8 ms·

While more R&D is good, if their intent is to stabilize the production markets other changes are likely required. It must be at least moderately profitable to

While more R&D is good, if their intent is to stabilize the production markets other changes are likely required. It must be at least moderately profitable to build and run _new_ fabs that produce the simple 'jelly bean' components that have been in dire shortage. Inventories, both of sellable common 'ingredients' and also of shelf stable commonly desirable outputs should probably be reflected differently on asset books. Cutting buffers to the bone should not be good accounting practice as that encourages vulnerability. Laws need to change how that accounting is performed.

daniel-cussen 4y ago
Just keep the MBAs with their Midas touch away from basic tech. Engineers are good enough at math to balance the books, it's not really harder than balancing a checkbook. I had better finances as a high school student than most Wall Streeters at the peak of their career. Got alpha they didn't, accounting for real is just mathematical horse sense.
- bsder 4y ago
  One of the big problems in the US is accounting for inventory. If you're buying "tax-free" from a supplier, that part goes "onto your books" when it goes into your inventory. If you don't put that part into a product and sell it relatively quickly, you owe tax on that part as it sits on your shelf. There are some other issues with inventory taxation like how fast you can depreciate it (ie. for tax purposes, chips are treated like mechnical inputs even though chips depreciate MUCH faster). This all strongly discourages holding inventory. And even engineers running companies will come to that conclusion.
  - Kadin 4y ago
    > If you're buying "tax-free" from a supplier, that part goes "onto your books" when it goes into your inventory. If you don't put that part into a product and sell it relatively quickly, you owe tax on that part as it sits on your shelf. I admit to not being a CPA, but that... doesn't make a ton of sense to me. What sort of tax do you pay on inventory? My understanding is that it's not tax that's the issue, but the tying-up of capital in inventory that's generally being minimized. If interest rates are 3% and you have $1M in inventory, that's $30k per year in interest you're paying in order to hold that inventory, plus the physical costs of warehousing it. And the MBAs naturally look at cutting costs as the fastest and most direct route to improving profitability.
    - bsder 4y ago
      > I admit to not being a CPA, but that... doesn't make a ton of sense to me. What sort of tax do you pay on inventory? Welcome to the US taxation system. As I understand it, VAT solves a lot of this silliness. However, the US doesn't do VAT for a bunch of historical reasons.
    - gnopgnip 4y ago
      Cost of goods are deductible against sales. But unsold inventory is not. So effectively it is taxed as business profit.
      - daniel-cussen 4y ago
        Can't you sell it next year? And you know what? At some point somebody has to lose money to the tax collector. You can't deduct everything, can't shunt it all onto the customer (typically a leaf-node employee, someone at the bottom of an org chart). The business has to be profitable by enough that it can eat some taxation. Or what, you expect the orphan to do it instead? Has to push through friction for others. And plus, cost of goods of unsold inventory isn't that painful if you actually are making huge margins on it, like you ideally should, because you built a better mousetrap that was that much better that you could protect it from copycats with patents and therefore let everyone benefit enormously from it. In the end, the businessman must be creative. Must be an inventor, basically. Or a leader. And so in order to overcome that friction for the sake of the orphanage, the businessman must resolve friction in nature, some inefficiency of some sort, something that could be much better than it is. Something ineffective that could be effective. Plant a seed and reap two.
        MichaelZuo 4y ago
        You are free to send extra money to the government if you truly believe in it.
        daniel-cussen 4y ago
        I actually went ahead and did already! And I'm going to do it again!
  - daniel-cussen 4y ago
