
| produced under the war will be used.
| WillPostForFood wrote:
| The risk isn't war between China and the US, but China and
| Taiwan, which China has 100% chance of winning. That then
| makes the the US extremely dependent on China for
| semiconductor supply.
| _-david-_ wrote:
| China only has 100% chance of winning in a war with
| Taiwan if the west and allies do not join.
| smithza wrote:
| From some commentaries I read, China has a near 100%
| chance of winning in war with Taiwan _even if_ US and
| allies join. This is mostly to do with mainland China 's
| relative proximity to Taiwan and the few relative number
| of air bases US has on Japan and how far away Hawaii is.
| threeseed wrote:
| You do know that there is the concept of carrier strike
| groups which involve you putting a bunch of planes on an
| aircraft carrier and sailing it to the region. Just like
| UK's HMS Queen Elizabeth is doing as we speak.
|
| Also there are US air bases in Phillipines, Singapore,
| South Korea, Australia, Guam etc. This is going to be a
| regional conflict not just between US and China.
|
| Again. Anyone who says there is a 100% chance of winning
| is delusional and ignores the history of war on this
| planet.
| _-david-_ wrote:
| Wars are not single battles. If China were to attack (and
| capture) Taiwan the war would not just be over. The West
| could attack mainland China and attempt to retake Taiwan.
| christkv wrote:
| To take Taiwan China will need air supremacy as well as
| naval supremacy lack of either one will make it close to
| impossible. Think about what it took to do d day possible
| and that was a much shorter crossing and the combined
| resources of the allies with full air and naval
| supremacy.
| voidfunc wrote:
| Attacking mainland China seems like a great way to end up
| in a very bad Nuclear conflict.
| randmeerkat wrote:
| You're making the assumption that the U.S. would just let
| China attack Taiwan unchallenged. There's an enormous
| risk of war between China and the U.S., if China invaded
| Taiwan.
| voidfunc wrote:
| 10 years ago I would agree without challenge that the US
| would defend Taiwan if necessary. Less sure about that
| these days.
|
| Even if we would go to war, its probably a war we would
| prefer not to have to fight even if the weapons used stay
| conventional. It's the kind of situation that changes the
| course of history in a big way for the loser.
|
| Nobody wants to be the Spanish after the defeat of the
| Armada of the 21st century.
| threeseed wrote:
| US world order centres around its word.
|
| If allies can't depend on US to defend them then it opens
| up all sorts of possibilities none of which are in the
| best interests of the US or those that value democracy.
|
| For example closest allies like Australia for example
| would have no choice but to capitulate and bow down to
| China's whims. This would include ending the Five Eyes
| security arrangement and allowing Huawei to operate the
| 5G backbone infrastructure.
| threeseed wrote:
| The idea that China has a 100% chance of winning is
| laughable and plain wrong.
|
| There are so many dynamics involved e.g. Japan needing to
| defend the Senkaku Islands, India, UK and EU member
| states being involved and the fact that you an
| increasingly united front within APAC.
|
| Also China's military is a lot of smoke and mirrors. They
| simply can't match the F-22 and F-35 in the air or the
| Ford class aircraft carriers in the sea. And US is
| looking to build a missile defence system on Guam to
| prevent long range attacks.
|
| There are simply too many factors in play to give any
| percentage of winning.
| WillPostForFood wrote:
| The US hasn't even committed to defending Taiwan. I doubt
| the US would militarily intervene. The risk of escalation
| is too high. If China is committed to taking it, they
| will get it. The response would be economic, and I'm not
| confident enough of the world cares, or isn't already
| beholden to China for it to matter.
|
| >Ford class aircraft carriers
|
| Isn't there only one Ford class carrier? And it is still
| not fully ready, and it is in the Atlantic, so at this
| point is not ready to play a part in any South China Sea
| conflict.
| threeseed wrote:
| At this point there is very little economic sanctions US
| could impose on China that Trump didn't already either
| try or talk about. And anything with teeth will never
| work whilst US companies build everything in China. So
| for me a short military dispute is more likely.
|
| No one is expecting war this year. There will be 3 Ford
| Class carriers by 2030 and 5 by 2040. As well as the
| Nimitz class which are still better than what China has
| today.
| Meandering wrote:
| This is what I was thinking...
|
| These corporations are the ones whom benefited from exporting
| the production infrastructure at the expense of the labor
| market. Now, they want the labor market to fund the
| redevelopment of the infrastructure for their benefit.
|
| I'm confused as to why the US government needs to be involved
| capital investment when these companies are boasting historic
| profit margins.
