[HN Gopher] Apple mobile processors are now made in America by TSMC
___________________________________________________________________
Apple mobile processors are now made in America by TSMC
Author : colinprince
Score : 1437 points
Date : 2024-09-18 01:38 UTC (21 hours ago)
(HTM) web link (timculpan.substack.com)
(TXT) w3m dump (timculpan.substack.com)
| benoau wrote:
| _Some of_ the processors used in the iPhone 14 Pro, 14 Pro Max,
| 15 and 15 Plus are being made in America by TSMC.
| bydo wrote:
| Not even. The only device still in production using the A16 is
| the iPhone 15 (and plus if you consider that a different
| model).
| runjake wrote:
| It seems likely the new iPhone SE will be released in the
| next 12 months, and if so, and it follows past patterns,
| it'll roughly use the iPhone 14 hardware and thus, the A16.
| dgacmu wrote:
| And the next base model ipad may use it (or the older a15).
| iPad is currently using a14.
| whynotminot wrote:
| The SE has always used the latest chip.
|
| No chance in hell Apple releases any new phones -- even SEs
| -- that can't do Apple Intelligence.
| ravetcofx wrote:
| The A16 could certainly run the AI with enough RAM
| whynotminot wrote:
| Maybe, perhaps. Idk I don't work at Apple.
|
| I'm just telling you that if it follows past SE pattern
| it'll be an A18. And they won't skimp on the RAM because
| Apple Intelligence is clearly going to be rolled out
| across their entire product line.
|
| 2 + 2 = A18 with 8GB of RAM
| Reason077 wrote:
| According to Apple, the upcoming "Apple Intelligence"
| features are exclusive to devices with A17 Pro, A18, or
| M-series chips.
| newaccount74 wrote:
| Apple Intelligence is a bunch of new tech they haven't
| really released yet. In typical Apple fashion, they start
| slow, and will improve it year over year.
|
| Apple rarely backports new tech to older devices. It
| probably could run on the older chips, but it doesn't
| look like Apple isn't going for the widest possible
| rollout. They are launching it for the newest chips only,
| and are not wasting time porting it to old chips, when
| they don't even know yet how it's going to scale. So
| right now they are focussing on English speaking markets
| and newest devices only.
|
| They are skating to where the puck is going to be, and in
| a few years no-one will care if their tech runs on the
| A16 or not. Right now they are focussing on getting this
| thing launched, and backward compatibility would only
| slow them down.
|
| And its a selling point to get people to buy new iPhones,
| so it's win/win for Apple.
| quitit wrote:
| While I can think of a few examples where they have done
| back ports given time (but not at launch). I still very
| much see this the same way as you do for Apple
| Intelligence. Firstly because they're unlikely to
| announce it for older phones unless they can get every
| model working well. Secondly because I notice they've
| been careful about which of the new AI upgrades are
| classified as Apple Intelligence, versus those which have
| been packaged into iOS 18 without fanfare.
|
| I'll give an example:
|
| The iOS 18 photos app, without "Apple Intelligence",
| still has an improved search function. This is driven of
| course by a new AI model that tags images with more
| detail and fidelity than earlier iterations.
|
| However "Apple Intelligence" also features further
| upgrades to photo searching where a user can request
| images with highly specific details, expressions or
| interactions. The example they give is "Katie with
| stickers on her face", and beta testers have shown
| examples which demonstrate that other than just tagging
| individual objects, those items themselves are described
| and searchable. (E.g. The difference is like between
| being able to search for photos with a "dress", versus "a
| red dress", "a wedding dress", <person> "wearing polka
| dot dress", etc.)
| papichulo2023 wrote:
| Maybe for the EU market?
| duckmysick wrote:
| Isn't the bulk of Apple Intelligence processing on-
| device? You want to have powerful chipsets for local,
| more privacy-friendly processing.
| Lio wrote:
| In most industries regulation is an opportunity for
| incumbents like Apple.
|
| If Apple can profitably provide AI services without
| breaking privacy laws but their competitors can't Apple
| wins.
| dannyw wrote:
| It's unlikely to be able privacy laws, but rather DMA /
| competition laws.
|
| Apple Intelligence requires deep access to user data,
| systems apps, etc to make it useful.
|
| Under the DMA, Apple would be required to also offer
| similar functionality to competitors (e.g. Google).
| overstay8930 wrote:
| Ironically the DMA is telling Apple to reduce privacy to
| make Apple Intelligence work in the EU, it's just a
| populist political attempt at regulating a market.
|
| No sane person actually thinks Apple isn't private enough
| for EU standards, they're just not being allowed to
| compete because they aren't allowing anyone else access
| to local user context, which would be a privacy nightmare
| if done incorrectly.
| jacooper wrote:
| None of the EU ai rules prohibit apple from enabling
| apple intelligence in the EU, they just don't want to.
| Gemini, Claude, chatgpt all already exist.
| stetrain wrote:
| I agree that Apple being stubborn is part of this, but
| also the point of the DMA / antitrust in general is that
| large companies that control their own markets can't do
| some of the same things that less influential companies
| in the same space can do.
|
| Apple Intelligence is a set of features for a platform
| (iOS) which the EU has determined to be a Gatekeeper
| platform which comes with special restrictions and
| oversight.
|
| There's a regulatory difference between that and just
| releasing an LLM accessible via the web or an app
| download.
| ErigmolCt wrote:
| Now that I'm thinking about buying a new phone, maybe
| it's worth waiting for the SE to come out
| nfriedly wrote:
| Yeah, MacRumors thinks a new iPhone SE is due sometime
| soon, based mostly on how long it's been since the last
| model released:
| https://buyersguide.macrumors.com/#iPhone_SE
| GeekyBear wrote:
| Going by past practices and current rumors, I would
| expect an iPhone 14 body and display (FaceID, OLED, and
| no large bezels) with the current flagship model SOC and
| a single recent gen camera module.
|
| It will be interesting to see how much they bump up the
| RAM for Apple Intelligence.
|
| New SE models tend to launch in March or April.
| runjake wrote:
| You are correct. I am wrong. And good point about Apple
| Intelligence. I'm disappointed in myself for not seeing
| that.
| loeg wrote:
| You think they'll make another SE? I thought that product
| line was being abandoned.
| meling wrote:
| Rumors say an update is in the works; my guess is a
| release early next year.
| https://www.macrumors.com/roundup/iphone-se/
| Reason077 wrote:
| Reportedly, the 2025 iPhone SE will use an A18-family SoC
| (same as this year's iPhone 16 models).
| aalimov_ wrote:
| Could be used in an Apple TV as well?
| janandonly wrote:
| Yeah why are these chips still produced at all? The iPhone 16
| just came out and the 14/15 stockpiles will be sold off for
| cheaper just to get rid of them. What am I missing?
| BirAdam wrote:
| AppleTV, HomePod, a new display. Could be anything. There
| could also be government or corporate contracts requiring the
| mass production of a slightly older chip for something.
| windowsrookie wrote:
| The iPhone is not the only product Apple makes.
|
| The Apple Watch, TV, iPad, Studio Display, etc. all use
| variants of older A series SOCs.
| epistasis wrote:
| After all the wailing and rending of clothes, the industrial
| policy worked out great and we have top tier production here in
| the US, transferring knowledge from TSMC to a US workforce.
|
| This is a significant win for the US, and just the beginning of
| the amazing industrial policy passed over the past few years.
|
| US manufacturing is about to be reinvigorated, and we in the US
| are going to be building our own future both for chips and for
| energy security.
|
| This is great news, and we should celebrate.
| lettergram wrote:
| Notably, this was started in 2020 with a $12B investment -
| https://www.tsmc.com/static/abouttsmcaz/index.htm
|
| Then in 2022, TSMC invested another $18B and received $6.6B
| from the CHIPS act.
|
| My bet, is TSMC was given a "you build in the US or we wont
| give you defense contract work" in 2018-2020 timeframe lol
| iknowstuff wrote:
| https://en.m.wikipedia.org/wiki/CHIPS_and_Science_Act#Histor.
| ..
| thatwasunusual wrote:
| Of course Republicans opposed it. :-/
| nebula8804 wrote:
| Does it matter? They played pretend opposition like they
| always do. Democrats can pass this stuff no problem but
| people elected the opposition party to advance meaningful
| democratic reforms like better health care, dealing with
| housing, increasing minimum wage. They haven't done
| anything. Its blatantly obvious this chips bill was a
| giant handout to corporations. Sure the plens get a few
| breadcrumbs but its pointless to point to republicans
| when both sides are not really enacting fundamental
| change for the common man.
| klyrs wrote:
| > My bet, is TSMC was given a "you build in the US or we wont
| give you defense contract work" in 2018-2020 timeframe lol
|
| TSMC is in an extremely precarious geopolitical situation;
| China's hardball is a lot scarier than Trump's. Expanding
| their geographical redundancy through billions in handouts is
| pretty appealing to investors.
| mlyle wrote:
| TSMC improves the geopolitical situation of Taiwan by
| building here, too. China doesn't have the possibility of
| being "the best logic manufacturer left standing" after an
| invasion and TSMC being destroyed, if some of TSMC's world-
| class fabs are also located in North America.
| InkCanon wrote:
| Would it not make the situation worse? The risk/reward of
| an intervention massively changes when Taiwan is no
| longer the only source of chips.
| mlyle wrote:
| So, there's two factors here, that move in opposite
| directions:
|
| 1. China is less likely to secure a semiconductor
| advantage over the West, if TSMC has a US location.
| Instead, China is likely to take out the nearby, high
| quality fab, and whatever they are left with domestically
| is more likely to be inferior to distant capabilities.
|
| 2. Because of #1, China is less likely to secure a
| massive advantage over the US by invading Taiwan; as a
| result the US may feel it less likely to support Taiwan.
|
| I'm inclined to think #1 is the more important one. #1
| makes the risk of an invasion much higher. #2 makes the
| reward for an intervention somewhat lower, but I don't
| think it changes China's calculation of how likely the US
| is to intervene that much.
| high_na_euv wrote:
| How china would secure semico advantage by invading
| Taiwan? Those fabs would be damaged or destroyed
| mlyle wrote:
| > Those fabs would be damaged or destroyed
|
| > > China is likely to take out the nearby, high quality
| fab
|
| Yes.
|
| If China's domestic fabs are second best or close --- and
| China may manage to crawl into this position ---
| destroying the best fab increases their relative standing
| and significantly hurts Western security. Whatever crumbs
| they get from Taiwan (the proportion of expertise that
| decides to roll over and help, and whatever capital
| equipment survives to be reverse engineered) are just a
| bonus.
|
| If China's domestic fabs are not --- because there's a
| fab tied for first place in North America-- destroying
| the neighboring fab that they benefit from clearly
| doesn't benefit them.
| vineyardmike wrote:
| > My bet, is TSMC was given a "you build in the US or we wont
| give you defense contract work" in 2018-2020 timeframe lol
|
| My bet is that TSMC recognizes they are a crazy geopolitical
| pawn. And is frankly playing their part.
|
| Once China develops chip production abilities _similar_ (but
| not necessarily better) to TSMC, they're free to destroy
| Taiwan. Then they'll be the sole cutting-edge producer,
| meaning that everyone will continue to do business with them
| despite their behavior.
|
| TSMC and the US recognize this. If TSMC bring their tech to
| America, they'll at least be safe to continue manufacturing
| ("for the shareholders"). It also is self-serving because it
| changes the geopolitical game. It increases the risks to
| China of an invasion, and favors to the US increase the odds
| of US intervention (good for their patriotism).
|
| Finally, it's pretty well established that the US defense
| industry prefers local factories for security purposes.
| They're obviously interested in preserving this ability
| domestically, and most companies recognize that and
| accommodate.
| Animats wrote:
| TMSC has fabs in Taiwan, Japan, the United States, Germany,
| and China. the most modern ones are in the US and Taiwan.
| The others are older processes.
| mlyle wrote:
| > US manufacturing is about to be reinvigorated
|
| One thing that I think that frequently eludes people in this
| discussion is that US manufacturing has pretty much been
| constantly growing for the past century; just its _share_ of
| GDP has fallen as other sectors have grown faster. And the
| share of the workforce has fallen even faster, as the actual
| manufacturing has moved towards higher value items and greater
| degrees of automation.
|
| I think the actual outcome of this policy is mixed. I think it
| was a big case of corporate welfare that will result in
| somewhat increased chip production in the US. I think this is a
| win for national security. I don't think the government
| applying such levers to change how the market allocates capital
| probably won't be a win for economic output or quality of life.
| jojobas wrote:
| This might be true, but the rust belt is called that for a
| reason.
|
| I also wonder what's the share of non-disposable products in
| US and other Western countries manufacturing.
| mlyle wrote:
| > This might be true, but the rust belt is called that for
| a reason.
|
| > > as the actual manufacturing has moved towards higher
| value items and greater degrees of automation.
|
| US manufacturing has moved away from things like primary
| metals, which the steel belt had focused on, and towards
| things further up the value chain.
|
| https://www.nist.gov/sites/default/files/styles/2800_x_2800
| _...
|
| Manufacturing fell from 25% of GDP in 1947 to 12% in
| 2015... _but real GDP increased by 10x_. So, the value of
| manufacturing output went up by ~4x over that span.
|
| https://www.stlouisfed.org/on-the-
| economy/2017/april/-/media...
|
| What really went away were the jobs.
| llamaimperative wrote:
| Just further evidence of the accelerating returns to
| capital. It just makes less and less sense for America to
| be engaged in highly wealth-distributive (i.e. labor
| intensive) activities, more sense for it to engage in
| capital-intensive ones which, by definition, accrue
| further benefit to the owners of that capital. Yikes!
| starspangled wrote:
| But industry cries out for more immigration to suppress
| wages because they don't have enough workers (or at
| least, not enough leverage in the labor market as they
| would like), so I'm not sure if that tracks.
| weweersdfsd wrote:
| They will keep crying that, no matter the actual labor
| market situation. My country has low wages, high
| unemployment, and yet businesses similarly cry for more
| immigration, as they always want to find the most
| desperate worker who accepts the lowest wage possible.
| That's the reality of modern capitalism.
| eru wrote:
| Have you considered that those foreigners are humans,
| too?
|
| Or do you believe in out-of-sight-is-out-of-mind?
| llamaimperative wrote:
| Why wouldn't you want cheaper labor to the extent you
| need it at all?
| starspangled wrote:
| Nobody would be investing in labor intensive industry
| because it doesn't return as well, so there would be a
| huge oversupply of labor, so prices would already be at
| their floor.
|
| That doesn't seem to be what's happening though.
| llamaimperative wrote:
| Economic systems aren't typically describable with terms
| like "nobody." There's an equilibrium in investment
| levels between capital- and labor-intensive sectors, and
| that equilibrium is moving. If there was a huge
| oversupply of labor, then it'd make it more compelling to
| invest in labor-intensive sectors, which would both shift
| the equilibrium and eliminate the oversupply (which is
| what has already happened/is happening every hour of
| every day, thus there's no massive oversupply).
| Shog9 wrote:
| The jobs, and in many cases the expertise held by the
| people working those jobs.
|
| I think this was the angle epistasis was coming from: not
| just that chips are physically being formed within the
| boundaries of the US, but that citizens are involved,
| being trained and garnering the practical experience that
| comes with being intimately involved.
|
| So, so much of this sort of experience has been lost over
| the past few decades, and the fallout is palpable: how
| many discussions have played out right here surrounding
| the challenges of manufacturing _anything_ , even trivial
| bits of plastic, at scale without spending years
| traveling across the world, dealing with language and
| cultural mismatches, ensuing mistakes and quality issues?
|
| We're in a weird place now, wrt manufacturing skill -
| there are still plenty of individual crafters, folks who
| can make one-off or small runs of high-quality goods...
| For a pretty high cost per/ea. But scaling is
| troublesome; to hit that economy of scale requires a lot
| more people with maybe journeyman-level skill, folks who
| cut their teeth in a large operation and are looking to
| specialize - and those large operations aren't here.
| mitthrowaway2 wrote:
| > US manufacturing has pretty much been constantly growing
|
| By dollar value, perhaps, but that mostly means the US makes
| lot of high-value microchips, a field that has made (well-
| documented) exponential progress over the past decades. It is
| still consistent with US manufacturing capabilities
| regressing in other key aspects, such as machine tools,
| injection molding, shipbuilding, consumer goods, and so on.
| mlyle wrote:
| > US manufacturing capabilities regressing in other key
| aspects, such as machine tools, injection molding,
| shipbuilding, consumer goods, and so on.
|
| But this is exactly what Econ 101 tells you to expect to
| happen (and I teach Econ 101 ;) . Countries specialize to
| maximize comparative advantage. If you are the US and can
| manufacture high value items at a lower opportunity cost
| (or high value services at a lower opportunity cost), you
| will, but this means giving up on doing other things you
| could use the resources for.
|
| The net result is that US manufacturing output in real
| dollars has increased 4x, in the past 70 years. At the same
| time, its share of the economy has shrunk (because other
| sectors have outgrown it), and many lower value
| manufacturing subsectors have been largely abandoned.
| lotsofpulp wrote:
| > but this means giving up on doing other things you
| could use the resources for.
|
| Aka giving up the security and being more vulnerable to
| volatility. The pendulum can swing too far, as resilience
| cannot be measured in dollars.
| mlyle wrote:
| Sure. As I pointed out, something like the CHIPS Act may
| be good for US resilience and national security, but is
| unlikely to be good for US economic output.
| _DeadFred_ wrote:
| Up until recently we all naively believed 'a rising tide
| lifts all ships' meant we'd all choose to get along and
| everyone would benefit.
| t-3 wrote:
| It wasn't a naive belief, people did choose to get along
| economically and everyone benefited. The naive part is
| thinking that economic interdependence means political
| submission and that political and economic development
| are necessarily related.
| mitthrowaway2 wrote:
| Maybe our economic policy should go deeper than 101-level
| economics then! Because comparative advantage is a
| dynamic quantity which changes over time, and while some
| advantages (like geography) are fixed, others are built
| by investment.
|
| Here's a video [1] which explains why, in 1955,
| manufacturing household goods was cheaper to make in the
| US than in China (and why, at the time, they thought this
| manufacturing dominance was _the_ thing that backed the
| US position as a global superpower). It 's not because
| Americans worked more cheaply than Chinese workers, it's
| because American factories had a well-developed tool-and-
| die expertise, which meant that when anyone in the world
| wanted to make something, they were well-advised to
| travel the US to get it made.
|
| Econ 101's comparative advantage is true at an
| instantaneous point in time, which is a good start, but
| if perhaps it's just "knowing enough to be dangerous".
| Economic policymakers (and company leaders) would do well
| to think about comparative advantage as _planning an
| optimal trajectory over time_ , which can mean
| sacrificing a short-term optimum in exchange for a long-
| term optimum, and if there even is a textbook solution
| for that, it's going to look less like a 101-level
| intersection of straight lines, and more like an
| iterative optimization over nonlinear differential
| equations.
|
| [1]: https://www.youtube.com/watch?v=QU6nsfoNWDI
| mlyle wrote:
| I think you're missing the point of what I'm saying. The
| US has steadily moved away from those past competencies
| _because there was more profit to be made elsewhere_.
|
| And, sure, there are _absolutely_ network effects with
| related goods and industries that have steepened that
| movement. If it was a win to change the allocation of
| resources when e.g. steelmaking was strong in the US, it
| 's even more of a win after steelmaking withered.
|
| > and if there even is a textbook solution for that,
|
| It's not quite what you're saying, but the closest work I
| have read is 'Dynamic Optimization: The calculus of
| variations and optimal control in economics and
| management' by Kamien et al. It is all about estimating
| gradients and plotting trajectories in dynamical economic
| systems.
| mitthrowaway2 wrote:
| The feeling of misunderstanding is mutual! I agree that
| there was more profit to be made elsewhere. But I'm
| arguing that those profits were _short-term_ profits
| which may well have come at long-term expense. If you
| follow the local gradient of profitability, you 'll
| always find great short-term returns selling off your
| seed corn. Unlike what Econ 101 asserts about maximizing
| comparative advantage being the most profitable strategy,
| there is absolutely no guarantee that following a
| locally-optimal comparative-advantage strategy is
| globally optimal over a long-term window, where
| advantages are path-dependent.
|
| Manufacturing is _the_ core example of path-dependent
| advantages, because (unlike what any econ 101 textbook
| teaches), marginal costs decline with increasing
| production quantity in the manufacturing sector. This
| means the more you make, the better you are at making
| more things!
| 1123581321 wrote:
| The thing is there are also network effects, expertise
| building and marginal cost improvements to be built up in
| high value items and services.
|
| The United States was able to build a tremendous economy
| by building up those systems while continuing to benefit
| from its older manufacturing base for decades.
|
| The United States economy is far from perfect, but it
| hasn't traded away a long-term asset for only short-term
| ones as you're suggesting.
| mlyle wrote:
| > . Unlike what Econ 101 asserts about maximizing
| comparative advantage being the most profitable strategy,
| there is absolutely no guarantee that following a
| locally-optimal comparative-advantage strategy is
| globally optimal over a long-term window,
|
| I think there's little doubt that our change in
| allocation of resources has been advantageous versus
| staying an economy focused on primary metals and
| relatively simple manufacturing. Do you really feel
| otherwise?
|
| Of course, economic assessments and the behavior of
| markets generally assumes free choice by participants. So
| there's always:
|
| 1. Geopolitical risks: state leverage can turn a local
| absolute advantage in e.g. producing war materiel into
| other advantages.
|
| 2. Sure, we could back ourselves into a corner,
| ultimately, by not being able to provide a key part of
| the value chain by following that gradient. (Geopolitics
| can be related, too, in that states can gather together
| lots of small advantages and use them in coordinated ways
| against other states).
|
| So our state, of course, needs to focus on countering
| those actions of other parties. And maintaining some
| diversity beyond what is economically optimal can add
| resilience.
|
| (One point I make in class: our textbook pretty much says
| that price controls are always dumb... but that there are
| plenty of reasons that a country might desire to have a
| surplus of food or to not be dependent upon another
| country).
|
| The track record of those who would seek to centrally
| plan and optimize for some future outcome instead of
| following that profit gradient has been very poor. Not to
| say that it's never worked: but generally following the
| profit gradient has yielded better outcomes.
|
| > because of (unlike what any econ 101 textbook teaches),
| marginal costs decline with production quantity in the
| manufacturing sector.
|
| Unlike what any econ 101 teaches? Talking about LRATC,
| returns to scale, etc, is a big part of my unit 3. If
| you're not referring to that and instead e.g. Wright's
| law, that too is mentioned.
| mitthrowaway2 wrote:
| I wasn't talking about "base metals and relatively simple
| manufacturing". Were you? When Tim Cook explained, in
| 2017, why the iphone had to be made in China, he
| explained that it's because China dominates _advanced_
| manufacturing, and has skill that cannot be replicated
| elsewhere.
|
| The behavior of markets assumes free choices by
| participants that _rewards the participants who make
| those choices_. I do not dispute that the CEOs who were
| responsible for shipping supply chains to China were
| following their incentives, and it worked out well for
| them. I would argue that there are alterations to
| regulations on corporate governance which would increase
| long-term profitability of those corporations overall,
| but that the key people in the corporations aren 't
| properly incentivized to pass them, nor are shareholders
| sufficiently informed or coordinated.
|
| > Talking about LRATC, returns to scale, etc, is a big
| part of my unit 3
|
| In your unit 3, do you draw LRATC curve as a parabola?
| Because that's the wrong shape for manufactured goods.
| Not only do average costs decrease, so do marginal costs,
| and this is monotonic over all but the shortest
| timescales. Wright's law is about half of the reason,
| yes.
| mlyle wrote:
| > I wasn't talking about "base metals and relatively
| simple manufacturing". Were you?
|
| A whole lot of the decline that we're talking about has
| been in those sectors. Microchips and aerospace grew;
| simple consumer goods and steel manufacturing fell
| through the floor.
|
| > The behavior of markets assumes free choices by
| participants t...
|
| Incentives can be, and often are misaligned. However, the
| context of our discussion is talking about large overall
| economic growth that has _outpaced manufacturing growth_
| , even though it is still positive. This isn't evidence
| of misaligned incentives.
|
| > In your unit 3, do you draw LRATC curve as a parabola?
| Because that's the wrong shape for manufactured goods.
|
| It's absolutely a bathtub.
|
| It's steep-downward sloping, mostly flat for a
| loooooonnnggg time, and then upward sloping. Indeed, this
| understanding of the shape of LRATC _originally comes
| from_ study of manufactured goods. At some point
| coordination gets hard and further increases in quantity
| require using resources that are not well suited for the
| task.
|
| Of course, the quantity at which costs slope upwards may
| be at an impractically large quantity for any industry--
| in which case that industry is likely to be a natural
| monopoly. And there are some recent arguments that
| coordination is easier thanks to information technology
| and that it is even harder to reach diseconomies of
| scale.
| mitthrowaway2 wrote:
| > It's absolutely a bathtub.
|
| I endeavour to convince you that you are teaching your
| students a falsehood. Natural resource industries have
| bathtub-shaped average costs. Average costs fall strictly
| monotonically for manufacturing, and marginal costs
| either fall or remain constant. Constant marginal costs
| are what you get if you don't even _bother_ to solve
| coordination problems, and just copy-and-paste your whole
| assembly line instead (except even _then_ you can 't help
| but gain economies of scale, if only from your tooling
| suppliers). The misconception that it's a bathtub does
| not come from the study of manufactured goods, it comes
| from _thought experiments_ about manufactured goods done
| by people who never managed quote requests at a real
| factory. Empirical studies done on actual firms almost
| never show rising marginal costs at any quantity.
|
| That this error has permeated introductory economics is a
| very, very big problem.
| mlyle wrote:
| > Constant marginal costs are what you get if you don't
| even bother to solve coordination problems
|
| You still have coordination problems on the supply and
| distribution side.
|
| > Average costs fall strictly monotonically for
| manufacturing
|
| This is an extraordinary claim that is easy to refute
| with simple thought experiments. e.g. You think that if I
| want 103% of the units that a set of equipment from ASML
| can deliver, that average costs will be lower than
| producing 100%? Or do you mean "strictly monotonically"
| in some other sense?
|
| Being able to vary your capital in the long run doesn't
| mean that you can have 10.3 sets of photolithography
| apparatus.
|
| > and just copy-and-paste your whole assembly line
| instead
|
| If you copy and paste and have everything truly
| independent, without the need for any coordination of
| resources, what you effectively have is multiple firms.
| In practice, firms still need to allocate scarce
| resources among lines.
|
| > The misconception that it's a bathtub does not come
| from the study of manufactured goods , it comes from
| thought experiments about manufactured goods
|
| This is a falsehood. Bain conducted _reams_ of real-world
| research on manufacturing, plant size, firm size, and
| returns to scale, and this informs today 's idea of LRAC.
| Of course, this research is 70 years old, and recent data
| is more ambiguous. As I've said, some believe that
| information technology has changed everything.
| dr_dshiv wrote:
| I've been interested in Henry Charles Carey, the chief
| economic advisor to Abraham Lincoln. He wrote a book
| called the "Harmony of Interests" about the need for
| state policy + markets (to contrast with purely free
| markets). Lots of data and rigorous argumentation.
|
| Apparently this was known as the "American School" of
| economics -- and it dominated from the mid-late 1800s for
| over a century.
| kragen wrote:
| it seems that you both agree that it depends on the
| timescale; asml's next model of machine may be able to
| produce 10% more, or 91% less, and in either case that
| extra 3% of your demand will lower the average costs
| labcomputer wrote:
| > and marginal costs either fall or remain constant
|
| Not true. If your factory can make N widgets per year,
| and you want to make N+1 widgets, the marginal cost of
| the N+1th widget is vastly greater than the Nth widget.
| hyeonwho4 wrote:
| I think the parent comment was talking about building
| factories and amortizing their costs over your unit
| production, whereas you assume the factory is a fixed
| cost with fixed capacity and looking at the marginal cost
| to produce a unit, which is really rare in many real
| world situations.
|
| For most goods, the factory doesn't run anywhere near N,
| and the fixed costs are 6 or more orders of magnitude
| higher than the marginal widget costs, so your business
| is well served just by finding any method to use that
| plant more effectivly. As an example, I was quoted
| $60,000 for a mold which would have produced parts at
| $0.005. (Very small plastic widgets.) At that ratio, any
| amount of scale will increase my profit, since the
| marginal costs, even if they increase by a factor of 10
| or 100, are negligible to the cost of the tooling. (And
| the global market for this widget is measured in hundreds
| of units.) Any amount of reusing the mold is going to
| save me money. Sure we have problems if we need N+1
| widgets in less than 1/N more time, but if we expected to
| need 2N widgets, we could reuse the tooling design at a
| second factory, and marginal costs actually do keep
| dropping.
| mitthrowaway2 wrote:
| But in real life, by the time you received orders for N/2
| widgets, you were already breaking ground on your next
| factory. And if you get an order for 100N, you smile
| because now you can switch to a higher productivity
| manufacturing method, like stamping instead of machining;
| at 10000N you can invest in mass-producing the machines-
| that-make-the-machines. This is how we end up being able
| to make even complex products like cars so cheaply that
| we have more cars than people.
| corimaith wrote:
| You know, part of the problem with the massive youth
| unemployment in China is that the Chinese, just like most
| people, don't want to work in blue collar advanced
| manufacturing. You might call jobs like consulting or
| investment banking as "useless jobs", but that kind of
| comfy white collar job is what everyone is sending their
| kids to university for.
| ta_1138 wrote:
| Fun fact: You should sell your seed corn, because the
| best hybrid seeds, crossed from especially made inbreds
| that you'd never want to use for yield, are so much
| better than the second generation crossing that you'll
| always lose money replanting.
|
| There is never any guarantee that profits are long term
| or short term, or that your manufacturing specialization
| is going to remain useful, instead of being a dead end.
| Retaining specialization on, say, cathod tubes wasn't
| exactly profitable. See all the camera manufacturers that
| zigged when they should have zagged, and used their
| manufacturing strength to unprofitability. All of this is
| hidden by talking about 'manufacturing' in very large
| terms, but the real world doesn't work like that.
| Specifically, semiconductors were a very nice place to
| keep expertise in, and paid off. Internal combustion
| engines, and filaments for incandescent lighbulbs
| probably not.
