Tech giants join call for funding U.S. chip production
reuters.com
reuters.com
The issue with such points isn't that they're wrong, it's that they're not interesting. Nothing predictable and obvious is. We want interesting conversation here, and that comes from curiosity. If you're feeling agitation rather than curiosity, please wait until that polarity flips.
The interesting things in a story like this are any diffs from what one would have expected.
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
It's a significant move, so there must be interesting diffs. But sometimes one has to hunt for those, or at least wait for them to occur to one. That sort of waiting is key to getting good HN discussion, which is reflective rather than reflexive.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
I don't want to hear it creates jobs, it generates blah blah blah, a real equity stake and possibly repayment of the capital. Creating jobs should be a happy by-product of subsidizing an industry that is probably more well capitalized than any other in existence.
According to (https://startupanz.com/5-tech-giants-hold-588b-cash-reserves...) Amazon, Apple, Google, and Microsoft had 526 billion dollars between the four of them in cash reserves. They have over half a TRILLION dollars in cash. If this were life or death, they could afford anything.
But the calculus is offload risk onto the tax payer (despite being a shareholder directly in all those companies or indirectly via mutual funds/etfs), I don't want to be left holding the bag with no upside beyond the general sentiment of 'national security was secured' while private companies reap all the benefits.
Presumably they would cooperate and do something about it if they saw the current situation as too risky?
In this case, the risk is that China literally takes over (one way or another) the vast majority of supply of semiconductors to specifically harm western companies (or countries in a war setting). In that scenario, are you still worried about unequal kick backs or are you happy that the nation has access to the chips it needs for industry and defense?
Of course, whether that holds true if boots land on their soil, who knows.
Also there are US air bases in Phillipines, Singapore, South Korea, Australia, Guam etc. This is going to be a regional conflict not just between US and China.
Again. Anyone who says there is a 100% chance of winning is delusional and ignores the history of war on this planet.
Being able to sink any hostile warship within 2000 miles of the Spratly Islands is a significant deterrent to external military intervention in the region.
Even if we would go to war, its probably a war we would prefer not to have to fight even if the weapons used stay conventional. It's the kind of situation that changes the course of history in a big way for the loser.
Nobody wants to be the Spanish after the defeat of the Armada of the 21st century.
If allies can't depend on US to defend them then it opens up all sorts of possibilities none of which are in the best interests of the US or those that value democracy.
For example closest allies like Australia for example would have no choice but to capitulate and bow down to China's whims. This would include ending the Five Eyes security arrangement and allowing Huawei to operate the 5G backbone infrastructure.
Crimea begs to differ...
There are so many dynamics involved e.g. Japan needing to defend the Senkaku Islands, India, UK and EU member states being involved and the fact that you an increasingly united front within APAC.
Also China's military is a lot of smoke and mirrors. They simply can't match the F-22 and F-35 in the air or the Ford class aircraft carriers in the sea. And US is looking to build a missile defence system on Guam to prevent long range attacks.
There are simply too many factors in play to give any percentage of winning.
>Ford class aircraft carriers
Isn't there only one Ford class carrier? And it is still not fully ready, and it is in the Atlantic, so at this point is not ready to play a part in any South China Sea conflict.
No one is expecting war this year. There will be 3 Ford Class carriers by 2030 and 5 by 2040. As well as the Nimitz class which are still better than what China has today.
This is a contradiction. It leaves open the possibility of sanctions sufficient to induce US companies to stop building everything in China.
In the long term the cost of this is negligible or produces a net benefit. Maybe some things cost more if it would have been cheaper to make them in China, but that isn't necessarily true outside of China's cross-subsidies which you're then still paying for, and even if they do you get the countervailing economic benefit of repatriating some of the production. (It's also plausible that sanctions on China would move production to places like Mexico and Brazil which are still cheaper than the US, but then you're back to no significant long-term cost increase and a benefit from diversifying production.)
The main cost is in the short term, because things would cost more. But they would cost more by the amount of the tariffs. Which go to the government, which it can then give back to the domestic population in various ways. Which could produce a domestic benefit, if China ends up paying any of the tariffs. If there is a $1 import tariff which pays for a $1 tax reduction for the middle class, but the tariff is paid $0.75 by the domestic buyer and $0.25 by the foreign manufacturer, you just transferred $0.25 to the domestic population.
The only way you even get a short-term domestic cost is if manufacturing actually does start moving out of China. Because then you have a $1 tariff which causes people to be willing to pay $0.25 more for a product made in Ohio or Mexico. Which costs you the $0.25 and then you don't get the $1 to offset domestic taxes. But it costs China $5, i.e. the full value of the sale and not just the amount of the tariff or the marginal cost of manufacturing it elsewhere. It costs them more than it costs the US. Which gives the US more negotiating leverage to get whatever concessions they want.
In times of war, this USD debt is going to be a liability for china, since the US can just refuse to repay it (and after all, what else is china going to do about? Declare war again?).
Kind of explains the problems with China having too much USD debt. Even without times of war.
To see the mind-set of the US/Europeans in the 1940s, take the time to watch the miniseries "The Singapore Grip". The British in particular were very dismissive of the Japanese. They sent a whole two(!) battleships off to destroy the Japanese invasion fleet. The Japanese polished them off in about an hour and a half. [I see that moment as the point when the whole British Empire died. But it took the British another 15 years to recognise that death.]