| lostlogin wrote:
| > Amazon, Apple, Google, and Microsoft had 526 billion dollars
| between the four of them in cash reserves.
|
| Presumably they would cooperate and do something about it if
| they saw the current situation as too risky?
| jedberg wrote:
| They are doing something -- forming a lobby group to get the
| government to pay for it. That's much cheaper than actually
| paying for it themselves.
| TakuYam wrote:
| It also gets the actual foundry a pretty sharp knife to cut
| through the pesky red tape/law when they do start looking
| for prospective sites.
| _wldu wrote:
| IBM use to manufacture PowerPC chips in New York and Vermont.
| They may still, but I'm not sure.
| bluedino wrote:
| AFAIK the Vermont plant is owned by GlobalFoundries and is
| still operational.
| yarg wrote:
| I think GlobalFoundries pretty much abandoned the idea of
| actually improving their tech
| (https://www.anandtech.com/show/13277/globalfoundries-
| stops-a...).
|
| I'm not sure what's changed since then.
|
| It may work for GF, but it's not enough for national security
| interests - critical parts of the supply chain depend on a
| potentially hostile foreign power (and it's not just
| silicon).
|
| I'd say the US should invest in TSMC, and push to expand
| manufacturing capabilities to domesticate some production -
| but good luck convincing taxpayer's that that's a good idea.
| elevation wrote:
| Even if this consortium constructs a North American fab, a single
| natural disaster near that fab could wreak the same follow-on
| effects in the headlines today; the underlying problem isn't only
| that we've outsourced our critical manufacturing, but also that
| we keep so little buffer that any disruption could cause today's
| headlines.
|
| The MBAs running US manufacturers need to scrap their JIT
| strategies, build some warehouses, and start keeping a store of
| the essentials. If a tangible good is essential to your business
| continuity on a 6 or 12 month horizon, then your business should
| not outsource the maintenance of this lifeline, regardless of
| whether your supplier is domestic.
| Mountain_Skies wrote:
| Isn't one of the problems that JIT was made to solve that there
| is a tax on inventory? That the government punishes you for
| maintaining slack in the manufacturing chain by taxing it?
| bsder wrote:
| > Isn't one of the problems that JIT was made to solve that
| there is a tax on inventory?
|
| Then hold that inventory in Canada or Mexico or India or
| China? This isn't a hard problem.
| kingsuper20 wrote:
| I would expect that it depends on the state.
| elevation wrote:
| Yes, tax policy compounds the problem; if you have a
| warehouse of goods, you're already risking that your tangible
| goods will be damaged by mold, rodents, fire, severe weather,
| improper employee handling, theft, or changing market
| conditions. Now on top of that the IRS treats your inventory
| as if it's an appreciating asset, and Sarbanes Oxley makes
| you out to be an enron-class criminal if you claim to hold
| any value there -- because it's not as easy to audit as other
| financial instruments as stores of value.
|
| We could definitely retool our regulatory policy if we want
| to improve our posture in the trade conflict.
| leesalminen wrote:
| > The MBAs running US manufacturers need to scrap their JIT
| strategies, build some warehouses, and start keeping a store of
| the essentials.
|
| Just the other day here on HN I read an account from a founder
| who did just that- in early 2008. He ended up having a
| warehouse full of raw materials and no cash to make payroll.
| That's one way a business dies.
|
| So, this talking point sounds good, those damn MBAs and their
| JITs!, but carries its own set of risks. It's important for
| each business to balance those risks and arrive at their own
| decision. It's not as cut-and-dry as one would necessarily
| think.
| DebtDeflation wrote:
| A few months into the pandemic. a Texas manufacturer of N95
| masks offered to ramp up capacity and start cranking out
| millions of N95 masks so long as hospitals and the government
| were willing to sign a multiyear contract to continue to buy
| masks from him at pre-pandemic prices after the pandemic
| ended. No one took him up on his offer. He said without a
| long term contract there would eventually be a supply glut
| and all of the buyers would just go right back to the
| offshore suppliers who would undercut him by a few cents per
| mask. At the time, I thought he was crazy, but it looks like
| he was exactly right.
| mjevans wrote:
| This is exactly where the government should operate with
| emergency stockpiles.
|
| Buy stuff and sit on it for half it's shelf life, and when
| it's done sell it at just a little bit under fair market
| cost.
|
| E.G. Buy N95 masks with a 5 year shelf life, hold them for
| 2, and rotate it out of the warehouse so the warehouse
| always has newer stuff and places that use it like
| construction and hospitals have a price stabilized source.