|
| Even in cases where we are looking at the same kind of
| manufacturing in multiple places, competitive advantages
| are lost. There are parts of Europe taht still have
| metallurgy and never attempted to divest, but lost
| comparative advantages because better technology came in
| at the wrong time in the capital depreciation curve: They
| invested heavily at the slightly wrong time, still had
| expensive labor, so they became far less competitive, at
| least for a while. Did they not pray enough to the
| manufacturing god? Did the Netherlands get lucky, or was
| sufficient dedication to manufacturing that led them to
| have ASML in their borders? Is the fact that Novo Nordisk
| found the most important pharmaceutical in the world a
| matter of Danish superior industrial policy, or did they
| just get lucky compared to the many other places with
| large investments in pharma that didn't get anywhere near
| that lucky?
|
| The path dependence is not so predictable, and the path
| that makes you better today can lead you down a cliff.
| It's all gambles, and whoever claims they can predict
| what is the right one in the long run is being
| overconfident
| codersfocus wrote:
| Novo Nordisk didn't find GLP-1s, they commercialized
| them. The current dean of Harvard medical school says he
| had a startup on them in the 80's.
|
| https://x.com/jflier/status/1826985844684570747
| refurb wrote:
| Pharma has plenty of examples of things like that.
| Discovery is made, nobody thinks it's worth pursuing, the
| world and knowledge base changes, someone goes back and
| says "this deserves another look".
|
| A lot of the GLP-1 success is based on progress made in
| the diabetes space (incidentally so), the refinement of
| molecules and better understanding of how obesity could
| be treated.
| chronogram wrote:
| ASML's success is partly (gross simplification) because
| it was the biggest local tech company (Philips) realising
| that they're too big to be effective, so they made a
| startup-esque new company which allowed them to be lean
| and engineering-focused. It's a good story of proper
| accounting allowing good company structures to persist
| inside of a bloated company.
|
| Van den Brink gave a great interview some time ago, I'll
| see if I can translate it and post it here.
| carlmr wrote:
| >Manufacturing is the core example of path-dependent
| advantages, because (unlike what any econ 101 textbook
| teaches), marginal costs decline with increasing
| production quantity in the manufacturing sector. This
| means the more you make, the better you are at making
| more things!
|
| Looking at how Apple said it would be impossible to get
| US chips, so much this. It needed a lot of investment to
| onshore chip production again. And we should onshore more
| high value manufacturing to keep the supply chain working
| in one place.
|
| The EU has been better at keeping manufacturing
| competence, but I see a lot of these short term
| comparative advantage econ 101 ideas taking over in the
| EU as well.
| eitally wrote:
| That last statement is absolutely true, but if you have a
| constrained domestic supply chain, high employee cost,
| and/or constrained margins on finished products, you're
| still going to have come out behind if you persist with
| domestic manufacturing rather than offshore. This is the
| calculus OEMs faced in the 1990s-2000s. The big bet that
| they all made is to assume relatively stable geopolitics,
| and that there wouldn't ultimately be a squeeze on the
| potential manufacturing constraints (labor, supply chain,
| capacity). Ultimately, it's proven to have been _by far_
| the smartest decision for high-vol / low-mix stuff:
| electronic components and consumer electronics (not to
| mention apparel and many industrial products).
|
| Like I said in my previous comment, though, this doesn't
| mean the capability to build has left the US (or Europe).
| Just that the decision to continue investing in
| manufacturing things that aren't competitively profitable
| has been made and the capacity has been allocated to
| higher margin manufacturing (regulated industries,
| complex products, and products where customers are less
| price sensitive).
| mitthrowaway2 wrote:
| > The big bet that they all made is to assume relatively
| stable geopolitics
|
| It's not just geopolitics. China required partnering with
| local companies and sharing IP. Even if they were
| geopolitically friendly, Western countries set up to
| build their own Chinese competition from scratch in
| exchange for lower labour costs, believing that either
| they could out-innovate China at design (even when
| Americans no longer understand how their own products get
| made), or that they'd be retired by the time it did
| matter.
| qwytw wrote:
| > it's because American factories had a well-developed
| tool-and-die expertise, which meant that when anyone in
| the world wanted to make something, they were well-
| advised to travel the US to get it made.
|
| Also because you couldn't offshore production to China or
| most other places even if you could provide all that due
| to various geopolitical, economic, social, institutional
| and other reasons.
| kragen wrote:
| mostly container shipping didn't exist, but things like
| tool and die products cost enough per kilogram that even
| air shipping is economical, to say nothing of integrated
| circuits
| yndoendo wrote:
| I don't teach economics 101 nor taken a class. What about
| the other corporate departments that are being outsource?
|
| The company I previously worked for not only outsourced
| product manufacturing to South Korea with assembly in the
| USA, after I left. They also outsourced customer service
| (CSR) to south Asia. Texas VCs bought the company and are
| trying to maximize all returns on their investment.
|
| Companies like American, that produce branded products,
| have a whole department that helps their sales reps with
| moving customer support, be it email, physical letter,
| and or phone, to south Asia to reduce office management
| costs in the USA. They also could just be outsourcing
| invoicing while CSR is a local provider.
|
| Manufacturing is a simple concept that is heavily
| politically pushed. The other departments that are needed
| to support products seem to be ignored. ML has a great
| likelihood of perpetuating this with real-time vocal
| transitioning. The CSR in India can sound like some
| person from New Jersey and break the accent barrier. This
| would put the customer at ease when sharing the same
| vocal tones. Consumers would be none the wiser.
| eitally wrote:
| At the end of the day, everything but 1) product
| development (R&D) and 2) corporate leadership are
| fungible and prone to outsourcing to the lowest cost
| locations until they get moved to a place where quality
| drops off enough that the company backpedals a bit. All
| those corporate departments are largely filled with
| commodity staff, so this shouldn't be surprising.
|
| I'm not saying that in a judgmental or harshly negative
| way -- I've personally worked in cost centers for most of
| my career, and although I think highly of myself and my
| peers, we're still just assessed bluntly as part of COGS.
| p_l wrote:
| Product Development, R&D, etc is absolutely fungible and
| outsourced, even by some ostensibly big names.
|
| If C-level could be outsourced while keeping shareholder
| returns, it would be
| mrkstu wrote:
| See IBM
| p_l wrote:
| The companies I had direct involvement with that
| outsourced R&D at least partially had names starting with
| J and N.
|
| At least with J, if they outsourced the full part of one
| of the project, we would have it done faster and better
| XD
| mitthrowaway2 wrote:
| > The net result is that US manufacturing output in real
| dollars has increased 4x, in the past 70 years.
|
| _All_ of that manufacturing growth is semiconductors,
| and most of that measured semiconductors growth is simply
| Moore 's law. I don't think anybody would say that the US
| is worse at making transistors today than it was in 1970,
| but that's table stakes; _everybody_ is better at making
| transistors than they were in 1970. Automotive
| manufacturing has also done well (in part thanks to trade
| barriers). When it comes to everything else -- vacuum
| cleaners, fans, washing machines -- that manufacturing
| output is not doing so well.
| kevin_thibedeau wrote:
| The US is worse at manufacturing discrete transistors. It
| is almost all offshore with all the other commodity
| parts.
| kragen wrote:
| i'm pretty sure the small fraction of transistors that
| are made in the usa are cheaper, better, and more diverse
| than they were in 01970, even if those made elsewhere are
| far more abundant and cheaper still
| hakfoo wrote:
| They didn't do a very good job of pricing in politics.
|
| Just because they're "lower value" subsectors doesn't
| mean they have significant real-world impacts.
|
| This sort of announcement will inevitably be used
| shortsightedly for political reasons. Someone will
| interpret "We have 3nm at home" as "We can do something
| foolhardy with Taiwan" or "We can throw up a big, non-
| surgical tariff". This will soon be followed by "did
| anyone mention that the 3nm chip is useless without a
| galaxy of half-cent supporting parts that we outsourced
| decades ago?" or "people consume products other than
| highly binned silicon dies, and now we have supply
| crunches and price spikes from televisions to toasters to
| turmeric?"
| kranke155 wrote:
| Econ 101 is mostly nonsense. Read up Steve Keen.
| klooney wrote:
| I heard an econtalk pod a long time ago claiming that the
| long pole wasn't even dollar value, it was hedonic
| adjustments for Intel microchips that kept the graph of US
| manufacturing output looking like a tailspin since 2000.
| gruez wrote:
| Not sure what podcast you're talking about, but since
| we're trading vague recollections, my recollection was
| opposite. Manufacturing as % of GDP certainly went down,
| but gross value added did not.
|
| Also, hedonic adjustments are typically applied to CPI
| figures, not figures like GDP or value added, so I
| suspect you have some facts crossed.
| mlyle wrote:
| Note I think this evidence and discussion is all
| ambiguous, but hedonic adjustments absolutely affect real
| GDP.
|
| When comparing to a past year's GDP, you need to make an
| adjustment for the differing value of money, and you
| can't calculate the differing value of money without
| considering the changes in the qualities of what you can
| buy with it.
| mitthrowaway2 wrote:
| Yes. Here's an example: https://research.upjohn.org/cgi/v
| iewcontent.cgi?referer=&htt...
|
| Excerpt:
|
| > "The computer industry, in turn, is an outlier and
| statistical anomaly. Its extraordinary output and
| productivity growth reflect the way statistical agencies
| account for improvements in selected products produced in
| this industry, particularly computers and semiconductors.
| Rapid productivity growth in this industry--and by
| extension the above-average productivity growth in the
| manufacturing sector--has little to do with automation of
| the production process. Nor is extraordinary real output
| and productivity growth an indicator of the
| competitiveness of domestic manufacturing in the computer
| industry; rather, the locus of production of the
| industry's core products has shifted to Asia"
|
| The whole document is well worth a read.
|
| Here's another article: https://qz.com/1269172/the-epic-
| mistake-about-manufacturing-...
| kiba wrote:
| We were only temporarily good at shipbuilding in the world
| wars. The United States just don't have much of an
| aspiration to be world class in building ships.
|
| Given that we have the largest navy in the world, it would
| behooves us to grow our shipbuilding capabilities to be at
| least competitive.
| throwaway48476 wrote:
| The US was a shipbuilding superpower because it had what
| Europe did not, access to vast untapped timber. It wasn't
| until globalization that the US lost its shipbuilding
| industry.
| Cthulhu_ wrote:
| > access to vast untapped timber
|
| ??? Scandinavia is full of it. But I suppose in the
| 1600's it was the Netherlands that cut down all the
| forests, they were the shipbuilding superpower at the
| time.
| throwaway48476 wrote:
| They didn't have enough.
|
| >The Swedish Navy planted oak trees on the island
| beginning in 1831 to provide strategically important
| timber for future ship construction. Once the timber was
| ready to harvest it was no longer required for ship
| construction.
|
| https://en.m.wikipedia.org/wiki/Visings%C3%B6
| speleding wrote:
| Fun fact: the word "Holland" comes from "Houtland"
| meaning "Wood" land. There is almost no forrest left
| there now because they turned the trees into boats during
| their golden age.
| tirant wrote:
| It was the same situation for Spain. Its rise as a naval
| superpower in the 15th and 16th centuries came at a high
| environmental cost too. To build its fleet, including
| those iconic Spanish galleons, Spain logged high amounts
| of oak and pine, especially from northern regions like
| Cantabria and the Basque Country.
|
| As ship production ramped up, there were growing concerns
| about resource depletion. To the point that by the late
| 16th century, Spain was forced to start importing timber
| from its colonies to keep up with demand.
| shmeeed wrote:
| What I find so chilling and reminding about this history
| is that to this very day, the spanish peninsula remains
| largely deforested because of that fleet they had 500
| years ago.
| impossiblefork wrote:
| We have forests, but not like the US. We had to carefully
| manage our forests in order to keep them.
| csdreamer7 wrote:
| > The US was a shipbuilding superpower because it had
| what Europe did not, access to vast untapped timber. It
| wasn't until globalization that the US lost its
| shipbuilding industry.
|
| Where did you get this information? The Spanish-American
| war wasn't considered much of a war by Americans at the
| time since the American fleet had been built with steel
| vs the Spanish that still used wooden ships. Those ships
| were run on coal. The US lost its shipbuilding industry
| because of cheaper competition from Japan and S. Korea in
| the civilian sector and Congress favors aircraft carriers
| over smaller ships like frigates and destroyers from what
| I read.
| vimy wrote:
| China has the largest navy in the world. And the gap with
| the US keeps growing.
|
| Times are changing.
| omegabravo wrote:
| how is this measured? Because if it's by total vessels
| it's a poor comparison. If it's by total aircraft
| carrier, it's also a poor comparison.
|
| Basically measuring this is difficult, but this is
| contrary to my only knowledge of this which was a
| Wendover video (that was an enjoyable watch), but I
| wouldn't hold in the highest standard.
| dukeyukey wrote:
| > China has the largest navy in the world.
|
| China has the most ships.
|
| Most of those ships are tiny.
|
| By tonnage, the US comes _way_ out on top.
| FooBarBizBazz wrote:
| Before adding up ship tonnage, we should subtract one US
| carrier for every, I dunno, two ASBMs possessed by the
| PRC, and if (lol, I mean when) we get to zero, move on
| to, say, the Arleigh Burke class.
|
| I guess we can give the US some bonus points here for
| each SM-6 they have, but pretty sure those'll run out in
| a week too.
|
| On the "plus" side, China is food-insecure, so the US can
| cause millions of civilian deaths via famine. So it
| can/would still win, just via genocide. It would take a
| decade though, and require a strong campaign by the media
| to maintain domestic support.
|
| Actually, no, I'm overstating things. The strategy would
| not be so much to kill so many people, as to "make the
| economy scream" (as in South and Central America), so as
| to hopefully bring about regime change. The net result
| might actually be an increase in immigration from China
| to the US (to the extent that people are able to make
| that migration). In the long run that'd be a net win for
| the US, actually.
|
| Indeed, you could say that the first shots of that
| campaign have already happened. Look at Chinese youth
| unemployment.
| imglorp wrote:
| I think the number is a lot higher than two ASBM per
| carrier. There's always a group of carrier, cruiser, and
| a destroyer squadron that provide a layered defense. So
| it's probably not that simple.
|
| https://totalmilitaryinsight.com/aircraft-carrier-
| defense-sy...
| eru wrote:
| Well, you can (partially) thank the Jones Act for US ship
| building being so abysmal.
| tivert wrote:
| > Well, you can (partially) thank the Jones Act for US
| ship building being so abysmal.
|
| Or you can thank it for there being any shipbuilding left
| at all.
|
| I would like to hear the case for how repealing the Jones
| Act would strengthen the US shipbuilding industry. I
| imagine it would be quite amusing.
| eru wrote:
| It's pretty easy to make a limited case that should
| convince you, though not very amusing, I'm afraid.
|
| > [The Jones Act] requires that all goods transported by
| water between U.S. ports be carried on ships that have
| been constructed in the United States and that fly the
| U.S. flag, are owned by U.S. citizens, and are crewed by
| U.S. citizens and U.S. permanent residents.
|
| Repeal all provisions save for the requirement of having
| to be constructed in the US.
|
| It's not what I would suggest (an outright repeal would
| be better), but it's easy to see how this partial repeal
| would strengthen the US shipbuilding industry: you are
| making their products more useful and cheaper to operate.
|
| For comparison, you can have a look at eg German
| shipbuilding. Germany isn't exactly a low-cost country,
| has no equivalent of the Jones Act, and is doing some
| shipbuilding. (They aren't the biggest player in building
| whole ships, but the world loves to import German Diesel
| engines. Division of labour and all that.)
| bigiain wrote:
| "There's only four things we do better than anyone else:
|
| music
|
| movies
|
| microcode
|
| high-speed pizza delivery"
|
| --- Neal Stephenson, Snow Crash, 1992
| kleiba wrote:
| Debatable.
| kibwen wrote:
| Snow Crash is tongue-in-cheek. The line above is the
| inner monologue of a samurai-sword-wielding high-speed
| pizza-delivering super-hacker martial artist.
| chx wrote:
| Excellent quote. While the effect of American music is
| huge without a doubt let me go off on a personal tangent
| because it's related.
|
| I have immigrated from my homeland (first to Canada and
| then Malta) and I usually say "I had the bad luck to be
| born in Hungary but I fixed that when I could". In other
| words, I am not particularly fond of the country / people
| living in there. But it being my mother tongue, growing
| up there has an interesting effect: some Hungarian songs
| have a much stronger emotional effect than any in say
| English. These are not even songs I knew as a child. I am
| actually quite curious whether there has been scientific
| research in this.
| axus wrote:
| I'd bet the culture that produced the singers and
| songwriters mattered more than the language, but how
| could I measure those independently
| tirant wrote:
| Nelson Mandela had a famous quote about the power of
| speaking someone's native language:
|
| "If you talk to a man in a language he understands, that
| goes to his head. If you talk to him in his language,
| that goes to his heart."
|
| The idea here is pretty straightforward: speaking to
| someone in a language they merely understand reaches them
| intellectually, but speaking in their mother tongue
| resonates on a deeper, emotional level. You can imagine
| now why songs in Hungarian resonate more to you than the
| ones in English.
| robertlagrant wrote:
| Markets
| kibwen wrote:
| Markets cease to function efficiently in the presence of
| massive concentrations of wealth. But if by saying
| America is good at "markets" we actually mean the latter,
| then yes.
| robertlagrant wrote:
| > Markets cease to function efficiently in the presence
| of massive concentrations of wealth
|
| Why?
| Bluecobra wrote:
| My guess is that it has to do with index funds.
| eru wrote:
| Huh, how?
| mitthrowaway2 wrote:
| Not the OP, but one reason is because concentrated wealth
| allows you to adjust the rules of the market or suppress
| competition. Another reason is that the market only
| rewards you for delivering value to people who can pay
| for it, so wealth concentration skews the production of
| goods towards a small quantity of luxury items, which
| lack the economies of scale for efficient production.
| This may still be a Pareto efficient market but not one
| that maximizes national wealth or welfare.
| kibwen wrote:
| The self-balancing mechanism of markets requires "skin in
| the game", which is to say, there must be incentive for
| individual actors to make wise decisions backed by the
| risk of loss. However, as wealth accumulates, the
| marginal value of a dollar decreases. Beyond a certain
| point of wealth accumulation, losing money is no longer a
| punishment, which means wise decisions are no longer
| systematically incentivized. This gives individual actors
| unilateral power to keep markets irrational for longer
| than wise actors can remain solvent, creating market
| failure.
| consteval wrote:
| There's a fixed supply of money (ish, the real life stuff
| money represents is actually scarce). If wealth disparity
| is great that means that less money is available for
| working people. You can't really gain a dollar here
| without losing a dollar there.
|
| The problem here is working people ARE the economy. If
| they no longer have the power of consumption everything
| crumples. Of course it's a sliding scale, but even just a
| bit less consumerism can be catastrophic for some
| industries.
| themaninthedark wrote:
| Money is just a proxy for time spent, so yes there is a
| fixed amount because we all have only so much time.
|
| You can make gains by new technology(printing press vs
| handwritten), cutting quality(cheaper inputs/materials)
| or improving efficiency(work cell design).
|
| Looking at it from a view of consumerism paints a bleak
| picture, if you look at if from a view of social
| stability without a functioning economy everyone will
| starve since the fertilizer, DEF fluid, John Deere
| tractor code and everything that ties all those together
| are so far spread out that is has become like a spider
| web facing a hurricane.
| eru wrote:
| Singapore (for example) is better at markets than the US.
| moomin wrote:
| Indeed, by revenue the U.K. is a bigger manufacturer than
| it has ever been. But it's all things like jet engines and
| other high value items. Whether that's a good or bad thing
| is a matter for protracted debate.
| kranke155 wrote:
| It's a terrible thing.
|
| De industrialisation in the UK led to the annihilation of
| the middle class.
| ddingus wrote:
| You are dead on
| pavon wrote:
| Do you have a source for this? In the past when I've been
| told this, the statistics referenced where based on whether a
| company was classified as being in in the manufacturing
| sector, not based on which jobs were classified as
| manufacturing. This included companies that were classified
| that way due to historical inertia, or based on their global
| industry but actually had little to no manufacturing in the
| US. Based on that I have a hard time knowing what to believe,
| and would love to be pointed to more accurate information.
| parhamn wrote:
| If you go by manufacturing jobs, BLS seems to have the data
| going back to 1939. Peaks at 18.4m jobs in 1969. Currently
| at about 12.9m.
|
| N.B. the current U.S. population is 1.6x the population of
| 1969.
|
| https://data.bls.gov/timeseries/CES3000000001
| macleginn wrote:
| Average productivity per manufacturing worker in the US
| grew on average by 3% per year in the 1950-1980s and 4%
| per year in 1990s
| (https://www.bls.gov/opub/mlr/2002/06/art4full.pdf), i.e.
| its current output is comparable with that of ~50m people
| working in 1969, so a 30% decrease in total manufacturing
| employment was probably well compensated for (putting
| aside the social welfare point of view).
| speleding wrote:
| > Do you have a source for this?
|
| There are reams of economic literature trying to estimate
| whether government intervention in the market was a good
| idea. Most of the time it doesn't turn out great. So the
| parent's suggestion "probably won't be a win for economic
| output" is a pretty safe bet.
|
| Often governments will use "security" as an argument to
| keep steel, shipbuilding, etc, in the country. That
| argument is not really possible to evaluate on economic
| grounds.
| corimaith wrote:
| Well I do think the security argument does stand, you
| don't want to outsource navy carrier construction to
| China for example. Just don't expect a thriving economy
| to be built around it.
| woodruffw wrote:
| Does "government intervention" include subsidies and R&D,
| in your account? I can think of more than a few industry
| segments (aerospace, biotech, etc.) that likely wouldn't
| exist or be nearly as lucrative as they currently are
| without the extensive government intervention that helped
| build them.
| cogman10 wrote:
| And continues to make. The NHS, for example, is a major
| source of funding for research into new drugs and
| treatments. mRNA vaccines came from decades of NHS funded
| research that the manufacturers are just now picking up
| and running with.
|
| It should also be pointed out that economic goodness is
| not and should not be the be-all end-all reason for
| government spending. Governments building parks, for
| example, is a social good with little economic value (or
| at very least hard to quantify benefits).
|
| In the case of things like medicine, government spending
| there has a social good of limiting communicable disease
| which is more important than how much money a drug
| company can make off a drug.
|
| For something like TSMC putting plants in the US, even if
| it's somewhat economically disadvantageous we are still
| talking about bringing onshore more jobs and training for
| US citizens which will generally increase our
| capabilities here and the satisfaction of those
| employees.
|
| Trying to get onshore development of electronics, the
| government basically has 2 levers to pull, either
| subsidizing building new manufacturing or applying
| tariffs to incoming tech goods. One of those levers has
| the negative consequence of raising prices on tech goods
| for everyone while we wait for manufacturing to build
| out.
| lostlogin wrote:
| > the government basically has 2 levers to pull
|
| That's simplistic and assumes a baseline where the
| relationship with the government starts at zero.
|
| The company pays taxes. There can be negotiations over
| the tax rate, which is not a subsidy so much as a 'tax
| you less' type arrangement. This can happen at multiple
| levels for a company like Apple, even beyond the
| state/federal thing. The repatriation of billions of
| dollars of earnings is also in play.
| cogman10 wrote:
| TSMC doesn't pay taxes to the US government (at least,
| not significant taxes until recently). And that's what we
| are trying to onshore, the fabrication capabilities.
|
| We could try and incentivize a company like Apple to
| fabricate in the US, but the simple fact is that (until
| recently with the new TSMC fabs) we did not have the
| fabrication capabilities in the US needed to make apple
| silicon. Apple does not have the capabilities to make
| these fabs either.
|
| You can cut taxes to 0 for US fabrication plants, but
| there are simple overhead costs that are hard to get away
| from. That's why an actual subsidy is needed.
|
| I mean, you could exempt fabrication plants from
| employment and environmental laws to allow them to
| operate cheaper... but that's sort of monstrous.
| eru wrote:
| > For something like TSMC putting plants in the US, even
| if it's somewhat economically disadvantageous we are
| still talking about bringing onshore more jobs and
| training for US citizens which will generally increase
| our capabilities here and the satisfaction of those
| employees.
|
| And completely ignores customers.
| theGnuMe wrote:
| The NHS? Are you referring to the UK national health
| service? They are not mentioned at all in the history of
| mRNA vaccines...
| https://www.nature.com/articles/d41586-021-02483-w
| cogman10 wrote:
| Sorry, NIH is what I meant. I get those two mixed up in
| my head.
| trashtester wrote:
| The main reason for TSMC to build plants in the US is as
| a hedge against a Chinese invasion of Taiwan.
|
| That outweighs anything like jobs or economic efficiency
| (given no such war) by a couple of orders of magnitude.
|
| And this really applies whether or not the US would join
| the war on Taiwan's side. TSMC production would be likely
| to be shut down for 5-10 years, regardless.
| throw0101a wrote:
| > _I can think of more than a few industry segments
| (aerospace, biotech, etc.) that likely wouldn't exist or
| be nearly as lucrative as they currently are without the
| extensive government intervention that helped build
| them._
|
| This is the central thesis of Mazzucato:
|
| * https://en.wikipedia.org/wiki/The_Entrepreneurial_State
|
| Has an entire chapter on the iPhone and its technologies
| (GPS, touch screens, Siri, _etc_ ), which would be
| applicable to most smartphones.
| Someone wrote:
| > I can think of more than a few industry segments
| (aerospace, biotech, etc.) that likely wouldn't exist or
| be nearly as lucrative as they currently are without the
| extensive government intervention that helped build them.
|
| Likely, yes, but even if they are, it's impossible to say
| whether that's a net win for society. Possibly, if the
| government hadn't subsidized them, but instead had had
| lower taxation, other industry segments would have
| blossomed, and gotten better benefits for society.
|
| As an example, US government support for the Internet may
| have led to larger automation, making labor relatively
| more expensive, and because of that decreasing the size
| of the middle class. Opinions will differ on whether
| that's a net positive.
| woodruffw wrote:
| I think there's too many layers of counterfactuals here:
| much of the government's economic intervention stems from
| a (perceived) need that transcends ordinary economic
| concerns. Think wars, epidemics, famines, etc.
|
| In other words, I think we'd need to presume the absence
| of those concerns to intelligibly consider the absence of
| taxation-funded interventions. And that's more of a
| minarchst fever dream than a thing that could actually
| happen.
| mlyle wrote:
| Sure. Maybe the market will provide food security in 98%
| of years on its own, but we need more 9's. And we
| obviously need our government to be coercive enough to
| protect us from outside, less benevolent, forms of
| coercion.
|
| At the same time, this isn't a "yes/no" question. This is
| thousands of sliders that we adjust for each industry.
|
| You always have to consider the opportunity cost. Sure,
| perhaps we've ended greater security and have also ended
| up with vibrant industry A at the end of it; but we maybe
| had to pay by hurting industries B, C, and D. It might be
| worth it; but it doesn't mean it makes sense to do it for
| industry Z where there is a smaller security benefit.
| eru wrote:
| And that's not necessarily a good thing.
|
| All those subsidies had to come out of some tax payers
| pocket, and they could have spent it on something more
| worthwhile (to them!).
| woodruffw wrote:
| A lot of people would prefer to pay no taxes, but that's
| presumably not your point. Per-dollar, I think the
| average American taxpayer is probably _very_ happy with
| the government's investment in, for example, the Heavy
| Press Program (= modern airplane airframes) and resilient
| packet switched networking (= the Internet).
|
| Or more directly: it's hard to even imagine a
| contemporary national or international industry without
| the economic interventions that produced those things.
| eru wrote:
| I know, imagining things is hard. But that's not much
| evidence either way.
|
| Yes, there might be some government programs that look
| like a good deal in retrospect. Just like some lottery
| tickets are winners.
|
| The heavy press program even turned a profit, if I
| remember right. Though private enterprise is usually
| pretty good at funding these kinds of projects, even with
| long lead times. (See eg how Amazon or Tesla or even
| Microsoft took ages to return capital to investors, but
| still had enthusiastic shareholders.)
|
| I don't know specifically about packet switching, but you
| hear similar arguments about the invention of the
| computer.
|
| In our reality, programmable electronic computers owe a
| lot to government and specifically military funding. But
| as a thought exercise, perhaps you can imagine an
| alternative history without WW2: IBM already made
| computing devices for business long before the war, and
| it's relatively easy to see how they would have
| eventually come up with a programmable electronic
| computer.
|
| Compare also Konrad Zuse's work in Germany:
|
| > After graduation, Zuse worked for the Ford Motor
| Company, using his artistic skills in the design of
| advertisements.[14] He started work as a design engineer
| at the Henschel aircraft factory in Schonefeld near
| Berlin. This required the performance of many routine
| calculations by hand, leading him to theorize and plan a
| way of doing them by machine.[21]
|
| > Beginning in 1935, he experimented in the construction
| of computers in his parents' flat on Wrangelstrasse 38,
| moving with them into their new flat on Methfesselstrasse
| 10, the street leading up the Kreuzberg, Berlin.[22]: 418
| Working in his parents' apartment in 1936, he produced
| his first attempt, the Z1, a floating-point binary
| mechanical calculator with limited programmability,
| reading instructions from a perforated 35 mm film.[14]
| Zuse Z1 replica in the German Museum of Technology in
| Berlin
|
| > In 1937, Zuse submitted two patents that anticipated a
| von Neumann architecture. In 1938, he finished the Z1
| which contained some 30,000 metal parts and never worked
| well due to insufficient mechanical precision. On 30
| January 1944, the Z1 and its original blueprints were
| destroyed with his parents' flat and many neighbouring
| buildings by a British air raid in World War II.[22]: 426
|
| > Zuse completed his work entirely independently of other
| leading computer scientists and mathematicians of his
| day. Between 1936 and 1945, he was in near-total
| intellectual isolation.[23]
|
| In our real history, the US and UK armed forces came
| first, but a world with more resources in the hands of
| the private sector (and also with less war) would have
| surely accelerated some of these private computing
| experiments (IBM or Konrad Zuse or someone else), and we
| would have seen computers at roughly the same time as in
| ours, or perhaps even sooner.
