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Comment by tooltalk | Hacker News Reader

I'm no fan of gov't handouts, but I guess you sometimes need to fight evil with evil. America's semiconductor manufacturing is down to only 13% of global chip production share and declining -- the country's manufacturing industry would get wiped out without the same level of subsidies or protection provided by the Chinese or Taiwanese gov't.

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>evil

it used to be common sense not to hand over your nation's strategic assets to potential foreign adversaries, common Americans all intuitively knew shipping manufacturing to China was bad. Wall Street greed and bribed politicians allowed this to happen. Evil is selling out your nation for profit

There's a stark difference between selling out and refusing to use public funds to subsidize large corporations.

There is also the thing that American corps like to do: sell out and buy out the politicians so they can use public funds to campaign against subsidies, education, and all possible methods to regain the capabilities that they sold out to begin with.

It's like American capitalism wants itself to fail. It's pretty much self sabotage at this point.

The tendency to destroy itself is both the good and the bad part of capitalism. Karl Marx was pretty sober about this. He always argued capitalism is a necessary stage but externalities would bottom out and the system would inevitably destroy itself.

The interesting part is that government subsidies like pretty much every responsible government does (China AND the US obviously included) help delay the predicted collapse of capitalism.

What is food stamps for Walmart and Amazon workers if not an unaccounted for government subsidy?

By that logic, if we truly hated capitalism we could just set off the nukes and never have to worry about stupid capitalism ever again.

Are you opposed to anti-dumping legislation, too?

Because I see subsidizing exports through the nose as a way of dumping on foreign markets.

There’s also a difference subsidizing large companies that relies on being at the top of the supplier chain vs those that exist somewhere near the bottom or the middle.

Evaluating the tech stack is very important and usually at the very top you find trivial technologies that are not difficult to replicate. This is where you find brand, trademarks, and marketing.

>usually at the very top you find trivial technologies that are not difficult to replicate

Maybe in other markets, anything related with semiconductors has a HUGE capital barrier to entry. Exhibit A: ASML's EUV machines.

I think the concept GP was using is lowest level of abstraction to highest level. Twitter can be cloned easily. ASML’s EUV machines cannot. I don’t think he meant “high technology”

By the way, a common pattern of technology trasfer is a company buys a product, reverse engineer it and in a few iterations (which could be many years long) it competes on price or on quality with the original manufacturer.

I understand that an EUV machine is much more complex than a chisel but how difficult (in time) would be to clone one? Did anybody already start doing it?

A scenario is: China invades Taiwan, the chip factories blow up so China doesn't get them, it takes years to build them somewhere else for the rest of the world but China won't have those machines from ASML ever (embargoes.) But can they buy one now and clone it in a reasonable time?

My wild speculation: without any outsider's help, 30-40 years, or most likely never.

China has barely 10 years of experience in chip industry and it's not necessarily the most profound one. China's most successful foundry SMIC was made possible by former top TSMC engineers (many with PhD's from top US universities) and it's generally understood that SMIC's most cutting edge 14nm node is really a clone of TSMC N16FFC. Many also suspect 14nm is their limit and can't advanced any further without access to the chip manufacturing supply-chain in the US/Japan/EU, who collectively own 95% of the market. Shanghai Micro Electronic Equipment, SMEE, recently announced that they developed their own 28nm lithography machines, but that's also with help and components from Japan. The 28nm processing is hardly a cutting edge tech and that's not even under US sanction. Even Taiwan/South Korea depend almost entirely on supply-chain from the US/Japan/EU (except wafer).

Now, the key idea here is "outsider's help." It's not impossible if China is allowed to poach engineers from their suppliers/competitors, steal IP, or import highly sensitive, cutting-edge components and materials from the US/JPN/EU. The problem as I see it is, there is obviously no shortage of American multinational companies, such as Apple, Nike, etc,... willing to sell out America's national security or economic interests to make more doh's in China. And Apple isn't just a very profitable US company with the largest market cap in the world, but also it's very well politically connected -- just look at the shenanigan Apple pulled against Qualcomm with their operatives at FTC. The orange man was somewhat of an anomaly and managed to stop this flow, but I'm not so sure about Biden or whoever comes next. The recent revelation, or $270B deal between Tim Apple and Xi, clearly shows what Apple intends to do and where this is going to go if Apple is left unchecked.

Well, it pretty much requires a large corporation to crank out high-quality OLED displays. It's not the kind of thing that can be hand-crafted by a one-person shop on an artisanal basis.

Import taxes could also protect a countries strategic industries and in that case subsidies might not be needed. I kinda feel using import taxes on foreign goods that are a threat to local industries are a better approach that providing subsidies.

The foreign company will still have an advantage in other places of the world if your company wants to export to the same locations.

In what way has the US refused to use public funds to subsidize large corporations?

Common people have benefitted greatly from shipping manufacturing to China.

Americans are richer than ever. The problem in America, however, is that the distribution of that wealth has become completely lopsided so it’s concentrated in a few hands. That’s a domestic policy issue.

Outsourcing manufacturing is different, however, from shopping away strategic assets and not investing in keeping strategic manufacturing capacity alive, which once again is a failure of US domestic policy.

Wealth inequality isn't necessarily bad

http://www.paulgraham.com/ineq.html

Please tell me again how a billionaire says wealth inequality is OK. Didn't read the whole piece, but on its face it's farcical to listen to anything someone so wealthy has to say on the subject, even if it's pg.