Getting in a naval battle with China may likely someday become "getting in a land war with Russia".
> https://www.scmp.com/news/china/military/article/3098972/chi...
With good regulation and unionization this can lead to great wealth distribution in the US along with worldwide economic power.
These corporations are the ones whom benefited from exporting the production infrastructure at the expense of the labor market. Now, they want the labor market to fund the redevelopment of the infrastructure for their benefit.
I'm confused as to why the US government needs to be involved capital investment when these companies are boasting historic profit margins.
Another way to look at this is to say that other countries are now more appealing places to manufacture certain goods than the USA is. Everything is relative, and other countries have agency too.
These companies move manufacturing overseas because they don't want to pay family members/neighbors a decent wage, or other business incentives like lax polution standards.
Now they want struggling Americas to build them a new cozy home in the country they abandoned. (You know what I mean by abandoned. The last thing the wealthy boys will ever do is move these wealthy executives to these cheaper countries completely.)
I'm at the point---go ahead and give them billions. Give them land. Take off any tariffs. Yes--a complete 180 from my opening sentence.
I feel computer chips are very important, and we do need factories here.
It seems like every few years a big prospering industry takes tax payer money. I'm always hoping they might show a bit of gratitude, but no. We bailed out "big stupid banks" (quote by Jamie Diamond), and the banks just turned around raised fees for everything.
I don't want a lot. Just some compassion with prices. If you sell drugs (Pharmacutical jab) to another counties at a huge discount; give poor/middle class Americas the same deal? Johnson & Johnson were the only drug company that didn't take millions in grants for Covid research. You would think by taking millions in gifts, the manufactoring information would be freely available to any American? (I am so glad they found a vaccine. I am still angry over my prescription price dole out each month.)
Oh yea, I'm not one sided. I felt AOC, and others, took demands to far with Amazon a few years ago.
It's almost like when we do get a say in a private business decision, we go overboard? We are so used to big businesses stepping on us, we over demand?
But yea, I'm completely disenfranchised. Give them money, and incentives.
It will be interesting to see what our inflation rate will be in a few years.
I heard a big wig stock guy say today he is worrying the dollar might not be used as a bench mark in other countries in a few years if we don't stop spending like drunken sailors.
I'm all for spending when it benefits the poor, and middle class. It doesn't seem to ever trickle down.
The homeless encampments are just getting bigger in my county. I see too many frantic people filling up moving vans. Instead of happiness over the opening, I'm seeing a lot of misplaced anger when I go out.
(Sorry about rambling.)
IMHO a more sustainable strategy is the government taxing the environmental and human rights externalities of off-shore production.
While this means the countries may develop slower, they will likely/hopefully wind up with less concentrated wealth (hiring more workers instead of a few people pocketing all the profits.)
I would hope that such taxes would be used towards environmental or humanitarian efforts, to be a proper 'offset' tax.
Doing so will likely result in some short term shocks, but a more sustainable society overall. My hope is that when prices would go up in such a scenario, consumers would again care about how long something lasts in big enough numbers that we have a less disposable society.
This has never been an issue in the semiconductor industry until now. Demand was always increasing and margins have been high enough to allow them to self-fund. If semiconductor companies now need subsidies to expand then we are probably past the "exponential growth" era of semiconductors. Technological gains will be much slower and much more consistent with traditional industries rather one that what we're use to.
2. I think both e.g. US and EU should have their own chip-manufacturing infrastructure. We need more robustness at a global scale in this area.
3. Taiwan needs (and deserves) US/EU support. TSMC has turned into a geopolitical play - it seems like Taiwan feels like they need it to avoid a PRC invasion.
If it was started 5-10 years ago, would it have survived the change of administrations?
That unironically makes complete sense.
If they were going to pay taxes to fund the subsidy, why have the subsidy in the first place?
(My conclusion: don't subsidize, don't pick winners and losers.)
I guess my point here is that the devil is in the details, and an organization as large as the US Government has a lot of different options for incentivizing or assisting in starting up new industries.
https://www.csmonitor.com/Business/In-Gear/2016/1017/Solyndr...
I've noticed that for the most part every time a corporation export jobs it's the corporation's fault. Whenever a corporation brings jobs to the US the politicians get credit for good policy.
From the cultural left, if you believe that nationalism is immoral and everyone is a global citizen with nation-states being obsolete and even illegetimate ideas, you can't expect someone to have a sense of loyalty to his fellow citizens and not outsource. After all, why deny good jobs to the poor in other countries who benefit from them? Isn't it bigoted for a company to want to keep jobs in America? So that's why the left is strangely silent on these trade deficits, and attacks anyone who raises concerns about them as "nativist".
On the economic right, if you believe that profit maximizing behavior leads to pareto-maximizing outcomes, why would you interfere with a company that decides to boost profits by outsourcing?
It is the cultural right, economic left that remains shaking their heads at what are obviously foolish, self-destructive policies, but they are generally locked out of power in this country, and so the national firesale continues.
Being against free trade works for an economy right up until it has fully squandered its competitive advantage (derived in great part in the modern world by leveraging comparative advantage) and then GDP and the tax base start collapsing. And then capital flight happens when the combination of protectionism and necessarily increased taxes to sustain government programs makes it prohibitive to conduct business, compounding the vicious contractive cycle.
Retarding an economy with protectionist policies is a losing strategy in the long term. The only way to win is education and retraining. That's it.