    Suck up those taxes! Suck them up! Just pay them! Subordinate yourself to the authority of the State that governs the place you do business, it's the least you can do. Don't cheat the orphanage! Push through the friction! The State of California gave me a huge break that I would have never gotten on my own. I did the math and the taxes I pay turn into that help at a 1/1000000 (one millionth) efficiency rate. That's awesome, that may be a high hurdle for everyone else but for me it's a great deal, because I can get speedups as great or greater, with just that help they gave me. So in fact a 1000000000x (one billion times) speedup was possible directly due to this break they gave me, so the ROI is already 1000x (a thousand times). And once they unlock that, hey that's just the beginning, sky's the limit! That 1Bx speedup (1 billion times) is actually an undersell, I could have kept going and gotten a 1000000000000x speedup (trillion times) and kept going and going beyond that, literally ad nauseam (numbers that would sicken you by looking at them, literally that). It's just a trillion-x speedup is too big, people get dizzy, there's no metaphors, people distrust the problem you're solving if you get that speedup, it's better to say a billion. There's metaphors for that (difference between wheelbarrow of dirt and a mountain, two seconds and the human lifetime, jumping a foot off the ground and going to the Moon). It's the biggest number that really fits in people's heads. But they're both still big speedups that vastly overcome the meaningless 1000000x hurdle that taxation and redistribution impose. Advice: value the taxes you pay at more than 0%. Fine, not 100% or more, but not 0% or less. Say 20%, to start with. Start by reducing what you deduct from your taxes, limit that to the things the State really doesn't want you paying taxes for. But on business lunches! Dude cough it up completely! And in the process get rid of the tax lawyers and accountants who tell you to do contortions for tax reasons. Then you'll see your business with clarity.
    - bsder 4y ago
      This issue isn't "paying taxes"--it's the fact that inventory laws in the US are stupidly obtuse. Computer chips are not nuts and bolts. I believe that VAT solves a lot of these issues (while trading off for others).
    - ravel-bar-foo 4y ago
      If you get 1 trillion x anything taxes won't be a factor in your ability to get money. At that multiplier my pocket change becomes the entire world economy.
xadhominemx 4y ago
Why would any laws need to be changed? Companies should and will just start holding higher levels of inventory as a business practice.
- JaimeThompson 4y ago
  Companies should not spend billions on stock buybacks instead of keeping their factories in running order but the recent baby food issues in the US show that isn't always the case.
  - bloodyplonker22 4y ago
    It's not one or the other, they can do both. You think that a company would rather do a stock buyback and NOT keep their factories in running order so their stock will tank right after they buy back their stock at a higher price?
    - vkou 4y ago
      Depends on the vesting schedule of the people doing the buybacks.
- tbrownaw 4y ago
  This article[1] says that in some states it's included in what you have to pay property tax on. That seems like it would push businesses to keep less than would otherwise be optimal. [1] https://www.boxstorm.com/articles/inventory-tax-explained-for-your-small-business/ https://www.boxstorm.com/articles/inventory-tax-explained-fo...
  - nickff 4y ago
    Money used to purchase inventory is also usually taxed as profit, which is a further disincentive.
    - WheatM 4y ago
xt00 4y ago
So I wonder if anybody here could compare what Phoenix has vs Hsinchu in Taiwan. It seems like the closest the US has to what Taiwan has.. (Intel, new TSMC, various other fabs are there).. so making Phoenix the Mecca of semiconductor jobs in the US seems like a pretty smart goal .. while the federal govt loves to spread money around it seems wise to just say let’s be real folks, it’s way easier / efficient to pour gas on an existing fire than to build totally greenfield.. like pump tons of cash into the AZ universities for semiconductor work. But I wonder if people have some history / perspective on why people don’t say “oh you want to work in semi area? Go to Phoenix..”..
- Kadin 4y ago
  Seems a bit strange that Phoenix would be a desirable place to build a fab, given how water-intensive most processes are. Yes, the water can and should be recycled... but it just seems weird to build a plant like that in one of the parts of the country that will probably never have enough fresh water, compared to other areas where they can't get it out of the way fast enough. Is it the labor pool there that makes it attractive? Energy costs? Something about state/local subsidies?
  - windowsrookie 4y ago
    The reason I heard is that Phoenix is seismically stabile, and weather stabile. Both of those things can cause power outages which are incredibly expensive at a fab.
    - whatshisface 4y ago
      Can power outages be more expensive than diesel?
      - Vecr 4y ago
        Quakes and flooding can kill generators. You can be smart and build them on elevated earthworks, but if the event is severe enough something will fail.
WheatM 4y ago