|
| Similarly, the real history of packet switching is
| heavily intertwined with some US government projects. But
| even just browsing Wikipedia
| https://en.wikipedia.org/wiki/Packet_switching tells you
| about other attempts and projects going on around the
| same time. So the government's investment probably did
| not speed up things by that much, even before you
| consider that in our counter-factual the private sector
| would have more resources.
| woodruffw wrote:
| > I know, imagining things is hard. But that's not much
| evidence either way.
|
| Imagining is easy; "hard to imagine" is an English idiom
| for "that seems implausible" :-)
|
| You're providing examples that counter the impact of
| government innovation, but it's unclear to me whether
| these are true counterexamples. The history for IBM, for
| example, is almost entirely intertwined with IBM's role
| as a defense contractor. Zuse's second computer (the Z2)
| was funded directly by the German government, presumably
| because it aligned with Nazi military interests.
|
| (As a whole, these things are impossible to extricate:
| it's clear that the government doesn't _create_ every
| possible idea, and there are an infinite number of
| innovations that can 't be assigned back to government
| sponsorship. But I think there's general academic
| consensus that computing, aerospace, and biotech all
| progressed at rates _beyond_ their equivalent private
| sector capacity due to government investment, and that
| the resulting progress was "worth it" in terms of
| returned economic and social value.)
| eru wrote:
| Yes, that's why I talked about Zuse's earlier work. And
| IBM also had plenty of private business (and would have
| had more).
|
| > But I think there's general academic consensus that
| computing, aerospace, and biotech all progressed at rates
| beyond their equivalent private sector capacity due to
| government investment, and that the resulting progress
| was "worth it" in terms of returned economic and social
| value.
|
| It depends on your counterfactual. If government had
| taxed the same funds, but spent it on something else,
| yes, we would have had less progress in these specific
| sectors.
|
| If they had taxed and intervened less, perhaps we would
| have had more?
|
| And, of course, we picked these sectors out after the
| fact. There's plenty more examples of failed government
| investments.
| CPLX wrote:
| > There are reams of economic literature trying to
| estimate whether government intervention in the market
| was a good idea. Most of the time it doesn't turn out
| great.
|
| These sentences are just propaganda. There's no factual
| basis for them.
|
| There are no markets without government intervention.
| Statements like this are more like religious incantations
| than appeals to "research" of some kind.
| robertlagrant wrote:
| > There are no markets without government intervention
|
| What does this mean?
| bottled_poe wrote:
| Someone must police the rules of the market I suppose?
| Also, a truly free market benefits those who own the
| market, no?
| dbspin wrote:
| It means that markets rely on the rule of law. From
| monopoly regulation to the prohibition on outright theft,
| markets literally cannot exist without governance.
| robertlagrant wrote:
| I think law and order needs to exist, or enforced rules,
| but that's not "government intervention".
| lostlogin wrote:
| It's rather vague as to where the line is, but as you
| say, 'government intervention' is a term with political
| baggage in financial theory.
|
| https://policonomics.com/government-intervention/
| robertlagrant wrote:
| Yeah, even there:
|
| > beyond the mere regulation of contracts and provision
| of public goods
|
| Building roads or enforcing rules: not intervention,
| according to that.
| MichaelZuo wrote:
| How is stopping trucks on the road to check their papers,
| and holding up the delivery for some period of time, on a
| semi-random basis, not 'intervention' of some kind?
| eru wrote:
| Roads are not public goods.
|
| > In economics, a public good (also referred to as a
| social good or collective good) is a good that is both
| non-excludable and non-rivalrous.
|
| If you ever sat in a traffic jam, you will have
| experienced that road use is rivalrous. And toll roads
| show that it's rather easy to exclude people from using
| roads.
|
| Building roads with general taxpayer money and making
| them available without payment by the users might or
| might not be good policy. I don't know. But roads ain't a
| public good.
| mlyle wrote:
| Most roads are difficult to exclude. Most spend most of
| their time with excess capacity and are not rivalrous.
| They're clearly not a typical private good.
|
| And they're usually a natural monopoly, too. Not to
| mention that the acquisition of land to make a road is
| often problematic.
|
| Basically, there's a lot of reasons to expect market
| failure in a market for roads. That's not to say the only
| solution is for the government to provide them, but that
| laissez-faire, completely hands off solutions are
| probably not going to turn out great.
| eru wrote:
| Nowadays it's fairly easy to exclude people from roads:
| just put up a sign that says you can only use them if you
| paid. (You can also use a camera and some machine
| learning to catch offenders; or otherwise cheap overseans
| workers who manually review footage.)
|
| > Most [roads] spend most of their time with excess
| capacity and are not rivalrous.
|
| Most cars sit around idle most of the time. I'm not sure
| what your argument shows?
|
| > And they're usually a natural monopoly, too. Not to
| mention that the acquisition of land to make a road is
| often problematic.
|
| That's a different discussion. Though I'm more
| optimistic.
| lostlogin wrote:
| > Roads are not public goods.
|
| They are a subsidy to the car industry.
|
| They require ongoing maintenance.
|
| They are a massive transfer to public land to whoever
| occupies the road, and the person occupying the road
| might not even be in their steel box for days on end.
| consteval wrote:
| > but that's not "government intervention"
|
| I would argue it 100% is. You can make MUCH more money if
| you steal or perhaps keep slaves. We're just so used to
| these preventative measures that we don't really consider
| them, but this is, in essence, a huge "tax" on the
| private sector.
|
| Playing by the rules is very expensive as compared to
| not.
| eru wrote:
| Even if you buy that argument (and I'm skeptical), that's
| at most an argument for a minimal nightwatchmen state;
| not for further government intervention.
| dbspin wrote:
| If you're skeptical about whether governance is required
| for markets to function, launch your next startup on the
| darkweb or in a failed state. I fail to see how one could
| imagine any kind of healthy market operating without
| basic governance, reliable infrastructure etc. It's a
| religious idea (anarchocaptialism or something similar)
| at that point.
|
| Past that, actually engaging with business (as a customer
| or employee) should be a rapid reminder of how much we
| have regulation to thank for. From not being poisoned
| (immediately or over the course of a lifetime) by our
| food, burned alive by non-fire retardant furniture (and
| the absence of a fire service), to having weekends off,
| our wages reliably paid, to being free from physical and
| the more obvious forms of psychological abuse. It's right
| there - you engage with the rights and privileges
| afforded by legislation daily.
|
| Just astonishing to me that this kind of market
| fundamentalism is still actively engaged in. People can
| disagree on the extent and fundamental structure of
| government, but to deny it's role in the basic
| functioning of business in a society as complex as ours
| seems outright absurd.
| eru wrote:
| As people get richer they demand better quality stuff and
| can afford it.
|
| That includes taking weekends off.
|
| It's perfectly legal where I live to work on the weekend.
| There's also no minimum wage here. Yet, most people get
| weekends off and get paid more than zero.
|
| It's also entirely legal here to offer jobs without
| reliable pay (as long as the contract doesn't promise
| reliable pay).
|
| There's plenty of long term poisonous food available in
| all countries: you can mainline eg pure sugar to your
| heart's content. Most people in most countries opt for
| tastier and healthier fare, because they can afford it.
| There's also plenty of immediately poisonous substances
| available, like strong alcohol.
|
| People also regularly opt for more than the legal minimum
| in terms of furniture safety. Eg Ikea sells you kits to
| bolt your cabinet to the wall, so it doesn't fall on your
| child trying to climb up on it. So the legal minimum's
| don't seem particularly binding: people voluntarily
| exceed them.
|
| > Just astonishing to me that this kind of market
| fundamentalism is still actively engaged in. People can
| disagree on the extent and fundamental structure of
| government, but to deny it's role in the basic
| functioning of business in a society as complex as ours
| seems outright absurd.
|
| Governments do stick their hands into many pies, but that
| doesn't mean that them doing that is required by some
| physical or natural law.
|
| > If you're skeptical about whether governance is
| required for markets to function, launch your next
| startup on the darkweb or in a failed state.
|
| Yes, governments control some of the best real estate on
| earth. That doesn't mean they necessarily contributed
| much to that happy state of affairs; often just the
| opposite.
|
| Btw, many companies are trying to escape even basic
| functions provided by government, and are going for
| private arbitration instead, because it's more efficient.
| eru wrote:
| > There are no markets without government intervention.
|
| David Friedmann (and others) would like to object, I am
| sure. See eg http://daviddfriedman.com/Legal%20Systems/Le
| galSystemsConten... for how many legal systems work
| without (or despite!) government intervention.
| mlyle wrote:
| Functional markets require a strong mechanism for
| protection of property rights. The fact that we have some
| historical systems where that has taken a different form
| than a conventional government doesn't negate that the
| only practical mechanism that we have to protect property
| rights and support markets is a government.
|
| Ancap fantasies aside, of course.
|
| And then, there's lots of situations where externalities
| exist. If I poop in the river and you're downstream, it
| costs me nothing; I have no reason to stop.
| eru wrote:
| > Functional markets require a strong mechanism for
| protection of property rights. The fact that we have some
| historical systems where that has taken a different form
| than a conventional government doesn't negate that the
| only practical mechanism that we have to protect property
| rights and support markets is a government.
|
| Even if we grant that argument, that's at most an
| argument in favour of a minimalist nightwatchmen state.
| Not the full blown Leviathan.
|
| > And then, there's lots of situations where
| externalities exist. If I poop in the river and you're
| downstream, it costs me nothing; I have no reason to
| stop.
|
| See https://en.wikipedia.org/wiki/Coase_theorem
| kloop wrote:
| > There are no markets without government intervention.
|
| Of course there are. Black markets pop up everywhere to
| route around government intervention
| chrisdhoover wrote:
| Yes they do. Consider weed. It was well established
| before being legalized. Legalization brought higher taxes
| and interference. The black market continues as an
| alternative to the free one.
| CPLX wrote:
| For obvious reasons a market for a product that is banned
| by the government is a poor example of a market that
| exists "without government intervention"
| zztop44 wrote:
| I have no idea what you could mean by this unless you
| have a very specific personal definition of "government
| intervention in the market".
|
| The literature makes it clear that government
| intervention in markets is broadly necessary; the
| disagreement is around the how and what and why.
| speleding wrote:
| Sorry, I should have picked a clearer term. There is
| broad agreement among economists that _regulating_
| markets is needed to have an optimal outcome for society.
| I was referring to government subsidies specifically, in
| that case the distortion is rarely beneficial. Especially
| when taking into account that the money could have been
| applied elsewhere with bigger gains to society.
| Spooky23 wrote:
| There's a lot of navel gazing around these sorts of
| analyses. Consider that the entirety of the tech industry
| exists in its current form due to federal spending.
|
| The Silicon Valley story is well known; the SAGE project
| really created the classic IBM.
| criddell wrote:
| One of the greatest examples is the DARPA VLSI project of
| the late 70's and 80's. The ROI of that program is crazy.
|
| If you are interested in this time, I 100% recommend the
| book _The Dream Machine_ which is centered on J.C.R.
| Licklider but covers most of the people and projects that
| lead to personal computers. Stripe Press has a beautiful
| hardcover version of the book, but the font is tiny. I
| had to switch to an ereader version in order to read it.
| Spooky23 wrote:
| Thanks for the book recommendation!
| testrun wrote:
| A few counter examples:
|
| 1. TSMC (supported by the ROC
| government[https://dominotheory.com/tsmc-and-taiwans-
| government-two-boa...])
|
| 2. Korean chaebols (Samsung, Hyundai, LG etc, supported
| by ROK
| government[https://www.investopedia.com/terms/c/chaebol-
| structure.asp])
|
| 3. Japanese heavy industries (Japanese government
| support)
|
| The government support are a combination of low interest
| loans, import controls and financial subsidies.
| throw0101a wrote:
| > _The government support are a combination of low
| interest loans, import controls and financial subsidies._
|
| There is a very well-understood formula on how to go for
| from an agrarian society to an industrial one, which has
| been used going back to the late 1800s:
|
| * https://www.goodreads.com/book/show/16144575-how-asia-
| works
|
| Of course you have to actually follow it, and not get
| sidetracked with cronyism and such, like the Philippines
| did:
|
| * https://en.wikipedia.org/wiki/Crony_capitalism
| eru wrote:
| 'How Asia Works' is not exactly economic orthodoxy, to
| put it lightly.
| epistasis wrote:
| I would like to hear how that book is viewed by the
| orthodoxy, if you have any pointers.
| eru wrote:
| I'm trying to pull some things together.
|
| Mostly, a big part of the book is just a warming up of
| the tired 'Infant Industry argument'. See
| https://en.wikipedia.org/wiki/Infant_industry_argument
|
| For now, have a look at https://mises.org/journal-
| libertarian-studies/prejudice-free... to get an
| alternative look at Malaysia, one of the recurring
| example in 'How Asia Works'. (That paper is also just a
| really good read by itself.)
|
| I don't particularly like Noah Smith (he's also in favour
| of protectionism and 'industrial policy'), but his
| https://www.noahpinion.blog/p/the-polandmalaysia-model
| has some good points also about Malaysia.
|
| https://www.amazon.com/Just-Get-Out-Way-
| Government/dp/193086... is an alternative view at
| development economics. The title is a bit provocative,
| (even the author wasn't really happy with it, when I had
| a chat with him about it). The main thesis of the book is
| that honest and competent civil servants are the most
| rare and precious resource a country has, especially a
| poor one, so policies should economies on their labour.
|
| So eg you should privatise a state-owned company by
| auctioning it off in one piece to the highest cash-bidder
| open to all comers from anywhere, no questions asked.
| Instead of having your civil servants set up a complex
| system or worse trying to evaluate proposed business
| plans. Complexity breeds corruption in the worst case,
| and in the best case still takes up civil servants'
| limited time.
|
| Directly about 'How Asia Works'
| https://www.astralcodexten.com/p/book-review-how-asia-
| works mentions some critiques in the 'Conclusion'
| section. See also
| https://open.substack.com/pub/astralcodexten/p/book-
| review-h...
| throw0101a wrote:
| > _I don 't particularly like Noah Smith (he's also in
| favour of protectionism and 'industrial policy'), but his
| https://www.noahpinion.blog/p/the-polandmalaysia-model
| has some good points also about Malaysia._
|
| Yeah:
|
| > _On a trip to Turkey in 2018, I read How Asia Works, by
| Joe Studwell. Despite the fact that it didn't get
| everything right, it's probably the best nonfiction book
| I've ever read._
|
| * https://www.noahpinion.blog/p/the-developing-country-
| industr...
|
| > _As any longtime reader of mine will know, my favorite
| book about economic development is Joe Studwell's How
| Asia Works. If you haven't read this book, you should
| definitely remedy that. In the meantime, you can start
| with Scott Alexander's excellent summary._
|
| * https://www.noahpinion.blog/p/what-studwell-got-wrong
|
| The book goes over _what actually happened_ : it's not
| theory, it's history. What worked in each country (often
| the same/similar things), the variations, and where
| things were tried but went badly (often with analysis on
| why).
| chlodwig wrote:
| Is that an indictment of the book or of economic
| orthodoxy?
| throw0101a wrote:
| > _' How Asia Works' is not exactly economic orthodoxy,
| to put it lightly._
|
| And yet it describes the historical record of several
| countries (in the case of Japan, how they did it _twice_
| : post-Meiji Restoration and post-WW2).
|
| It goes over countries deemed 'successful' (Japan, Korea,
| _etc_ ), and others (Philippines).
|
| What (particular?) "economic orthodoxy" would you suggest
| countries follow? What are countries (if any) have
| followed them, and what are the results? Are there
| book(s) that you would recommend on how to implement
| this/these orthodoxies, with case studies or historical
| examples of implementations?
| eru wrote:
| That the favoured industry (or company) is doing well
| isn't necessarily a sign that the policy is overall good
| for the country's economy.
|
| As an analogy: weapons manufacturers do well when there's
| a war on, too, but that doesn't mean war is good for
| prosperity.
| smallnamespace wrote:
| > That the favoured industry (or company) is doing well
| isn't necessarily a sign that the policy is overall good
| for the country's economy.
|
| You are answering specifics with generalities.
|
| If Taiwan didn't support and nurture TSMC so that today
| it's a national champion that prints money, what
| development path do you think they could have taken that
| would've brought at least the same economic success?
| Please be specific.
| lostlogin wrote:
| > to estimate whether government intervention in the
| market was a good idea. Most of the time it doesn't turn
| out great.
|
| Is this really accurate? Most places regulate, surely
| there is a reason for that? It works pretty well compared
| to the infamous 'self regulation'.
| edgyquant wrote:
| Yet the most successful nations on the planet go against
| this economic wisdom and do subsidize industries they
| deem important and/or protect them with tariffs. The US
| did this until the 1960s. China does this now.
| consteval wrote:
| > Most of the time it doesn't turn out great.
|
| I don't know why people say this. The reason China beat
| us out in manufacturing of many goods is BECAUSE of
| government interference. They have a much more top-down
| leadership style that allows these gains in efficiency.
| They've streamlined.
|
| But even looking at the US' history this hasn't been the
| case. The only reason we got out of the Great Depression
| was because of the most radical government-backed
| economic policy ever: The New Deal. Even today HUGE
| sectors of our economy, like defense, are paid for on
| government money. Those are jobs, companies, entire
| industries.
| chrisdhoover wrote:
| There is debate about the new deal. Its not clear it was
| a success.
| consteval wrote:
| There really, truly, isn't. Classical economists can't
| handle being wrong, but given an alternative reality did
| not happen, it was a success.
|
| We can speculate and play armchair economist all day. But
| the hard reality is that the New Deal revitalized the
| economy and created countless jobs to pull the US out of
| the Depression. Maybe a "do nothing" approach would've
| worked too, eventually. When I unlock the secrets to
| interdimensional travel, I'll let you know.
|
| Armchair economists set up an argumentative scenario
| where they cannot be wrong. You see, if they're wrong
| about a situation then secretly they're right, because if
| you did what they suggested instead it would've worked
| too (and better!). But if they happen to be right then of
| course they're right, and countering suggestions are
| obviously wrong and would've caught the economy on fire.
| eitally wrote:
| There's a vibrant high-tech contract manufacturing segment
| of the economy, led by behemoths like Foxconn and several
| other Asian players who specialize in consumer electronics
| & computing gear (Compal, Pegatron, Quanta, etc). That
| doesn't mean manufacturing doesn't exist in the US, though,
| and there are still very large EMS firms with significant
| presence domestically, like Jabil, Flex, Celestica,
| Sanmina, and plenty of others. The difference between now
| and 25 years ago is that it hasn't been cost effective to
| manufacture high volume, low complexity electronics in the
| US for a full generation. But, the majoarity of high
| complexity, low volume (NPI, very large PCBs, PCBs with
| many complex layers) stuff is still made in the west, and
| there will always be meaningful demand for high tech
| manufacturing in regulated industries (defense, medical),
| too. For example, CGMs are made in Alabama & Ireland,
| avionics for Apache helicopters are made in Alabama, data
| center server racks for Meta are assembled in Finland,
| Germany & San Jose. Same for Netflix CDN racks.
|
| It goes on and on. The majority of what has been outsourced
| to China (and Taiwan and Singapore and India and Vietnam)
| is the "face" of high tech electronics, and the majority of
| electronic piece parts components, but not final assembly
| and not much of the tricky stuff. I don't think we'll see a
| quick ramp of high-vol/low-mix mfg coming back anytime soon
| because too much of the supply chain is in Asia, but it
| _could_ if there were sufficient demand.
| MichaelZuo wrote:
| How does this square with 5G radios being almost entirely
| made in Asia? As in the entire chain from antenna design
| to finished chip happens >90% in Asia by dollar value.
|
| None of the things you mentioned come even close in terms
| of complexity, on a per cubic volume basis at least.
| shortrounddev2 wrote:
| I think politicians hook onto manufacturing as an ideal of an
| industry which should pay well and has a low barrier to
| entry. If manufacturing grew 15% every year but employed 15%
| fewer people every year due to automation, it would be
| considered a catastrophe.
|
| The reason most people want more manufacturing in the US is
| because they want manufacturing _jobs_. It is only within the
| last few years since the pandemic that we started to care
| about domestic manufacturing as a matter of national security
| DanielHB wrote:
| > low barrier to entry
|
| > they want manufacturing jobs
|
| Shame most of those jobs in high tech factories are not low
| barrier to entry...
| throwaway48476 wrote:
| The real benefit of local manufacturing is that it makes
| related industries dramatically more efficient. For example
| electronics in the pearl river delta. You can buy
| everything locally and get prototypes in hours.
| philwelch wrote:
| > I think this is a win for national security. I don't think
| the government applying such levers to change how the market
| allocates capital probably won't be a win for economic output
| or quality of life.
|
| National security and global freedom of navigation are
| essential preconditions for our current level of economic
| output and quality of life. In the long run, it's not an
| either/or.
| mlyle wrote:
| Well, sure. The essential tradeoff is always figuring out
| how much to economically kneecap yourself in the short term
| to maintain economic independence in the long term.
|
| And, of course, if you overshoot and the other guys outgrow
| you as a result, that limits your ability to be secure as
| well.
| philwelch wrote:
| Not all economic growth contributes to national security
| the same way. In particular, outsourcing a large share of
| your manufacturing to your primary geopolitical adversary
| is a poor strategy.
| nebula8804 wrote:
| Well maybe _your_ quality of life but for the common man in
| the US? There only seems to be hopelessness on the horizon.
| It makes you think, who are we _really_ fighting for?
|
| As someone who also feels like the future is trending
| downward, I hope we can at least get some crumbs from the
| top.
| eru wrote:
| > There only seems to be hopelessness on the horizon.
| [...] As someone who also feels like the future is
| trending downward, [...]
|
| What are you talking about? We are living in an age of
| unprecedented global peace and prosperity. Most people
| never had as good as today, and things are set to improve
| further.
| bwanab wrote:
| And you would imagine that quality of life would be
| better if the U.S. found itself on the losing side of a
| major war? Your premise that there seems to be
| hopelessness is more of a media driven phenomenon than
| reality. There is just no evidence that "the future is
| trending downward" - at least in the U.S. Every measure
| you look at shows that for Americans life has improved
| and continues to - especially in comparison with our
| global contemporaries.
| nrb wrote:
| I'd go as far to say that even a credible threat of war
| against the USA would have a substantial negative impact
| on our economy and by extension our quality of life;
| practically all of us would be impacted. People who don't
| see that are missing how much the OVERWHELMING majority
| of Americans have benefitted from USA hegemony over the
| past several decades.
| badpun wrote:
| You also need millions of destitute people somewhere on
| Earth, to work on all the goods that Americans buy for
| cheap.
| eru wrote:
| Huh, why, how?
|
| People in mainland China have gotten massively richer
| over the last few decades, but America did not have to
| pay more for imports. If anything, the increase in
| productivity made Chinese imports relatively cheaper.
| badpun wrote:
| It's simple. If one day we run out of people willing to
| work on goods for us for pittance, the price of goods we
| consume will rise and our quality of life will drop,
| because we won't be able to afford as much stuff. Right
| now, there are still billions in people living in poverty
| in countries that are friendly to capitalism (so, easy to
| set up a factory, a sewing sweatshop etc. there), so that
| risk is far from us.
| nrb wrote:
| I'm not convinced... there's so much room for technology
| to fill the gap. Companies that fail to properly invest
| in tech to replace this labor will be beaten by those who
| do, and quality of life may actually improve as the
| marginal cost of production marches ever downward.
| ninetyninenine wrote:
| Yeah China has only ever really been a major player for about
| 3 decades. In a third of a century it has Actually SHRUNK
| American manufacturing to the point where there was genuine
| knowledge loss. It was cheaper to manufacture things in China
| so we used China, and now America doesn't even have the
| capacity to manufacture anything on the scale of China.
|
| >just its share of GDP has fallen as other sectors have grown
| faster
|
| I think this is inn-accurate. You're looking at a century of
| data but China only took 1 decade to overtake the US. We're
| now three decades in and the overall decline of American
| manufacturing is pretty evident.
| breerbgoat wrote:
| I see empty factories in Shenzhen and Donguan, and massive
| unemployment in Guandong in September 2024. And I raise you
| full factories in Vietnam.
| ninetyninenine wrote:
| True. That shift would be in the last couple of years.
| Maybe Vietnam is next China. But this is still an
| emerging event. What China did to the US already
| happened.
| bluGill wrote:
| Vietnam doesn't have the population to be the next China.
| I wish them the best, but their time will not last nearly
| as long as China. (or more likely it lasts as long but it
| is shared with a bunch of other countries in Asia,
| Africa, and/or South America)
| thimabi wrote:
| Nowadays, with so much automation going around, Vietnam
| can afford to become the next China even without a
| comparable population. Not that I think it will, but see
| the story of the Four Asian Tigers to realize how smaller
| countries can suddenly have a much bigger importance to
| the world economy.
| eru wrote:
| Made Americans a lot richer and allowed them to consume
| more?
| ninetyninenine wrote:
| Made the Chinese even more richer and technologically
| superior to the us in many many areas as well.
| kragen wrote:
| china has been a major player in manufacturing technology
| for 4000 years, with several minor exceptions of roughly a
| century or two, one of which ended about 30-40 years ago
| robertlagrant wrote:
| What does it mean to be a major player in manufacturing
| technology 4000 years ago?
| kragen wrote:
| painted pottery produced in large, centralized workshops;
| bronze knives
|
| https://en.wikipedia.org/wiki/Majiayao_culture
|
| pottery wheels; ultra-thin polished black "egg-shell"
| pottery; silk; indoor plumbing; dagger-axes; elaborately
| carved jade
|
| https://en.wikipedia.org/wiki/Longshan_culture
|
| lacquerware and _tin_ bronze knives and pots
|
| https://en.wikipedia.org/wiki/Lower_Xiajiadian_culture
| knallfrosch wrote:
| "just its share of GDP has fallen"
|
| The little "just" does a lot of work here. It means people in
| the manufacturing industry are being left behind.
| tempestn wrote:
| It does not mean that, especially given the next sentence,
| "And the share of the workforce has fallen even faster."
| anovikov wrote:
| Moreover, share of GDP has been falling because prices of
| manufacturing goods have been all falling vs inflation,
| pressured by foreign competition and by productivity
| improvements, while rest of the economy - services - face
| none of that: they usually (except corner cases like call
| centers) can't be outsourced abroad, and output there depends
| strongly on labor inputs (e.g. waiters) thus making
| productivity stagnant almost by definition.
|
| So there isn't a problem about manufacturing, never has been.
| Problem is strictly about manufacturing _employment_ , which
| is of course, inexorably falling and will continue doing so
| and every politician promising to reverse it is a blatant
| liar. It's falling much like farm employment has been falling
| 40-70 years ago, sure it's traumatic, ruins livelihoods of
| millions of families many of which will never recover,
| destroys not just their personal finances but their source of
| pride and sense of self in many ways. But just like it didn't
| result in decrease in food output back then (quite the
| opposite happened), it doesn't result in dearth of
| manufacturing products now.
| eru wrote:
| You could outsource more services and automate them more.
| But many service industries are protected by laws and
| regulations from such competition and improvements.
| throw156754228 wrote:
| > I don't think the government applying such levers to change
| how the market allocates capital probably won't be a win for
| economic output or quality of life.
|
| We've got China cheating with their massively deflated
| currency, so how the market allocates capital is already
| screwed.
| tw1984 wrote:
| you probably didn't read news lately. your CNY deflation
| theory is no longer being cooked by your MSM for a good
| reason - if the CNY deflation claim is true, then it means
| the Chinese economy has probably already surpassed the US
| economy not just in PPP but in real term as well. That
| would cause huge load of issues for the US which is never
| prepared to be the No.2.
| ClumsyPilot wrote:
| > I think it was a big case of corporate welfare that will
| result in somewhat increased chip production in the US.
|
| I see two issues with this:
|
| One, this is the same kind of subsidies and meddling with the
| markets that we accuse China of doing. If we are adopting
| state-led approach, it can be done in a serious manner
| without being hypocrites. But that would also require
| admission of some mistakes.
|
| Two - why is it seen as okay to give tax breaks to an
| engineering company, why not give tax breaks to engineers
| themselves instead? Companies are imaginary, people are real,
| why not give incentives to individuals?
|
| At least that money won't be squirrelled away in tax heavens.
| eru wrote:
| Just don't hand out tax breaks to politically favoured
| groups, but clean up the overall tax system to make it
| simpler and saner..
|
| But that's hard to do politically.
| chrisweekly wrote:
| > "I don't think ... probably won't be a win"
|
| Accidental double-negative, right?
| jrcii wrote:
| > US manufacturing has pretty much been constantly
|
| Middle class manufacturing jobs have fallen off a cliff and
| completely destroyed huge swaths of our country. Take a tour
| around Bridgeport, CT sometime as a great example. The
| northeast is littered with towns like this. These executives
| and their buddies in Congress mortgaged our middle class for
| profits by sending all our industry to Asia.
| darby_nine wrote:
| > I don't think the government applying such levers to change
| how the market allocates capital probably won't be a win for
| economic output or quality of life.
|
| Cuz letting it manage itself works _so well_
| chaos_emergent wrote:
| I think the statistics he cited actually make that case
| darby_nine wrote:
| ...compared to what? Growth is just one way of
| representing market health, and it's one that is
| typically pushed by capital for obvious reasons.
|
| If you're talking about efficiency or productivity, you
| don't need markets for either of these, you just need any
| kind of economy to work with. Industrialization only
| intersects with markets (or capitalism for that matter),
| they aren't the same thing.
| convivialdingo wrote:
| Agreed.
|
| Even the premise that it was always cheaper to manufacture
| abroad is flawed in many respects as Congress subsidized
| offshoring over many years as part of an effort to
| encourage globalization.
|
| Companies often receive massive tax breaks with write-offs
| to close US plants, tax credits, zero percent import
| duties, and lower overall tax rates by shifting their
| profits and losses through offshore banks.
|
| In many respects profitability has most often been
| determined by the policies we subsidize. and for decades
| those policies were essentially all in for the benefit of
| offshoring.
|
| Comparing the actual cost of production by location is far
| more complicated than just the cost of materials and labor
| when there are so many subsidies and policies involved.
| themaninthedark wrote:
| Not to mention the demonetization of the working
| class(i.e. the dumb redneck stereotype) and the job class
| itself with the association of manufacturing jobs as
| dirty and unneeded with the goal of a service economy as
| the new future.
