4 ms·

Clearly, handouts are needed to force/incentivize these companies to build new fabs in the continental US. Otherwise they would have built them under their own

by Alupis 4y ago

Clearly, handouts are needed to force/incentivize these companies to build new fabs in the continental US. Otherwise they would have built them under their own gumption by now. When there is no clear benefit for the company to fab chips in the continental US, and a lot of clear negatives (cost, regulations, etc) - you have to do something to outweigh the cons. If the US had been an amazing place to fab chips already, hand-outs would be completely unnecessary and we would already have a bustling chip fabbing industry. But... we don't. Perhaps after handing out all this "free" money, lawmakers need to take a long hard look at why our chip fabbing industry has nearly vanished.

lettergram 4y ago
Alternatively, you add a 20% tax on CPUs made outside the US. That would incentivize the fans manufactured in the US even if it’s a foreign company.
- kube-system 4y ago
  Depends on how much money the other countries are handing out to build CPUs there.
- Alupis 4y ago
  Or, chips just become 20% more expensive in the US and the consumer loses... and the US still doesn't gain supply chain security. I don't think tariffs will work when the alternative requires massive outlay of capital and decades to recoup. Not to mention, there is no reality where manufacturing these chips in the US costs less than Taiwan, for example. There is no reason to build a fab in the US with the current economic and regulatory climate. So... we have to force it to happen... which is what this bill does.
  - StillBored 4y ago
    I think in this case the US is different than say Chile because its such a large market. AKA its large enough to support home grown manufacturing if the incentives aren't out of wack. The chicken tax, as been an incredibly efficient way to assure that car's are manufactured in the USA, so much so that the cost difference between a Ford manufactured in Mexico and a Toyota manufactured in TX is basically 0.
    - Alupis 4y ago
      How is this not the consumer still losing, though? There is no reality where manufacturing a car in Mexico costs the same as in Michigan. We've artificially increased the cost of the Mexico product... that is what will happen if you try that approach with chips - they will be more expensive for no real good reason. It also appears to cost many multiples more capital to build a chip fab than a car plant according to these sources[1][2]. [1] https://www.exacthowmuch.com/how-much-does-it-cost-to-build-a-car-manufacturing-plant/ https://www.exacthowmuch.com/how-much-does-it-cost-to-build-... [2] https://builtin.com/hardware/american-made-semiconductor-costs https://builtin.com/hardware/american-made-semiconductor-cos...
      - StillBored 4y ago
        Well its MX, vs TX, so maybe that is part of it, but I suspect there are other more significant differences, like for example ford sells ~7x the number of F-150's as Toyota sells Tundra's and that is only reflected in a ~3K difference in base price. Its hard to have an exact 1:1 comparison, but I think most people would agree they are roughly the same price for roughly the same product. And yet one is largely designed and manufactured in the USA (the Toyota). So, maybe they it costs more to employ someone in San Antonio, but maybe that doesn't really matter in the grand scheme of things vs flying engineers to MX to work out kinks in the assembly line. And its probably the same with semiconductor manufacturing. Intel isn't behind because it costs more to manufacture things in the US, they are behind because they didn't invest in EUV, and made some technical mistakes, as well as business mistakes around contract manufacturing and refusing low margin deals. I think if you look at the results of the IBM/Lenovo deals its abundantly clear that where the manufacturing was located had nothing to do with the success of the products (It was outsourced to Lenovo long before it became their business). The American management was the problem, and kicking it to the curb allowed them to grow the business 10X+. And lets not ignore Samsung which has a large fab just down the road from me. So it can't be a terrible environment for USA based semiconductors if a Korean company is willing to fab things here.