We did just like China starting out, rather than be stuck undeveloped, enslaved to comparative advantage, we stole trade secrets from the more powerful nation, heavily subsidized R&D, and education (as you point out as a good thing), etc. See for instance "Slater the Traitor" as the British knew him:
https://en.wikipedia.org/wiki/Samuel_Slater
If the WTO existed back then we might have gotten invaded and blockaded over it.
All the Asian tiger countries avoided almost all of our free trade advice and did heavily protectionist policies in order to achieve their rapid development. Most of the countries that bought into it remained third world, pursuing their comparative advantage as an undeveloped nation against developed ones, which seems to basically be shorthand for having their natural resources looted.
The book Bad Samaritans goes into how that development occurred in S. Korea, and other similar countries that successfully broke out of the comparative advantage trap:
Why are you holding government R&D as mutually exclusive of free trade policy and an open economy?
> we'd be just trading in furs and stuff.
Asinine straw man.
> rather than be stuck undeveloped, enslaved to comparative advantage, we stole trade secrets from the more powerful nation, heavily subsidized R&D
Either/or fallacy once again.
> All the Asian tiger countries avoided almost all of our free trade advice and did heavily protectionist policies in order to achieve their rapid development.
This statement is laughably false. Hong Kong, Singapore, South Korea, and Taiwan are practically famous for having leveraged free trade and open economies to catapult to economic stardom.
On the whole, this is a stunningly poor counterargument. It's so lacking in sense that it reads like it was generated by GPT-3.
The state played a heavy role in all of them:
"The four countries were inspired by Japan's evident success, and they collectively pursued the same goal by investing in the same categories: infrastructure and education."
https://en.wikipedia.org/wiki/Four_Asian_Tigers
Re: protectionism and South Korea I think Ha-Joon Chang covered the development of their steel industry (a later big force behind their "free trade" auto industry) for an example of extreme protectionism in the book I linked. Samsung is practically corporate-state.
Once capabilities are developed and become a comparative advantage for a state, they encourage free trade in them and attack others' subsidies as being protectionist by benefiting the upstart state's local industry instead of pursuing comparative advantage in menial labor, natural resources, etc. (Chang's book Kicking Away the Ladder is about this I think).
There are many countries that have always wanted to be self reliant but the powers be can't allow it. Coz it's sets a bad example that countries can exist without certain giants. I don't think they are about to allow that
The "victimized by a conspiracy" anthromorphization is also deeply wrong. They cannot be oppressed - they do not have rights.
Governments are fundamentally made of coercion. Without it they are an empty pile of words, a rules card for poker when the deck is being used for blackjack or building houses of cards. The coercion may be used to support rights like "not being murdered" but granting it rights to further human rights is like trying to increase a number by multiplying a negative number by a grearer than one positive number.
To sum it up if you apply the "corporation as a sociopath" conception governments are basically so alien to be cthulu. Corporations are at least made of people essentially, at least until the first AI run no human owner corporation is founded.
It was not. How could it be? Cheap and fast long range transportation, the Internet, mass consumerism,interconnected financial systems...
What could possibly make you think the world was more globalised in the 1910s than 2020s?
And yes, many people said a war is impossible due to the globalisation. I guess what they missed was telling it to the people in charge ( many of whom,like the Kaiser and Tsar didn't want a war, but felt pressured and like it was inevitable).
Europe of 1914 was actually much more liberal than people tend to think. With the exception of Russia and Turkey, which required passports from visitors, you could travel passport-free around the entire Europe, settle down and work wherever you wanted.
There were many railway lines crossing the borders and cargo flows among countries were fairly heavy. The social elite was used to sending their kids abroad to study languages and spending vacations in fashionable foreign resorts.
For example borders were a lot more porous in the late 1800s - early 1900s compared to the 2020s, Ellis Island could have never happened today, when you have children from El Salvador or Guatemala kept in cages for basically doing the same thing that children from Calabria or Sicily were doing back then.
I don't see why becoming some sort of Juche state would help anyone.
If the world actually did have globalized production, the pandemic, which originated in China, would probably have hurt relatively less.
Something like this can change the economics, which could be a good thing.
No, its a monopoly if you have market power.
It’s only illegal if you are abusing market power.
The fact they are holding it as cash is an indication they are not bullish on the fundamentals.
Cheaper just to buy from the foreign government? sure. But if a product is considered core to survival it may be good to have domestic production. Whether it's food, weapons, computer chips, water supply, etc.
On the other hand, the government potentially has a lot to lose if domestic companies are completely unable to produce hardware needed for critical infrastructure. The government also benefits from these companies expanding their supply chain to include domestic production, so the companies are asking the government to provide enough capital/tax breaks to make domestic production viable, and they're trying to convince the government that this provides enough value to the USA for it to be worth it.
But this is being pushed by lobbyists paid for by giant corporations, so it's fair to be skeptical. In reality, the $50B number probably sits somewhere between "the bare minimum needed to make this viable" and "a handout pocketed by greedy corporations".
Essentially, a prisoner's dilemma.
There is also the fact that American companies are competing against Chinese companies, where the government can subsidize various Chinese companies and initiatives. China is communist, of course, which does sort of favor this sort of thing. If the US was to close itself off to China, then it's a lot easier to be 100% capitalist as in your ideal scenario.
