House Bill Funds CHIPS Act, Stresses R&D
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It must be at least moderately profitable to build and run _new_ fabs that produce the simple 'jelly bean' components that have been in dire shortage.
Inventories, both of sellable common 'ingredients' and also of shelf stable commonly desirable outputs should probably be reflected differently on asset books. Cutting buffers to the bone should not be good accounting practice as that encourages vulnerability. Laws need to change how that accounting is performed.
There are some other issues with inventory taxation like how fast you can depreciate it (ie. for tax purposes, chips are treated like mechnical inputs even though chips depreciate MUCH faster).
This all strongly discourages holding inventory.
And even engineers running companies will come to that conclusion.
I admit to not being a CPA, but that... doesn't make a ton of sense to me. What sort of tax do you pay on inventory?
My understanding is that it's not tax that's the issue, but the tying-up of capital in inventory that's generally being minimized. If interest rates are 3% and you have $1M in inventory, that's $30k per year in interest you're paying in order to hold that inventory, plus the physical costs of warehousing it.
And the MBAs naturally look at cutting costs as the fastest and most direct route to improving profitability.
Welcome to the US taxation system.
As I understand it, VAT solves a lot of this silliness. However, the US doesn't do VAT for a bunch of historical reasons.
Has to push through friction for others. And plus, cost of goods of unsold inventory isn't that painful if you actually are making huge margins on it, like you ideally should, because you built a better mousetrap that was that much better that you could protect it from copycats with patents and therefore let everyone benefit enormously from it.
In the end, the businessman must be creative. Must be an inventor, basically. Or a leader. And so in order to overcome that friction for the sake of the orphanage, the businessman must resolve friction in nature, some inefficiency of some sort, something that could be much better than it is. Something ineffective that could be effective. Plant a seed and reap two.
Don't cheat the orphanage! Push through the friction!
The State of California gave me a huge break that I would have never gotten on my own. I did the math and the taxes I pay turn into that help at a 1/1000000 (one millionth) efficiency rate. That's awesome, that may be a high hurdle for everyone else but for me it's a great deal, because I can get speedups as great or greater, with just that help they gave me. So in fact a 1000000000x (one billion times) speedup was possible directly due to this break they gave me, so the ROI is already 1000x (a thousand times). And once they unlock that, hey that's just the beginning, sky's the limit! That 1Bx speedup (1 billion times) is actually an undersell, I could have kept going and gotten a 1000000000000x speedup (trillion times) and kept going and going beyond that, literally ad nauseam (numbers that would sicken you by looking at them, literally that). It's just a trillion-x speedup is too big, people get dizzy, there's no metaphors, people distrust the problem you're solving if you get that speedup, it's better to say a billion. There's metaphors for that (difference between wheelbarrow of dirt and a mountain, two seconds and the human lifetime, jumping a foot off the ground and going to the Moon). It's the biggest number that really fits in people's heads.
But they're both still big speedups that vastly overcome the meaningless 1000000x hurdle that taxation and redistribution impose.
Advice: value the taxes you pay at more than 0%. Fine, not 100% or more, but not 0% or less. Say 20%, to start with. Start by reducing what you deduct from your taxes, limit that to the things the State really doesn't want you paying taxes for. But on business lunches! Dude cough it up completely!
And in the process get rid of the tax lawyers and accountants who tell you to do contortions for tax reasons. Then you'll see your business with clarity.
I believe that VAT solves a lot of these issues (while trading off for others).
[1] https://www.boxstorm.com/articles/inventory-tax-explained-fo...
They can dividend it, use it as capital, or use it to increase working capital (like stock.) Some tax environments tax dividends further, thus making it attractive (or cheaper, depending on you pov) to reinvest the profit in the business.
Of course working capital (stock on hand) can also be increased by other means - for example a loan or a capital injection.
Lastly, raw stock (pile of chips) is easy to value for stock-taking purposes (usually cost basis.) partially, or in some cases completely, finished goods is trickier. They could be valued at cost, at zero (a half finished controller is worth, what?)
Generally companies keep as much as they need, ideally no more. But the right number can be a moving target. We've been erring on the high side for a while now.
Is it the labor pool there that makes it attractive? Energy costs? Something about state/local subsidies?
While there's cost involved, its shortage probably won't be a bottleneck?
(can't find the citation that i want for that, though)
Tax breaks sound much more reasonable way to improve onshore manufacturing if that would be the real goal.
The more predictable outcome would be once domestic chips are being manufactured in sufficient quantity, foreign chips are either banned because "national security", or large tariffs are imposed on them. In either case you effectively create an uncompetitive oligopoly within the country in a field with tremendous barriers to entry. I'm sure that'd never be abused.
[1]: https://www.bloomberg.com/news/articles/2021-05-13/korea-unv... [1 Non paywalled]: https://archive.ph/9Gs8q
Plus the chinese shipyards build literal battleships/aircraft-carriers and cruise ships and cargo ships sitting right next to eachother - and its said they steal/share technologies from the various contracts/products.
https://www.dailymail.co.uk/news/article-6520357/Satellite-i...