  - phkahler 4y ago
    >> Or, chips just become 20% more expensive in the US and the consumer loses... and the US still doesn't gain supply chain security. Push it up 50 percent. This quarter trillion dollars is going straight on the debt pile so it will hurt a lot, just not today.
    - Alupis 4y ago
      Without getting political - does it even matter anymore? Trillions of dollars were just thrown out the window to whoever could catch some... and few if anyone has any idea where most of it actually went. At least this money will have a tangible, appreciable outcome. Supply chain security for such critical things such as chips is really hard to overstate the importance of for the US.
      - gscott 4y ago
        We inflate away our national debt anyway so in future dollars that is a few hundred billion at most.
  - ZetaZero 4y ago
    Intel had profits of $20B last year. They could easily build a new modern fab every year if they wanted to. But it makes more sense for them to spend tax payers money instead.
    - thfuran 4y ago
      Easily as in "if they feel like wiping out all their profits", which is not really how public companies tend to feel.
      - 01100011 4y ago
        Amazon went years basically making no money because they were reinvesting and in a growth stage. Intel could do the same. They just need to convince investors of the new narrative. Wall Street doesn't demand profits if you deliver promises.
    - BeetleB 4y ago
      > They could easily build a new modern fab every year if they wanted to. And they are, and have always been.
- stevenjgarner 4y ago
  How significant is the US market to foreign manufacturers?
arrosenberg 4y ago
> Clearly, handouts are needed to force/incentivize these companies to build new fabs in the continental US. Otherwise they would have built them under their own gumption by now. I don't have a problem with government subsidy for jumpstarting industry, but it's absurd to give the money to Intel and AMD. They profited massively from offshoring their production. If we are going to spend money (and I agree we must), it should be invested in new competition so that Intel and AMD have to spend their largess on fixing their business model to compete.
nerpderp82 4y ago
Fabs are only a small part of the supply chain. Any one of the thousands of critical components that go into maintenance or manufacturing put the whole thing at risk. Just dumping money on industry will not solve this. Having a dirt to package solution with everything domestically produced would and it doesn't need to be the latest process node, that is ridiculous and folks that advocate for that don't see the forest for the trees.
pessimizer 4y ago
> Clearly, handouts are needed to force/incentivize these companies to build new fabs in the continental US. Otherwise they would have built them under their own gumption by now. That doesn't make sense. I could declare that lollypops are needed, or a third sequel to Space Jam on the same evidence. It's just affirming the consequent. I think that these companies aren't building new fabs because I personally am too poor, so the best way to get us out of this rut is to hand me the billions. edit: the government needs to stop giving wealthy people money. Buy equity in the companies and get on their boards, don't just hand wealthy people cash and pretend it's capitalism.