Automotive chips for example tend to be produced on older nodes, not fancy 14nm and below at TSMC. I'm not talking about SoC used in infotainment but all the micro controllers all over the car.
There is really zero incentive for a chip maker to expand capacity of old nodes since they are obsolete in some sense. It doesn't pay to upgrade to a new node without a product that demands something from the new node, and even then it's still an obsolete node. Think 130nm, 90nm, or even 45nm, the world could use more capacity at all of those but would you really want to invest heavily in any of those?
I suspect the end game for most of the industry is commodity priced chips at every "last node" where that term means the last node that doesn't require X, and X is a technology change like immersion lithography, multi-patterning, material change, or EUV. With that kind of environment nobody can afford to increase capacity much.
I'm not arguing for government funding here, just pointing to what I suspect is one of the problems.
On sells a variety of components -- some are completely commodity and are produced in super cheap fabs in Malaysia. Some are mid-tier and are (or were) made at fabs in Phoenix or Pocatello. And some are high-end and come out of the Gresham fabs that they bought when LSI went fabless.
There's value in producing the commodity stuff. Obviously they're not going to enter a bidding war with TSMC for cutting edge manufacturing equipment to make commodity voltage regulators. But they still invest in fab technology at the lower end.
I don't think ONN is particularly special in this space. They had plenty of competitors and they worked to distinguish themselves on cost, depth of their product catalog, and ability to execute.
For that matter, I wonder how a government-subsidized fab could compete with an old overseas fab making lower end parts that has been long-ago paid for?
Perhaps these companies should create a fund to start a few foundries etc. because they can definitely afford it.
It will be in their economic interest when the PLA will show up at TSMC's door. Of course, that won't probably happen in the next few quarters, so on that you are correct, it's not in their short economic interest.
What these companies are basically doing is asking the US government to subsidise the costs incurred by geo-politics.
Not necessarily, maybe those companies can just make a deal with the CCP to keep access to TSMC's fabs.
This sounds a lot like "God moves in mysterious ways and has a plan for everyone, everything happens for a reason". No actual analysis and reasoning required.
This free market religion is what gave us 2008 and will keep giving.
What matters is a society's capacity to produce. Not whether something is "fair", not whether an industry deserves this or that. Not whether some cherished economic theory is being honored.
Specifically, what matters is the creation and support of productive ecosystems, which are networks of credit, knowledge acquisition and transfer, skilled workers, skilled product managers, and supplier/vendor/retailer relationships.
A key part of these productive ecosystems is jobs. If you want to learn how to build bridges, you do not set up schools to teach engineering, you fund the building of bridges, and people will figure out how to build them on the job, and the demand for civil engineers will pull students to study this and then universities will open up programs to cater to that demand. The jobs come first. Only 5% of China's population attends university, yet they are able to build all the infrastructure they need because they have a laser like attention to creating jobs. They will even build bridges for America, as long as Chinese workers get to make them. They will build a port for anyone who wants it, as long as Chinese workers are the ones building the port. The entire Belt and Road initiative is an attempt to import infrastructure jobs by sending workers all over the world to build infrastructure, as long as China gets to build it. They know that half these projects will default and not make any money, but what they get out of that is a skilled workforce, and with a skilled workforce they can do anything. They will let American companies set up factories in China as long as there is a knowledge transfer as part of the deal. That all their state owned enterprises are losing money is not important, the acquisition of skills and the creation of productive ecosystems is what matters. I wonder when the US will realize this.
Western economic thinking is focused on P&L, rule of law, etc, and assumes as an article of faith that in such an environment, productive ecosystems will just arise all on their own, like rats being created from piles of trash. It will just happen, because in the past it just happened. So we are focused on abstract principles, but what the last 30 years has shown us is productive ecosystems being destroyed right and left as production migrates over to Asia.
Apparently these abstract principles don't work in all cases, so people are going to need to abandon their faith in free markets just as much as they need to abandon their concerns over some fat cat getting a subsidy -- unless they want their nation to completely deindustrialize.
However abandoning our faith in what worked before still leaves as muddied the concerns of what will work now, because it's not so clear that Asia's economic model can be successfully copied. Latin America tried to adopt this model in the 1970s -- a policy of import substitution, production subsidies and taxes on consumption. But it didn't work. Similar policies were tried in Africa in the 1980s and they also didn't work. So apparently you need more than just a policy of subsidizing production. What is that X-factor?
One proposal is that the X-Factor is human capital. Whether cultural or genetic or literary, for some reason China has human capital for which these policies work well but in Latin America/Africa they don't. Another proposal is that the X-Factor is exports - it's not enough to just subsidize production you need to subsidize exports as well. A third proposal is that the X-Factor is state organizational capacity (a kind way of saying "less democracy, more centralization"). A fourth is nationalism -- being willing to sacrifice some of your own wealth for the benefit of the nation, rather than say boosting your bonus by outsourcing. And last, there is the notion of practicality. The West is often quite fanatical in holding to beliefs that no longer work, because our wealth has made us take for granted so much that we have the luxury of rigid moral views when other nations are just focused on acquiring skilled jobs.
Whatever that X-factor really is, Latin America and Africa didn't have it but the East Asian nations do, even though all of these tried to subsidize investment.
What I think is worthwhile is to start adopting explicit policies to nurture productive ecosystems rather than insisting that more of whatever we believed before is needed now. Because we are rapidly deindustrializing, the foreign sector already owns 40% of the nation's productive capacity and very little is still produced in the West at all. Clearly the old beliefs need to change.