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And there is this:
China builds mock-US ships in what seems to be for battle scenario training ops..
https://www.politico.com/news/2021/11/08/satellite-china-us-...
Sure, but the point is that an entire industry which added employment and other positives to the economy evaporated.
By saying "customers won, because they could still buy stuff through sending money to companies and industry in other countries" -- could be argued as a loss.
The US is so myopically built around consumption its sickening.
We can only look at the outcome as being satisfactory to the statistics of politicians and economists - rather than the effect upon the actual families, towns, and cottage support undustries around those enterprises which left the USA... Good to see that "well, it looks good on paper" -- because the labour fallacy also suffers from thinking that all the new shit we do in the US would not have happened.
Further - the new jobs that have been created (aside from the tech industry are things like massive fastfood, and consuption-capital-growth...
If I an wrong, I would like to learn... but this appears to be the emgergent reality of the US, as evidenced by the ridiculous situation this country is in economically.
(No, Oligarch level wealth creation and stock market actions for the 1% and corporate/hedge funds profits are not the indicators of a truly strong economy: The health, happiness, prosperity of the populous and the quality of both the countries infrastructure and of life is.
And in these regard, imo, USA is flailing horrifically.
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Also, and when we look at the strength of the pretty much every industry in the US, such as tech, pharma, healthcare, finance, etc... Every single one of them is 100% dependent on the brain-importation from other countries.
Yet, we can't even service the needs of the overall citizenry.
Many people can't relocate to continue to be productive ; due to the cost of living, the substance living that the current system provides to 90% of the population.
If you look at vast swaths of jobs, they are 100% barely substance (work to ensure you dont die, only)
Where do you think the chip industry and every other industry came from, but from resources freed up when other industries and companies failed. Look at the composition of economic output 50 and 100 years ago and now - most of that is gone and less productive than what we do now.
Certainly having government driven by lobbyists to pick the 'winners', rather than the marketplace, isn't going to help our economy. It will temporarily help the lobbyists' clients.
Unemployment is at record lows. Uncompetitive companies and industries fail by design - it's essential to the free market. Then resources can be shifted to something that's productive.
> The US is so myopically built around consumption its sickening.
What's sickening to me is this growing trend for advocating corporate welfare - we can't provide healthcare to poor people, but we can take money out of my pocket and give it to Intel.
>unemp at record low!
YAY - Look at how many absolutely fucking terrible, useless, non-growth, subsistence level jobs with zero healthcare, no protections, shitty wages, union busting, oligarch politicians telling people to shut the fuck up and we cant afford healthcare, college, living wages. We are "fighting" for you! Dont you get how hard it is for us to develop agreements that are for the benefit of such a diverse... wait.... Hang on a sec - Ukraine is on the phone, hes an important war buddy of mine...
It doesn't seem like you are trying to make it clearly, or trying to understand me.
I find your comments interesting and have great points. We are both not wrong. :-)
your comment style is interesting in that you start with a refute, then end with an agreement...
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I enjoyed this exchange.
US consumers have still won to date but the worry is that this move will in the long term hurt US consumers.
Fyi, the US government subsidizes the overproduction of food so that we do not experience famine in the event that a significant portion of the food supply gets taken out (e.g. bad harvest, drought, etc).
That's the first time I've heard that reasoning, and not that the farm lobby had enough power to obtain subsidies. What evidence is there that the subsidies (from taxpayers to the farms, many run by large companies) are driven by some kind of famine protection?
There's a ton of Superfund[0] sites in Silicon Valley[1]. What's the current situation re. semiconductor manufacturing and toxic waste?
[0] https://en.wikipedia.org/wiki/Superfund
[1] "The Superfund Sites of Silicon Valley" https://www.nytimes.com/2018/03/26/lens/the-superfund-sites-...
Odds are good that re-shored manufacturing will be cleaner than older plants built in regions with lower environmental regulation.
Enlighten us, how manufacturing 'silicone' has become less chemical intensive.
A good proper justification of the claim from the claimant or supporters of that argument is useful.
But generally those chemical engineers are pretty good at cleaning up the processes (it cheaper, also cheaper to ship manufacturing overseas…)
The Resource Conservation and Recovery act https://en.m.wikipedia.org/wiki/Resource_Conservation_and_Re...
And toxic substance control acts seemed to rules of note.
https://en.m.wikipedia.org/wiki/Toxic_Substances_Control_Act...
GE silicones [1]https://www.epa.gov/hwcorrectiveactionsites/hazardous-waste-...
"silicon" is the chemical element number 14, and this name, which is used in the English-speaking countries, was coined by someone who believed that it is a good idea for it to rhyme with "carbon" (actually a bad idea in my opinion)
"silicone" is the generic name for a class of plastics, i.e. the polymers with a poly-siloxane structure. This name was coined by someone who believed that it is a good idea for it to rhyme with "acetone", because he erroneously believed that these polymers have a structure similar to ketones.
I don't know what the Chinese fabs do, so I have no idea if pump their waste out into the environment.
You would think that dissolved copper would have some recovery value, given the price of copper.