It means the rich can get richer without the poor getting poorer since they are creating wealth, not taking it in a zero-sum or rent-seeking way. So relative inequality increases but the mean standard of living for everyone including the poor rises.

"Poverty and economic inequality are not identical. When the city is turning off your water because you can't pay the bill, it doesn't make any difference what Larry Page's net worth is compared to yours. He might only be a few times richer than you, and it would still be just as much of a problem that your water was getting turned off."

> It means the rich can get richer without the poor getting poorer since they are creating wealth, not taking it in a zero-sum or rent-seeking way.

Except outside of the most abject poverty that is fairly rare in the developed world, utility/disutility is more a function of relative economic status than absolute economic status. So, in the only sense that matters, this is at least oversimplified; you have to improve absolute wealth on the lower end considerably just to offset the disutility of increased equality and break even. It is possible to increase inequality and have everyone better off in utilitarian terms, but improvements in the usual economic measures are not sufficient to show that because those are poor proxies for utility.

Any data to back up that claim?

LOL but bailing out the financial sector in 2008 without anyone paying for what they did was fine? At least check what’s going on with Evergrande.

You all have it so ingrained that market forces are the only way things should work that you even end up using absolute categories such as good and evil.

And that is to say nothing about how much money is funnelled into the defence industry. A lot of the American industrial prowess came precisely from that.

Semiconductor making is of such general utility that supporting a robust, accessible, at home supplier market seems incredible incredibly beneficial.

If we're just making handouts to support big companys competing to make their own chips, then yeah, it's boring & "evil". But there's a lot to be gained if America could reopen not just companies but foundries, places that take orders. If a nation can get it's citizens access to domestic chipmaking capabilities at competitive prices, that nation can start spawning all kinds of firms specialized in all manners of chips, can create a massive amount of intellectual & market leadership for itself.

I propose that creating silicon foundries again, as a public good, would be enormously enormously beneficial for the intellectual & economic prosperity of a nation.

You're not making any clear arguments why foundries in the US would be better (outside the strategic reasons). Firms can already get chips done overseas.

I'd love to hear some university perspectives, on how hard it was for them to get their departments able to make chips. My feeling is that the strategy of availability is the key, vast, & dominating factor in all of this. Getting more and more people being creative about chipmaking, by giving them access to chipmaking, is the thing. That patently seems less and less accessible, less possible. The strategy of making your nation a place of great makers, seems, to me, the only thing worth considering, but your definition/restrictions seem- to me- to oppose thinking of how a nation can improve itself, can beget a good & powerful & creative people.

If the world were well served by chip-making, then I think your disregard would be due. But we seem to be well well well into a period of mass consolidation, of less & less accessibility to chip-making. America & many other places that have been hotbeds of intellectual knowledge & creativity will surely languish & die unless the environment can be improved, unless access to the means of production can be secured & made available to the people, to the students, to the upstarts. Ignore that "stragedy" at your nation's mortal peril, imo.

I think it's a bit telling that the Google/SkyWater collaboration is still on 130nm. It's great that some patron is out there trying to encourage novel chip making, trying to reboot a general knowledge in a dying decaying sector. And there's some reasons why perhaps like 40nm or so might be un-strategic a choice. But generally I think access to even vaguely-quasi-modern chipmaking is falling away, is collapsing. The strategy of keeping this industry accessible is, to me, a defining battle.

(That said, OLED making is not where I think accessible, competitive silicon foundries are needed. But this thread, this story is a telling indicator to me.)

Protectionism and government intervention like bailing out corporations is typical of governments, and is a reason why the US is successful. Just to give one example, if Reagan hadn't protected the chip industry in the 80's it could have been dominated by Japan.

My understanding is that the US has the most advanced chip making capabilities in the world and is unmatched by anyone. Intel, AMD, Nvidia, Qualcomm.

Is that not true? Does the US constitute only 13% of world chip making because most chips sold are cheap, low powered chips? And if that is the case, does it really matter that we aren't making the cheap stuff?

AMD,Nvidia and Qualcomm chips are made in Taiwan/Korea. For future Intel also is moving to TSMC Taiwan.

These chips are not cheap by anyway, US has lost advanced chipmaking ground

If it's any consolation, it's not as bad as Japan. They at one point had all the top players in the business -- now hardly anyone recognizes their name.

Chip design != chip manufacturing. Qualcomm, Broadcomm, Nvidia, and AMD are all so-called "fabless" manufacturers, meaning that they design the chips and then send their designs to fabs like TSMC. Intel is the big exception.

America's semi industry was spawned and supported with government money since the beginning. China is no different.

Capitalism doesn't exist in a vacuum, nor is it magical in the way you imply. You youngsters

This is literally not new and has been the case even in the west for centuries. In fact in many ways it contributed to its domination. It's just that the post WW2 era was entirely an anomaly, and one that we got too comfortable with.

Corporations can't compete with governments, especially large ones with sovereign currencies who can subsidize without bound.

If China is going to do this we either have to do the same or levy corresponding import duties on the product. If we do nothing at all we lose all our industries to China.

Edit: yes the US does this too in other industries like aerospace. That just illustrates the point.

>> but I guess you sometimes need to fight evil with evil.

Instead of propping up our own companies, a better response might be to ban imports of these government subsidized products. Apple wouldn't be harmed in the slightest, this move is just a cost savings for them.

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