| sbeller wrote:
| cash it the most important thing that should not be done JIT.
| ;-)
| 8note wrote:
| Business idea: caching layer for kit manufacturing.
|
| You have a warehouse that stores stuff, and sells it to
| manufacturers when JIT runs into issues.
| MrBuddyCasino wrote:
| This exists, those are called distributors. Its just that the
| fluctuations are too large now.
| [deleted]
| xiaolingxiao wrote:
| What are the geopolitical consequence of a de-coupled chip supply
| chain? Recall TSMC is headquartered in Taiwan, which has been a
| point of contention in US-China relationship since the 1950s.
| Please discuss civilly.
| 8note wrote:
| I think the main question is how much of the US support for
| Taiwan comes from the chip supply chain, vs ensuring that china
| needs american permission to trade
| paxys wrote:
| Same reason Foxconn is a proponent for manufacturing in
| America. If the shift is happening and you can't control it,
| may as well hedge by being part of it.
| csharptwdec19 wrote:
| Interesting to think about.
|
| On one hand, this could cause other countries to pay more
| attention to the situation, since -they- will still be
| dependent on TSMC and may not have the US doing all the
| posturing.
|
| But that's assuming we wound up truly 'de-coupled'. TSMC tends
| to be the leader in fab tech, and I am fairly certain any near
| term plans will involve providing incentive for TSMC to build
| more fabs in the US.
| pietromenna wrote:
| It is always nicer to do things with somebody else's money. Not
| with out own, right? Even if we have money to spend.
| robbrown451 wrote:
| To all those saying that those companies can afford it
| themselves, remember that there are reasons they don't. The
| economics don't add up. Companies tend to do what is in their
| economic interest to do.
|
| Something like this can change the economics, which could be a
| good thing.
| jollybean wrote:
| It doesn't matter what the economics adds up to when the
| government is printing trillions of dollars and spending it on
| 'what it thinks needs to happen', whereupon trillionaire
| companies can lobby for some of that money.
|
| Perhaps these companies should create a fund to start a few
| foundries etc. because they can definitely afford it.
| phkahler wrote:
| >> To all those saying that those companies can afford it
| themselves, remember that there are reasons they don't.
|
| Automotive chips for example tend to be produced on older
| nodes, not fancy 14nm and below at TSMC. I'm not talking about
| SoC used in infotainment but all the micro controllers all over
| the car.
|
| There is really zero incentive for a chip maker to expand
| capacity of old nodes since they are obsolete in some sense. It
| doesn't pay to upgrade to a new node without a product that
| demands something from the new node, and even then it's still
| an obsolete node. Think 130nm, 90nm, or even 45nm, the world
| could use more capacity at all of those but would you really
| want to invest heavily in any of those?
|
| I suspect the end game for most of the industry is commodity
| priced chips at every "last node" where that term means the
| last node that doesn't require X, and X is a technology change
| like immersion lithography, multi-patterning, material change,
| or EUV. With that kind of environment nobody can afford to
| increase capacity much.
|
| I'm not arguing for government funding here, just pointing to
| what I suspect is one of the problems.
| coredog64 wrote:
| I used to work for OnSemi, so take the following for what you
| will.
|
| On sells a variety of components -- some are completely
| commodity and are produced in super cheap fabs in Malaysia.
| Some are mid-tier and are (or were) made at fabs in Phoenix
| or Pocatello. And some are high-end and come out of the
| Gresham fabs that they bought when LSI went fabless.
|
| There's value in producing the commodity stuff. Obviously
| they're not going to enter a bidding war with TSMC for
| cutting edge manufacturing equipment to make commodity
| voltage regulators. But they still invest in fab technology
| at the lower end.
|
| I don't think ONN is particularly special in this space. They
| had plenty of competitors and they worked to distinguish
| themselves on cost, depth of their product catalog, and
| ability to execute.
| kingsuper20 wrote:
| By having in-country fabs, have you just pushed the problem
| to some sort of precursor materials or parts?
|
| For that matter, I wonder how a government-subsidized fab
| could compete with an old overseas fab making lower end
| parts that has been long-ago paid for?
| paganel wrote:
| > Companies tend to do what is in their economic interest to do
|
| It will be in their economic interest when the PLA will show up
| at TSMC's door. Of course, that won't probably happen in the
| next few quarters, so on that you are correct, it's not in
| their short economic interest.
|
| What these companies are basically doing is asking the US
| government to subsidise the costs incurred by geo-politics.
