6 ms·

I understand the point of these subsidies. I am just doubting (a personal opinion) that they'll actually work and calculating the wealth transfer happening here

by csomar 3y ago

I understand the point of these subsidies. I am just doubting (a personal opinion) that they'll actually work and calculating the wealth transfer happening here.

KoftaBob 3y ago
Why do you doubt they'll accomplish their goal of removing dependency on foreign chip makers?
- phone8675309 3y ago
  Not parent poster, but there's a long track record of these sorts of subsidies to big tech companies already rolling in money to go bust with little oversight, investigation, or prosecution. The big one everyone remembers is the set of grants giving to incumbent providers to expand access to broadband (25 Mbps down/3 Mbps minimum) to everyone in the country - a promise that, despite three rounds of grants in the billions, has not materialized.[1] [1] https://www.jsonline.com/in-depth/news/2021/07/14/weve-spent-billions-provide-broadband-rural-areas-what-failed-wisconsin/7145014002/ https://www.jsonline.com/in-depth/news/2021/07/14/weve-spent...
  - bee_rider 3y ago
    Chips and telecom are pretty different markets, right? GlobalFoundries needs a leg up, most of the big telecom companies are already abusive monopolies.
- csomar 3y ago
  Because they do not fix the underlying causes; and also they create perverse incentives. Most companies are in the business of extracting money and will see this as such: an opportunity to extract money and the product is bureaucracy checkboxes. It would make more sense, in this personal view, to restrict sales to domestic production only and make sure the field is even for competitors to out-compete one another. This guarantee the dependency aspect at least (as you already restricted yourself!). Another solution: Move the manufacturing to a near-shore and friendly country (ie: Mexico or Puerto Rico) and keep the design part in the US. But of course, that wouldn’t be as politically popular and wouldn’t create the extraction opportunity (which lots of companies will want to benefit from).
  - edgyquant 3y ago
    If a certain former president is reelected he will likely continue to push for the type of tariffs that will incentivize domestic production over foreign imports. If that happens the chips act will have put us on the footing required for that ramp up to begin.
  - jacobsimon 3y ago
    This is a compelling perspective. But putting sales or import restrictions in place right now would be damaging in the short term both for the manufacturing partners and the US. They’ve already put some export restrictions in place (ie preventing nvidia from selling their most powerful chips to china). In terms of nearshoring - that’s a good idea too but I think the workforce training would be even more difficult than it has been in the US and it would be less popular politically as you said. (Side note: PR is part of the US - maybe you meant Costa Rica)
    - coredog64 3y ago
      Intel does (or used to do) wafer packaging in Costa Rica. On paper, CR is an attractive near shore location: Good amount of English speakers, time zone parity with the US, and not difficult to travel to.
  - KoftaBob 3y ago
    > Move the manufacturing to a near-shore and friendly country (ie: Mexico or Puerto Rico) Puerto Rico isn't a foreign country, it's a territory of the United States. Regardless of that, semiconductor fabrication is one of, if not THE most complex form of manufacturing. It's not enough to simply build a fab in Mexico, the supply chain of materials and highly skilled labor that runs these fabs needs to exist there too. That's not to say that it can't exist somewhere like Mexico, but currently it doesn't and it would take longer to build up. So while moving it to Mexico would remove the geopolitical risk problem, putting it there instead of the US would only give the advantage of cheaper labor but at the cost of taking much much longer to ramp up.
    - coredog64 3y ago
- rusticpenn 3y ago
  Global Foundries promised 7nm tech to IBM and dropped it after winning the contract. https://www.datacenterdynamics.com/en/news/ibm-sues-globalfoundries-over-dropping-7nm-demands-25bn/ https://www.datacenterdynamics.com/en/news/ibm-sues-globalfo...
chrinic839400 3y ago
> I am just doubting (a personal opinion) that they'll actually work and calculating the wealth transfer happening here. The goal is not wealth transfer. If you want that, move to Europe.
- dukeyukey 3y ago
  Europe does a lot of income transfer, but not much wealth transfer.
myrmidon 3y ago
Do you think that the gain from this (investment into Saratoga Fab) is useless or that the state pays too much for it? Because I personally believe that this is a decent deal; I hate the idea and it still reeks of protectionism to me, but I think this serves US (taxpayers!) interests decently well. I especially like the investment matching aspect, where the necessary commitment from the company is much larger than the grants, so in the end, they are dropping money into that fab (fudging numbers only gets you so far), and its in their best interest to make it work out. I'd be very careful with characterising this as "wealth transfer", because it seems significantly less questionable than most defense spending to me and even that I wouldn't label as "wealth transfer". Out of personal curiosity: Are you similarly opposed to agriculture subsidies, or do you consider those less problematic (magnitude is somewhat comparable at ~20billion$/year)?
- mschuster91 3y ago
  > Out of personal curiosity: Are you similarly opposed to agriculture subsidies, or do you consider those less problematic (magnitude is somewhat comparable at ~20billion$/year)? European here, we could and should close our borders for agricultural goods that we can grow ourselves (and you Americans should ban alfalfa exports from California, while you're at it). Ag subsidies are only required because there's no way an US or European farmer can compete with Russian, Ukrainian, South American or African labor and land costs, but we still need farmers to ensure we're self-sufficient and don't end up like many developing nations did once Russia blockaded Ukrainian grain exports.
  - tuatoru 3y ago
    As a New Zealander: please don't.
  - user_7832 3y ago
    That is an interesting take. If I'm not mistaken in India at least (which one would imagine has fairly cheap labour) sugar and corn is still cheaper imported, although in sugar's case I think the production costs are higher due to water requirements. The sugar import situation had become highly political some years back.
graeme 3y ago
Your comment doesn't address the parent comment's point though. You'd have to make an argument that the chip factories won't get built at all.

by csomar 3y ago

I understand the point of these subsidies. I am just doubting (a personal opinion) that they'll actually work and calculating the wealth transfer happening here.