Please read comments you reply to.
That's grossly optimistic numbers, given US labor costs, startup costs, etc, but it's also potentially a reasonable investment that would be sustained by domestic and international purchases (one would hope).
What still worries me is that ramp up time for fabs like these are on the scale of years - if we assume a fab started right now, we'll be making semiconductors in ~2 years at the earliest (very optimistic)? It seems like the root of the issue seems to be the inventory tax and accounting rules - perhaps an exception for the semiconductor industry would help rather than even a single domestic fab (which could be impacted by natural disasters as well).
A 250M$ - 1G$ investment / year is big, but if it's self-sustaining in a couple years, that's a huge win.
TSMC announced the Arizona fab in May of 2020. They estimate it will be at volume production by 2024. The challenge is that it's not just building the fab, but also the lead times for all of the equipment involved, getting the specialists in to install+calibrate, then doing some initial runs to work out issues before going to volume production.
Who will be billed for this negative equity?
TSMC's economists certainly know what they do when they put a $12B investment: this can only happen with US government guarantee, thus taxpayers paying.
On one hand, this could cause other countries to pay more attention to the situation, since -they- will still be dependent on TSMC and may not have the US doing all the posturing.
But that's assuming we wound up truly 'de-coupled'. TSMC tends to be the leader in fab tech, and I am fairly certain any near term plans will involve providing incentive for TSMC to build more fabs in the US.
My implication here being that China is aware that they are capable of making an unstoppable strike against all TSMC's leading edge fabrication capacity, and that this action would be far more harmful to the strategic positioning of the US than to any other nation on earth. The ability to execute this option is time-limited by the US wishing to grow domestic capacity.
Whether this implication holds in reality is something I am very much open to suggestion on. I am fully aware that the US military's response to such an action is probably the leading reason it is not something we have seen occur already. I am also unsure if the impact of all 7nm node loss is substantially greater for the US vs any other country.
Isn't this simply an attempt at "double-dipping"?
"Please subsidize us! The humongous corporate income tax deduction you gave us is not nearly enough!"
[1] https://www.google.com/search?q=rare+earth+us+national+secur...
But yeah, if the government is serious about securing supply chains, then it's not enough to have semiconductor manufacturing here, one also needs to be able to source the inputs closer to home (quartz, etc).
And I'm not even sure it requires government to directly fund the manufacturing/mining - it would be enough if government took a "not-hostile" attitude towards the environmental and engineering approvals, and then incentivized domestic sourcing.
The relevant part is kind of buried but tl;dr: new mines do take a while (but are in the works). Luckily, there are old mines that can be productively restarted:
> “Our mission as a company is to restore the full supply chain,” said James Litinsky, CEO of MP Materials, the new owner of the U.S.’s only rare-earth mine, located in Mountain Pass, in California’s Mojave Desert.
> “We are probably further ahead than people realize.”
> MP Materials restarted the mine in 2017; the previous owner, Molycorp had declared bankruptcy a few years prior.
> “It was mismanaged for some time,” Litinsky said. Mountain Pass’ reserves are particularly rich in rare earths and now supply, in unpurified form, 15% of the rare earths consumed globally each year.
I recently watched a youtube video predicting a semiconductor bust that https://www.youtube.com/watch?v=Z7QkIECEkVc, though I don't quite understand if the differing say <7nm versus mid range 14~28 nm chips will have differing oversupply in the future.
> The economics don't line up.
Suppose you're Google. You know what's cheaper than investing $100m in a new chip manufacturing company? Lobbying for the government to invest $100m in the chip manufacturing company.
This is why "the economics don't line up", and "the incentives don't align". No shareholder would want you to do the financially irresponsible thing of investing in a risky, capital-intensive venture when governments can do that for you.
As a result, companies have the incentive to invest in lobbying rather than actually fund the chip production themselves. Essentially the companies believe that chip production will result in $X/yr, but investing in it themselves would be $Y/yr, whereas they could just invest in lobbying for $Z/yr, where $Z << $Y.
[1] https://www.bloomberg.com/news/articles/2021-04-23/google-am...
From here: https://www.johnlocke.org/policy-position/publicly-funded-st...
The problem for sports stadiums seems to be a monopsony relationship. That wouldn't be true for a fab, which can sell to anyone.
It seems like this relationship is desirable because a sports team can't benefit from all the profit they generate, for example at restaurants near the sports stadium, whereas the city can, by taxing those businesses. I suppose there might be an equivalent relationship with respect to a fab, but I'm not sure what it is.
Otherwise why should TSMC invest billions in US while having US government handing out money to American companies competing against TSMC with their own money?
I don't want to seem politically ignorant but isn't the entire existence of Taiwan is simply dependent on the US wanting it to exist. If the US didn't provide billions in defense -- TMSC would be a Chinese FAB pretty fast. I see your point but I'd imagine the extra layer of geopolitics is propping up this odd situation.
From their letter: “Manufacturing incentives funded by Congress should focus on filling key gaps in our domestic semiconductor ecosystem and cover the full range of semiconductor technologies and process nodes – from legacy to leading-edge – relied on by industry, the military, and critical infrastructure.”
So... give us your semiconductor ecosystem gap analysis, SIAC :)
Source: Former semiconductor analyst / planner when domestic fabs went out of style.