daniel-cussen 4y ago

Just keep the MBAs with their Midas touch away from basic tech. Engineers are good enough at math to balance the books, it's not really harder than balancing a checkbook. I had better finances as a high school student than most Wall Streeters at the peak of their career. Got alpha they didn't, accounting for real is just mathematical horse sense.

bsder 4y ago
One of the big problems in the US is accounting for inventory. If you're buying "tax-free" from a supplier, that part goes "onto your books" when it goes into your inventory. If you don't put that part into a product and sell it relatively quickly, you owe tax on that part as it sits on your shelf. There are some other issues with inventory taxation like how fast you can depreciate it (ie. for tax purposes, chips are treated like mechnical inputs even though chips depreciate MUCH faster). This all strongly discourages holding inventory. And even engineers running companies will come to that conclusion.
- Kadin 4y ago
  > If you're buying "tax-free" from a supplier, that part goes "onto your books" when it goes into your inventory. If you don't put that part into a product and sell it relatively quickly, you owe tax on that part as it sits on your shelf. I admit to not being a CPA, but that... doesn't make a ton of sense to me. What sort of tax do you pay on inventory? My understanding is that it's not tax that's the issue, but the tying-up of capital in inventory that's generally being minimized. If interest rates are 3% and you have $1M in inventory, that's $30k per year in interest you're paying in order to hold that inventory, plus the physical costs of warehousing it. And the MBAs naturally look at cutting costs as the fastest and most direct route to improving profitability.
  - bsder 4y ago
    > I admit to not being a CPA, but that... doesn't make a ton of sense to me. What sort of tax do you pay on inventory? Welcome to the US taxation system. As I understand it, VAT solves a lot of this silliness. However, the US doesn't do VAT for a bunch of historical reasons.
  - gnopgnip 4y ago
    Cost of goods are deductible against sales. But unsold inventory is not. So effectively it is taxed as business profit.
    - daniel-cussen 4y ago
      Can't you sell it next year? And you know what? At some point somebody has to lose money to the tax collector. You can't deduct everything, can't shunt it all onto the customer (typically a leaf-node employee, someone at the bottom of an org chart). The business has to be profitable by enough that it can eat some taxation. Or what, you expect the orphan to do it instead? Has to push through friction for others. And plus, cost of goods of unsold inventory isn't that painful if you actually are making huge margins on it, like you ideally should, because you built a better mousetrap that was that much better that you could protect it from copycats with patents and therefore let everyone benefit enormously from it. In the end, the businessman must be creative. Must be an inventor, basically. Or a leader. And so in order to overcome that friction for the sake of the orphanage, the businessman must resolve friction in nature, some inefficiency of some sort, something that could be much better than it is. Something ineffective that could be effective. Plant a seed and reap two.
      - MichaelZuo 4y ago
        You are free to send extra money to the government if you truly believe in it.
        daniel-cussen 4y ago
        I actually went ahead and did already! And I'm going to do it again!
- daniel-cussen 4y ago
  Suck up those taxes! Suck them up! Just pay them! Subordinate yourself to the authority of the State that governs the place you do business, it's the least you can do. Don't cheat the orphanage! Push through the friction! The State of California gave me a huge break that I would have never gotten on my own. I did the math and the taxes I pay turn into that help at a 1/1000000 (one millionth) efficiency rate. That's awesome, that may be a high hurdle for everyone else but for me it's a great deal, because I can get speedups as great or greater, with just that help they gave me. So in fact a 1000000000x (one billion times) speedup was possible directly due to this break they gave me, so the ROI is already 1000x (a thousand times). And once they unlock that, hey that's just the beginning, sky's the limit! That 1Bx speedup (1 billion times) is actually an undersell, I could have kept going and gotten a 1000000000000x speedup (trillion times) and kept going and going beyond that, literally ad nauseam (numbers that would sicken you by looking at them, literally that). It's just a trillion-x speedup is too big, people get dizzy, there's no metaphors, people distrust the problem you're solving if you get that speedup, it's better to say a billion. There's metaphors for that (difference between wheelbarrow of dirt and a mountain, two seconds and the human lifetime, jumping a foot off the ground and going to the Moon). It's the biggest number that really fits in people's heads. But they're both still big speedups that vastly overcome the meaningless 1000000x hurdle that taxation and redistribution impose. Advice: value the taxes you pay at more than 0%. Fine, not 100% or more, but not 0% or less. Say 20%, to start with. Start by reducing what you deduct from your taxes, limit that to the things the State really doesn't want you paying taxes for. But on business lunches! Dude cough it up completely! And in the process get rid of the tax lawyers and accountants who tell you to do contortions for tax reasons. Then you'll see your business with clarity.
  - bsder 4y ago
    This issue isn't "paying taxes"--it's the fact that inventory laws in the US are stupidly obtuse. Computer chips are not nuts and bolts. I believe that VAT solves a lot of these issues (while trading off for others).
  - ravel-bar-foo 4y ago
    If you get 1 trillion x anything taxes won't be a factor in your ability to get money. At that multiplier my pocket change becomes the entire world economy.