|
| https://www.forbes.com/sites/stevedenning/2012/01/31/is-
| the-...
|
| https://www.forbes.com/sites/stevedenning/2011/08/17/why-
| ama...
| AnthonyMouse wrote:
| > One thing that I think that frequently eludes people in
| this discussion is that US manufacturing has pretty much been
| constantly growing for the past century; just its _share_ of
| GDP has fallen as other sectors have grown faster. And the
| share of the workforce has fallen even faster, as the actual
| manufacturing has moved towards higher value items and
| greater degrees of automation.
|
| The last part is missing something important though. If we're
| measuring "output" in dollars and the US is doing the parts
| (like aircraft manufacturing) that globally don't have a lot
| of competitors, the high "output" is from high prices rather
| than high production, and then what we're doing is surviving
| in the markets where there isn't a lot of competition and
| getting killed in the markets where there is.
|
| There are three problems with this. The first is that it
| implies the US isn't competitive in competitive markets,
| which is a sign that something is very messed up. The second
| is that the markets where other countries aren't competitive
| tend to get eroded over time. The US essentially had a lock
| on the auto market in the mid-20th century; not anymore. What
| happens when China starts making globally competitive
| aircraft?
|
| And the third is that supply chains matter. If you give up on
| the low margin stuff instead of figuring out how to make it
| competitively domestically (e.g. via automation) then foreign
| competitors have a leg up when it comes to making the high
| margin stuff for which the commodities are inputs.
|
| > I don't think the government applying such levers to change
| how the market allocates capital probably won't be a win for
| economic output or quality of life.
|
| Relying on "free markets" actually requires free markets. If
| other countries are willing to subsidize their industries
| until they drive manufacturing out of the US, that's not a
| free market. It's the equivalent of a monopolist using
| dumping and tying to leverage their existing monopoly into
| new markets, but with a country acting as the monopolist and
| therefore being exempt from antitrust enforcement.
|
| Doing the same thing in return is not likely to be an
| _efficient_ strategy, but neither is the status quo. The main
| alternative would be to realize that the thing we 've been
| calling "free trade" is not actually that and a country that
| subsidizes its industries until its US competitors exit the
| market has to be dealt with as an abusive monopolist, e.g.
| via tariffs and similar policy levers, since antitrust laws
| don't apply to foreign governments.
| bluGill wrote:
| We are not only measuring in dollars. We measure tons of
| steel, number of cars produced and so on. Not all of those
| measures are growing, but many are. While market share has
| gone down, total production is up.
|
| Take cars - https://www.bts.gov/content/annual-us-motor-
| vehicle-producti... US production is up greatly in 2019
| (that is before Covid - the chart doesn't have after Covid
| numbers to work with). US production is up by a lot since
| 1960. However in 1960 the US population was lower, and your
| typical family only had one car (women often didn't even
| have a drivers license). Thus you see market share is down
| while production is up.
| treis wrote:
| Eh this is bending the word "produced". In 1960 all the
| parts were made in the US likely from raw materials mined
| & refined in the US. That's very different from today.
| _heimdall wrote:
| The ratio of domestic sales and domestic production has
| widened over the same period. In 1970 the ratio of
| domestic production to domestic sales was .933, in 2019
| that ratio is .796.
|
| Though we are making more total cars, were making a
| smaller percentage of all cars sold.
|
| As another commenter pointed out, the cars we make today
| are amalgamation of parts and design work done overseas.
| That isn't necessarily a bad thing if you view
| globalization favorably, but it is another factor when
| considering the value created in the US with regards to
| vehicle production.
| johnmaguire wrote:
| Can you explain how tariffs are an effective tool against
| foreign governments subsidizing industries? It has been my
| understanding that tariffs typically end up being tit-for-
| tat and relatively zero-sum.
| dkasper wrote:
| Maybe zero sum on a global scale but not zero sum in
| terms of where industry gets developed.
| tivert wrote:
| > Can you explain how tariffs are an effective tool
| against foreign governments subsidizing industries? It
| has been my understanding that tariffs typically end up
| being tit-for-tat and relatively zero-sum.
|
| They neutralize the subsidy's effect on pricing and
| prevent the subsidizer from taking over _your_ market, at
| least.
|
| > It has been my understanding that tariffs typically end
| up being tit-for-tat and relatively zero-sum.
|
| The subsidy is already a tit, the tariff is tat. Zero-sum
| is at least better than just taking the blow and having a
| negative-sum outcome for yourself.
| johnmaguire wrote:
| I think I'm looking for a more substantial answer.
|
| > The subsidy is already a tit, the tariff is tat. Zero-
| sum is at least better than just taking the blow and
| having a negative-sum outcome for yourself.
|
| To be more clear, I meant that it was typical for foreign
| governments to impose retaliative tariffs. e.g.
| https://www.trade.gov/feature-article/foreign-
| retaliations-t...
|
| To say nothing of who actually pays the cost of
| tarrifs.[0][1]
|
| [0] https://taxfoundation.org/blog/who-really-pays-
| tariffs/
|
| [1] https://www.cato.org/publications/separating-tariff-
| facts-ta...
| tivert wrote:
| > To be more clear, I meant that it was typical for
| foreign governments to impose retaliative tariffs.
|
| And in the context of massive trade deficits, so what?
| IIRC, when the Trump tariffs went into effect, there was
| a lot written that the Chinese didn't have many levers to
| pull to respond, because of the US trade deficit. I think
| they implemented a tariff against soybeans (and some
| other non-tariff actions), and that was about it.
|
| > To say nothing of who actually pays the cost of
| tarrifs.[0][1]
|
| Who cares who technically pays, especially when they're
| correcting for some other market distortion? Focusing on
| that is a hallmark of libertarian anti-tariff propaganda
| that's pretty monomaniacally focused on free trade dogma
| and prices _to the exclusion of all other
| considerations_.
| johnmaguire wrote:
| > And in the context of massive trade deficits, so what?
|
| I was thinking more in the context of consumer inflation.
| Countries tend to go back and forth in a tariff war,
| effectively raising taxes and lowering incomes for their
| citizens.
| saint_fiasco wrote:
| > The subsidy is already a tit, the tariff is tat
|
| Why is someone else subsidizing the price of a thing you
| buy bad?
|
| The subsidy is doing you a favor by reducing your input
| costs, or freeing up your work and capital to produce
| something else.
| Longlius wrote:
| For the same reason we disallow severe product dumping -
| it's a ploy to build marketshare in an attempt to become
| hostile to consumers down the road. We don't let
| companies dump products for a reason.
| kranke155 wrote:
| Because they are doing so to erode your manufacturing
| base through unfair competition.
|
| From a national security standpoint this can be deadly in
| a hot conflict.
|
| From an industrial strategy standpoint, it's the same as
| any other monopolist practice - they will erode your
| base, take over your market, then raise prices to fleece
| your population's wealth while increasing their own.
|
| Industrial bases are economic strongholds that shouldn't
| be lost, particularly not to great power competitors.
| saint_fiasco wrote:
| > From a national security standpoint this can be deadly
| in a hot conflict.
|
| What about a cold conflict? How much do the tariffs and
| protectionist policies cost in the middle to long run?
|
| For example, the Jones Act costs billions per year and
| has been going on for a lot of years. How many additional
| aircraft carriers and submarines and so on could the US
| have bought with that money?
| kranke155 wrote:
| Tariffs and protectionist policies are unfairly maligned.
| They are effectively the only way countries build and
| rebuild industries. The idea that they are bad is an
| invention of bad economists who don't study history. See
| the book "How Asia Works" for an accurate economic
| history of the growth of industrial power in Asia, how it
| was based on Germany's ascension before it, and how it
| was al built on the RIGHT kind of policies.
| https://www.gatesnotes.com/How-Asia-Works
|
| Successful Asian powers studied history, not Milton
| Friedman. https://en.wikipedia.org/wiki/Historical_school
| _of_economics
| saint_fiasco wrote:
| I don't disagree, you can definitely build more
| industries with tariffs and protectionism. I just don't
| see the point.
|
| I'm a consumerist at heart. As long as consumers get to
| consume, it does not matter to me whose industry is doing
| the producing.
|
| I get that your foreign suppliers can turn on you and
| raise prices. I think the money you make during peacetime
| by not putting tariffs will let you buy more weapons and
| bribe more allies so that the foreign suppliers don't try
| anything too awful with the supply chains. Stockpiles can
| buy a lot of time to restart industry in an emergency or
| at least find a different foreign supplier.
|
| Take a look at Russia, they are sanctioned by half the
| planet and they still keep going on a reduced industry
| because they had huge stockpiles of tanks, artillery and
| so on. Imagine something like that but with a military
| that doesn't suck. Nobody would even dare try a sanction.
| kranke155 wrote:
| The point is that unfortunately geopolitics ends up in an
| eternal competitive state.
|
| Losing your industrial base and giving it away to a
| geopolitical competitor is almost certainly an error in
| the long run.
|
| Large industrial bases also are correlated with healthier
| middle class societies, according to Vaclav Smil, and in
| my experience, he's exactly right.
|
| So losing the industrial base is fine for you, a service
| sector worker, but it's bad for the country and it's bad
| for society, if you want it to have a healthy middle
| class.
| saint_fiasco wrote:
| Most of the country works in the service sector. It's not
| like I'm some kind of out of touch elite.
|
| The ones who are most hurt by tariffs, most affected by
| higher prices, are the working class. Sure, the workers
| of the specific industries that are lucky enough to be
| protected, the ones with the most persuasive lobbies,
| will certainly benefit. But every other worker will be a
| little worse off.
|
| If you are concerned about the people who got hurt by
| globalization, maybe the government should collect money
| from people like us and spend it on people like them.
| They can set up the tax in such a way that rich people
| pay the most.
|
| But if you use tariffs to help the people who got hurt by
| globalization, you cannot set it up in such a careful
| way. It's a blunt instrument that hurts productivity
| across the board and increases the prices to the end
| consumer. It becomes an implicit tax that poor people pay
| the most. An actual explicit tax would hurt much less.
| kranke155 wrote:
| If the consumer becomes richer by brining industry back
| to your country you might actually end up a victor in
| that transaction.
| tivert wrote:
| > The ones who are most hurt by tariffs, most affected by
| higher prices, are the working class.
|
| Perhaps _in the short to medium term_ , the people who
| had their livelihoods decimated and _partially_
| compensated for the decline in their standard of living
| by buying cheap imported products, will be most affected.
|
| But tariffs should be a component of a longer term plan
| of _tradeoffs_ to revitalize the protected industries.
|
| > If you are concerned about the people who got hurt by
| globalization, maybe the government should collect money
| from people like us and spend it on people like them.
|
| That idea is past its sell-by date. It's the neoliberal
| Democrat's response to the economic damage done by
| globalization: put the losers on welfare indefinitely.
| IMHO, that money should be
| itsoktocry wrote:
| > _I don 't disagree, you can definitely build more
| industries with tariffs and protectionism. I just don't
| see the point._
|
| You don't see the point of building up, say, your
| domestic chip building capacity? Really?
|
| > _Take a look at Russia, they are sanctioned by half the
| planet and they still keep going on a reduced industry
| because they had huge stockpiles of tanks_
|
| Russia can "keep going" because they have vast reserves
| of fossil fuels that Europe, currently, can't live
| without.
| trashtester wrote:
| Tariffs that merely offset subsidies in the other country
| has zero net effect on competition, and doesn't harm
| producers on either side unduely.
|
| The net effect is merely a net transfer from the foreign
| government to the domestic one.
|
| Tariffs that go BEYOND the subsidies in the foreign
| country has a net protectionist effect. This CAN cause
| stagnation in the industry in question. But less so if
| there is still healthy domestic competition.
|
| Subsidies are potentially the most destructive measure.
| This is especially true for protectionist subsidies, and
| less so for export subsidies. But in general, subsides
| sets up a cash transfer facility between a government and
| local industry, often removing incentives to innovate. In
| turn, this means that the subsidies need to increase year
| by year to have the desired effect.
|
| This can lead to the subsidized industry dying a sudden
| death once public patience for the growing subisides (and
| so the subisides themselves) come to an end.
| heavyset_go wrote:
| > _Because they are doing so to erode your manufacturing
| base through unfair competition._
|
| I wouldn't say it's _unfair_ , if other countries
| actually value domestic manufacturing then they'll
| provide the subsidies and incentives to cultivate it.
| loandbehold wrote:
| It's a favor in the short term but a blow in the long
| term because you lose ability to manufacture.
| Manufacturing capacity is a use-it-or-lose-it thing.
| roughly wrote:
| Because you are a producer, and not just a consumer.
| _heimdall wrote:
| > typically end up being tit-for-tat and relatively zero-
| sum.
|
| That pretty much sums up all economic policy honestly. It
| will always be tit for tat since one aide can only
| respond to the other and doesn't directly control their
| economy.
| itsoktocry wrote:
| > _Can you explain how tariffs are an effective tool
| against foreign governments subsidizing industries?_
|
| Because the US is a huge market, and if you can't sell
| your goods here competitively (because tariffs price you
| out), it hurts your business. It's a negotiating tool.
| specialist wrote:
| Preaching to the choir, yes and:
|
| > _...supply chains matter._
|
| A corollary (?) is that competency matters too.
|
| The outsourcing mania forfeited vertical integration to
| please Wall St. Collateral damage included knowledge,
| culture, and ability to innovate.
|
| > _...not likely to be an efficient strategy_
|
| Per principle of no free lunch, greater efficiency at the
| expense of resiliency.
|
| > _...tariffs and similar policy levers..._
|
| Yup. The Rudyard Kipling School of Economics doesn't
| acknowledge realpolitik, will to power, balance of trade,
| finance, labor relations, foreign interests, etc.
|
| The Econ 101 glasses give a very myopic view of the world.
| It's just an introductory model for a very complicated
| system.
| pksebben wrote:
| Nitpick, I know, but
|
| > but with a country acting as the monopolist and therefore
| being exempt from antitrust enforcement.
|
| This is the US. _what_ antitrust enforcement?
| edgyquant wrote:
| It doesn't elude people, they just think that the 80% of
| manufacturing that isn't high end shouldn't have left and
| that it was criminal for it to have been shipped overseas at
| the expense of middle America.
| Veliladon wrote:
| I mean, how are people supposed to afford all this high
| tech shit if they can't work decent paying jobs without a
| degree and the welfare state has been hollowed out?
| Manufacturing used to provide that.
|
| Are companies just going to fight for a constantly
| shrinking middle class? Or just turn into gacha companies
| looking to hook a whale? Sell a single doll for $46,000?
| mywittyname wrote:
| A lot of it stuck around. I grew up in the rust belt and
| tons/most of my friend's parents worked at one of the many
| factories that were, and are still around. Think dog food,
| plastic molding, car part manufacturing, and glue. Not the
| big stuff that people think of when they think of
| manufacturing though.
|
| I think if you start to deep dive into the industries that
| left, you'll find the reasons were _often_ more complicated
| than simple labor costs. American companies did get out-
| competed by foreign firms in a lot of key areas.
|
| America is large, but they can't expect to be the best in
| the world at every industry. If an entire country focuses
| on a specific niche for long enough, it's possible they
| will become the best. Samsung and TSMC are incredible
| companies that didn't happen by accident. And yeah, the USA
| might not compete at that level on the global stage, but
| the American economy is also not so completely dominated by
| one megacorp either.
|
| Also, a lot of manufacturing, especially the high tech
| stuff, is highly automated. So these massive factories
| don't generate the same number of jobs they once did. And
| the jobs they do generate are often technical. More
| maintenance and calibration of machinery, and less putting
| bottle caps on.
| themaninthedark wrote:
| Tell me specificly which niche that Samsung focuses on:
| >Product: Clothing, automotive, chemicals, consumer
| electronics, electronic components, medical equipment,
| semiconductors, solid-state drives, DRAM, flash memory,
| ships, telecommunications equipment, home appliances
| >Services: Advertising, construction, entertainment,
| financial services, hospitality, information and
| communications technology, medical and health care
| services, retail, shipbuilding, semiconductor foundry
|
| https://en.wikipedia.org/wiki/Samsung
|
| Samsung is also very closely tied to the Korean
| government.
|
| >I think if you start to deep dive into the industries
| that left, you'll find the reasons were often more
| complicated than simple labor costs
|
| Care to share any of the reasons?
|
| Here are reasons that I know about; EPA regulations, OSHA
| regulations, their supply base relocating.
|
| https://www.forbes.com/sites/stevedenning/2011/08/17/why-
| ama...
|
| Don't get me wrong though, we shouldn't roll back our
| regulations but we should however ensure that what we buy
| is manufactured in that same conditions that we would
| demand at home.
| tivert wrote:
| > One thing that I think that frequently eludes people in
| this discussion is that US manufacturing has pretty much been
| constantly growing for the past century; just its share of
| GDP has fallen as other sectors have grown faster.
|
| > ...I don't think the government applying such levers to
| change how the market allocates capital probably won't be a
| win for economic output or quality of life.
|
| I think the problem you're having is you're thinking of
| manufacturing in terms of dollars, like an aloof economist.
| chlodwig wrote:
| _that US manufacturing has pretty much been constantly
| growing for the past century;_
|
| Really? Every time I see this claim its based on some citing
| some statistical mismash that the person citing does not
| understand and cannot explain.
|
| How much tonnage of merchant shipping does the USA build in
| 2020s versus the 1960s?
|
| How many TVs and computer monitors does the United States
| make in 2020s versus 1990s?
|
| How many tons of steel does the USA make in the 2020s versus
| the 1970s? Of tool steel?
|
| How many nuclear reactors are produced in the USA in 2020s
| versus the 1970s?
|
| How many railway rails graded for high-speed trains are
| produced in the USA in 2020s versus 1980s?
|
| How many CNC mills are produced in the USA in the 2020s
| versus the 1980s?
|
| How many artillery shells are produced in the USA in 2020s
| versus the 1980s?
|
| How many jet engines are produced in the USA in the 2020s
| versus the 1980s?
|
| How many car engines blocks are produced in the USA in the
| 2020s versus the 1980s?
|
| How many computer hard drives are produced in the USA in the
| 2020s versus the 1990s?
|
| How many motherboards are produced in the USA in the 2020s
| versus the 1990s?
|
| (Also, adjust all the comparisons above for population
| growth, we should be comparing manufacturing production per
| capita)
|
| If you think that these comparisons are misleading because
| there are 'quality changes' please tell me exactly how you
| quantify these changes in quality.
| mlyle wrote:
| Ignoring the thrust of the argument above, and missing the
| entire subthread where the nuance of how the US has
| redeployed its economy for comparative advantage is
| discussed and debated, to type that over and over was a bit
| of a waste of your time, IMO. Reading it wasn't a good use
| of mine.
|
| If you read the surrounding argument and want to discuss
| some further point not covered, I'm here.
| chlodwig wrote:
| I've read the thread and have been very familiar for
| decades with these debates.
|
| There are two separate questions:
|
| 1) Has USA manufacturing increased or declined in its
| output (measured in things, not $)?
|
| 2) If output has declined in terms of things, is this ok
| because of comparative advantage? Is this ok because the
| US mains a competitive edge in the highest value most
| technically advanced products?
|
| As for 1), you say "The net result is that US
| manufacturing output in real dollars has increased 4x, in
| the past 70 years." Are you familiar with the term
| "researcher degrees of freedom"? "manufacturing output in
| real dollars" is an impossibly complicated statistical
| construct with infinite researcher degrees of freedom.
| There are infinite opportunities for "Getting Eulered"
| https://slatestarcodex.com/2014/08/10/getting-eulered/
| That is why I insist on starting with the most straight-
| forward numbers -- how many cars? How much steel? And
| then layering on adjustments on top of that. If steel is
| down but it is compensated by some other high value
| product being up, OK, but _show me the calculation_ ,
| show me the work. Otherwise your argument boils down to
| "Trust the US government's impenetrable statistical
| calculations, we are getting richer comrade"
|
| As for 2), when I first heard that argument from the most
| prestigious and credentialed economists twenty-five years
| ago, my toys and clothes said "Made in China" while
| advanced technical products like my computer motherboard
| was made in the USA. Now it's OK that the motherboards
| are all made abroad and because the most technically
| sophisticated motherboards are made in the USA. Well, it
| seems to me like the areas where the USA has comparative
| advantage in making the most technically advanced
| products is becoming a smaller and smaller every year.
| Just this year we are made aware of how much Boeing has
| lost ground to Airbus. Seems to USA is increasingly
| reliant on low-tech exports like soybeans, or worse,
| exporting dollar bills. It seems to me like our trade
| deficit is gaping wide, which means our real export is
| living off our status as the global reserve currency.
| Which feels nice until ones military might is no longer
| able to support that status (see 16th century Spain).
| Seems to me that the US is losing ground on military
| relevant manufacturing -- particularly drones but also
| steel, ships, etc. And without that, it will not be able
| to maintain its status as reserve currency in the long
| run.
| vehemenz wrote:
| Whether manufacturing grows, on its own or as % of GDP, has
| nothing to do with any particular segment of manufacturing
| has grown or declined, or emerged or disappeared.
|
| As a thought experiment, you can do the same analysis with
| any number of technologies from the 20th century--
| typewriters, vacuum tubes, plate-based printing presses,
| analog telephones--and the point is obvious.
| chlodwig wrote:
| I didn't include typewriters on my list of goods. I only
| included items like cars and motherboards that were as
| economically relevant at the beginning measurement point
| as they are at the endpoint.
|
| If you think that the manufacturing output in some of the
| things I listed declined or stagnated -- but it is
| countered by the fact that US manufacturing of other
| newly invented goods has increased -- then please specify
| what those goods are. Seems to me like the US
| manufacturing also lags in newly invented goods -- like
| drones.
| bwanab wrote:
| > I think this is a win for national security.
|
| I think that's largely the point. Obviously, it's a balancing
| act, but when market forces create a situation that is
| incompatible with national security it really is the
| governments job to address the situation even if, as in the
| case with Chinese EVs, it means a bit of pain for consumers.
| ddingus wrote:
| Let me tell you a story:
|
| Tektronix lifted the Portland Oregon region right up. Was
| called silicon forest.
|
| At that time, Tek was funding startups its employees thought
| up after working for Tek, getting great education provided
| directly by the company as well as through college
| partnerships.
|
| Tek also literally trained a workforce here by educating any
| of its employees and by doing programs with suppliers to do
| the same.
|
| I am a product of that time.
|
| A drive through this region in the 80's and early 90's was
| awesome! Shops of all kinds, Tek itself had COMTEK which
| could make damn near anything, and opportunities abounded!
|
| Howard Vollem died and the MBA took over.
|
| COMTEK was torn down, work was sent overseas, education
| stopped, startup funding stopped, and soon a drive through
| this region looked very different: hair nails and laundry.
|
| While large scale manufacturing has grown, the rest has
| suffered huge!
|
| Our military can't find the capacity it needs! And they,
| along with aerospace, are the best customers there are, with
| auto in some parts too.
|
| The rest has been gutted.
|
| That is what we need to fix. It matters.
|
| If companies won't do what Tek did, and that is invest in the
| region and it's people, and they won't because getting max
| dollars at any cost matters more than sustainable business
| does, then we must have robust small to mid sized
| manufacturing.
|
| Where else will our future skilled labor come from? And I
| left for higher end professional work and software. I can
| make anything I can draw, it was damn good at it too. Saw way
| too many places close and there's no way I can raise a family
| on that and I quit ... tons of us did.
|
| The skills I have are rare and in high demand. Young people
| today can't get them like I did, and that adds right the hell
| up.
|
| You think your arguments make sense. And you are not wrong.
| They do, but that is not the problem.
|
| The problem is for your argument to make sense, a ton of
| people and manufacturing potential is lost and nobody seems
| to recognize the massive opportunity costs in all that.
|
| And frankly if large companies aren't going to do it and get
| a return on that investment, then our government damn well
| should. We do really put our national security at risk doing
| otherwise.
| mlyle wrote:
| > Our military can't find the capacity it needs!
|
| This has a lot more to do with the stance of the past 30
| years to manufacture defense materiel at relatively
| constant, small rates. There was no capital investment,
| because why pay to have a huge line that isn't being used.
| We spent our military dollars on wonder-weapons that would
| probably win a direct war quickly, but that we can't give
| to allies in a proxy conflict. Going so far was a strategic
| mistake.
|
| > And they, along with aerospace, are the best customers
| there are,
|
| Military are terrible customers, especially if you're a
| subcomponent manufacturer. Gravy might pour, it might not;
| it's very unpredictable. You spend a lot of effort and
| business just evaporates.
|
| > Howard Vollem died and the MBA took over.
|
| On the flip-side, can you imagine being the high-cost Tek
| of old in today's test equipment marketplace? Tek already
| struggles to compete against cheaper, adequate solutions.
| So much of that market has commoditized out.
|
| > nobody seems to recognize the massive opportunity costs
| in all that.
|
| Actually, that's exactly what I'm talking about, in both
| directions. Having a ton of manufacturing means we would
| have opportunity costs in the other direction. We've traded
| the manufacturing we had 50 years ago for other things.
| It's not possible to specialize in "everything."
| sounds wrote:
| > There was no capital investment, because why pay to
| have a huge line that isn't being used.
|
| I'd like to suggest that what Tek did worked back then,
| and the same insightful leadership wouldn't simply copy
| the solutions from 20 years ago.
|
| Thus the problem is "there was no capital investment,
| because there was no visionary leadership," and the
| problem is also that the short-sighted leadership simply
| saw "a huge line that isn't being used," instead of a
| workforce ready to take your company into the next
| century.
|
| > Military are terrible customers ... You spend a lot of
| effort and business just evaporates.
|
| This only applies to companies that lack vision, that
| seem to only be able to keep stamping out the same widget
| as 20 years ago.
|
| > Tek already struggles to compete against cheaper,
| adequate solutions.
|
| Seems like a lack of leadership, instead of an
| existential proof that Tek can't compete.
|
| > We've traded the manufacturing we had 50 years ago for
| other things. It's not possible to specialize in
| "everything."
|
| This actually sounds like the kind of visionary
| leadership that Tek or the larger Portland metro needs.
|
| If I sound combative, please only read this in a curious
| voice. What kind of visionary leadership could rise from
| the ashes of the Silicon Forest?
| mlyle wrote:
| > > There was no capital investment, because why pay to
| have a huge line that isn't being used.
|
| I was specifically talking about war materiel. The US is
| not doing great at making things like low-tech artillery
| shells, because we've not had a large line running for
| them for quite some time. In retrospect, it would have
| been better to have a bigger stockpile and to be paying
| for more line capacity.
|
| Things are steadily ramping, but it's taken a good year
| and a half to get to the quantities we now want.
|
| > > Military are terrible customers ... You spend a lot
| of effort and business just evaporates.
|
| > This only applies to companies that lack vision, that
| seem to only be able to keep stamping out the same widget
| as 20 years ago.
|
| Nah, vision or not: political winds change and projects
| get killed. Being involved in an early program is
| exceptionally high risk: you need to start ramping to do
| the whole thing and you may get a good return on capital
| or a pittance.
|
| > Seems like a lack of leadership, instead of an
| existential proof that Tek can't compete.
|
| The overwhelming majority of the test equipment
| marketplace has commoditized out. This is a problem if
| you're still mostly a test equipment vendor. It would be
| even worse if Tek had higher costs.
|
| > This actually sounds like the kind of visionary
| leadership that Tek or the larger Portland metro needs.
|
| In those sentences, I'm not talking about Tek: I'm saying
| the United States has, as elementary economics predicted,
| specialized in areas where it has a comparative advantage
| over other countries. It is not possible to have a
| comparative advantage in "everything."
| ddingus wrote:
| >Nah, vision or not: political winds change and projects
| get killed. Being involved in an early program is
| exceptionally high risk: you need to start ramping to do
| the whole thing and you may get a good return on capital
| or a pittance.
|
| Often, people wonder about the higher cost associated
| with government cobtract work. One does need to cost out
| those risks and include them in project costs.
|
| "Elementary Economics"
|
| Economics is not a science. We cannot execute the
| scientific method on Economics because we have no way to
| repeat and or establish controls needed to understand
| results.
|
| Policy drove "elementary economics", and made it
| predictive. And the policy was driven by strong advocacy
| dressed up as real science too. That advocacy was
| produced by people of significant means wanting more and
| more control.
|
| Change the policy, and we will see the Economics change
| too.
|
| Fact is we gutted a lot of small to mid sized
| manufacturing, and with it went many strong opportunities
| for people to take advantage of. Those people require
| help to make it because the opportunities they did find,
| if they found them at all, do not pay enough to make it,
| or should they, the labor burden and often painful
| scheduling makes for tired people lacking often the means
| and energy required to build skill on their own.
| hollerith wrote:
| >Economics is not a science. We cannot execute the
| scientific method on Economics because we have no way to
| repeat and or establish controls needed to understand
| results.
|
| You could say the same thing about mathematics, but it
| remains the case that it is useful to know some math.
| ddingus wrote:
| Of course math is not a science either. Ultimately, math
| is a reasoning tool and in the economic context, it is
| not a complete tool.
|
| There is policy, and that has a major league effect on
| what will make good economic sense.
|
| The current policy could change, and that would impact
| what is worth what and why and the math can tell us what
| it always has.
|
| Here is one:
|
| For a long time we have ignored anti monopoly laws.
|
| When competition is present, margins are less, people
| tend to get higher value for the dollar. When it is not
| present, margins are higher and people get much less
| value for the dollar.
|
| Right now, big grocery is wanting to do one more merger
| to basically put Krogers in charge of grocery stores,
| with its competition being Walmart and maybe Amazon.
|
| So far, each merger has reduced the number of products
| available to people and higher prices. But someone
| somewhere is banking more and paying less.
|
| I like competition. I like higher value for the dollar
| and choice in business. I bring this up because I
| personally dislike Kroger and it is all about the much
| lower value per dollar.
|
| How this all goes is political. Policy may be to preserve
| competition to prevent price gouging and all that comes
| with a monopoly.
|
| The math may say more dollars are made by having one
| company, but that same math says it comes at the expense
| of the people too.
|
| Does not, and I would argue, should not go that way.
| ddingus wrote:
| And by the way the cost reductions that the guy above was
| talking about and other things were all in progress. And
| there was plenty of capital to invest.