| spaced-out wrote:
| >It will be in their economic interest when the PLA will show
| up at TSMC's door.
|
| Not necessarily, maybe those companies can just make a deal
| with the CCP to keep access to TSMC's fabs.
| KptMarchewa wrote:
| Taiwan Army can use scorched earth tactics to make sure
| that it does not happen.
| ClumsyPilot wrote:
| "To all those saying that those companies can afford it
| themselves, remember that there are reasons they don't."
|
| This sounds a lot like "God moves in mysterious ways and has a
| plan for everyone, everything happens for a reason". No actual
| analysis and reasoning required.
|
| This free market religion is what gave us 2008 and will keep
| giving.
| bdhess wrote:
| +1. I'd also guess that these companies getting together to
| start a joint venture is not really feasible, due to anti-
| monopoly laws.
| genericone wrote:
| It's only a monopoly if the government says you are using
| market position anti-competitively and/or against the common
| good. If the US government says that chip production
| capability is now a national focus, companies can expect
| government cooperation for a joint venture.
| dragonwriter wrote:
| > It's only a monopoly if the government says you are using
| market position anti-competitively and/or against the
| common good.
|
| No, its a monopoly if you have market power.
|
| It's only _illegal_ if you are _abusing_ market power.
| throwaway481048 wrote:
| Can you please elaborate? I struggle to discern the ultimate
| effect of private capital versus government funds in this
| situation. Ideally, a business' problems are handled by itself,
| not via the federal government using taxpayer monies.
| [deleted]
| mkipper wrote:
| The basic argument is that domestic production of integrated
| circuits isn't economical for American businesses. Having a
| more flexible supply chain is beneficial to these companies
| (e.g. when a global pandemic hits), but the required
| investment outweighs these benefits.
|
| On the other hand, the government potentially has a lot to
| lose if domestic companies are completely unable to produce
| hardware needed for critical infrastructure. The government
| also benefits from these companies expanding their supply
| chain to include domestic production, so the companies are
| asking the government to provide enough capital/tax breaks to
| make domestic production viable, and they're trying to
| convince the government that this provides enough value to
| the USA for it to be worth it.
|
| But this is being pushed by lobbyists paid for by giant
| corporations, so it's fair to be skeptical. In reality, the
| $50B number probably sits somewhere between "the bare minimum
| needed to make this viable" and "a handout pocketed by greedy
| corporations".
| bpodgursky wrote:
| If Google thought they could get a solid return on investing
| $50B rather than holding cash, they would do so.
|
| The fact they are holding it as cash is an indication they
| are not bullish on the fundamentals.
| foobarbaz33 wrote:
| In a vacuum, sure. But these companies are competing with
| foreign governments using taxpayer monies to make a product.
|
| Cheaper just to buy from the foreign government? sure. But if
| a product is considered core to survival it may be good to
| have domestic production. Whether it's food, weapons,
| computer chips, water supply, etc.
| rsj_hn wrote:
| Rather than advocate for a specific conclusion, I'd like to
| propose a way of looking at this problem:
|
| What matters is a society's capacity to produce. Not whether
| something is "fair", not whether an industry deserves this or
| that. Not whether some cherished economic theory is being
| honored.
|
| Specifically, what matters is the creation and support of
| _productive ecosystems_ , which are networks of credit,
| knowledge acquisition and transfer, skilled workers, skilled
| product managers, and supplier/vendor/retailer relationships.
|
| A key part of these productive ecosystems is jobs. If you want
| to learn how to build bridges, you do not set up schools to
| teach engineering, _you fund the building of bridges_ , and
| people will figure out how to build them on the job, and the
| demand for civil engineers will pull students to study this and
| then universities will open up programs to cater to that
| demand. The jobs come first. Only 5% of China's population
| attends university, yet they are able to build all the
| infrastructure they need because they have a laser like
| attention to creating jobs. They will even build bridges for
| America, as long as Chinese workers get to make them. They will
| build a port for anyone who wants it, as long as Chinese
| workers are the ones building the port. The entire Belt and
| Road initiative is an attempt to import infrastructure jobs by
| sending workers all over the world to build infrastructure, as
| long as China gets to build it. They know that half these
| projects will default and not make any money, but what they get
| out of that is a skilled workforce, and with a skilled
| workforce they can do anything. They will let American
| companies set up factories in China as long as there is a
| knowledge transfer as part of the deal. That all their state
| owned enterprises are losing money is not important, the
| acquisition of skills and the creation of productive ecosystems
| is what matters. I wonder when the US will realize this.