The MBAs running US manufacturers need to scrap their JIT strategies, build some warehouses, and start keeping a store of the essentials. If a tangible good is essential to your business continuity on a 6 or 12 month horizon, then your business should not outsource the maintenance of this lifeline, regardless of whether your supplier is domestic.
Just the other day here on HN I read an account from a founder who did just that- in early 2008. He ended up having a warehouse full of raw materials and no cash to make payroll. That's one way a business dies.
So, this talking point sounds good, those damn MBAs and their JITs!, but carries its own set of risks. It's important for each business to balance those risks and arrive at their own decision. It's not as cut-and-dry as one would necessarily think.
Buy stuff and sit on it for half it's shelf life, and when it's done sell it at just a little bit under fair market cost.
E.G. Buy N95 masks with a 5 year shelf life, hold them for 2, and rotate it out of the warehouse so the warehouse always has newer stuff and places that use it like construction and hospitals have a price stabilized source.
We could definitely retool our regulatory policy if we want to improve our posture in the trade conflict.
Then hold that inventory in Canada or Mexico or India or China? This isn't a hard problem.
JIT is about freeing up capital (which in the 80s when JIT came in was expensive). It also reduces waste a lot.
You have a warehouse that stores stuff, and sells it to manufacturers when JIT runs into issues.
This will start with Tech, but will extend to other domains.
The gas pipeline shut down is currently showing this to be an issue for refined fuel. The hurricane that squatted on top of Houston a couple of years ago also shows that to be true as well. We also saw that in toilet paper as well.
What I don't see mentioned too often is promoting chip design. Compared to building a fab, making a startup that simply designs chips should be straightforward but through my initial research into it, that's not the case. Tech cos like Google and Amazon have already begun endeavors into in-house fabless chip design through ex.: TPU and Graviton, but hardware startups seem to be few and far between (there are a few like SciFive and Cerebras, but it's not like they are exactly ubiquitous).
In part it has to due with the huge complexity of modern day chips and the fact that if any new startup wants to be competitive it requires hiring talent with deep and niche industry experience.
I think what's more of an issue is accessibility for newcomers into the space. From what I've read, the top 3 EDA companies control the vast majority of their market and license their tools for hundreds of thousands of dollars. These tools aren't accessible to the majority of students and most likely fledgling startups. I know these tools are extremely complex, but it always stuck me as odd how IDEs like VS Code and the ones made by JetBrains are free or are priced so that the vast majority of developers (whether as individuals or as companies)can afford it, while the top of the line EDA tools are only accessible by established players. I know there is an open source effort to change this, but there's a long way to catch up.
Maybe things will change. AMD started out reverse engineering Intel chips and now are beating Intel in most metrics. Hopefully hardware becomes more hyped over time just as machine learning and software startups have.
back then I used to watch all the videos of https://millcomputing.com/docs/belt/ as that seemed promising, but they seem to be stuck in the hardware production and writing a compiler for that architecture.
China maintains economic well being by donating the chip market and also the supply chains.
The Quad has emerged to dislocate Chinese tyranny in the Indo-Pacific, and US chip takeover will be one of the last strokes in China’s downfall.
Can anger lead one to explore and learn things that wouldn't have happened without the anger? Sure it can, and comments coming from that place are more likely to be on topic here. But that's already a later stage of a pretty complex process. I'm talking about the split-second moment that we all experience when a flash of anger first arises, where we're reacting adversely to something we've heard before and are propelled to respond immediately with something we've said before. A lot of internet comments, including HN comments, are generated in that state, and they aren't distinguished by curiosity.
But here, I find it particularly ironic that these companies want all the protection of govt regs like Section 230, insulating them from responsibility of content they host and platform, but now want the govt to step in, far too late, and fix the shortage that is harming them.
They are all "libertarian" scolds about govt interference, until they could use some.
Since they collectively have something on the scale of more money than the USG, and they think the USG is a waste of time, they should implement such a consortium themselves.
I say that not merely out of annoyance at the hypocrisy, but I really think that such a consortium of FAANG, Intel MS, Tesla, Micron, and others could much more rapidly and effectively setup such an innovative chip fab co-op or some other structure, and could really kick ass in global manufacturing.
If they really believe their patter, they should just do it.
The best time was 10 years ago, the second best time is now.
Hah - one can hope. But really, is there a chance that could happen? I'm not sure if there's any precedent.
Globalization is inevitable , resistance is futile, in 300y we will have the world finally united and democrat with some due exception
Can we still build some stuff in the continental Americas? Yes please to all solutions for producing modern stuff.
I would also like competition among fabrication providers, and each fabrication provider to have a factory on the same continent I live on, even if it isn't in the same country (which does happen to be the US).
It would be really frustrating to have to listen to companies that refuse to pay taxes ask for tax money.
I'm not sure what's changed since then.
It may work for GF, but it's not enough for national security interests - critical parts of the supply chain depend on a potentially hostile foreign power (and it's not just silicon).
I'd say the US should invest in TSMC, and push to expand manufacturing capabilities to domesticate some production - but good luck convincing taxpayer's that that's a good idea.
The US doesn't have the spare trillions to throw at the problem, whereas China does. Forcing China to build their own fabs by banning sales of US chips has been the US shooting itself in the foot.
The new US semiconductor manufacturers will be out-competed and and outsold by the new Chinese semiconductor manufacturers.