KoftaBob 3y ago

Why do you doubt they'll accomplish their goal of removing dependency on foreign chip makers?

phone8675309 3y ago
Not parent poster, but there's a long track record of these sorts of subsidies to big tech companies already rolling in money to go bust with little oversight, investigation, or prosecution. The big one everyone remembers is the set of grants giving to incumbent providers to expand access to broadband (25 Mbps down/3 Mbps minimum) to everyone in the country - a promise that, despite three rounds of grants in the billions, has not materialized.[1] [1] https://www.jsonline.com/in-depth/news/2021/07/14/weve-spent-billions-provide-broadband-rural-areas-what-failed-wisconsin/7145014002/ https://www.jsonline.com/in-depth/news/2021/07/14/weve-spent...
- bee_rider 3y ago
  Chips and telecom are pretty different markets, right? GlobalFoundries needs a leg up, most of the big telecom companies are already abusive monopolies.
csomar 3y ago
Because they do not fix the underlying causes; and also they create perverse incentives. Most companies are in the business of extracting money and will see this as such: an opportunity to extract money and the product is bureaucracy checkboxes. It would make more sense, in this personal view, to restrict sales to domestic production only and make sure the field is even for competitors to out-compete one another. This guarantee the dependency aspect at least (as you already restricted yourself!). Another solution: Move the manufacturing to a near-shore and friendly country (ie: Mexico or Puerto Rico) and keep the design part in the US. But of course, that wouldn’t be as politically popular and wouldn’t create the extraction opportunity (which lots of companies will want to benefit from).
- edgyquant 3y ago
  If a certain former president is reelected he will likely continue to push for the type of tariffs that will incentivize domestic production over foreign imports. If that happens the chips act will have put us on the footing required for that ramp up to begin.
- jacobsimon 3y ago
  This is a compelling perspective. But putting sales or import restrictions in place right now would be damaging in the short term both for the manufacturing partners and the US. They’ve already put some export restrictions in place (ie preventing nvidia from selling their most powerful chips to china). In terms of nearshoring - that’s a good idea too but I think the workforce training would be even more difficult than it has been in the US and it would be less popular politically as you said. (Side note: PR is part of the US - maybe you meant Costa Rica)
  - coredog64 3y ago
    Intel does (or used to do) wafer packaging in Costa Rica. On paper, CR is an attractive near shore location: Good amount of English speakers, time zone parity with the US, and not difficult to travel to.
- KoftaBob 3y ago
  > Move the manufacturing to a near-shore and friendly country (ie: Mexico or Puerto Rico) Puerto Rico isn't a foreign country, it's a territory of the United States. Regardless of that, semiconductor fabrication is one of, if not THE most complex form of manufacturing. It's not enough to simply build a fab in Mexico, the supply chain of materials and highly skilled labor that runs these fabs needs to exist there too. That's not to say that it can't exist somewhere like Mexico, but currently it doesn't and it would take longer to build up. So while moving it to Mexico would remove the geopolitical risk problem, putting it there instead of the US would only give the advantage of cheaper labor but at the cost of taking much much longer to ramp up.
  - coredog64 3y ago
rusticpenn 3y ago
Global Foundries promised 7nm tech to IBM and dropped it after winning the contract. https://www.datacenterdynamics.com/en/news/ibm-sues-globalfoundries-over-dropping-7nm-demands-25bn/ https://www.datacenterdynamics.com/en/news/ibm-sues-globalfo...

chrinic839400 3y ago

> I am just doubting (a personal opinion) that they'll actually work and calculating the wealth transfer happening here. The goal is not wealth transfer. If you want that, move to Europe.

dukeyukey 3y ago
Europe does a lot of income transfer, but not much wealth transfer.

myrmidon 3y ago

Do you think that the gain from this (investment into Saratoga Fab) is useless or that the state pays too much for it? Because I personally believe that this is a decent deal; I hate the idea and it still reeks of protectionism to me, but I think this serves US (taxpayers!) interests decently well. I especially like the investment matching aspect, where the necessary commitment from the company is much larger than the grants, so in the end, they are dropping money into that fab (fudging numbers only gets you so far), and its in their best interest to make it work out. I'd be very careful with characterising this as "wealth transfer", because it seems significantly less questionable than most defense spending to me and even that I wouldn't label as "wealth transfer". Out of personal curiosity: Are you similarly opposed to agriculture subsidies, or do you consider those less problematic (magnitude is somewhat comparable at ~20billion$/year)?

mschuster91 3y ago
> Out of personal curiosity: Are you similarly opposed to agriculture subsidies, or do you consider those less problematic (magnitude is somewhat comparable at ~20billion$/year)? European here, we could and should close our borders for agricultural goods that we can grow ourselves (and you Americans should ban alfalfa exports from California, while you're at it). Ag subsidies are only required because there's no way an US or European farmer can compete with Russian, Ukrainian, South American or African labor and land costs, but we still need farmers to ensure we're self-sufficient and don't end up like many developing nations did once Russia blockaded Ukrainian grain exports.
- tuatoru 3y ago
  As a New Zealander: please don't.
- user_7832 3y ago
  That is an interesting take. If I'm not mistaken in India at least (which one would imagine has fairly cheap labour) sugar and corn is still cheaper imported, although in sugar's case I think the production costs are higher due to water requirements. The sugar import situation had become highly political some years back.

graeme 3y ago

Your comment doesn't address the parent comment's point though. You'd have to make an argument that the chip factories won't get built at all.