|
| Western economic thinking is focused on P&L, rule of law, etc,
| and assumes as an article of faith that in such an environment,
| productive ecosystems will just arise all on their own, like
| rats being created from piles of trash. It will just happen,
| because in the past it just happened. So we are focused on
| abstract principles, but what the last 30 years has shown us is
| productive ecosystems being destroyed right and left as
| production migrates over to Asia.
|
| Apparently these abstract principles don't work in all cases,
| so people are going to need to abandon their faith in free
| markets just as much as they need to abandon their concerns
| over some fat cat getting a subsidy -- unless they want their
| nation to completely deindustrialize.
|
| However abandoning our faith in what worked before still leaves
| as muddied the concerns of what will work now, because it's not
| so clear that Asia's economic model can be successfully copied.
| Latin America tried to adopt this model in the 1970s -- a
| policy of import substitution, production subsidies and taxes
| on consumption. But it didn't work. Similar policies were tried
| in Africa in the 1980s and they also didn't work. So apparently
| you need more than just a policy of subsidizing production.
| What is that X-factor?
|
| One proposal is that the X-Factor is human capital. Whether
| cultural or genetic or literary, for some reason China has
| human capital for which these policies work well but in Latin
| America/Africa they don't. Another proposal is that the
| X-Factor is exports - it's not enough to just subsidize
| production you need to subsidize exports as well. A third
| proposal is that the X-Factor is state organizational capacity
| (a kind way of saying "less democracy, more centralization"). A
| fourth is nationalism -- being willing to sacrifice some of
| your own wealth for the benefit of the nation, rather than say
| boosting your bonus by outsourcing. And last, there is the
| notion of practicality. The West is often quite fanatical in
| holding to beliefs that no longer work, because our wealth has
| made us take for granted so much that we have the luxury of
| rigid moral views when other nations are just focused on
| acquiring skilled jobs.
|
| Whatever that X-factor really is, Latin America and Africa
| didn't have it but the East Asian nations do, even though all
| of these tried to subsidize investment.
|
| What I think is worthwhile is to start adopting explicit
| policies to nurture productive ecosystems rather than insisting
| that more of whatever we believed before is needed now. Because
| we are rapidly deindustrializing, the foreign sector already
| owns 40% of the nation's productive capacity and very little is
| still produced in the West at all. Clearly the old beliefs need
| to change.
| Clubber wrote:
| I wonder what the "strings attached" will be. Perhaps the back
| doors the FBI has always wanted? Sounds like a double fleecing of
| the taxpayer. We get to give them subsidies and they get to give
| law enforcement an easier vector to spy on us. What a deal!
| savant_penguin wrote:
| "The iPhone maker said last month it will lose $3 billion to $4
| billion in sales in the current quarter ending in June because of
| the chip shortage,"
|
| The IPhone maker has $3 to $4 billion in incentives to fund its
| own factory
| lostlogin wrote:
| I wonder if it's as simple as that? Presumably making their own
| fab would mean they had more chips, but then the chips need to
| get to their production line. Shipping is a significant problem
| at the moment.
| thamer wrote:
| I was curious about the cost and looked it up, the estimates I
| found were in the $5-15 billion range. Not that it's out of
| reach or anything, but it's quite a bit more than $3-4B.
|
| For example, this TSMC fab planned in Arizona is estimated to
| cost $12 billion:
| https://www.forbes.com/sites/willyshih/2020/05/15/tsmcs-anno...
| justaguy88 wrote:
| This is a great point, Apple has plenty of capital to fund it's
| own dedicated fabs (even if operated by TSMC)
| Mountain_Skies wrote:
| True but that also creates vertical integration, which is
| something that has caused many problems in the past. I'd like
| to see these huge companies solve their supply chain problems
| by splitting themselves up, in the process creating the
| companies they need to supply them, without owning them
| outright or restricting them from working with others in the
| market. Basically spin-offs that are designed to be spin-offs
| from the start.
|
| Since the current stockholders would have shares in existing
| company and the new entities, they're not being damaged in the
| process so they shouldn't be opposed unless maximizing vertical
| integration is their plan for continued wealth growth.
| yumraj wrote:
| Does anyone know if AMD is just not mentioned or is not even part
| of this group?
|
| If not, why not? Do they think they are better suited under their
| current arrangement with TSMC and perhaps Global Founderies?
| Rafuino wrote:
| I found the lobby group and AMD's logo is there... They're
| probably not mentioned just because they're a blip on the radar
| compared to what AWS, GCP, and Azure buy from Intel still.
|
| https://www.chipsinamerica.org/about/
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