US semiconductor manufacturing will go the same way as US paper production, US tools production, US textile production, US contsruction-materials production, US auto production, US shipbuilding production, ....., (You get the idea).
* undergoing a drought and they're having to truck in water to sustain their operations.
* claimed by a powerful country different than the one currently controlling it.
Sounds like a lot of risk that they probably would otherwise not want.
(TSMC also owns WaferTech and their US fab in Washington state).
If not, why not? Do they think they are better suited under their current arrangement with TSMC and perhaps Global Founderies?
If not, that's going to be a hard pass from me.
Instead of corporate welfare like these rich companies clearly want, why don’t we take the tariff money and use that to fund regular welfare, such as some of the programs Biden is suggesting.
Or maybe we could just take all the tariff money and divide it equally amongst all citizens? That should offset the tariff for the average person, while still allowing us to get companies to figure out the problem for themselves.
That approach can be extended to taxes on pollution as well. Capitalism does work, and we need to recognize that, but it has to be guided and regulated appropriately, or it gets really greedy really fast.
The IPhone maker has $3 to $4 billion in incentives to fund its own factory
For example, this TSMC fab planned in Arizona is estimated to cost $12 billion: https://www.forbes.com/sites/willyshih/2020/05/15/tsmcs-anno...
Since the current stockholders would have shares in existing company and the new entities, they're not being damaged in the process so they shouldn't be opposed unless maximizing vertical integration is their plan for continued wealth growth.
> “Government should refrain from intervening as industry works to correct the current supply-demand imbalance causing the shortage,” the group said.
What do they think "intervening" means?
> All: this thread got a flash flood of angry-predictable-obvious comments. Please don't post those! They're really bad for this site. The issue with such points isn't that they're wrong, it's that they're not interesting. Nothing predictable and obvious is. We want interesting conversation here, and that comes from curiosity. If you're feeling agitation rather than curiosity, please wait until that polarity flips.
> The interesting things in a story like this are any diffs from what one would have expected.
>https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
> It's a significant move, so there must be interesting diffs. But sometimes one has to hunt for those, or at least wait for them to occur to one. That sort of waiting is key to getting good HN discussion, which is reflective rather than reflexive.
> https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
What "flash flood of angry-predictable-obvious comments" are you talking about? What would an "obvious" reaction to this news be? I understand if the news was something along the lines "startup incubator for black girls goes live" or something, where you have a divide roughly amongst the line of "let's help the underpriviledged" and "we should see beyond race and gender".
But this news? Could you at least point me to some examples?
They're collapsed at the bottom of the page now. Before that, they were the page.
Downweighting low-quality generic subthreads is one of the key things moderators do here to try to improve the quality of the threads—which unfortunately tends to go to the lowest common denominator by default.
p.s. "@dang" is a no-op. I only saw your question by accident. Please send such questions to hn@ycombinator.com instead (see https://news.ycombinator.com/newsguidelines.html).
Most people who see a moderation decision they dislike leap straight to the idea that the moderators secretly hold $VIEW, ignoring (or not noticing) all the moderation decisions going the opposite way. In reality, we just don't care— I don't have words to describe how profoundly we don't care about commenter opinions. All that was sandblasted out of my brain years ago. The weariness that arises at the thought of caring about commenter opinions is enough to make me want to lie on the floor for a week.
The only thing I care about is trying to prevent this place from plunging to the bottom of the internet barrel, and that only because it's my job. That's the true answer, by the way, to all the accusations of $BIAS that people fire from all directions every day: existential weariness has destroyed the ability to care. It turns out that's a decent proxy for neutrality. Not perfect, of course, but enough as a first pass filter.
If you were being consistent about this, by the way, you'd be censoring the banal security and bug sanctimony that dominates every thread on that topic. A buffer overrun? Good heavens! An unsalted pw hash? Fetch my inhaler!
I'm sure you're right that there are tropes of reaction in particular areas that deserve to get moderated by the same principles (of avoiding repetition etc.) and I don't doubt that you see some of them more clearly than I do. If you want to help with that, you could let us know when you see them, particularly when they're sitting at the top of a thread, choking out more interesting discussion. Downweighting those is probably the single biggest thing we can do to help discussion quality.
I wouldn't use the word "negative" - that covers way too many things. We're not trying to exclude negativity. We're trying to prevent certain common forms of it from dominating. I don't think it's so hard to understand why—this place would cease to be interesting if they did dominate. Thoughtful critique is always welcome, and we don't label that "predictable" because it isn't.
Re "industry cheerleading in this community is wildly untethered" - such perceptions are conditioned by the passions of the perceiver. If you had opposite passions, you'd have opposite perceptions. The data set has more than enough data points to satisfy all of these. That is by far the most consistent phenomenon I've observed on HN; nothing else comes close.
Reading your words "The weariness that arises at the thought of caring about commenter opinions" got me thinking about how the unique experience (even if perhaps not specially positive) that a moderator has to go through can influence his view of the world. I hope this equilibrium that you seem to have reached makes you happy, I can imagine how moderating can be an ungrateful job.
This is just a commenter opinion, though, so feel free to not care about it :-)
I'm fine and didn't mean the comment to sound complainy. The reason I put it that way is that the alternative (going on about how little I care what people post) would have sounded like a putdown, which would be worse.