|
| What happened was the MBA crew took it right out of the
| fucking company, gutted the rest and we have a a shell of
| what we had before today.
| mike50 wrote:
| All of the contemporary competitors of Tek were also
| bought out except for Keysight. Why? Low margins an
| incomplete lineup and commoditization of the asics.
| ddingus wrote:
| Tek would have cost reduced that gear and it was in
| progress when it was all torn down. Tek would have also
| continued to make more great gear. That spirit stopped.
|
| Tek was also getting nice returns on several of the more
| successful startups.
|
| Vollum was no fool.
|
| Snark mode = 1
|
| You mean traded our future for baubles and trinkets
| today?
|
| Yeah, I agree!
|
| Snark mode = 0
|
| I will ask again:
|
| Where does our next generation of skilled labor come
| from?
|
| And don't tell me we won't need it because automation. I
| have automated many things and will do so again, but I
| never managed to find a robot looking for a good meal, or
| a home, etc...
|
| At some point we need to look at this in terms of our
| own, or we will be living in even more of a dystopia than
| the already growing one threatens to be.
|
| If we do not ask and answer the question, "how do our
| future leaders and builders, mechanics make it?", they
| won't. And the cost on that is a lot higher than many
| will admit it is.
| mlyle wrote:
| > Where does our next generation of skilled labor come
| from?
|
| I don't really want to talk to you because you're being
| deliberately abrasive. But I will leave you with one
| answer.
|
| Your question presupposes that all the other areas of the
| economy that have eclipsed still-growing manufacturing do
| not produce "skilled" labor. I do not think this is a
| valid assumption.
| ddingus wrote:
| Hey I marked the snark. I guess I don't want to talk to
| you either if you can't handle a little real discussion.
|
| And that helps nobody, yourself-included. There's nothing
| on this thread that you should turn your back away from.
| There's nothing on this thread that should even hurt!
|
| And finally, I'll always talk to the other people.
| Keeping that door open is the only way we get progress.
| Just consider that for the future.
|
| What's your calling abrasive is passion. I actually do
| really give a shit. Consider that too.
| mlyle wrote:
| There's infinite people to talk to on the internet--
| indeed there's more people to talk to on this thread that
| share your views than I can manage. I don't need to pick
| the sub-branch which is unnecessarily unfriendly.
|
| edit: I care, too. I mean, I went into education where
| I'm teaching future high-skilled labor and building human
| capital ;) And--- where I am, the kids are alright.
| ddingus wrote:
| They are all right for now. No joke. The ones who can
| afford to see you that is. ( education is currently
| expensive, not a slight on you at all)
|
| There are good reasons why the percentage of people who
| agree with me are high.
|
| Edit: yes you absolutely do get to pick and choose and I
| support your ability to do so! However I will observe
| that you are operating at a disadvantage by doing so
| mlyle wrote:
| I'm at a private high school, so sure I breathe rarefied
| air.
|
| But they're doing stuff like machining aerospace gear
| that will fly in space, doing structural and thermal
| analysis, designing and assembling circuit boards,
| implementing LQG controllers. Or just doing carpentry and
| fabrication for theater productions to the highest
| aesthetic standards.
|
| And I go to competitions against other schools and see a
| ton of what we would have before considered "high
| skilled" adults, except they're 13-16 year old kids.
| They're going to go to university and further develop the
| ability to work with their head and their hands. But
| they're not going to go supervise a press stamping out
| the same part over and over, and they're not going to
| reinvent the wheel that they can buy for 30 cents per
| unit.
|
| > There are good reasons why the percentage of people who
| agree with me are high.
|
| This isn't a very good argument for the validity of an
| idea.
|
| > Edit: yes you absolutely do get to pick and choose and
| I support your ability to do so! However I will observe
| that you are operating at a disadvantage by doing so
|
| Avoiding being trolled is not "operating at a
| disadvantage." There's plenty of reasonable discussion,
| and the points you raise have already been answered and
| debated in cousin threads. I'm choosing to answer you a
| little more because you've been a little nicer.
| ddingus wrote:
| I have taught in those programs and have also provided
| resources and equipment. Frankly that's all pretty darn
| good stuff! I'll bet you're having a pretty good ride
| too.
|
| I will just say what you and others are doing is not
| enough.
|
| Meta:
|
| I was nice the whole time. There are no words of mine
| here to fret over. That is deliberate intent too. Some
| style choices are aimed at passersby and to provoke
| thought. Nothing more. Others may not be so nice. I get
| that.
|
| Whether you answer me or not has no impact on my choices.
|
| To be 1,000 percent clear, you were never trolled by me.
| Frankly I could probably do it and not even get under
| your radar. That sounds something I choose to do. The
| single most likely reason you answer is my speech here is
| compelling enough to warrant an answer.
| ddingus wrote:
| >This isn't a very good argument for the validity of an
| idea.
|
| Indeed it is not in terms of a convincing argument,
| however is is more than sufficiently compelling for
| others to think about, perhaps ask "why?" In this, they
| often will entertain more conversation that has real
| advocacy potential and that is just fine, intended.
| ddingus wrote:
| It does produce some skilled labor, but those skills
| aren't always the same as the ones needed to make things
| and make them well and make them inexpensively and make
| them sustainably.
|
| And by percentage it's no replacement for what we had
| before. All one needs to do is take a look at massive
| numbers of young people looking for opportunity not able
| to find it to understand what this all means.
| mike50 wrote:
| And suddenly it wasn't 1960 and the PCBs were in mass
| production. Suddenly it was 1990 and only the true high end
| low volume (space and mil) paid for their own custom
| silicon and fabs. Finally it was the year 2010 and the
| front end of a scope was a mass produced part for pennies
| with an fpga and the scope was a hobbyist and auto
| mechanics tool.
| ddingus wrote:
| Sure the scope did change, and Tek made those moves as
| they should have.
|
| There was a great argument for trading some capability to
| continue to build new products on now current processes,
| with the same rapid feedback loop in place.
|
| That should have happened rather than the very aggressive
| tear down and brain drain we actually saw.
|
| The key point being ongoing and regular investment in the
| company and people would have yielded more and better
| products that would compete just fine, not just be the
| cheapest.
|
| That organization would be smaller, but still potent and
| a lot more nimble, able to continue supporting technical
| engineering across many fields.
|
| And as I have mentioned up thread, couple that with
| returns from smart spin-off investments and an ongoing
| innovation culture rather than just a cost cutting one
| and we would have seen more than we did.
|
| I would also argue the big push to apply software was
| sexy, and took the air right out of hardware efforts.
| Lack of investment there was not about the lack of
| returns, and it still is not about that. They are just a
| different kind and over a longer time.
|
| Ignoring those has bled the region of a lot of
| capability. It is much harder to make things and here we
| are trying to understand how the next generation makes it
| on hair, laundry and food.
|
| Making things is important. And it is not the cheapest
| way of course. Having a large percentage of people unable
| to build lives is and will continue to be very expensive.
| Crime, need for government services and more abound.
|
| Early on, the promise of new tech and automation was a
| reduced need to work as much and or at the least
| maintaining respectable standards of living.
|
| Put simply, it was supposed to cost less to live and for
| the most part these things did not happen.
|
| Something needs to.
| tmaly wrote:
| If the rumors about Elon's robots are true, I see a lot of
| manufacturing coming back to the US.
|
| However, I do not see this benefiting regular workers.
| KK7NIL wrote:
| > transferring knowledge from TSMC to a US workforce.
|
| No, no it's not.
|
| When semiconductor manufacture moved to Asia, this was
| generally done under a "technology transfer agreement", which
| was an explicit agreement for US companies to transfer their
| (usually older) tech to an independent local company who would
| then be allowed to manufacture it and develop it. This is how
| TSMC started, by doing a deal with Philips to manufacture for
| them but also to trained on the tech and to be allowed to use
| it themselves.
|
| This TSMC US fab (and Samsung's new fab) are not under such an
| agreement, it is directly run by TSMC with no explicit goal to
| transfer technology. I think it was a mistake for the US CHIPS
| act funding to go to such a venture without a clause for
| technology transfer back to a US company.
| klooney wrote:
| The workers can walk away with whatever is in their heads
| pests wrote:
| Long walk back to Taiwan.
| moooo99 wrote:
| I've seen this attitude in other fields and while it is
| conceptually true, the more complex the field, the more
| workers have to ,,walk away" with their knowledge to have
| enough knowledge to be of any use
| Joeri wrote:
| Arizona has enforceable non-compete contracts, so they may
| walk away with the knowledge but they might not be allowed
| to use it.
| cududa wrote:
| Yes, and if China invades Taiwan, those noncompetes are
| going out the window and/ or the plant is getting
| nationalized
| proudeu wrote:
| TSMC really screwed thesmelves with that deal honestly.
| Washuu wrote:
| I would say as a company having an extra foundry in a
| less earthquake prone part of the world is a good idea to
| keep the company alive in the case of a major disaster.
| tonyhart7 wrote:
| well TSMC actually winning on this one because TSMC have
| another fabs if china invade taiwan
|
| and for taiwan, US has pledged to its security in case of
| invasion would defend no matter what
| yodsanklai wrote:
| > US has pledged to its security in case of invasion
| would defend no matter what
|
| Maybe with TSMC building chips in the US, that'll be one
| less reason for the US to defend Taiwan.
| WinstonSmith84 wrote:
| This. And it's certainly an argument that has not escaped
| China (nor Taiwan). If there is a "loser", that's Taiwan.
| tw1984 wrote:
| > US has pledged to its security in case of invasion
| would defend no matter what
|
| by borrowing 155mm shells from South Korea? cute.
| pas wrote:
| Invasion of Taiwan and deterrence of it hangs on non-
| land-war stuff.
| HumblyTossed wrote:
| Walk away to where? And what transferable knowledge?
| lossolo wrote:
| These workers didn't create the fab equipment and don't
| know how to design or create the machinery used there. They
| also don't have access to the software source code. Most US
| workers hold maintenance or managerial positions, while
| those with the deep technical expertise come from Taiwan.
| There will be no knowledge transfer, aside from how to
| operate the fab, which is something Intel US employees
| already know.
| mixmastamyk wrote:
| Fab equipment is made by other companies. Such as ASML:
|
| https://en.m.wikipedia.org/wiki/ASML_Holding
| llamaimperative wrote:
| Aren't Philips and ASML both effectively under American
| control anyway? Is the TSMC part of the stack that special in
| terms of actual IP (versus more squishy organizational know-
| how)?
| KK7NIL wrote:
| > Aren't Philips and ASML both effectively under American
| control anyway?
|
| IDK about Philips but ASML follows US export restrictions
| due to a deal it agreed to when it bought a US company a
| few decades ago, yes.
|
| > Is the TSMC part of the stack that special in terms of
| actual IP (versus more squishy organizational know-how)?
|
| I don't want to go into too many details as I work in the
| Intel Foundry but it's certainly both. We'd be very happy
| to know how TSMC does some specific things, let me put it
| that way. At the same time, our execution has been dubious
| since 10 nm.
| _DeadFred_ wrote:
| Isn't it that ASML has to for continued access to the USA
| IP that they acquired?
| throwup238 wrote:
| IIRC it wasn't because of an acquisition but part of a
| joint venture with ASML, Intel, and some other companies
| to develop EUV with a bunch of Department of Energy
| funding that started in the late 1990s.
| KK7NIL wrote:
| Indeed, I was wrong, thanks for the correction.
|
| From Wikipedia:
|
| > In 1997, ASML began studying a shift to using extreme
| ultraviolet and in 1999 joined a consortium, including
| Intel and two other U.S. chipmakers, in order to exploit
| fundamental research conducted by the US Department of
| Energy. Because the CRADA it operates under is funded by
| the US taxpayer, licensing must be approved by Congress.
| mnau wrote:
| ASML follows US restrictions because of US power. That
| purchase is just convinient excuse. If they never bought
| it, US would force them other way (e. g. access to
| banking).
| appendix-rock wrote:
| Political capital exists. A more explicit tit for tat
| makes these grabs more palatable to people.
| Slartie wrote:
| Europe has banking, too. Even better: nobody in Europe
| sends paper checks around anymore, we use instant wire
| transfers here! European banking is way ahead of US
| banking in a lot of ways.
|
| So, banking is not exactly something that the US can use
| to coerce a European company. There are much more
| effective avenues for coercion, though. But IIRC, in this
| case, the US gov basically convinced the Dutch gov that
| making ASML adhere to US restrictions would be in the
| best interest of both of them, and not much coercion was
| necessary. After all, both countries are on the same side
| when it comes to the system conflict with China.
| Cyph0n wrote:
| Their competitors have access to the same tech. If TSMC's
| process wasn't special, they wouldn't be years ahead of the
| competition.
| kalium-xyz wrote:
| Philips as far as im aware doesnt contribute that much
| anymore. NXP split off forever ago. Philips may have build
| TSMC together with the taiwanese government but its hardly
| relevant nowadays.
| tirant wrote:
| Philips spun off both NXP and ASML years ago, so all
| their relevancy in chip manufacturing disappeared and
| went to both companies. Same happened with LED
| manufacturing, going to Signify NV.
|
| Philips has only kept its expertise in medical devices
| and a large pool of patents for many technologies
| (MPEG-2, H264, Ambilight, BluRay, OLED, etc.)
| umanwizard wrote:
| American companies already know how to manufacture older
| chips. It's not like TSMC is light years ahead of Intel.
| They're ahead, but not by so much that their older generation
| tech would be transformative.
| KK7NIL wrote:
| Semiconductor R&D is very multi-dimensional (despite the
| media only talking about the one dimensional made up
| measurement of node size), there are many things Intel
| could learn from TSMC, and the other way around too.
| throwaway48476 wrote:
| TSMC and intel are more directly comparable than, say
| Sony CMOS image sensors.
| insane_dreamer wrote:
| TSMC is ahead because it adopted ASML's EUV tech earlier
| than Intel (huge blunder by Intel). The real tech
| breakthroughs came from ASML, and Intel now has that
| technology too (and is trying to leapfrog TSMC by being the
| first to get the new High-NA EUV from ASML, though it won't
| actually producing sub-3nm chips with it until 2025 or
| maybe 2026).
| KK7NIL wrote:
| > TSMC is ahead because it adopted ASML's EUV
|
| Depends what you mean by "adopted". Pretty sure Intel had
| EUV prototypes before TSMC (or at least very close), but
| it was slower to transition its high volume production to
| it due to execution issues.
|
| > The real tech breakthroughs came from ASML
|
| I know this how the media portrays it now a days but
| there's so much more to semiconductor manufacturing than
| lithography, especially since the serious slowdown of
| lithography scaling with around 193 and 193i litho.
|
| Great example is GlobalFoundry which sent its EUV machine
| back because it realized it could not compete on the R&D
| needed to keep up with the other foundries.
| insane_dreamer wrote:
| > Depends what you mean by "adopted".
|
| by that I mean shipping production chips leveraging EUV
| 0x457 wrote:
| > Depends what you mean by "adopted". Pretty sure Intel
| had EUV prototypes before TSMC (or at least very close),
| but it was slower to transition its high volume
| production to it due to execution issues.
|
| EUV by ASML was not possible until there was a technology
| to create focusing lenses for it. Intel decided not to
| "wait" and use their existing technology to beat
| everyone.
| HarHarVeryFunny wrote:
| There was recent news of Japan (OIST) developing a new
| more efficient type of EUV, and also of Canon having a
| new alternate "nanoimprint" chip manufacturing
| technology.
|
| https://www.tomshardware.com/tech-industry/japanese-
| scientis...
|
| https://www.tomshardware.com/tech-industry/new-stamping-
| chip...
| KK7NIL wrote:
| Japan has been working on EUV for a long time but is very
| far from a working machine, despite developing IP. Notice
| how that article only mentions simulation tests; very
| very far from getting all the pieces needed for EUV
| litho.
|
| On the nanoprint technology: as far as I understand it,
| this will have economic advantages in trailing nodes but
| is not currently seen as a way to scale past EUV.
| insane_dreamer wrote:
| They're working on it, but for some time now ASML has
| been the only game in town
| whimsicalism wrote:
| Why would TSMC ever agree to such a deal?
| nineteen999 wrote:
| One can only hope that the US learned from its mistake, and
| doesn't allow chip manufacturing to go offshore to that degree
| again in future peaceful times.
| VWWHFSfQ wrote:
| > US learned from its mistake, and doesn't allow chip
| manufacturing to go offshore to that degree again
|
| I don't think USA made any mistake. It was always heavily
| invested in South Korea and Taiwan. Neither of them would
| even exist today without USA's investment, interest, and
| stewardship.
|
| Intel is the one that made the mistake.
| mschuster91 wrote:
| On top of that, the US outsourced of a very very
| ecologically damaging part of industry. The remains of
| Silicon Valley, literally named after the hotbed of what
| was manufactured there, are the largest concentration of
| Superfund sites in the US.
| flakeoil wrote:
| Is it that ecologically damaging? Maybe in the old times
| when silicon wafers where produced in Silicon Valley and
| when no-one thought or cared much about the environment.
| But today, I would assume the damaging effects of
| semiconductor manufacturing are less profound. But I do
| not know. Any inputs are welcome.
| mschuster91 wrote:
| > But today, I would assume the damaging effects of
| semiconductor manufacturing are less profound
|
| Manufacturing chips of just TSMC accounts for 5% (!) of
| Taiwan's entire electricity consumption, Intel's Arizona
| fab produces thousands of tons of hazardous waste a year
| [1]. It's far from the old days, but still a massive
| impact.
|
| [1] https://www.theguardian.com/environment/2021/sep/18/s
| emicond...
| dehrmann wrote:
| It's a lot harder to go to war when countries depend on each
| other economically.
| mschuster91 wrote:
| Tell that to Russia, its economy is - military production
| aside - in shambles due to Western sanctions and especially
| the brain drain.
|
| The idea of economically enforced peace only works for
| democratic countries where the government has to show at
| least a bare minimum of respect towards its citizens, but
| not in countries that follow the whims of their respective
| Dear Leader.
| amanaplanacanal wrote:
| Putin is surrounded and supported by people who are
| probably losing a ton of money right now. When he finally
| learns his lesson, it's probably going to be a harsh one.
| lucianbr wrote:
| That won't undo any of the damage done by the war, nor
| bring anyone back. It will pretty much not have any
| effect at all.
| rasz wrote:
| russian MOD people are making bank right now.
| foldr wrote:
| This was famously the argument made in the book _The Great
| Illusion_ , 5 years before the outbreak of the First World
| War.
|
| https://en.wikipedia.org/wiki/The_Great_Illusion
|
| Wars are often irrational.
| crote wrote:
| It wasn't wrong, just too early.
|
| At the time international trade was still fairly minor,
| so although a war would be deeply unprofitable it'd still
| be _possible_. Today 's economy looks quite different,
| with even basic consumer goods coming from overseas. If
| international trade were to suddenly cease, most major
| countries would be in serious trouble _really_ quickly.
|
| The most extreme example of this is the European Union.
| Its economies are so deeply interwoven that they act as a
| single entity. Separating them to the point that one of
| its members can independently support a war economy would
| take _decades_ , so it does indeed make intra-European
| wars virtually impossible.
| foldr wrote:
| It doesn't make war impossible, just economically
| ruinous.
| MetaWhirledPeas wrote:
| And yet it may be the best deterrent we have.
| isk517 wrote:
| Make's war more unappealing to those that are rational,
| which is the best you can hope for because there is no
| sure fire way of dealing with the irrational.
| foldr wrote:
| Although I think wars do often have an irrational
| element, economic considerations aren't the only ones
| that should influence rational decision making.
| thimabi wrote:
| We survived the Cold War because the U.S. and the Soviet
| Union were able to rationally agree on not using nuclear
| weapons. I sure believe countries today can rationally
| agree on avoiding war for fear of the economic
| consequences.
| sct202 wrote:
| It wasn't really a mistake. At the time Taiwan and South
| Korea were advancing into semiconductors, the US was more
| concerned with Japanese domination of the industry so having
| 2 small countries as alternatives to compete with Japan in
| some sectors of the industry was beneficial.
| mostlysimilar wrote:
| Meanwhile we're offshoring all of our software engineering
| jobs at a breakneck pace with no regard for the consequences
| on our future.
|
| The whole same story is going to play out again and in 20
| years we'll be panicking because nobody in the US will know
| how to write software anymore.
| bongodongobob wrote:
| Maybe you should visit the rust belt/midwest before SV starts
| patting itself on the back for single-handedly re-invigorating
| the economy.
|
| I get the spirit, but flyover country is not doing great.
| Unemployment is rising and there is a severe lack of decent
| paying jobs. Chips are great, but everything else is made in
| Asia. Increased automation is making a ton of jobs obsolete and
| there is no solution in sight yet. Chips ain't gonna do it.
| tomcam wrote:
| You are completely correct. But the chips have immense
| strategic value. Not being able to manufacture them would be
| catastrophic in the event that China cut us off.
| epistasis wrote:
| Maybe you should look at actual stats for what's going on in
| the economy before being completely cynical.
|
| The investment in factories is absolutely massive over the
| past few years. The Inflation Reduction Act is bringing
| massive amounts of manufacturing into the US, starting with
| the lowest value add of assembly, and after that additional
| suppliers lower down the chain will be built up too.
|
| It is not SV reinvigorating the economy, it's not happening
| in SV, it's happening in small towns all over the country.
| It's happening due to the bills that Democrats passed over
| Republican opposition, but because of politics, it's not
| being trumpeted as a partisan win in the towns where
| factories are being built.
| laidoffamazon wrote:
| > The investment in factories is absolutely massive over
| the past few years.
|
| The fascinating thing is people _don 't want to believe
| this_. They'll make every excuse before admitting that it's
| true. They _want_ to be in a declining empire when the
| reality is the opposite.
| riehwvfbk wrote:
| That's because reality that is readily observable by
| these people does not match the reality reported by the
| media and the reality portrayed in Democrat speeches. In
| that alternate reality manufacturing-heavy towns are
| booming and not dying out. US-made automobiles are the
| most advanced and Detroit is a world-class city. And it's
| simply not true, much like what Pravda would report back
| in the day.
| laidoffamazon wrote:
| > reality that is readily observable by these people does
| not match the reality reported by the media and the
| reality portrayed in Democrat speeches.
|
| Democratic* and also, no.
|
| > US-made automobiles are the most advanced
|
| You may be living in a different country then, given how
| impressive Tesla, Rivian, and Lucid are.
|
| > And it's simply not true
|
| Except it is, you're proving my point
| kragen wrote:
| here's a bookmark from a few days ago:
|
| _https://www.youtube.com/watch?v=aqhTRQ--x_Q #video on
| #China/#USA politics trying to keep out electric vehicles
| with 100% tariffs while US car companies spend their
| government EV research grants on stock buybacks. High-end
| electric cars, electric dumptrucks, and even electric
| mopeds support battery-change recharging; it's
| commercially deployed. They're very impressed with how
| advanced all the Chinese cars are, and also positively
| impressed with how accommodating the auto parts
| manufacturers they met with were, especially by contrast
| to US and Canadian companies._
|
| a thing i didn't mention in that bookmark is that the
| prc-company-made equivalent to the (prc-made) tesla model
| y (still the most popular car in the prc) is one fourth
| of the price
| corimaith wrote:
| Somebody took the time to bookmark some political video
| about the trade war between China and US to post in a
| comment on hackernews?
| kragen wrote:
| my bookmarks file has 14601 entries, including dozens of
| entries about that trade war.+ i find that it's helpful
| to be able to cite sources when discussing topics with
| other people, and summarizing them helps me understand
| them better to start with
|
| the video itself is only incidentally political; it's a
| 'custom car build show' from canada with 700k subscribers
| which primarily focuses on things like engine
| performance, welding machines, impact wrenches, and
| fixing dilapidated machinery. but a month ago the guys
| that make the show decided to go to china to see if they
| could source some car parts for their custom builds, and
| they were absolutely blown away by how much more advanced
| chinese cars were than usa-made cars, to the point that
| they filled a half-hour video mostly marveling at that
|
| to me this seemed relevant to the thread
|
| ______
|
| + i'm interested in things that seem likely to result in
| hundreds of millions of deaths in the next few years, so
| there are lots of entries about drones and the ukraine
| war too, for example
| riehwvfbk wrote:
| A democratic speech would be something about the right of
| the people to elect a government that represents them (as
| opposed to being told they are Nazis for wanting to do
| so). A Democrat speech is any speech delivered by a
| Democrat.
|
| The USSR also had fanatical members of the Youth Comsomol
| who'd loudly denounce anyone who questioned the party
| line as either insane or "anti-Soviet". That's what you
| and your comrades are doing.
|
| But really, it doesn't matter if Pravda reports a new
| record in farm production every other week - the people
| still see the empty shelves in the grocery stores.
|
| US manufacturing growth is manufactured as follows: use
| tariffs to ban much cheaper (and frequently better) goods
| and demand that they are produced locally. Or even
| better: make components for a fleet of ships that costs
| $4B each and that nobody needs and that gets canceled
| (see: Zumwalt). Step 2: use the ridiculously inflated
| costs as proof that manufacturing is growing (hey, you
| just need a big number).
| epistasis wrote:
| This is some sort of weird projection, where you have
| swallowed lots of propaganda, accuse anybody with actual
| facts as being "insane," and then accuse others of
| exactly what you are doing.
|
| Meanwhile, back in reality
|
| Bloomberg: US South Accounts for Lion's Share of Factory
| Construction Boom https://archive.is/URbMw
|
| Bloomberg Video from a year ago "factory construction has
| doubled":
| https://www.bloomberg.com/news/videos/2023-10-06/the-
| america...
|
| "So one was just like, "Oh yeah, they got those higher
| starting wages." If you're walking in with no background
| in manufacturing, no skills that you could point to, the
| starting wages are in the like $17.50 to $22 an hour
| range depending on the role" https://www.volts.wtf/p/how-
| is-new-clean-energy-manufacturin...
|
| This is not from tariffs, it's from carrots in tax
| incentives, used to build up the entire supply chain, not
| just a few factories.
|
| If you have empty shelves in grocery stores, where the
| hell are you living? You expect me to not believe my own
| eyes, and imagine some empty grocery store shelves? If
| so, it's your own area's politics that are causing the
| problem. Wages are waaaaay up, especially on the lower
| end, much less on the top end.
|
| The economy in the US is blowing away China, Europe, etc.
| We are so strong right now. If you are not doing well in
| your own micro area, look internally to see how your area
| is fucking up so much when there's opportunity
| everywhere.
| riehwvfbk wrote:
| Empty grocery shelves are you not being able to read, and
| taking a comparison literally. However, they could be
| observed not long ago in much of the country. There were
| supply chain issues during COVID with most anything. And
| even after COVID there were disruptions like a sudden
| unavailability of eggs.
|
| Starting wages increasing by 20% for the first time in a
| decade doesn't even keep up with inflation.
|
| You are so strong you have to completely change trade
| policy to a protectionist one. China is the one to watch
| for the next decade.
| bongodongobob wrote:
| Cool, factories get invested in, the c levels get paid
| $500k/year and the workers get $17.50/hr. Come to the
| Midwest and see it.
| macinjosh wrote:
| Investment in factories != investment in american
| communities.
|
| Legal immigrants with special protected status, Medicare
| coverage, and some basic income from the government are
| given these manufacturing jobs because then the investors
| don't have to pay for health benefits, can severely under
| pay, plus they have the bonus of having a desperate,
| captive workforce.
|
| The investment class thinks workers need to be knocked
| down a couple pegs. This stuff will not end well.
| consteval wrote:
| > don't want to believe this
|
| I don't think so. Rather, we are being told repeatedly
| that investment in factories is real bad and we should
| just continue to do what we did. We, then, respond to
| that - and that gets interpreted as "oh so you don't
| believe the situation is getting better?"
|
| It is getting better, but there's still a lot of
| opposition and the opposition still needs to be addressed
| and their concerns heard.
| bongodongobob wrote:
| Bro I fuckin live in it. I don't care what stats you have,
| people in the Midwest are struggling to afford groceries
| and housing. Come visit.
| bydo wrote:
| This is (only a few years later than the rest of the world's)
| state-of-the-art manufacturing, built only with the expertise
| of a Taiwanese company, that relies on the technology of a
| Dutch company, that in turn purchased (and has since
| monopolized) its IP from another US company, twenty years ago,
| and only then because a number of other companies (notably
| Canon and Nikon, both in Japan) were excluded from using it.
|
| It is not something to be celebrated. What TSMC and ASML are
| doing is amazing, but we could be so much further ahead.
| breerbgoat wrote:
| If you look at it from a geopolitical angle, it's much to be
| celebrated. It means US can rely on its democratic like
| minded friends to help protect the supply chain of cutting
| edge chips, against the now very visible alliance of
| dictatorships (Russia, China, North Korea, Iran).
|
| And make no doubt about it, there is a democratic alliance vs
| dictatorships here. Russia is aggressively sourcing artillery
| shells from North Korea, ballistic missiles from Iran, and
| financing and weapons from China. China incidentally is the
| economic caretaker of Iran and North Korea.
|
| US accuses China of giving 'very substantial' help to
| Russia's war machine https://www.politico.eu/article/united-
| states-accuse-china-h...
|
| China's Double Threat to Europe: How Beijing's Support for
| Moscow and Quest for EV Dominance Undermine European Security
| https://www.foreignaffairs.com/china/chinas-double-threat-
| eu...
| thomasahle wrote:
| > If you look at it from a geopolitical angle, it's much to
| be celebrated.
|
| I'm not sure. Taiwan is already a democratic ally. They are
| relying on the chip manufacture to keep them safe
| politically. Without that they'll quickly get "absorbed" by
| China.
|
| The US decoupling and isolating
| technologically/economically from the rest of the world,
| likely makes war more likely. Not less.
| codethief wrote:
| China has already been working hard on decoupling from
| the West, likely because they are anticipating conflict
| in the future, so I don't think we'd be doing ourselves a
| favor by continuing to rely on our supply chains in Asia.
| In-sourcing doesn't make that conflict more likely, but
| it does increase our options to react if push comes to
| shove.
| consteval wrote:
| > likely makes war more likely
|
| Maybe, but it also makes the impact of war much less.