by Alupis 4y ago

lettergram 4y ago

Alternatively, you add a 20% tax on CPUs made outside the US. That would incentivize the fans manufactured in the US even if it’s a foreign company.

kube-system 4y ago
Depends on how much money the other countries are handing out to build CPUs there.
Alupis 4y ago
Or, chips just become 20% more expensive in the US and the consumer loses... and the US still doesn't gain supply chain security. I don't think tariffs will work when the alternative requires massive outlay of capital and decades to recoup. Not to mention, there is no reality where manufacturing these chips in the US costs less than Taiwan, for example. There is no reason to build a fab in the US with the current economic and regulatory climate. So... we have to force it to happen... which is what this bill does.
- StillBored 4y ago
  I think in this case the US is different than say Chile because its such a large market. AKA its large enough to support home grown manufacturing if the incentives aren't out of wack. The chicken tax, as been an incredibly efficient way to assure that car's are manufactured in the USA, so much so that the cost difference between a Ford manufactured in Mexico and a Toyota manufactured in TX is basically 0.
  - Alupis 4y ago
    How is this not the consumer still losing, though? There is no reality where manufacturing a car in Mexico costs the same as in Michigan. We've artificially increased the cost of the Mexico product... that is what will happen if you try that approach with chips - they will be more expensive for no real good reason. It also appears to cost many multiples more capital to build a chip fab than a car plant according to these sources[1][2]. [1] https://www.exacthowmuch.com/how-much-does-it-cost-to-build-a-car-manufacturing-plant/ https://www.exacthowmuch.com/how-much-does-it-cost-to-build-... [2] https://builtin.com/hardware/american-made-semiconductor-costs https://builtin.com/hardware/american-made-semiconductor-cos...
    - StillBored 4y ago
      Well its MX, vs TX, so maybe that is part of it, but I suspect there are other more significant differences, like for example ford sells ~7x the number of F-150's as Toyota sells Tundra's and that is only reflected in a ~3K difference in base price. Its hard to have an exact 1:1 comparison, but I think most people would agree they are roughly the same price for roughly the same product. And yet one is largely designed and manufactured in the USA (the Toyota). So, maybe they it costs more to employ someone in San Antonio, but maybe that doesn't really matter in the grand scheme of things vs flying engineers to MX to work out kinks in the assembly line. And its probably the same with semiconductor manufacturing. Intel isn't behind because it costs more to manufacture things in the US, they are behind because they didn't invest in EUV, and made some technical mistakes, as well as business mistakes around contract manufacturing and refusing low margin deals. I think if you look at the results of the IBM/Lenovo deals its abundantly clear that where the manufacturing was located had nothing to do with the success of the products (It was outsourced to Lenovo long before it became their business). The American management was the problem, and kicking it to the curb allowed them to grow the business 10X+. And lets not ignore Samsung which has a large fab just down the road from me. So it can't be a terrible environment for USA based semiconductors if a Korean company is willing to fab things here.
- phkahler 4y ago
  >> Or, chips just become 20% more expensive in the US and the consumer loses... and the US still doesn't gain supply chain security. Push it up 50 percent. This quarter trillion dollars is going straight on the debt pile so it will hurt a lot, just not today.
  - Alupis 4y ago
    Without getting political - does it even matter anymore? Trillions of dollars were just thrown out the window to whoever could catch some... and few if anyone has any idea where most of it actually went. At least this money will have a tangible, appreciable outcome. Supply chain security for such critical things such as chips is really hard to overstate the importance of for the US.
    - gscott 4y ago
      We inflate away our national debt anyway so in future dollars that is a few hundred billion at most.
- ZetaZero 4y ago
  Intel had profits of $20B last year. They could easily build a new modern fab every year if they wanted to. But it makes more sense for them to spend tax payers money instead.
  - thfuran 4y ago
    Easily as in "if they feel like wiping out all their profits", which is not really how public companies tend to feel.
    - 01100011 4y ago
      Amazon went years basically making no money because they were reinvesting and in a growth stage. Intel could do the same. They just need to convince investors of the new narrative. Wall Street doesn't demand profits if you deliver promises.
  - BeetleB 4y ago
    > They could easily build a new modern fab every year if they wanted to. And they are, and have always been.
stevenjgarner 4y ago
How significant is the US market to foreign manufacturers?

arrosenberg 4y ago

> Clearly, handouts are needed to force/incentivize these companies to build new fabs in the continental US. Otherwise they would have built them under their own gumption by now. I don't have a problem with government subsidy for jumpstarting industry, but it's absurd to give the money to Intel and AMD. They profited massively from offshoring their production. If we are going to spend money (and I agree we must), it should be invested in new competition so that Intel and AMD have to spend their largess on fixing their business model to compete.

nerpderp82 4y ago

Fabs are only a small part of the supply chain. Any one of the thousands of critical components that go into maintenance or manufacturing put the whole thing at risk. Just dumping money on industry will not solve this. Having a dirt to package solution with everything domestically produced would and it doesn't need to be the latest process node, that is ridiculous and folks that advocate for that don't see the forest for the trees.

pessimizer 4y ago

> Clearly, handouts are needed to force/incentivize these companies to build new fabs in the continental US. Otherwise they would have built them under their own gumption by now. That doesn't make sense. I could declare that lollypops are needed, or a third sequel to Space Jam on the same evidence. It's just affirming the consequent. I think that these companies aren't building new fabs because I personally am too poor, so the best way to get us out of this rut is to hand me the billions. edit: the government needs to stop giving wealthy people money. Buy equity in the companies and get on their boards, don't just hand wealthy people cash and pretend it's capitalism.