It's just hard to communicate this phenomenon—the desensitizing effect of sheer quantity on the brain—in a way that captures what it feels like. Having the inside of one's brain sandblasted is the closest I've gotten so far. Imagine that your fingertips were sandblasted for years - they'd get pretty desensitized. Well, that's the reaction I have to commenter opinions.
Note: I'm not saying that makes me/us unbiased; bias has many forms, and "I am not biased" would be a dumb thing to say in any case, since it is often unconscious. I am, though, saying that commenters who rush to "you just disagree with my opinions!" as an explanation for moderator action do not know what they're talking about—not in the putdown sense, but quite literally.
If the government gives money then it better talk to these companies about where their items are produced.
Intel has been building fab capacity pretty much always, it's just that their 10nm process doesn't work as intended, and they haven't really been able to fix it, so their development is stalled and their production numbers aren't great and they haven't been able to stop making processors at 14nm to do other things with those fabs. So far, I think we've been hearing of delays on their 7nm node as well, so no good news there.
That said, if there's a market for a 14nm or more fab in the US, Intel has shown they can build that, but they'd probably prefer to spend their money getting 7nm to work than building an old tech fab; spending other people's money on a new 14nm (or whatever) fab in the US is still good for Intel though, so it's no wonder they'd put their hand out to do that.
~Montgomery Burns...probably
Because they are for-profit entities with shareholders interest as top priority, and it is much more profitable to use TSMC/Samsung for them. With subsidies, the situation may change.
I agree that they should be the ones to invest in these fabs, but it also makes sense for the government to make sure that is an internationally competitive move for them to make, rather than forcing them to pour water uphill.
Which policies? I believe you, genuinely curious
Obviously any barriers to the success of US fabs should be removed, but it's not clear if there's a market for more expensive US chips - if there were, you'd think someone would build it without the need for a subsidy
Often trade deals do include agreements about subsidies.
> it's not clear if there's a market for more expensive US chips - if there were, you'd think someone would build it without the need for a subsidy
They wouldn’t be more expensive with the subsidy.
Yes but it's complicated when you're dealing with China where the govt is heavily involved in many "private" cos
Too many outsiders tend to err on giving the benefit of the doubt, thinking that there's some sort of Chesterton's fence (you can see this in the comments here), but it's just not true. So much of what causes delays that I've seen firsthand comes down to unbelievably inefficient business processes plus the less-than-stellar pool of candidates that the industry overwhelmingly prefers to hire from.
> to create a new lobbying group to press for government chip manufacturing subsidies
None of those companies need subsidies.
Commoditize your complement. To some approximation and with few exceptions, hardware is everybody's complement.
But in terms of maintaining the competitiveness and security of the US, seems like they do.
As a rule, I don't care if giving someone money is fair. I care about whether it causes a general increase in the welfare of our society.
Even as a non-recipient of these subsidies, I might be better off if they existed if they reduce risk to the supply chain I'm downstream of as a consumer. If it's unfair to me but makes me better off, I'm not going to cry over the unfairness.
(Maybe tariffs on imported chips are a better solution, but I suspect that's more politically fraught, and solutions that work are better than solutions that don't.)
Sure
> I care about whether it causes a general increase in the welfare of our society.
But by what metric do you measure that? There has been a tech boom in the last couple of decades but the inequality divide has been growing day by day.
But economics works on incentives. Problem is these incentives are discontinuous and can change on a dime. You can accelerate a change by aligning incentives.
Chip manufacturing is important for products, but its also a security risk. The government should put up support to incentivize these companies to redirect capital towards US manufacturing. Otherwise the incentives for these companies are not going to align on a timeframe that is acceptable to employees and shareholders.
Now we can make all kinds of normative claims about how this should play out, but I honestly don’t have the energy to entertain that kind of conversation anymore.
They acknowledge the importance of the issue, but are not willing to take risks in a difficult an foreign (to them) business.
So, mostly worthless words.
I'm not even being snarky, this is just a lobby group trying to socialize costs to avoid spending their own money. Explicitly: “Government should refrain from intervening as industry works to correct the current supply-demand imbalance causing the shortage,”. The industry is not stripped for cash at all, so if the government is not expected to steer, why should it put up the people's money?
It's beyond ironic to call for subsidies but then label oversight as "intervening". Subsidies are interventions. Without a government plan and oversight they are just legalized corruption.
2. Lobby government for subsidies
3. Laugh all the way to the off shore bank
I said onshore banks open accounts for many entity types that are not limited to just humans or just businesses from the 50 states.
The prior poster assumed a bank in another country was necessary, which can be very difficult to open and maintain for a US citizen owner of an offshore company.
Assholes. They don't need subsidies to produce chips competitively in America (since they already do) and Intel is one of the reasons the industry is so reliant on TSMC.
I'd much rather see this money go to founding a domestic TSMC competitor than to Intel. Or even to TSMC to have them build plants in North America.
Fabless design is here to stay, so it behooves the country (and world) to have enough designless fabricators to ensure sufficient manufacturing capacity.
7 figures max
That said, I think that the parent is making a different point. I think the parent's point is that if the owners and employees of a company are paying taxes, then taxing the profit of a company taxes twice, once for the profit and then again for the income that comes from the dividend.
How do you remedy this? Create a "National Security" issue and have Uncle Sam fund it. The military has the same playbook https://www.youtube.com/watch?v=VSJjlaggbK0 .