| Because if Taiwan DOES get absorbed, you're not 100%
| screwed.
| deletedie wrote:
| Sadly the State Dept.'s moral panic over a non-aligned
| Military Complex rings somewhat hollow against the backdrop
| of 'very substantial' support in an on-going genocide.
|
| Coincidentally, it was Chinese intervention that brought an
| end to the last genocide the State Dept. was facilitating;
| the delineation of allies likely warrants reflection
| isr wrote:
| Ah, ok. If we're going to be throwing in personal takes on
| geopolitics, then here's mine.
|
| Less of the "democracies vs dictatorships". It's more like
| "western imperialism (essentially US & vassals) vs the rest
| of the world (who wants out of imperialism, endless
| sanctions, endless wars, the odd genocide or two)"
| Kavelach wrote:
| Very true, let's look at some of the strategic partners
| of the US: Saudi Arabia, an absolute monarchy, Israel, a
| state currently committing genocide.
| breerbgoat wrote:
| I don't think that's true. I see Europe and US and much
| of the rest of the world giving weapons and financial
| support to Ukraine. I don't see any other country giving
| weapons and financial support to Russia besides China,
| North Korea, Iran, and India who is buying more of
| Russian oil.
| bluGill wrote:
| There is more than Weapons though. Brazil is supporting
| the Chinese peace plan - the plan that China built
| without talking to Ukraine and looks like give Russia
| everything they want. A lot of Africa nations are drawing
| closer to Russia - they don't have much to give now, but
| may in the future. (just them not developing is a win for
| Russia)
| Intralexical wrote:
| Do you ever think about how disrespectful and
| imperialistic it is for you to think this way?
|
| The US's "vassals", I suppose, actually means dozens of
| independent countries with around a billion people. That
| includes Japan, a thousands-years-old and completely
| foreign culture with 125 million people that leads the
| world in many fields of advanced technology. It includes
| the EU, representing 450 million people and 15% of the
| world economy in 27 member states, with 8 nuclear missile
| submarines and 6 aircraft carriers of their own. But in
| your take, it's like they don't even exist as their own
| entity. They're just "vassals".
|
| And meanwhile, I don't see you respecting the
| independence of places like Rwanda, Myanmar, the Balkans,
| the Levant, the Tarim Basin, Somalia, either-- The places
| where your "odd genocide or two" _actually happen_. There
| 's no acknowledgement of the thousands of years of
| history, no discussion of the ethnic tensions and unique
| cultures, that make their lives in each of those places.
| Again, it's as if that doesn't even exist. You just
| reduce it to "western imperialism".
|
| You're just objectifying _everyone_. I suppose if you
| think in a fundamentally imperialistic way, if you find
| the idea of consensual multilateralism to be genuinely
| confusing, then it makes sense to just blame everything
| on the most visible power. But nobody likes a real
| imperialist, even if you pretend that your imperialism is
| actually anti-imperialist:
|
| https://en.wikipedia.org/wiki/United_Nations_General_Asse
| mbl...
|
| https://www.ipsos.com/en-uk/russia-iran-israel-and-china-
| ran...
| breerbgoat wrote:
| "vassals" is a common phrase/tactic used by netizens in
| China to try to drive a wedge between US and rest of its
| allies. Nevermind that they never mention their allies
| like Russia or Brazil/Italy who seeks economic alignment
| as vassals.
| Intralexical wrote:
| I think some number of them are probably just
| legitimately psychopaths living in the West. Though maybe
| they latch onto the term after hearing it as a PRC
| talking point. If you genuinely can't imagine mutually
| beneficial positive relationships based on consent, then
| it's only natural that seeing the US work together with
| so many other countries would be scary and look like "US
| & vassals".
|
| "A billion people" and "thousands year old civilization"
| are also Chinese talking points I've noticed. Hence why I
| included it in my comment, to both call out the really
| degrading "vassals" narrative and also point out these
| dictatorships aren't as special as they like to pretend.
| lynx23 wrote:
| Why is democracy relevant here? Seems like a rather random
| words thrown in to support your point, without any actual
| relevance. We're talking supply-chain here. And capitalism.
| Both really dont care what and if people voted.
| breerbgoat wrote:
| Friendshoring https://en.wikipedia.org/wiki/Friendshoring
| is the trend these days, which is why TSMC has setup
| factories in US and Japan.
| consteval wrote:
| > Both really dont care what and if people voted
|
| They kind of do. The reason various Asian companies
| pulled ahead in their own respective industries is top-
| down leadership and support. You dump money into them,
| tell them what to do, and lower the overhead of
| competition and you can create a world-class company.
|
| We, in the US, can't really do that. We try a little bit,
| but we don't fully commit so it doesn't work out.
| InkCanon wrote:
| I wonder how Taiwan feels about this. From their perspective
| jobs are getting offshored from their country because of
| massive subsidies, and the strategic shield of having most
| critical semiconductors coming from them is getting getting
| thinner. At the same time they can't complain because only the
| US could defend them from China.
| ip26 wrote:
| I've always thought there's some geopolitical chess at here.
| The US can't abide being completely dependent on the island
| of Taiwan. So if TSMC wasn't willing to do this, the US might
| fund an alternative. This could leave Taiwan no leverage at
| all.
|
| Now, with some US based production, TSMC is still in charge,
| and more resilient to disruption. So it may still be a very
| strong move.
| ImJamal wrote:
| I am not sure if Taiwan has any real leverage. If Taiwan is
| destroyed or otherwise compromised by China, the US would
| probably seize the American branch of TSMC, force the sale
| of the American branch to a western company, or force TSMC
| America become an independent company.
| zarzavat wrote:
| Isn't that like China seizing an iPhone factory and
| declaring that they are going to make the next iPhone? I
| doubt that a TSMC US fab can function independently for
| very long in the case of invasion, the Taiwanese govt
| presumably did this calculation before signing off on it.
| mjevans wrote:
| Context matters.
|
| Reactions to active conflict have a different threshold
| than normal civil operations. The interests of the US are
| biased towards continued peace. War is inherently value
| destructive (even if the military industrial complex gets
| to sell more stuff for a bit) so a majority of the
| population from a multitude of perspectives would rather
| remain fat and happy with their circuses (sports-ball).
|
| That balance changes, as it has since the dawn of western
| history times, when outside forces disrupt the regular
| machinations of the people. When events like Pearl
| Harbor, the turn of the century terrorist airplane
| hijackings that turned them into missiles and America's
| citizens into hostages to our own national security
| theater paranoia, or some country turning the place all
| of our iPhone and computer brains are fabricated in into
| a war zone.
| im3w1l wrote:
| > fat and happy with their circuses (sports-ball).
|
| You are protecting your ego. The modern circus is the
| algorithmic feed. And we are consuming it more
| obsessively then any previous form of entertainment.
| ceejayoz wrote:
| > Isn't that like China seizing an iPhone factory and
| declaring that they are going to make the next iPhone?
|
| In a hot war, they'd absolutely do the first bit.
|
| I don't think they _need_ to do the second bit.
| whimsicalism wrote:
| This seems extremely naive about what it takes to run
| tsmc and how human capital works.
| daedrdev wrote:
| The US would probably also accept any Taiwanese
| immigrants fleeing invasion and Chinese occupation
| whimsicalism wrote:
| The notion that the US could quickly build up the same
| capability Taiwan has currently is absurd - as we are
| currently seeing.
|
| Taiwan has significant leverage in this respect
| InkCanon wrote:
| The US is funding alternatives (Intel and Samsung).
| bamboozled wrote:
| Isn't this better for Taiwan because it strengthens their
| ally, The USA?
|
| If China would just wipe out Taiwan's ability produce chips,
| and disables part of the US information tech supply chain,
| then it would be bad for Taiwan right?
| wtallis wrote:
| The strategic shield isn't getting _that_ much thinner: this
| fab is a generation behind _last year 's_ iPhone Pros and
| MacBook Pros.
| boppo1 wrote:
| Wait does that mean the 16 isn't their "fastest iPhone
| ever"?
| audunw wrote:
| You may be confused by the chip numbering. The A16 chip
| that they're manufacturing is not the chip for the iPhone
| 16 (it uses the A18)
| resters wrote:
| You really think it's a success to force Apple to lose money to
| make US politicians look like they are "doing something" about
| a world economy that is increasingly leaving the US in the
| dust?
|
| Meanwhile in China, 1000 engineers (to one in the US) are
| building all kinds of electronics and embedded systems on
| shoestring budgets that truly force them to learn engineering.
| China's industrial policy architects are likely laughing at
| this big folly on the part of the US.
|
| The worst is the 100% tariff on EVs which keeps the US in an
| artificial economy of gigafactory, high-end nonsense when the
| rest of the world will be getting true economies of scale from
| EVs which are actually simple, reliable and low cost.
|
| It's deeply embarrassing that the US must suffer poltical rule
| of its economy along with the double embarrassment of seeing
| other nations do it so much more effectively.
|
| Industrial policy should be measured in terms of person months
| of career acceleration (experience) per dollar. The US focuses
| on helping prolong the dominance of internal combustion engines
| and taxing high profile, high-end companies that do not offer
| skills that transfer well into the rest of the economy. How
| many Apples are there? Will forcing manufacture in the US
| suddenly result in another company doing 2nm process and
| competing with Apple? It's absurd.
|
| I know of a variety of small and medium sized US tech companies
| (aerospace and 3d printing / robotics) that were almost sunk by
| US "industrial policy" becasue they relied on a small number of
| China-manufactured inputs that suddenly became unavailable,
| forcing unplanned re-engineering and work the companies could
| not afford. Sadly, one went under. Meanwhile, the US firms that
| import finished goods are thriving selling Chinese manufactured
| gear -- Chinese companies didn't have to pay US tariffs on the
| same inputs. Utterly absurd.
|
| Politicians should stay out of the economy and focus on moving
| us closer to nuclear war and promoting the religion of American
| Exceptionalism.
| worldsayshi wrote:
| > Industrial policy should be measured in terms of person
| months of career acceleration (experience) per dollar
|
| Sounds about right but how would you come close to measuring
| that?
| mrtesthah wrote:
| > _"It 's deeply embarrassing that the US must suffer
| poltical rule of its economy along with the double
| embarrassment of seeing other nations do it so much more
| effectively."_
|
| The Chinese Communist Party exerts far, far more control over
| all sectors of their economy than US politicians do over the
| US economy.
|
| https://www.cbsnews.com/news/xi-jinping-china-
| capitalism-60-...
| resters wrote:
| That's what I meant by this:
|
| > other nations do it so much more effectively
|
| China hsa an actual strategy, not just an attempt for
| politicians to pay lip service and win a few rust belt
| states.
|
| Also, China had a policy for years of dramatically
| suppressing its economy, so of course a few small changes
| result in massive growth (once some of the suppression was
| removed).
| yarg wrote:
| This is a move with swinging geopolitical implications. But the
| value and urgency of the reinvigoration of the American
| manufacturing centre cannot be overstated.
|
| China's gonna be a bit salty though.
|
| What I really want them building in America though is low-end
| AMD chips for development boards.
|
| 4-Core/8-Thread CPU, 4-Core GPU, 16 GB ram, sane IO, and
| however many of Xilinx's FPGAs they can put on it without
| overdoing it.
|
| People would be able to make some pretty decent things with
| that.
| Refusing23 wrote:
| It also helps TSMC, i think. More "allegiance" with the US
| while China is scrambling to catch up
| stackghost wrote:
| I've long been of the belief that, much like uranium
| enrichment, supply chain integrity of semiconductors will
| become a national security issue. We've seen it already in
| reverse with export controls being placed on GPU cards, and of
| course there is a reason the NSA operates its own chip fab. The
| threat to western economies of (for lack of a better term)
| "poisoned" chips making their way into phones, laptops,
| industrial SCADA equipment, etc. is real if nascent.
|
| On-shoring top-tier manufacturers like is absolutely a win not
| just for the high-tech manufacturing sector but also for the US
| and allied countries.
|
| >This is great news, and we should celebrate.
|
| Couldn't agree more.
| misja111 wrote:
| Not only that, the US now also has some backup when China will
| invade Taiwan and take over TSMC.
| vagrantJin wrote:
| > we in the US are going to be building our own future both for
| chips and for energy security.
|
| > just the beginning of the amazing industrial policy
|
| Isn't intel one of the biggest companies in the world, makes
| chips for everyone and everything and based in the US?
|
| If the marker for industrial success is supplying Apple Inc,
| Intel did until 2022?
| ninetyninenine wrote:
| >This is a significant win for the US, and just the beginning
| of the amazing industrial policy passed over the past few
| years.
|
| I don't consider it a win. I consider it a loss. This is a
| desperate move by the US. Intel making better chips then TSMC
| is a win. The government strong arming Taiwan with "protection"
| from China in order to gain this technology is a display of
| American incompetence.
|
| But then again maybe is't not about fair play. If the US wins
| by unfair means, it's still a win? A pathetic win but a win
| none the less.
| breerbgoat wrote:
| Someone in the thread mentioned "China's gonna be a bit salty
| though."
|
| I see what salty China looks like now.
| ninetyninenine wrote:
| I'm an American though. But yes, of course China will be
| pissed. I suspect China wants this though. Once the US has
| Taiwan semiconductor technology there's no need to protect
| Taiwan and China can move in. Symbolically Taiwan
| represents more to China than some island that makes great
| chips.
|
| I still think it's better if intel was able to pull it off,
| but i don't think us Americans have the capability.
| matrix87 wrote:
| There's a common pattern here, it's easier for them to import
| fresh meat than fix the rotting carcass back home
|
| Whether that's fair or not, who really cares, what can we do
| about it
| ninetyninenine wrote:
| As an American I care because it's shameful and rather
| pathetic.
|
| And remember stuffing a rotting carcass with imported fresh
| meat doesn't actually fix the rotting carcass.
|
| I look at where all the talent is going in the US and it's
| all full stack software engineers and gen AI.
| pbhjpbhj wrote:
| So the free market was the enemy all along, what we needed was
| state planning?
| anon291 wrote:
| The free market actually works great under the assumption of
| governments not acting irrationally.
|
| However, since China has expressed interest in war with
| Taiwan (not a thing advised by the free market), someone
| needs to address that.
|
| In terms of economics, this is a net loss, but then again,
| the effects of war in Taiwan would be worse.
| sph wrote:
| The free market is an innocent scapegoat that never existed
| in any government. As long as the State makes the laws, it is
| a form of state planning. The only different between Soviet
| Russia and modern Western countries is how heavy the hand of
| the state tries to move the needle of the market.
|
| But I agree on the sentiment: everybody seems to have decided
| the state should control the market even further than it did
| three decades ago. Free market was never given a chance.
| mihaaly wrote:
| Wave the flag and have colourful fireworks with hand at the
| heart and tears in the eyes, this is a glorious moment the
| children will cheer its glory in glorious essays!
| crote wrote:
| > US manufacturing is about to be reinvigorated, and we in the
| US are going to be building our own future both for chips and
| for energy security.
|
| Don't count on it. For every high-end chip you need _hundreds_
| of commodity parts to support them, and nobody is investing in
| US factories to make $0.001 capacitors or $0.10 connectors. You
| just can 't compete with cheap Chinese labor, so the US supply
| lines will never be able to equal a city like Shenzhen.
|
| Unless the US is willing to get rid of capitalism and switch to
| a plan economy, most of those expensive high-end chips will
| just be shipped to Asia for assembly. So much for building your
| own future.
| sgu999 wrote:
| > most of those expensive high-end chips will just be shipped
| to Asia for assembly
|
| I get the first part of your comment, but why wouldn't all
| the missing components be imported for assembly in the US?
| SMT lines in particular don't need that much cheap labour to
| operate. Even Brits can assemble PCBs!
| swalsh wrote:
| "You just can't compete with cheap Chinese labor"
|
| You sure can, we have cheap Mexican labor... and we have a
| much healthier trade relationship with Mexico.
| mike50 wrote:
| Those components are not used in military products.
| Specialized vendors manufacture passives for the military.
| AVX, CDE and Vishay are just the first three I recall.
| pyrale wrote:
| > This is great news, and we should celebrate.
|
| On the other hand, this is a protectionist policy that has been
| straining US' relations with its allies. That development means
| the US empire is a little less mutually beneficial, and a
| little more beneficial to the core.
|
| Its success requires these allies not to reciprocate, and this
| is a long-term prospect that only time will confirm.
| norswap wrote:
| Hold your horses -- this will only produce a fraction of the
| chips, and probably at a much higher cost.
|
| It's a step in the right direction for the policy goals, but
| they've really just entered the woods with this one.
| swalsh wrote:
| But it also makes us not dependent on a place that China has
| their literal sights focused on.
| Keyframe wrote:
| _...transferring knowledge from TSMC to a US workforce. This is
| a significant win for the US..._
|
| I get what you're saying and I agree, but there's some heavy
| irony in saying that considering that's exactly how TSMC
| started out but from the opposite side; Transferring knowledge
| from "the west" (RCA from US and Philips) with ITRI it evolved
| into a project of Taiwanese state which culminated in TSMC.
| ActionHank wrote:
| I feel like you are running around high fiving everyone for a
| job well done and the first chips aren't even off the line yet.
|
| This is a huge milestone, but it seems a little premature.
| swalsh wrote:
| "US manufacturing is about to be reinvigorated"
|
| Oh i'm going to be downvoted into oblivion for this one.... but
| I think this is a win we can give to Trump. It was a hard focus
| of his, I think he put the right people in place to do it, and
| I think time is going to prove he was right to do it.
|
| I didn't vote for him in 2016, but I think it's important to
| acknowledge it.
| erellsworth wrote:
| This is because of the CHIPS act. Other than Trump's constant
| whinging about China, he didn't have anything to do with
| this.
| swalsh wrote:
| I understand, but I was commenting specifically around the
| comment "US Manufacturing is reinvigorating" which it is,
| and which is more general than chips.
|
| I think when the Trump admin renegotiated trade policies
| (and I'll given Biden credit for keeping them) the economic
| incentives were rebalanced. I think the result is
| complex/low volume manufacturing is starting to return to
| the US, and simple high volume manufacturing is moving to
| Mexico (which we have a very good relationship with... i'll
| discredit Trump for being so stupidly aggressive with them
| in the first few months of his administration though)
| apercu wrote:
| Yep. We should be investing our tax dollars in our economy and
| our people.
| thisconnect wrote:
| > US manufacturing
|
| America is a continent.
| ckemere wrote:
| Agree that TSMC is good news.
|
| > US manufacturing is about to be reinvigorated
|
| I'd suggest you post a small/medium quantity machining RFP on
| MFG.com with a medium to high complexity. I've been quite
| discouraged that US vs China price differences are 5-10x. (My
| part was a custom M0.8 screw in quantity ~500.)
|
| It seems that without a vibrant base of small businesses, it
| will be very challenging to truly reinvigorate US
| manufacturing. And that would require reforming the finance
| sector/allocation of capital that currently is skewing really
| heavily towards "scale".
| Workaccount2 wrote:
| >and we have top tier production here in the US
|
| TSMC's process that they are bringing to the US is 2nd tier.
| The crown jewels are being kept at home.
|
| If Intel can get their act together, _then_ we will have top
| tier in the US.
| zrail wrote:
| That's not really true, afaict. This press release[1] states
| that Fab 21 (Arizona) phase 1 is 4nm, which is not the best
| but clearly is enough to manufacture the A16, phase 2 opening
| in 2026 will be 3nm, and phase 3 will be 2nm or better. I'm
| not a semiconductor engineer so maybe there's some process
| nuance that I don't know, but it certainly seems that this is
| at or near the top of TSMC's process list.
|
| [1]: https://pr.tsmc.com/english/news/2977
| talldayo wrote:
| Those are _decently_ advanced nodes, but if 3nm isn 't
| coming until 2026 then this is absolutely a last-gen fab.
| For reference, Samsung is considered a "last-gen/trailing
| gen" fab, and they'll be shipping 2nm in 2026 on their
| roadmap.
|
| Taiwan's TSMC will have a process and sampling edge for the
| foreseeable future, unless they change the roadmap.
| lossolo wrote:
| I think you are overly optimistic, this is an older process,
| which means that next iphones will need to source their CPUs
| from TSMC fabs in Asia, not from US. There also will be no
| knowledge transfer, that was not part of the deal. It's more of
| a national security political message than a real change. I
| guess it's better than nothing. I wouldn't call it a
| significant win, but it's a step in the right direction.
|
| And fabs are not enough:
|
| https://www.bloomberg.com/opinion/articles/2024-09-03/us-nee...
|
| You can't lead in the energy transition or produce chips
| without the supply chain and critical minerals:
|
| https://www.wsj.com/world/asia/china-harnesses-a-technology-...
|
| https://www.politico.com/news/2024/08/29/biden-minerals-pric...
|
| https://www.politico.com/news/2024/09/13/steelmaker-biden-cl...
|
| There's still a lot more to do to actually make it work before
| you can celebrate a win.
| AndrewKemendo wrote:
| Why did it take the United States government having to invest
| in US labor?
|
| Why wasn't the "free market" Capitalism allocating resources to
| the United States if in fact, it is the best place for this to
| happen?
|
| Or is this just garden variety realpolitik nationalism?
| BiteCode_dev wrote:
| This also lowers the Taiwan risk, which was increasingly high
| after the China chip ban.
| eru wrote:
| > After all the wailing and rending of clothes, the industrial
| policy worked out great and we have top tier production here in
| the US, transferring knowledge from TSMC to a US workforce.
|
| > This is a significant win for the US, and just the beginning
| of the amazing industrial policy passed over the past few
| years.
|
| I'm not sure these conclusions are justified. It's the 'seen vs
| unseen'.
| TaylorAlexander wrote:
| I actually think the extreme density and breadth of
| manufacturing in China is going to continue to outpace US
| manufacturing. They have multiple enormous manufacturing hubs
| connected by high speed rail lines over a wide geographic area.
| The US has no equivalent to the likes of Shenzhen and
| Guangzhou, where you can finish a PCB design in the morning and
| have the prototype in hand that evening. You can go to the
| Huaqiangbei Electronics Market and find exactly the right motor
| and controller for your specs, pick up specialized sensors, and
| build your next rev overnight.
|
| I have lived in the Bay Area my entire adult life. We used to
| have Halted/HSC, we used to have Weird Stuff. We used to have
| Triangle Machinery Co in Santa Clara. Now everything is gone.
|
| I think it's great that we built a semiconductor manufacturing
| plant. That's important for strategic manufacturing. But we've
| so thoroughly destroyed our manufacturing base, let the
| factories rot, and financialized property value that the "weird
| place with random electronics" can no longer even afford to do
| business. Starbucks makes more money, so in it goes.
|
| US politicians love to shout about manufacturing.
| "Manufacturing jobs jobs economy growth." But these people DO
| NOT understand how things get made. They have no serious
| industrial policy. They do not know the value of a high speed
| train connecting manufacturing centers. And even if they did,
| the entire apparatus of our government is set up to stop it.
|
| Manufacturing workers need education. They need housing,
| transit, health care, maternity and sick leave. They need
| secure jobs and extra income that allows them time off to take
| classes to learn new skills.
|
| I'm glad we passed the inflation reduction act, and the CHIPS
| act. We need that investment. But it's going to take much more
| than that to "bring manufacturing back" and I've have seen time
| and time again that we do not have the vision or capability to
| move in the ways that would be required.
|
| I hope manufacturing comes back. We desperately need it. But
| I'm quite frustrated that despite some marginal progress, the
| serious changes we need are not on the horizon nor seemingly
| beyond it.
| mptest wrote:
| Perfect comment, it's important to celebrate but more
| important to keep in mind it's a tiny piece of the public
| infrastructure and government inertia we need to do this
| correctly. We need exactly what you describe, and I want to
| bolster the mention of education. China produces 2x the stem
| phds we do every year. Sure, bigger population, but they also
| have a growing share of citations. (source for both is
| suleyman's book "the coming wave")
| s1mon wrote:
| I came here to say something like this. I've worked in
| product development in the Bay Area for 30+ years and brought
| numerous products to market, mostly manufactured in China.
| There's nothing like the density and ability of manufacturing
| that's in China (and more broadly in other parts of Asia). In
| the US I've worked with great molders and toolers, PCB fab,
| machine shops, CMs, etc. but the ability to turn on a dime
| and get stuff done quickly in southern China is insane. In
| the Bay Area you see billboards for esoteric SaaS products
| and credit cards for startups, in parts of China, they are
| for molding machines and CNC tools. You drive by rows of roll
| up doors in the base of apartment blocks and each stall/shop
| is filled with bar stock, plastic pellets, CNC machines,
| injection molding machines, etc.
|
| You'll also see people doing complex repairs of mobile phones
| sitting on a stool on the sidewalk. The level of skill and
| access to tools/spare parts that is endemic there is
| completely different than the US.
| onlyrealcuzzo wrote:
| > and financialized property value
|
| Do you think China has not?
| TaylorAlexander wrote:
| I suspect that the extent to which they have done so, and
| its impacts, vary significantly from how things have gone
| in the US.
| roughly wrote:
| As they say, the perfect time to plant a tree was 20 years
| ago.
| bboygravity wrote:
| It's also terrible/impossible news from a USD perspective if
| the US produces things nationally in a significant way
| (importing less, selling less printed USD in exchange for
| goods).
|
| Printing insane amounts of USD to allow for systemic government
| over-spending and huge untenable government debt doesn't go
| hand in hand with not importing most goods. You can't keep your
| currency strong if you can't force others to buy your currency.
|
| If you have a lot of production in the US, this is going to
| cause hyperinflation to come sooner.
|
| In the long term it won't matter, the end result is the same,
| but if production significantly moves back to the US it will be
| very scary from a currency perspective.
| digital-cygnet wrote:
| I don't see the argument here. Importing less leads to
| selling less USD (yes), somehow leading to devaluation of
| USD? Is the implication that the dollar is strong because the
| US government "forces others" (foreign manufacturers) to buy
| it? Isn't that the opposite of the first thought, which
| implied that "selling less printed USD" was the reason that
| domestic manufacturing would be inflationary? I don't
| understand the causality, and it doesn't match my mental
| model ("a country that can build things domestically at a
| competitive price point should be deflationary because now
| there is more supply of stuff and equal supply of money"), so
| I think this could do with some expanding.
| jojobas wrote:
| Perhaps a stupid question - what exactly is TSMC contribution to
| producing Apple designs on ASML equipment?
| hindsightbias wrote:
| A couple trillion dollar valuation?
|
| You can start here:
| https://www.youtube.com/results?search_query=asianometry+tsm...
| bydo wrote:
| That ASML is not undercutting TSMC and running off on their own
| should be telling? There's more to a running a fab than
| lithography.
| KK7NIL wrote:
| Apple doesn't design on ASML equipment. Apple (and other
| fabless companies) designs to a PDK (process design kit,
| basically rules about how to layout transistors and passives on
| the die), which is given to them by their foundry (TSMC in this
| case).
|
| There's a lot of steps between circuit design on the PDK to a
| working high volume process; and ASML machines are only part of
| that.
| sakras wrote:
| There are a lot of steps involved in making the chips -
| lithography is only one of them. You have to have the supply
| chains set up for massive amounts of silicon, you have to have
| a process for doping the silicon properly, you need quality
| control, you need to actually build a fab to house the
| lithography machines, I could go on.
| bri3d wrote:
| ASML make fancy printers.
|
| TSMC and other ASML customers build the designs that let those
| fancy printers create transistors and then logic gates, as well
| as a basic library of arrangements for those logic gates (PDK).
| They also provide all of the raw materials and processes and
| physics that go into said printers.
|
| Apple and other design customers then compile RTL using that
| PDK to produce a design that can be manufactured using the
| fab's process steps.
|
| The printers are A hard part but far from The hard part. If you
| have an ASML machine it is useless to you unless you have also
| figured out how to build a 3D transistor in layers. Good luck!
| tptacek wrote:
| This is a really sharp summary. I hope it's correct, because
| it was fun to read.
| initplus wrote:
| It does seem weird that there is this separation though. I
| would have assumed that there is a lot of overlap between
| machine design and operation.
| wtallis wrote:
| I don't think there's much overlap between things like
| making a sufficiently-bright EUV light source and designing
| a transistor.
| ajross wrote:
| ASML makes tools for only a small part of the semiconductor
| production process. It's true that EUV lithography is the big
| limiting factor right now, and that it is a field dominated by
| one manufacturer. So it's reasonable to credit ASML "as much
| as" TSMC for the current dominance of their high end nodes.
|
| Nonetheless if it was as simple as buying ASML boxes there
| would be more than one fab at the top of the heap, and there
| isn't. TSMC absolutely "contributes" to their own dominance,
| arguing otherwise is silly.
| andy_xor_andrew wrote:
| to be honest, this is far better news than I was expected, and
| sooner, too.
|
| is anyone else besides Intel making ~4nm* node wafers on US soil?
|
| *yes I know I know I know about the misnomer with using nm
| measurements nowadays
| vitus wrote:
| I mean, there are really only three bleeding-edge foundries:
| TSMC, Samsung, and maybe Intel if they've gotten their yields
| back on track.
|
| Samsung has a fab near Austin, TX that was slated to make 4nm
| but it's been postponed to 2026 along with a shift to 2nm:
| https://www.tomshardware.com/tech-industry/samsungs-yield-is...
|
| But their yields on 2nm are apparently... not great, so even
| that's in question.
| https://www.businesskorea.co.kr/news/articleView.html?idxno=...
|
| SMIC is apparently making low-yield 7nm and is supposedly
| working on even lower-yield 5nm, but absolutely not in the US.
| halJordan wrote:
| SMIC: "You got anymore if those Secure Foundry grants lying
| around?"
| MobiusHorizons wrote:
| Yeah I was surprised to hear this is already at a point where
| they can produce chips. From what I've heard it takes a really
| serious amount of effort and expertise to calibrate the
| machines, and get the water filtration and other chemistry
| working in a new location.
| phkahler wrote:
| I thought Intel 4nm was outsourced to TSMC. Or it's a
| rebranding of an earlier node. Am I mistaken? Do they actually
| produce that?
|
| Here we are:
|
| https://www.guru3d.com/story/intel-to-strategically-use-
| tsmc....
| biggieshellz wrote:
| Intel 4 was the initial internal-only version of that
| process. The version available to external fab customers is
| Intel 3, which is in production in Oregon and Ireland. See
| https://www.trendforce.com/news/2024/06/20/news-intel-
| claims...