xadhominemx 4y ago

Why would any laws need to be changed? Companies should and will just start holding higher levels of inventory as a business practice.

JaimeThompson 4y ago
Companies should not spend billions on stock buybacks instead of keeping their factories in running order but the recent baby food issues in the US show that isn't always the case.
- bloodyplonker22 4y ago
  It's not one or the other, they can do both. You think that a company would rather do a stock buyback and NOT keep their factories in running order so their stock will tank right after they buy back their stock at a higher price?
  - vkou 4y ago
    Depends on the vesting schedule of the people doing the buybacks.
tbrownaw 4y ago
This article[1] says that in some states it's included in what you have to pay property tax on. That seems like it would push businesses to keep less than would otherwise be optimal. [1] https://www.boxstorm.com/articles/inventory-tax-explained-for-your-small-business/ https://www.boxstorm.com/articles/inventory-tax-explained-fo...
- nickff 4y ago
  Money used to purchase inventory is also usually taxed as profit, which is a further disincentive.
  - WheatM 4y ago

xt00 4y ago

So I wonder if anybody here could compare what Phoenix has vs Hsinchu in Taiwan. It seems like the closest the US has to what Taiwan has.. (Intel, new TSMC, various other fabs are there).. so making Phoenix the Mecca of semiconductor jobs in the US seems like a pretty smart goal .. while the federal govt loves to spread money around it seems wise to just say let’s be real folks, it’s way easier / efficient to pour gas on an existing fire than to build totally greenfield.. like pump tons of cash into the AZ universities for semiconductor work. But I wonder if people have some history / perspective on why people don’t say “oh you want to work in semi area? Go to Phoenix..”..

Kadin 4y ago
Seems a bit strange that Phoenix would be a desirable place to build a fab, given how water-intensive most processes are. Yes, the water can and should be recycled... but it just seems weird to build a plant like that in one of the parts of the country that will probably never have enough fresh water, compared to other areas where they can't get it out of the way fast enough. Is it the labor pool there that makes it attractive? Energy costs? Something about state/local subsidies?
- windowsrookie 4y ago
  The reason I heard is that Phoenix is seismically stabile, and weather stabile. Both of those things can cause power outages which are incredibly expensive at a fab.
  - whatshisface 4y ago
    Can power outages be more expensive than diesel?
    - Vecr 4y ago
      Quakes and flooding can kill generators. You can be smart and build them on elevated earthworks, but if the event is severe enough something will fail.

WheatM 4y ago