I am reminded of the waste from silver halide photographic processing, which at one point was just dumped into rivers (an unfortunate amount went into the Great Lakes); when the price of silver increased, suddenly it became worthwhile to recover the silver rather than let it go down the literal drain.
What has, hopefully, changed is we aren't allowing companies to store it in leaking underground tanks, etc. All these superfund sites aren't a result if business as usual, in each case there is some major, systemic, intentional oversight and frankly corruption.
Source - I've worked some in that industry designing automation for asml, applied, etc.
Not in the semiconductor industry but a good example of the kind of thing that results in a super fund site is Rocky Flats in Colorado. There is a now famous news broadcast where the representative from the department of energy is saying "there is no fire" and a big fire can be clearly seen behind them.
They were machining plutonium and uranium nuclear bomb triggers on lathes in special glove boxes with particle capture and ventilation systems that were supposed to scrub the air before venting it to atmosphere. These systems weren't properly maintained and they got clogged up with radioactive dust and caught fire. It was later found that they were dumping radioactive dust into the air, and had hundreds of barrels of radioactive waste in steel barrels that were rusted through leaking into the ground for decades. It's the only time one federal agency (the FBI) raided a facility of another federal agency (DOE).
https://www.prevor.com/en/chemical-risks-in-semiconductors-i...
https://en.hesperian.org/hhg/Workers%27_Guide_to_Health_and_...
Point is - there are lots of bad chemicals used in semiconductor manufacturing, even today.
Exhibit A: https://www.science.org/content/blog-post/sand-won-t-save-yo...
https://www.npr.org/2022/02/28/1082934438/supreme-court-to-h...
Which the court knows damn well will be the outcome - that's the goal. Keep anything from being done.
We already complain all the time that legislators don't understand the stuff they pass laws about. Delegation is not authoritarianism. You haven't actually said how you'd "fix what's broken". Do you have any specific ideas?
We don't want to have one set of regulations for each party which change with the president, (we also don't want to delude ourselves into thinking our preferred party will keep winning).
You're assuming that there are "parameters" given to agencies to create regulation with the force of law and the case seems to be about the circumstances where these are not nearly direct enough.
I don't want the president to be able to run the country with executive actions, this has very much gotten out of hand.
Specific ideas involve people not watching news paid for with advertisements, changes to election funding which should be obvious (removing the idea that unlimited political contributions are "free speech"), killing the filibuster, fixing gerrymandered districts, alternatives to first-past-the-post voting, someone going out and trying to inform the electorate in a way that encourages independent thought and not just cheer-leading for ones own side, re-enforced and expanded limits on corporate media/news ownership.
Ultimately though, the electorate just has to demand it instead of letting itself get whipped up into an emotional frenzy with the ever-present latest manufactured crisis.
Like what do you think the “demanding” is going to look like if not an emotional frenzy and protests?
You find this all over and have to question about each issue that is emotionally charged... how does fanning the flames help certain parties and politicians? Likewise for news sources.
There's an incentive partially intentional by those pulling the strings and partially emergent (or a stand-alone complex for Ghost in the Shell fans) phenomenon where by in a intentional/emergent collusion between parties, politicians, media, and individuals... the most emotionally charged issues dominate the political landscape these days because from somebody seeking out the emotional rush of a like to a politician winning elections to corporate news advertisement sales there are benefits everywhere to make people frenzy about something, and whatever is most apt for it gets it, regardless if rationally it's a solved issue that only a few hangers on really want to fight about any more.
>Like what do you think the “demanding” is going to look like if not an emotional frenzy and protests?
There's a real core of the problem, inability to imagine what meaningful political discourse would look like without an emotional frenzy.
> it would just be solved
You can’t say “god why are we still taking about this, can’t we just do the_thing_i_want and call it a day?” Because obviously there would be a lot less political strife if we all just agreed or put up with outcomes we don’t like.
> Fix what’s broken
Some of this improvement came naturally, as the requirement for cleaner and cleaner manufacturing environment for the wafers themselves (to keep particulate contamination from lowering yield) meant that the chemicals were kept in enclosed systems, thus easier to keep from leaking out.
Some of this came about because, from what I was told by "old timers", in the 60's and 70's part of the problem was that fabs were not thought of as being very dangerous. This sounds incredible now, but the risks people thought of from manufacturing then were those present in steel mills, coal mines, auto factories, etc. Big heavy things and molten steel and roofs that can collapse on you; physically obvious risks. It took some time to realize that semiconductor fabs were just as dangerous; no doubt longer than it should have, but the realization did arrive in time.
I left the semiconductor industry because it was outsourcing, not because of concerns for my safety; in new fabs, there was a great emphasis on safety and the environmental impact (which no doubt raised costs relative to some of the other places that manufacturing shifted to).
Sec. 30219G. Requirements relating to vaccine branding.
Directs the President to ensure that every vaccine donated, procured, or financed by the U.S. Government is clearly branded with the U.S. flag.
The market does a pretty good job of sending demand signals to producers, faster than the government can generally create and pass incentivizing legislation.
But if you don't have the production capacity in the first place, encouraging that to be built out (which is a long-term process) does seem like something where government can meaningfully intervene.