| wtallis wrote:
| One of the chiplets of Intel's _Meteor Lake_ laptop
| processors launched at the end of last year is made on
| "Intel 4"; the rest of the chiplets are TSMC N5 and N6. It
| was not a meaningful improvement over Intel's preceding
| generation that was made on "Intel 7" aka. the iteration of
| 10nm where the process was finally good enough for their
| whole product line.
|
| Intel's _Lunar Lake_ low-power laptop processors shipping in
| a week will be the first all-TSMC x86 processor from Intel.
| Their desktop /high-power laptop processors ( _Arrow Lake_ )
| will also be all-TSMC, and should be launching this fall.
| After that, Intel intends to resume using their own fabs for
| consumer processors with their 18A process. There are some
| datacenter processors using "Intel 3" and the 20A process was
| cancelled in favor of the more fully-featured 18A.
|
| (In case of nitpicks: Intel is also manufacturing the silicon
| interposers that the chiplets are mounted on, but since these
| dies are completely passive and have no transistors, I'm not
| giving them credit.)
| adrian_b wrote:
| With Intel 4, Intel has not succeeded to obtain clock
| frequencies as high as with Intel 7, which is why the older
| Raptor Lake laptop CPUs still beat the Meteor Lake CPUs in
| single-threaded benchmarks.
|
| Moreover, the new Intel 4 process had low fabrication
| yields, so Intel has produced less Meteor Lake CPUs than it
| could have sold.
|
| Nevertheless, the Intel 4 process has demonstrated a much
| greater energy efficiency than the previous Intel 7
| process, which is why the Meteor Lake CPUs beat easily the
| older Intel CPUs in multithreaded benchmarks, where the CPU
| performance is limited by the power consumption.
| brcmthrowaway wrote:
| Why can't America build a TSMC from scratch?
| shiroiushi wrote:
| They did! It's called "Intel".
| arcticbull wrote:
| And GlobalFoundries (ex-AMD, ex-IBM). There's also less
| cutting edge process stuff at ONSemi, TI, Micron, Analog
| Devices, Diodes Inc and I'm sure I'm missing a few.
|
| Even Apple has their own fab.
| electronbeam wrote:
| I hadn't heard about Apple, is the node size public?
| arcticbull wrote:
| They picked up the old Maxim fab in San Jose almost 10
| years ago. Not sure what's happening in there now and I
| assume the people who do aren't likely to spill the beans
| :) unless its as shuttered I guess.
|
| [1] https://appleinsider.com/articles/15/12/14/apple-
| buys-former...
| Reason077 wrote:
| The San Jose facility is active. There was some
| controversy surrounding it recently as some members of
| the public have been complaining that they've been
| illegally releasing solvents into the environment, which
| resulted in some EPA investigation/enforcement action
| [1].
|
| According to some reports they may be developing micro-
| LED display tech there, not necessarily chips.
|
| [1] https://news.ycombinator.com/item?id=40772224
| KSS42 wrote:
| GF is 14/12 nm. Not really cutting edge anymore
| electronbeam wrote:
| Its called Intel Foundry
| trollian wrote:
| Have you even met Americans? We're terrible at this kind of
| thing.
| Cthulhu_ wrote:
| Do you know who invented and developed transistors,
| microchips and their manufacturing processes?
| handfuloflight wrote:
| Are the inventors of the wheel still in the driver's seat?
| mrguyorama wrote:
| The past is another country.
|
| Find me a modern US exec willing to actually invest in a
| risky hardware prospect, rather than throwing a billion
| dollars into real estate or "content" that can be filled
| with ads.
| acdha wrote:
| Tim Cook seems to have done okay with what a bunch of
| tech pundits said was a risky move compared to sticking
| with Intel.
| talldayo wrote:
| Considering how Intel doesn't tend to hold grudge-matches
| with their customers, I seriously doubt there was any
| risk in the first place. If TSMC yields were too low to
| mass-produce Apple Silicon, they could easily ship out
| another copy-paste Macbook iteration with Magic Keyboard
| and nobody would care what chip it had inside.
|
| With the benefit of hindsight, it feels more like Intel
| and Apple were in a race to see who would outsource the
| Mac chip first. Since Apple already had the supply chain
| set up for the iPhone, cutting Intel out of the equation
| was mostly just a matter of designing an SOC. They took
| the opportunity, and now we're seeing Intel glumly admit
| that they too can be energy-efficient if they swallow
| their pride and pay TSMC.
| coliveira wrote:
| This was build by TSMC, that's why it was completed in a few
| years. They have the know-how.
| klyrs wrote:
| Wrong question. They'd still be buying Zeiss
| kylehotchkiss wrote:
| Build a workforce with the world's leading company. Pull those
| people into senior positions at new companies nearby. An
| industry is born and competition can grow. All with export
| limits so the jobs hopefully can't be outsourced.
| sedatk wrote:
| About time. It's easier to secure supply chains domestically.
| trollian wrote:
| I wonder how bad the yields are and how long it'll take to get
| them up to being commercially viable.
| breerbgoat wrote:
| The yields are pretty good - TSMC's Arizona Trials Put Plant
| Productivity on Par with Taiwan
| https://finance.yahoo.com/news/tsmc-arizona-trials-put-plant...
| wilted-iris wrote:
| Has either company verified this?
| 7e wrote:
| How much of this fab's supply chain still comes from Taiwan
| and/or China? Most especially, where does the fab process
| equipment itself come from?
| abhinavk wrote:
| > the fab process equipment itself come from?
|
| Isn't there only one for this kind of scale: ASML?
| MobiusHorizons wrote:
| ASML for those who don't know is a Dutch company, and
| supplies the EUV machines for both TSMC and Intel (It is not
| clear to me if Samsung uses EUV in its current process
| nodes). I believe they are the only EUV supplier in the
| world. There are certainly other suppliers other that ASML,
| since there is a lot of other equipment other than
| lithography, but that's a critical one for modern process
| nodes.
| kylehotchkiss wrote:
| ASML has important ops in US offices fwiw
| https://www.asml.com/en/company/about-asml/locations/san-
| die...
| kcb wrote:
| Besides lithography there are also several US suppliers for
| semiconductor manufacturing, Applied Materials, Lam Research,
| KLA.
| tomcam wrote:
| A strategic triumph for both the current and previous
| administrations. Both Trump and Biden handled the situation
| adroitly. These may not be the absolute bleeding edge tech but
| it's a proof of concept that we can wean ourselves from Chinese
| tech if it becomes necessary.
|
| It comes at the cost of many, many Chinese jobs in the midst of a
| devastating economic downturn there. They are victims of repeated
| local and geopolitical malpractice by the current emperor.
|
| EDIT: User lotsofpulp pointed out that we don't make any
| strategic chips in China. That is of course true. I meant that
| the game of economic chess played by the current and previous
| administrations has been highly effective in reducing China's
| options.
| lotsofpulp wrote:
| >It comes at the cost of many, many Chinese jobs in the midst
| of a devastating economic downturn there
|
| As far as I know, TSMC does not make chips in China.
| tomcam wrote:
| They don't. I was unclear. What I meant to say was that our
| tightening of sanctions against China has harmed their
| economy greatly. It is an act of economic war against their
| acts of economic war.
| chuckadams wrote:
| TSMC Fab 10 is in Shanghai. Probably not cutting-edge stuff
| coming out of there though.
| lamontcg wrote:
| > Both Trump and Biden handled the situation adroitly.
|
| Trump started trade wars by raising tariffs. Biden passed the
| CHIPS act, the infrastructure bill, and the build back better
| act.
| tomcam wrote:
| Biden continued Trump tariffs and raised many of them,
| appropriately.
|
| https://taxfoundation.org/research/all/federal/trump-
| tariffs...
| laidoffamazon wrote:
| > Both Trump and Biden handled the situation adroitly.
|
| I don't remember any news like this during the Trump
| administration. I do remember the Foxconn plant that didn't
| open though!
| Cthulhu_ wrote:
| That's because a lot of news was dominated by him tweeting
| about his daily ablutions or something. I'm not convinced how
| much Trump himself was involved in all that to be honest.
| itkovian_ wrote:
| Tsmc will never allow the Arizona plant to be a viable
| replacement. They are extremely incentived to prevent this
| happening.
| kylehotchkiss wrote:
| That's OK. It's on US soil with US employees and can be
| nationalized if and when need be. I'm sure ASML will be happy
| to comply or else risk their US operations being nationalized
| too. Like their DUV/EUV light sources office
| https://www.asml.com/en/company/about-asml/locations/san-die...
| argsnd wrote:
| Holy shit they have 1,900 employees for that
| nashashmi wrote:
| Yup. Just pass another tiktok bill to force sell factory to
| US buyer.
| mindwok wrote:
| How so? They also are extremely incentivised to make this
| happen. A war on your front door is not good for business.
| itkovian_ wrote:
| Tsmc is mostly governed by Taiwanese who would like to
| maintain Taiwanese sovereignty
| ip26 wrote:
| Taiwan might be a more appealing target if all of TSMC's
| output is located there.
| dbtc wrote:
| My thinking is less appealing, because the more USA
| depends on them the more USA will defend them.
| hnthr_w_y wrote:
| TSMC is governed by the Taiwanese ruling class. If the
| Chinese launches a widespread attack on Taiwanese soil
| tomorrow, nothing would happen to any of these people.
| These people are not your random neighbors harboring
| nationalistic views.
| hug wrote:
| You don't have to be a rabid nationalist to not wish for
| your country to be invaded and annexed by others. You
| don't even have to _live_ there. I 'm sure a large
| percentage of Taiwanese living in countries outside of
| Taiwan would not wish for it to be invaded.
|
| I'm not even Taiwanese, don't know anyone of Taiwanese
| descent well, and _I_ don 't want Taiwan invaded.
|
| The suggestion that there's some kind of weird oligarchy
| class of TSMC-controlling Taiwanese who couldn't give a
| toss if Taiwan was invaded is a mustache-twirling level
| of caricature.
| jacobp100 wrote:
| Don't all the machines in Taiwan have explosives fitted in
| case of invasion?
| pie420 wrote:
| TSMC is governed by the Taiwanese government, which is a
| puppet government controlled by the US government and
| military. TSMC answers to the US directly, as without US
| support, Taiwan falls to China almost instantly. Nobody
| besides the US can prevent a blockade of Taiwan
| 33MHz-i486 wrote:
| the strength of the US defense commitment is likely
| proportional to the strategic value of the economic assets
| they still hold. the taiwanese have every incentive to do
| just well enough at the AZ plant for the $39 Billion checks
| to clear and no better
| mindwok wrote:
| While true, TSMC has a stronger incentive for its own
| survival than the survival of Taiwan. If it's easier for
| them to shift operations to the US and continue to make
| $$$, I suspect they'd do that over retaining operations in
| Taiwan and hoping it will convince the US to protect the
| country.
| dannyw wrote:
| The biggest shareholder of TSMC is the Taiwan government.
| Calvin02 wrote:
| Does it have to be or does it just have to be enough to be a
| deterrent to China?
|
| I wonder if the strategy behind the CHIPS act is to have enough
| "backup" capacity in the US that it isn't completely
| vulnerable.
| moduspol wrote:
| It doesn't need to be a viable replacement. Even if it only
| ever makes chips that are 1-2 years behind, it's still a huge
| strategic benefit for the country.
| mrguyorama wrote:
| This factory is not for economic independence or economic
| strategy. It is for geopolitical strategy. This factory is
| meant to build smarter munitions if war breaks out, not the
| latest cellphone. The US gov does not give a fuck about Apple's
| stock price and product plans if war breaks out with China,
| since, you know, there's real adult problems going on.
| KSS42 wrote:
| The question is where are these chips packaged? Potentially the
| wafers are shipped to the east for packaging, assembly and test.
| wmf wrote:
| People will be happy as long as it's not Taiwan (e.g. Singapore
| or Malaysia).
| trueismywork wrote:
| Packaging is much simpler
| BenFranklin100 wrote:
| Everyone seems to be celebrating this as a victory for the US,
| but I can't help but think of David Ricardo's Law of Comparative
| advantage. National security concerns aside for a second, what
| high tech sectors will the US necessarily be investing in less
| now that we are putting those valuable resources into chip-
| making? Are these sectors more or less valuable/profitable than
| chip-making? I don't have an answer, but this is the framework
| that needs to be used to address the question. The US can't do
| everything, especially with current immigration restrictions on
| high tech workers.
| kurthr wrote:
| Less adtech and crypto? Fewer gamified dating apps?
|
| I can think of a lot of negative/zero sum things that have next
| to no return or longer term advantage than monopoly seeking or
| greater foolism. They already got plenty of investment when
| interest rates were near zero.
|
| If there hadn't already been a significant semiconductor
| industry, or if there was some similar employment for those
| employees/grads to go maybe it would be different. If there
| wasn't large local demand for the product (and I'm including
| the packaging which is another issue) it would be different.
| Given what the US has it makes long term sense to put some 4nm
| and even 2nm Fabs in the US. Creating geopolitical risk by
| outsourcing ALL supply is sort of silly, quarterly profits be
| damned. (even $50B is <0.2% of annual GDP).
| __MatrixMan__ wrote:
| We could probably find some ways to encourage the Wall Street
| types to go get real jobs also.
| littlestymaar wrote:
| > Everyone seems to be celebrating this as a victory for the
| US, but I can't help but think of David Ricardo's Law of
| Comparative advantage
|
| This theory has always been an overly simplistic model designed
| to promote the _ideology_ of free trade. The most obvious
| problem with it is that it only works in a static world where
| everything stays the same and as such specializing makes sense.
| But the world isn 't like that, and if everybody invests only
| in the places where they have a comparative advantage, then you
| have set up a trade network that is very vulnerable to
| asymmetric shock: if one good becomes irrelevant or too
| desired, then the system starts failing.
|
| Germans are learning it the hard way now that ICE cars are
| getting out of fashion.
|
| As always, there's a yield/resilience trade off, and at nation
| scale, favoring yield is a recipe for disaster.
| Rinzler89 wrote:
| _> Germans are learning it the hard way now that ICE cars are
| getting out of fashion._
|
| Sadly, "the hard way" is the only way Germany learns lessons.
| All that national pride on German ICEs is coming home to
| roost. I remember when I was working for a large German auto
| company a while back, a division manager laughed at a Chinese
| auto company in a presentation that "they have tradition
| since 1995 lol". The arrogance aged like milk.
|
| It's not a nation that values proactive thinking and adapting
| to change but stubborn pride and conservativism.
| Ericson2314 wrote:
| Fun fact: If you read Ricardo you will find the modern form of
| "Comparative Advantage" isn't really there.
|
| Taiwan doesn't have a "natural climate for chipmaking". In a
| modern industrial economy, endowments are not natural/fixed by
| the result of previous rounds of investment.
|
| > what high tech sectors will the US necessarily be investing
| in less now that we are putting those valuable resources into
| chip-making?
|
| There is no evidence it is actually zero-sum
|
| > especially with current immigration restrictions on high tech
| workers.
|
| Yes, more immigration would be greatly appreciated. Probably
| won't happen until we unfuck housing, however.
| Animats wrote:
| (Some) "in small, but significant, numbers".
| desireco42 wrote:
| Unless this is election propaganda, which very well it might be,
| this is huge news. I know there were a lot of problems for this
| facility and wasn't aware they were this far advanced in
| production.
| transpute wrote:
| https://www.ft.com/content/3fa44901-33e4-4ab4-9f7b-efe1575a6... &
| https://archive.ph/FDmwq
|
| _> US and Japan are close to a deal to curb tech exports to
| China's chip industry.. export controls are designed to close
| loopholes in existing rules.. make it harder for China to obtain
| critical chipmaking tools -- restrictions that would have the
| biggest impact on ASML in the Netherlands and Tokyo Electron in
| Japan.. to restrict servicing, including software updates, and
| maintenance of the tools.._
| nektro wrote:
| this is wonderful news. at the same time i hope this doesn't
| weaken the security posture of Taiwan
| Cthulhu_ wrote:
| The dependency on Taiwan isn't going to go away any time soon,
| nor is the Taiwan Relations Act (which replaced the Mutual
| Defense Treaty between the United States and the Republic of
| China in the late 70s).
| scarface_74 wrote:
| Exactly what does "manufacturing in America" mean? It could be as
| little as final assembly with most of the work still being done
| in Taiwan. Like Cook said Mac Pros were "being made in America".
| wtallis wrote:
| There's not actually that much uncertainty about what a TSMC
| chip fab does.
| hollerith wrote:
| Maybe TSMC is sneaking finished wafers into the Phoenix fab
| at night and taking away blank wafers :)
| wmf wrote:
| It takes blank wafers in and produces finished wafers just like
| all other fabs. I would expect test and packaging are performed
| elsewhere.
| btbuilder wrote:
| Do the chips get shipped to China for assembly?
| VWWHFSfQ wrote:
| [flagged]
| btbuilder wrote:
| Assembly of the phone or device using the processor.
| VWWHFSfQ wrote:
| we're talking about the chip itself. Not the phone
| branko_d wrote:
| The dies themselves are "assembled" - cut from the wafer,
| bonded to the wires (or solder bumps) that carry signals to
| the rest of the system, and packaged for physical
| protection and thermal management.
|
| In recent times, multi-chiplet architecture has added its
| own layer of complexity to that process.
|
| See also: OSAT.
| chipdude1973 wrote:
| Two points to counter the snark:
|
| 1. The output of a "chip manufacturing" process is a wafer.
| There is absolutely further assembly (bonding, packaging)
| done on this output.
|
| 2. The chips themselves are not for the end user's
| consumption. They are assembled into a product, a "consumer
| electronic".
| dang wrote:
| Please follow the site guidelines when commenting here:
| https://news.ycombinator.com/newsguidelines.html.
|
| We've had to ask you this before
| (https://news.ycombinator.com/item?id=35998957), so if you
| wouldn't mind reviewing
| https://news.ycombinator.com/newsguidelines.html and taking
| the intended spirit of the site more to heart, we'd be
| grateful.
| wmf wrote:
| There's a lot of chip packaging in Taiwan, Malaysia, and maybe
| Singapore so these A16s are probably racking up frequent flier
| miles. Probably not China though.
|
| In the future they will probably be packaged in the US:
| https://www.apple.com/newsroom/2023/11/apple-announces-expan...
| joshstrange wrote:
| Most likely frequent boating miles given their push to use
| water transport over air when possible for the environmental
| benefits.
| cududa wrote:
| No. That was some misinformation. The chips are being fully
| packaged in the U.S.
| fngjdflmdflg wrote:
| I think "for assembly" here means iPhone assembly, ie. the
| final SoC will be sent to China to assemble the iPhone. I
| don't think GP is referring to packaging.
| aaronbrethorst wrote:
| That the term "electoral college" does not appear once in this
| entire thread is telling.
| MeetingsBrowser wrote:
| Now it does as a result of this comment. Is that also telling?
| lobochrome wrote:
| And then sent for packaging to Taiwan and assembly in China?!
| rgreekguy wrote:
| That's horrible news, as I was considering grabbing an iPhone...
| I guess only refurbished, but still, you can trust an American
| factory even less.
| al_borland wrote:
| Apple seems to have pretty tight quality control. Thought it is
| true, they are likely starting with lower scale production of
| an older chip to work the bugs out of the system.
| TigerofTao wrote:
| This is troubling news, as we could soon be paying $2,500 for an
| iPhone within the next three years. The original reason for
| outsourcing was to keep costs down, and now, with this trade war,
| it's clear consumers will bear the burden.
|
| While some may see the return of manufacturing to the U.S. as a
| win for national pride, the reality is more complex. The high
| cost of U.S. labor, combined with excessive bureaucracy, leads to
| higher production costs, which ultimately get passed on to
| consumers. There's nothing inherently beneficial about
| manufacturing in the U.S. other than symbolic gestures tied to
| identity politics.
|
| Most consumers want affordable, high-quality products, not
| overpriced goods that may be touted as "Made in America" but
| offer no real value beyond that label. Instead of focusing on
| where products are made, the priority should be on ensuring that
| they are durable and not part of a system of planned
| obsolescence. We want iPhones that last longer, not cost more,
| yet U.S. manufacturing may drive up prices without offering real
| improvements in quality or longevity.
|
| Unfortunately, the consumer is losing in this scenario--stuck
| paying for rising costs while receiving little in return. We need
| to reassess the real benefits of domestic manufacturing and
| whether they justify the inevitable price hikes. It's clear that
| without a shift in strategy, we're moving toward a future where
| innovation is stifled by political posturing and unnecessary cost
| inflation.
| negativeonehalf wrote:
| Chip manufacturing is critical for national security, which is
| to say world security, if you like the Pax Americana (and you
| should). This is not some trade war thing. My only actual
| concern about this is that it may make the US less willing to
| intervene if the CCP invades Taiwan, and we absolutely should
| intervene if that happens.
| can16358p wrote:
| I get the national security part, but not sure about world
| security part.
|
| Why should I, as an example, who is neither a US citizen nor
| Taiwanese nor Chinese, should trust a chip being manufactured
| in the US vs. somewhere else?
|
| I'd say it is neutral in regards to world security, not
| better.
| kelnos wrote:
| I suppose it depends on where you are from and your
| politics, but I think many people outside the US would feel
| safer with chip production in the US than under Chinese
| control. I don't think most would really jump at the chance
| to buy the same chip from a US manufacturing plant vs. a
| Taiwanese one, but if China were to make a move on Taiwan,
| I'm not sure the world's computing resources would be
| particularly safe. (Not to mention, I wouldn't be surprised
| if the secret back-room plan was to raze Taiwan's chip
| manufacturing capability to the ground if it looked like
| China was going to win a takeover of the island.)
|
| Even ignoring the specific players, having critical
| advanced technology manufactured in more than one place
| increases world security. What if, say, a catastrophic
| earthquake were to significantly damage Taiwan's chip
| manufacturing? Having expertise and working, active
| manufacturing elsewhere is a good thing.
| can16358p wrote:
| I see.
|
| Definitely agree with the second part.
| negativeonehalf wrote:
| I mean that the world is best off if the US continues to
| maintain the global maritime order, and this means there
| being no credible way of cutting off the US military from
| being able to mass produce weapons.
|
| Sure, this costs US taxpayers a lot, but whatever, it's
| worth it.
| cbg0 wrote:
| Fortunately iPhones are not essential items you need to buy, so
| there's nothing forcing you to drop a hypothetical $2500 for
| one.
| kelnos wrote:
| > _and now, with this trade war, it 's clear consumers will
| bear the burden._
|
| "Now"? The trade war has been on since what, 2017?
|
| > _There 's nothing inherently beneficial about manufacturing
| in the U.S. other than symbolic gestures tied to identity
| politics._
|
| While I think that argument can be made in general, if you
| consider certain sectors and certain products, the calculus
| changes. Onshoring chip production is a matter of national
| security. Not necessarily in the "big bad China will take over
| Taiwan and put backdoors in our chips" sense (though that's
| certainly a concern), but in the sense of not being dependent
| upon an adversarial state for fundamental advanced technology.
|
| > _Most consumers want affordable, high-quality products_
|
| Sure, but that's not sustainable. You end up playing "chase the
| country with the worst worker protections". This isn't the case
| of chips (yet?), but there are quite a few things where China
| used to be the go-to for manufacturing, but production has
| moved elsewhere because costs went up, and it's cheaper to stop
| doing it in China. The long-term end result of all this is that
| _everywhere_ has labor costs that have gone up enough that
| offshoring doesn 't really buy you all that much.
|
| Of course you can say, "okay, maybe that's true, but at least I
| can get my cheap iPhone now, and moving production to the US
| hurts that now, rather than decades from now". And I'm somewhat
| sympathetic to that. But ultimately Apple may just have to
| change how it prices things if it costs more to make iPhones.
| They already make solid profit on each unit, and perhaps
| they'll just have to make do with less of a markup.
|
| > _Instead of focusing on where products are made, the priority
| should be on ensuring that they are durable and not part of a
| system of planned obsolescence_
|
| I feel like Apple is a pretty bad example for you to use here.
| I had to replace my perfectly-functional, four-year-old Pixel 4
| last year because it stopped getting software updates after
| three and a half years. Meanwhile my wife has a six-year-old
| iPhone that will update to the latest major version of iOS
| tonight, and it will likely keep getting updates for a couple
| more years. My new Pixel 8 will supposedly get major OS updates
| for seven years. If I break the screen on my phone or the
| battery gets bad, I can get them replaced fairly affordably.
| These are improvements!
|
| Apple's repair situation is worse, but that's a choice Apple
| has made. If they wanted to focus on repairability, next year's
| iPhone would be the most repairable phone on the market. But
| they don't want to do that. Moving manufacturing around is
| orthogonal to all that.
| can16358p wrote:
| Genuine question: what upside does it have against supply chain
| attacks?
|
| Is it possible that an adversary to implement a backdoor into a
| chip design, without Apple noticing it?
|
| I'm not a chip designer so perhaps the answer is obvious to some
| of you guys, but I'd expect some verification mechanism at
| Apple's side of the manufactured chips to match their original
| design to verify that they aren't tampered with?
| TOMDM wrote:
| I think the vector people talk about most in this context is
| denial.
|
| If an adversary wants to deny access to a fab on American soil
| they'll need to deny access to dependencies or attack the fab
| itself.
| knallfrosch wrote:
| The article doesn't mention supply chain attacks. What context
| are you referring to?
|
| I'll take a guess and agree with TOMDM. It's about China
| invading or blockading Taiwan (remember the US attack/blockade
| against Cuba? Exactly that.) and thus denying America physical
| chip shipments.
| can16358p wrote:
| Not a specific context in the article. Just wanted to see
| what (if) aspects it might have as I've seen some other
| comments around that.
| clippyplz wrote:
| Very much possible. Talking more generally about
| microelectronics - You can imagine the DoD is very interested
| in making sure they're not putting 'bad' chips in their
| military hardware, whether 'bad' means backdoored or merely
| counterfeit.
|
| Manufacturing chips in the US means the DoD can investigate the
| acutal fabs and put cleared personnel on the manufacturing line
| to make sure nothing untoward is going on. Another strategy is
| to investigate the chip after it's been manufactured somewhere
| else and prove that it's the same chip you designed, but that's
| quite difficult.
|
| If you're interested you can read up on the Trusted & Assured
| Microelectronics (T&AM) program.
| tumetab1 wrote:
| Zero upside, probably a downside.
|
| Apple has a top notch logistics and security processes which
| had mitigated the issue of supply chain attack in China which
| his willing and capable of producing such attacks.
|
| Moving some production to the USA might induce some sloppiness
| in this due a perceived inferior risk.
|
| Also, some security measures requested by Apple to
| manufacturers in other countries are probably illegal in the
| USA.
| nova22033 wrote:
| _Also, some security measures requested by Apple to
| manufacturers in other countries are probably illegal in the
| USA._
|
| That's _interesting_...do you have any specifics?
| daft_pink wrote:
| The obvious question is when are they going to build 3nm chips
| here?
| prmoustache wrote:
| Since US manufactured products are traditionally reputed to be
| low quality, should we expect to have to look for serial numbers
| to get iphones with non buggy A16 chips?
| Cthulhu_ wrote:
| "Traditionally reputed" is a vague allusion containing multiple
| logical fallacies; can you cite some actual sources? Because
| it's nonsense. Quality is a factor of cost (and cost
| reduction), not the country of origin.
| FL33TW00D wrote:
| This happened significantly faster than I anticipated.
| hbarka wrote:
| Isn't Taiwan's success in creating a TSMC correlated to the
| pyramid of their workforce which supplied skill at every level
| commensurate for high tech manufacturing's demands? They have a
| high number of post-grads in their population AND also a large
| number of what we in the US call vocational/technical-educated
| working class. How are we doing as a country over time by the
| same measure?
| maxglute wrote:
| At what cost meme, but literally, what's the cost of a chip made
| in TSMC US vs TSMC TW.
| lm28469 wrote:
| It's ok their profit margin will go from 50% to 47%, they
| already have so much money that they don't even know what to do
| with it anymore
| maxglute wrote:
| I'm mainly curious if TSMC estimates that US fabs would cost
| 50% more is confirmed or not.
| mrguyorama wrote:
| It's hard to not cost more than employees who think it's
| literally a patriotic duty to sacrifice yourself for a
| profitable company. American execs _Dream_ of this kind of
| non-monetary influence on the work force
| anentropic wrote:
| Presumably competitive otherwise Apple wouldn't be buying them?
| maxglute wrote:
| IIRC morris chang indicated US operated fabs would cost ~50%
| higher, which is not cost competitive, well not something
| buyers would sign for without something happening behind the
| scenes (i.e. US gov pushes Nvidia and Apple to use Intel
| foundries). If A16 is $100 from TSMC TW, it's $150 from TMSC
| US, presumably $50 to BOM is something Apple can afford, but
| most others might not. List of companies who are willing to
| source at 50% limited (unless incentives).
| gtirloni wrote:
| This should not be a problem as 100% of Trump supporters
| will gladly pay the price to further their fight against
| China. /s
| ta988 wrote:
| They found a new enemy it seems with their cats and dogs
| stories.
| nova22033 wrote:
| _well not something buyers would sign for_
|
| I bet a lot of people thought the same thing about a phone
| costing more than $1000 but here we are..
| raverbashing wrote:
| Nah
|
| $100/$150 would be the "shelf price" of the Apple chips if
| they were in a box for sale like an Intel/AMD one
|
| I believe you that the cost of the delivered (roll of)
| plastic chips is 50% bigger in the US. Probably less but it
| might be (also need to include the logistic cost to send it
| back to assembly on iPhone, etc)
|
| Apple (pre-)pays for stuff and probably doesn't have any
| orders where Qty is under 7 digits with these big vendors.
| dubcanada wrote:
| Some of that has to be offset by shipping, importing fees,
| etc. But I do think the end goal is to get Apple/Nvidia/etc
| back on US soil manufacturing wise.
| fngjdflmdflg wrote:
| >shipping, importing fees
|
| Don't these chips still need to be sent to China for
| assembly by Foxconn? If anything this will increase costs
| even more and seems like import fees could potentially be
| even higher due to the current US-China trade war. Unless
| there is a plan to assemble everything in the US/Mexico
| as well. But then the costs would be way higher to
| assemble outside of China: certainly in US but probably
| also in Mexico, and I don't think they have any factories
| there.
| gadders wrote:
| This is good news for the US and bad news for Taiwan,
| geopolitically.
| spiderfarmer wrote:
| You're overestimating the importance of that specific chip.
| gadders wrote:
| My assumption is if they can do that chip, they can do others
| and there is less need to defend Taiwan and the massive TSMC
| fab there.
| drexlspivey wrote:
| No, TSMC said that the cutting edge fabs will always be in
| Taiwan
| jmmcd wrote:
| Good news doesn't have to mean overwhelming good news.
| Directionally, it is clearly good, not bad, and not nothing.
| bux93 wrote:
| Depends. China's obsession with Taiwan is a mix of domestic
| signaling and posturing internationally and the latter is
| mostly aimed at the US. China could choose to be more
| aggressive over Taiwan, as the US should care less. But, since
| the US care less about Taiwan, perhaps China will turn its
| saber rattling to other strategic interests of the US, giving
| the Taiwanese some reprieve.
| resource_waste wrote:
| This isnt Nvidia and this isnt some high end CPU.
|
| This is a mobile phone CPU, and its Apple. You are getting
| insignificant technology.
| vineyardlabs wrote:
| Not so. Apple's new mobile processors are routinely the
| fastest processors in the world (single threaded) when they
| come out. The A17 pro is currently the 17th fastest CPU, and
| the M3 (which is in MacBook airs and iPads) is number 2.
|
| Sure these don't have the scope or number of transistors of
| like an NVIDIA Blackwell or something but in terms of
| performance/watt these are ultra high-end ICs.
| resource_waste wrote:
| No one is competing on CPU though. Its like having the
| highest RPM lawnmower, no one cares, its not useful.
|
| To make it worse, they arent even the best. Its getting mid
| tier, and in 2024, its nearly unreasonable to buy mid-tier
| when low-tier is good enough for everything.
| vineyardlabs wrote:
| Not sure about that, the consumer CPU market is probably
| more competitive right now than it's been in a decade,
| primarily on efficiency.
|
| Also not sure what that has to do with the original
| point, which is that the A15 is not an impressive chip to
| be manufacturing in the US because it's designed by apple
| and meant for mobile devices, neither of which are
| reasons to discount the complexity of the chip.
| tmnvdb wrote:
| The idea that the US only cares about Taiwan because of chips
| is popular on HN but just dead wrong. Taiwan has been part of
| the China containment strategy before TSMC was founded.
| forinti wrote:
| So the US doesn't care about Taiwan, it cares about China.
| Taiwan is just a tool.
| stephen_g wrote:
| Well, yeah... The US doesn't _really_ have allies (the one
| exception some would say is Israel) - why would Taiwan be
| any different from the others? Interestingly, TSMC only
| became a stand-out player in the last 15 years, before then
| there were basically zero reasons for the US to care about
| Taiwan except to contain China. Now they have one reason
| apart from containing China, but it's still mostly just
| about China.
| barsonme wrote:
| The United States has many allies. Obviously the US and
| UK have a "special relationship." Then there is AUKUS.
| Then NATO. DoD calls a number of SEA countries "allies,"
| including Japan and Korea.
|
| Stating that the US has no allies other than Israel is
| unequivocally false.
| willy_k wrote:
| The _really_ before the claim suggests that GP is
| referring to internal attitudes, I would imagine that
| they are aware that NATO is technically an alliance.
| ijidak wrote:
| There is probably no alliance on earth tighter than the
| U.S. and the U.K.
|
| If that's not an alliance, then you might as well say
| that alliances don't exist anywhere. (And maybe that is
| what you mean to say.)
|
| Even the alliance with Israel can't compete with the
| alliance between the US and UK from World War I to now.
| macintux wrote:
| > There is probably no alliance on earth tighter than the
| U.S. and the U.K.
|
| I'd argue North Korea & China have a closer relationship.
| partiallypro wrote:
| That's less of an alliance and more of a dependance.
| thimabi wrote:
| They do not. China sometimes -- though not always --
| endorses and enforces Security Council sanctions against
| North Korea, and acts as a moderating force in its
| contacts with North Korean leadership. Substantial
| differences of opinion between the U.S. and the U.K., not
| to mention actual policy antagonism, is very rare.
| Atatator wrote:
| Exactly: https://en.wikipedia.org/wiki/Island_chain_strategy
| gadders wrote:
| I think it cares about Taiwan as a democratic country but I
| think the chip fabs are becoming a geo-political factor as
| much as oil fields or other resources.
|
| i.e. we don't want [Russia/China/Whoever] to invade Country X
| as Country X is an ally and a democracy, but as Country X has
| [Oil fields/Chip Fab/Lithium Mine] we REALLY don't want them
| to invade.
| chii wrote:
| The difference between an oil field and a chip fab is that
| the equipment is more easily destroyed in a chip fab, vs a
| hole for an oil well. Not to mention that expertise in
| human capital required for chip fab is way higher than that
| of an oil field.
|
| Even a successful invasion of taiwan guarantees either the
| people important to the fab will leave, and the equipment
| evacuated, or destroyed if unable to evacuate.
| thimabi wrote:
| As Saddam's Iraq unfortunately proved when invading
| Kuwait, it is really easy to destroy oil fields, and much
| harder to clean up the damage. I can't see much
| difference between that and destroying chip fabs.
| danbruc wrote:
| Should other countries put tariffs on devices made with chips
| that profited from the CHIPS for America Fund?
| running101 wrote:
| This news could be bad for Taiwan
| resource_waste wrote:
| Its a mobile CPU chip, and its Apple. This isn't going to move
| any markets, its insignificant. Maybe its politically useful
| for Apple and the US government for PR purposes, but there is
| no rush for CPU chips, or Apple hardware.
| amelius wrote:
| Taiwan is still in charge of the fab.
| mtrovo wrote:
| Wow that was fast, is this a regular timeframe to get a new fab
| working?
|
| From the conversations about China catching up on smaller chips I
| got the impression that it takes loads of iterations around how
| to calibrate the machines but it seems TSMC nailed it not only on
| Taiwan but also overseas very fast.
| ErigmolCt wrote:
| I think it's a significant milestone for the U.S. semiconductor
| industry.
| 9cb14c1ec0 wrote:
| Hats off to TSMC. Spinning up a new factory with processes this
| complex is very difficult, as anyone with manufacturing
| experience can confirm.
| londons_explore wrote:
| My understanding is it isn't a new factory. Wasn't the
| equipment moved from another operational factory so they could
| get up and running quicker?
| turnsout wrote:
| To build a factory from scratch you must first invent the
| universe
| asadm wrote:
| yeah I mean this isn't factorio...
| nemacol wrote:
| AFAIK TSMC does not manufacture the machines they use to
| create processors so in any case they would be moving the
| equipment into a facility.
| TheRealWatson wrote:
| Also, doesn't chip manufacturing require a lot of water? Water
| is not the first thing that comes to mind when I hear Arizona.
| I think I'm about to learn a lot with this.
| caseyohara wrote:
| Yes, ~10 million gallons per day (equivalent to 33,000
| households). But the plant's water recycling and re-use is
| very efficient, so it's mostly a one-time hit up front.
| BurningFrog wrote:
| From what I read the overriding factor was geological
| stability. Apparently these factories are very sensitive to
| vibrations. I guess when you do precision work at nanometer
| scale these things matter.
|
| Arizona isn't water rich, but it manages to keep the 4
| million people around Phoenix hydrated, so there _is_ water.
| kristofferR wrote:
| > From what I read the overriding factor was geological
| stability.
|
| Guess they are tired of dealing with all of Taiwan's
| earthquakes.
| buzzert wrote:
| Arizona actually has a lot of water because of several
| successful and ambitious irrigation projects in the last
| century.
|
| So much so, that it has become an agricultural region for
| growing notoriously water intensive crops like alfalfa and
| pistachios.
| nhubbard wrote:
| I mean, yeah, they have become an agricultural region...
| but it's not good for the people who live in Arizona right
| now. [0]
|
| [0]: https://www.cnn.com/2022/11/05/us/arizona-water-
| foreign-owne...
| rurp wrote:
| It's notoriously unsustainable. Those water intensive crops
| would be wildly infeasible if the farmers had to pay
| anything close to a market price for the obscene amounts of
| limited water they consume.
| janandonly wrote:
| The new Apple chips are second generation 3nm. This 5nm stuff is
| old tech. Why are people celebrating?
| talldayo wrote:
| Because _all_ of these commentators are ecstatic to use their
| _Made In America_ M4 processor in 2026!
|
| ...wait, M4 will be 3 generations old by then? W-well, a
| _little_ reliance on Taiwan never hurt anyone...
| londons_explore wrote:
| So this is the N4P node... From way back in 2021.
|
| And these are 2 year old chips for a phone that is about to stop
| being sold...
|
| Seems this news might be more political than strategic... The US
| still relies on Taiwan for every _modern_ chip.
| turnsout wrote:
| This may be a very expensive proof of concept... but it's
| definitely a concrete step toward their goal
| bogwog wrote:
| Apple isn't the only company in the world that needs CPUs
| talldayo wrote:
| America isn't the only country with a roadmap to manufacture
| 3nm silicon by 2026. If history has anything to say in the
| matter, it's likely that Samsung will have the US fabs beat
| on yield and price for a long time.
| jFriedensreich wrote:
| This happening at the same time as germanys intel project freezes
| makes the fall seem even harder
| jadayesnaamsi wrote:
| Knowing all the efforts that the US government has had to devote
| in order to push Apple to bring those jobs home, for other
| countries that do not have as much muscle as in financial and
| industrial leverage, their industrial future must look quite
| bleak.
| habitue wrote:
| It's really not about the jobs, it's about national security.
| The US needs the ability to fabricate chips on its own soil
| where the threat of China invading Taiwan isnt a concern.
| resters wrote:
| All this because Donald Trump claims (contrary to nearly _all_
| economists) that forcing companies to manufacture products on US
| soil is _beneficial_ in some way that he (Trump) feels confident
| will make America great again. It is so embarrassing that these
| outdated ideas are entertained for even a second by HN readers.
| stetrain wrote:
| Returning manufacturing to the US is a policy of both major
| parties right now.
| resters wrote:
| only because of the outsized political importance of a few
| states that happen to specialize in _outdated_ manufacturing
| technologies and happen to have enough electoral votes that
| politicians have an incentive to subsidize them.
|
| It's a massive tax on the economy all to provide a tiny bit
| of welfare to a small number of workers. Better to just pay
| them a welfare check!
| hajile wrote:
| The world is the most unstable it has been in decades.
| If/when a war kicks off, you have to have your supply chain
| local because the oceans will be instantly impassable until
| we can work out how to counter submarines.
|
| This has little to do with welfare and everything to do
| with national security.
| resters wrote:
| Uh, having entrenched trade relationships across oceans
| dramatically reduces the chance of war. Trump launched
| the tariffs to reduce "dependency" on China because it
| was the "dependency" that held back the typical rhetoric
| that leads to war.
| stetrain wrote:
| A lot of the new manufacturing isn't going to the states
| that specialized in manufacturing previously.
|
| A lot of the boom in EV and battery production is happening
| in the US southeast (Alabama, Georgia, South Carolina). The
| TSMC factory is in Arizona.
| resters wrote:
| Exactly, yet the push toward taxpayer-subsidized domestic
| manufacturing is driven by rust-belt politics.
| ralegh wrote:
| Why not? Are economists infallible? Even if there's many of
| them they may have been taught the same material and risk
| groupthink.
|
| What position is the US in if all their goods are manufactured
| abroad? What if the dollar stops being respected?
| stetrain wrote:
| Yeah, optimizing for economic output isn't the only factor to
| consider. Having some degree of geopolitical independence and
| leverage matters when things go off of the happy path for
| whatever reason.
| resters wrote:
| What does "geopolitical independence" mean? The ability to
| disregard international law? The ability to make war
| without worrying about the target being a trading partner?
| stetrain wrote:
| To me it means some degree of being able to continue with
| necessary production despite global disruptions due to
| political disagreement, war, disaster, etc.
|
| For example, a major push to bring more semiconductor
| production to the US was motivated by supply shortages
| during the COVID pandemic.
|
| A globally interconnected and inter-tangled trade economy
| has a lot of benefits, but it can also be disrupted. So
| some degree of resilience against this kind of disruption
| may be beneficial.
| resters wrote:
| The pandemic was part of it, but a lot of the shortages
| were related to the trade war started by Trump and the
| failure of the US collaborate with public health
| authorities in China to stop the pandemic sooner.
|
| From the perspective of Trump, those shortages were a
| good thing because they forced US firms to find other
| inputs and to resent China and feel suspicious of
| relationships they had depended on for years.
|
| A friend of mine whose company ultimately failed due to
| the tariff-induced shortages watched his 90% US-based
| manufacturing business go under after it couldn't keep up
| with lower-cost Chinese-manufactured goods -- Chinese
| manufacturers got all the parts cheaper with no tariffs
| so their resulting BOM cost was a lot lower. All because
| he did most of it in the US and relied upon a small
| number of Chinese manufactured parts.
|
| Lesson learned. Now he isn't even in business anymore so
| there are fewer voices to complain about the tariffs.
| resters wrote:
| Empirical studies show that governments typically do not
| introduce policies that result in benefits overall, and the
| costs of those polices are typically higher than if everyone
| had just paid a tax that was given as welfare to the small
| number of workers in the effected industry.
|
| What position is a homeowner in when they decide to hire
| someone else to mow their lawn? Economic specialization
| generally a good thing.
|
| US politicians get enamored by industrial policy when they
| see what happened to the "asian tiger" economies over the
| past decades. They forget that those nations were so
| destroyed by war that the "growth" was less due to the
| policies than to the people's motivation to live in a free
| and peaceful society.
|
| China is also now the poster child for industrial policy.
| China had many years of intentional economic suppression in
| the name of societal harmony (preventing chaos resulting from
| some regions being poor and isolated and others being rich).
| In recent years China has managed to use some of the wealth
| to undertake a social policy (plus industrial policy) of
| bringing wealth from the coastal manufacturing regions into
| the agricultural regions, training workers, etc.
|
| Even in spite of all this, China's GDP is still significantly
| lower than it would be without all the policies, but the
| societal order is preserved and there is likely greater
| social stability.
|
| China faces unique challenges in these areas relative to
| other countries (largely due to geography) which is why it
| had suppressed its economy so much for so long.
|
| We are getting a glimpse at what a modern approach to Chinese
| capitalism will look like and it has already left the US in
| the dust in terms of productivity. It's ironic that the US
| mis-attributes the success to the industrial policy rather
| than to the repeal of it.
| lurking15 wrote:
| It's funny how (supposedly liberal) opponents of Trump will
| strategically whine about economic theory when generally
| otherwise if you were to make appeals on the basis of economics
| you're labelled heartless, etc.
|
| You know what? I like when jobs are based in America because
| people need domestic careers that can sustain communities.
| There are non-monetary costs to outsourcing that are not mere
| quantities for an economist to decide for us.
|
| Ross Perot was wildly successful running on a platform like
| this, at least relative to any other third party in American
| politics, and as soon as he appeared to be a threat to the
| establishment, strange stuff started happening to him much like
| the assassination attempts in this election.
| resters wrote:
| Heartless? In my view it is inappropriate for the government
| to prohibit or tax peaceful, voluntary activity such as
| trade.
|
| The US grew economically due to the interstate commerce
| clause prohibiting states from imposing tariffs on each
| other, and now we are supposed to believe that Trump and
| Perot are economic geniuses because they want to subsidize
| coal extraction and tax EVs so that Americans have to pay
| double?
|
| Most of the big wars started because countries got
| protectionist and isolated and had no economic reason not to
| fight each other.
| mannyv wrote:
| Well actually, Alexander Hamilton is the father of
| mercantilism. And it's been followed and promulgated by pretty
| much every country at some point in time.
|
| It's not wrong, it's one strategy given the political goals of
| a nation. There are other strategies and other goals, like
| economic liberalism.
|
| Saying a behavior or approach is wrong and/or outdated shows a
| particular misunderstanding of what policy is for.
|
| What "most" economists believe in the West (and "believe in" is
| a perfect way to put it, because it's a belief) is economic
| liberalism. Underlying/embedded in that belief are a number of
| assumptions, policy goals, and desired outcomes.
|
| For a limited subset of countries on earth that worldview has
| been incredibly successful. However, for the vast majority of
| countries on earth economic liberalism has been a failure, and
| a costly one.
|
| Unfortunately, there aren't many new alternatives out there,
| and the current system is heavily biased towards economic
| liberalism.
|
| But it's important to remember that all this is relatively new.
| The era of modern states is relatively new, and the current
| postwar order is well, 80 years old or so. The Wealth of
| Nations was only published in 1776, Report on Manufctures was
| in 1791, and Das Kapital was in 1867.
| resters wrote:
| These are good points. In my view the idea that "making
| America great" entails illiberal economic policies which
| benefit a small fraction at the expense of the rest of the
| population is a non-starter because in my view "greatness"
| does not come from propping up outdated industries (coal
| extraction, steel production) and taxing everyone else to do
| it.
|
| I don't think economists are ideologically opposed to central
| planning. There are simply enough empirical studies that show
| how badly it fails. In fact most of the "economic
| liberalization" failure stories you refer to are actually
| centrally planned thefts that benefit specific firms but were
| sold as liberalization.
|
| China is an example of a state that does very smart central
| planning. Everything from its central bank to its
| subsidization of small businesses doing embedded systems
| (hence all the super cheap gear on Amazon sent via subsidized
| shipping to customers around the world) is intended to
| enhance the capability of the workforce and guide the
| workforce toward a future of technological change and rapid
| (but not too rapid) advancement.
|
| In other words, China's industrial policy is forward-looking,
| America's is backward-looking. The very phrase "Make America
| Great _Again_ " is backward-looking.
|
| China's policy is essentially an education policy disguised
| as trade policy. Corporate espionage leads to more knowledge,
| subsidized shipping leads to more low-end consumer devices
| and engineers who need to learn to build them, etc. There
| thousands and thousands of low-end consumer electronics, test
| equipment, etc., manufactured in China that are built upon
| the many low-end DSP chips and microcontrollers. This is not
| an Apple-esque 2nm process, it's much lower tech, lower cost
| but it offers far, far better experience to so many more
| workers than all but the best educational background can
| offer. What percentage of first or second year US EE grads
| could build and ship a $50 spectrum analyzer?
|
| In my view, China has already overtaken the US in key areas
| of technological innovation and the US is "copying" by
| deploying industrial policy that has the opposite effect and
| entrenches and protects top US firms while having minimal
| educational impact on US workers and minimal impact on
| educational and early career choices for US workers.
| nashashmi wrote:
| The era of people earning more from desks and mental gymnastics
| is over. The era of weaponization of supply and resources has
| begun.
|
| All manufacturing will need to become local in some quantity
| for any country serious about its security.
| consteval wrote:
| From what I've seen most economists have extremely short-
| sighted thinking. Their theories are almost comically naive.
|
| Yes, economically in the short term (< 50 yrs) putting your
| eggs in your few specialized industries will give you big
| economic growth. But, in the long term this is economically
| extremely risky - because you're relying on remaining
| competitive in those few, high price, more advanced industries.
| If that happens to change, you're screwed.
|
| And it CAN change due to geopolitical factors (something
| economists don't understand). A dictatorship of the future can
| 100% make more efficient supply lines than you. Even somewhere
| in-between and you can be screwed - just look at the Chinese
| automobile industry.
|
| For decades, the automobile industry has been the darling child
| of the US. This has, and will continue, to no longer be the
| case. The reality is China subsidizing their industry and
| providing top-down support means they can make better cars
| cheaper. The only reason this hasn't completely fucked that
| portion of our economy is because we don't let them in.
|
| We can't keep outsourcing all our manufacturing while we sit on
| our asses and rely on our darling child industries to grow.
|
| Take a look at what happened during the global communist
| revolutions. Those communist countries were scary to us because
| they have the potential to make more shit and make it cheaper.
| They can out manufacture us.
|
| Luckily we were not completely braindead (and the tech did not
| exist) to outsource our manufacturing to them. But if we did,
| it could have been catastrophic for our economy in the long-
| term.
| resters wrote:
| A few points to consider:
|
| - Electric vehicles are inherently much cheaper and have way
| fewer moving parts. Just because an entry level internal
| combustion vehicle costs $25K doesn't mean an EV has to. But
| with 100% tariffs it can!
|
| - Every day that American workers spend building heavily
| government subsidized internal combustion powered vehicles is
| a day we fall farther and farther behind. All those low-end
| "hoverboards" that everyone bought a few years ago, all the
| electric scooters. The engineers who design those in China
| are the ones designing low-cost EVs that _utterly out-compete
| what the US can do_. US policy to subsidize mediocrity
| (Tesla, over-priced, over-hyped, impossible to maintain)
| HARMS the entire US economy. How many people need to pay an
| extra $500 to $1000 a month in payments that are effectively
| a subsidy of outdated tech? Most people with a car payment
| are doing just that.
|
| Meanwhile we keep getting into wars over petrol which is why
| we don't keep track of how much we spend on the military
| because nobody cares, of course it's worth it to keep the oil
| flowing!
|
| Economics is about _information_. Price is a function of
| supply and demand. As much as governments may wish that
| internal combustion tech was competitive with low-cost EV
| tech, it 's not. As much as everyone wishes healthcare was
| free, it's not. We have to choose our subsidies wisely. US
| industrial policy is a disaster and it is fraught with so
| many misconceptions.
|
| If it's really a national security issue, where is the US
| stockpile of raw steel, copper, lithium, 555 timers, etc.?
| Politicians would rather rant and impose tariffs and get
| photo-ops near coal factories than actually do something
| simple and strategic that would take away the possibility
| that a conflict would disrupt crucial supply chain.
|
| Economic specialization is a good thing. Economies are not so
| simple as importer and exporter. Most companies are both
| importers and exporters. China's government knows this and
| adopts sensible policies like subsidizing oceanic shipment of
| goods so that shipping costs of the $25 electronic device
| aren't $100. This lets an engineer build and sell something
| and learn and grow.
|
| China has an economically-aware industrial policy, the US has
| a backward-looking, short-term, electorally driven one.
| tensor wrote:
| There is a difference between having manufacturing capabilities
| and trade tariffs. You can in fact build your own chips AND
| trade with other countries for the same items at the same time.
| gyoridavid wrote:
| Curious to see when the US will force the TSMC to sell because it
| presents a national security threat.
| pie420 wrote:
| Taiwan and TSMC are already USGov assets... why would they need
| to sell...
| fkilaiwi wrote:
| good news like this is so rare. this makes me happy
| nojvek wrote:
| Hats off to TSMC. They had big culture clash and US has a lot of
| red tape and high labor costs. They did it!
|
| Also kudos to CHIPS act.
|
| I'd rather have Boeing and Intel wither off, for them to be
| replaced by new players who bring highly efficient manufacturing
| to the table.
| reuben_scratton wrote:
| I can't believe iPhone chips, almost the supreme luxury good, are
| considered worthy of Federal subsidies.
|
| Surely a better path would have been to slap imported silicon
| with tarriffs at least equal to their gov't subsidies?
|
| (Unpopular opinion: The people that spent the last 30 years
| giving away US & EU manufacturing to the Far East - no doubt with
| plenty of "10% for the big guy" type deals behind the scenes -
| should all be shot.)
| skizm wrote:
| I feel like I've read a few articles on Bloomberg and/or NYT
| (drawing a blank on the exact source) that a very large portion
| of the workforce was taken directly from Taiwan and the American
| workers were having a hard time adopting to the Taiwanese way of
| doing things (long hours, on call all the time, constantly
| stepping outside your predefined roll, etc.). Is this currently
| now, or will it in the future, affect the overall success of the
| factory? (It also might simply be untrue for all I know.)
| yuters wrote:
| If you believe there has been a decline in American work
| ethics, this actually seems like a good thing. Optimistically
| they could reach a good middle ground here.
| skizm wrote:
| I am not sure framing it as work ethic is right. It is simply
| the cost of labor. Some people might argue American's are
| more or less productive the hours they are working, which
| means just because someone from Taiwan is willing to be
| oncall 24/7, doesn't mean you'll have to hire exactly 3
| American workers at 8 hours each to match productivity. You
| might need 5 because Americans truly are that lazy, or you
| might only need 2 because the on-call isn't that demanding
| since Americans are more productive.
|
| Not saying any of these specifics are true, but framing it as
| work-ethic is not accurately capturing why it is more
| expensive to run factories in one country vs another.
| nonethewiser wrote:
| To be clear, you are saying work ethic does exist and it is
| a factor but it's not the only factor, with productivity
| being another one?
| skizm wrote:
| Yea agree that it exists, but work ethic is one variable
| in the cost of labor equation.
| yuters wrote:
| I was commenting on a story about how americans had
| problems adapting to taiwanese work culture, and saying how
| they could benefit from this cultural exchange to optimize
| their productivity. Like you, I also do not thing this
| really captures why it's more expensive to run factories
| here, because I've never even suggested this.
| AnonC wrote:
| Morris Chang, the founder of TSMC was reported [1] by Nikkei
| Asia in March 2023 as saying this about the work culture:
|
| > "Design is the U.S.'s competitiveness. On the other hand,
| Taiwan, Japan and South Korea have competitiveness in
| manufacturing...It's also about the work culture and the
| people."
|
| > The TSMC founder cited chip production equipment as an
| example. Because these machines are so expensive, they need to
| be running 24 hours a day to justify their cost. "If it breaks
| down at 1 in the morning, in the U.S. it will be fixed in the
| next morning, but in Taiwan, it will be fixed at 2 a.m."
|
| > "If an engineer [in Taiwan] gets a call when he is asleep, he
| will wake up and start dressing. His wife will ask: 'What's the
| matter?' He would say: 'I need to go to the factory.' The wife
| will go back to sleep without saying another word," Chang said.
| "This is the work culture."
|
| [1]: https://archive.ph/LqV4M
| mulletbum wrote:
| As a person who runs manufacturing in the US, this is our
| work culture too. Also the same at the other 3 previous
| places I have been at. The company culture asks for
| something, if it is not provided, you find someone who wants
| to be a part of that type of culture. There is an expectation
| to pay for it though.
| jeffrallen wrote:
| The west has the same work culture when the industry and the
| pay demand it. The difference is that it may well be the
| woman who tells the man she's on the way to the factory. Or
| the wife who tells the wife. Thank goodness for liberalism.
| azemetre wrote:
| Hard to feign sympathy when companies trout the "no one
| wants to work" line when they always forget the second part
| of the statement that is always implied: "for how little we
| pay."
| aidenn0 wrote:
| "There is a shortage of qualified Software Engineers (who
| want to work 60 hour weeks for $40k per year)"
| pradn wrote:
| This isn't all so unusual if its written into the job
| description. SREs in tech companies are expected to respond
| within a few minutes if they're paged in the middle of the
| night. They are usually compensated for their oncall time,
| however.
|
| Expecting a worker to come to the factory out of fear or good
| will is not the way. Just write it into the
| contract/expectations/evaluations.
| rurp wrote:
| I've seen those same articles, but also ones saying that was
| largely a ploy. There were billions of dollars in subsidies
| that took some time to lock down, and the reported problems
| with American workers evaporated right after the money was
| committed to TSMC.
| Hansenq wrote:
| Many of those articles came out before TSMC received CHIPS Act
| grants. As soon as the CHIPS Act money was committed to TSMC,
| the factory was suddenly ahead of schedule. Noah Smith called
| it out here:
|
| > Three months after TSMC announced further delays at its $40
| billion Arizona fabs, the chip manufacturer has now said the
| plant is expected to be operating at full capacity by the end
| of [2024].
|
| > The announcement comes several weeks after it was first
| reported that TSMC is set to be awarded more than $5 billion in
| federal grants under the US CHIPS and Science Act...
|
| https://www.noahpinion.blog/p/at-least-five-interesting-thin...
| stonethrowaway wrote:
| Are they hiring?
| hajile wrote:
| TSMC started sampling N5 in 2019 and full production in 2020.
| This means the US finally has a 5-6 year old TSMC node in the US.
|
| Hardly a big win.
| simonsarris wrote:
| Any de novo chip plant operation in the US seems like a big
| win. Machinery can change any day. Operational workforce is
| significant.
| LetsGetTechnicl wrote:
| The article says that the A16 processors being produced here
| are using the N4P process, and are referred to as both 5nm and
| 4nm, confusingly. But they are used in the iPhone 15 and 15
| Plus which are still available.
| lo_fye wrote:
| SOME of them are. A tiny fraction. At 4-5nm. But Taiwan is
| already making 3nm chips for Apple. Still better than nothing, I
| guess.
| seatac76 wrote:
| This should go a long way to ensuring our national security does
| not suffer. We don't need TSMC level volume production, plenty of
| non Taiwan entities exist to balance the risk.
|
| We do need latest edge tech to be within our borders and TSMC and
| Samsung will deliver that in 2-3 years.
| logotype wrote:
| very happy to see this!
| imwillofficial wrote:
| This is title seems to be quite the overstatement of the facts.
| KETpXDDzR wrote:
| Once the US doesn't depend on Taiwan anymore, will they give up
| protecting and China will conquer it?
| tensor wrote:
| That's great to hear. I hope other countries, like Canada and the
| EU, also do this. I think it's important for all major nations to
| have this sort of critical capability in house.
|
| Covid showed this well, despite being allies, countries tended to
| get vaccines to their own people first, even breaking agreements
| with allies. That's likely normal, and a bit of mutual distrust
| is healthy.
| tibbydudeza wrote:
| I wonder if the US plant ASML equipment also have a destruct
| mechanism like the Taiwanese plants have.
| zwijnsberg wrote:
| Wonder how apple was able to curb the (assumable) higher cogs of
| producing this domestically.
| wdb wrote:
| I don't see this a positive thing as European. Why not produce
| the mobile processors in Europe?
| asadm wrote:
| Isn't EU basically abusing every tech company for money every
| month? Why would Apple be inclined in investing anything in EU.
|
| Plus, if US has skill shortage, can't imagine how bad it would
| be in EU.
___________________________________________________________________
(page generated 2024-09-18 23:00 UTC)