FWIW, I work at a company that stands to benefit from this bill.
Does the US need to secure reliable semiconductor supply chains free of China? Sure. This is not the most cost effective way to do it.
When there is no clear benefit for the company to fab chips in the continental US, and a lot of clear negatives (cost, regulations, etc) - you have to do something to outweigh the cons. If the US had been an amazing place to fab chips already, hand-outs would be completely unnecessary and we would already have a bustling chip fabbing industry. But... we don't.
Perhaps after handing out all this "free" money, lawmakers need to take a long hard look at why our chip fabbing industry has nearly vanished.
I don't have a problem with government subsidy for jumpstarting industry, but it's absurd to give the money to Intel and AMD. They profited massively from offshoring their production. If we are going to spend money (and I agree we must), it should be invested in new competition so that Intel and AMD have to spend their largess on fixing their business model to compete.
I don't think tariffs will work when the alternative requires massive outlay of capital and decades to recoup.
Not to mention, there is no reality where manufacturing these chips in the US costs less than Taiwan, for example. There is no reason to build a fab in the US with the current economic and regulatory climate. So... we have to force it to happen... which is what this bill does.
And they are, and have always been.
Push it up 50 percent. This quarter trillion dollars is going straight on the debt pile so it will hurt a lot, just not today.
At least this money will have a tangible, appreciable outcome. Supply chain security for such critical things such as chips is really hard to overstate the importance of for the US.
The chicken tax, as been an incredibly efficient way to assure that car's are manufactured in the USA, so much so that the cost difference between a Ford manufactured in Mexico and a Toyota manufactured in TX is basically 0.
There is no reality where manufacturing a car in Mexico costs the same as in Michigan. We've artificially increased the cost of the Mexico product... that is what will happen if you try that approach with chips - they will be more expensive for no real good reason.
It also appears to cost many multiples more capital to build a chip fab than a car plant according to these sources[1][2].
[1] https://www.exacthowmuch.com/how-much-does-it-cost-to-build-...
[2] https://builtin.com/hardware/american-made-semiconductor-cos...
Its hard to have an exact 1:1 comparison, but I think most people would agree they are roughly the same price for roughly the same product. And yet one is largely designed and manufactured in the USA (the Toyota).
So, maybe they it costs more to employ someone in San Antonio, but maybe that doesn't really matter in the grand scheme of things vs flying engineers to MX to work out kinks in the assembly line.
And its probably the same with semiconductor manufacturing. Intel isn't behind because it costs more to manufacture things in the US, they are behind because they didn't invest in EUV, and made some technical mistakes, as well as business mistakes around contract manufacturing and refusing low margin deals.
I think if you look at the results of the IBM/Lenovo deals its abundantly clear that where the manufacturing was located had nothing to do with the success of the products (It was outsourced to Lenovo long before it became their business). The American management was the problem, and kicking it to the curb allowed them to grow the business 10X+.
And lets not ignore Samsung which has a large fab just down the road from me. So it can't be a terrible environment for USA based semiconductors if a Korean company is willing to fab things here.
That doesn't make sense. I could declare that lollypops are needed, or a third sequel to Space Jam on the same evidence. It's just affirming the consequent. I think that these companies aren't building new fabs because I personally am too poor, so the best way to get us out of this rut is to hand me the billions.
edit: the government needs to stop giving wealthy people money. Buy equity in the companies and get on their boards, don't just hand wealthy people cash and pretend it's capitalism.
Geopolitical issues forcing this aren't the fault of the semiconductor providers, decades of policy are at fault for letting the situation get this bad.
And to be fair future taxes will recoup some of this, as will the value provided to the state of an increased reliability of sourcing semiconductors.
It may not be the most cost-effective solution but it's the solution we need at this point because China isn't our friend and increasingly seems like won't be.
Agreed. The alternatives should have been presented. Maybe include this in partnership with canada, mexico and others. Where the wonks at?
The short term goal should be to diversify critical US supply chains away from a country that is currently considered by the US to be an competitor. I'm sure you remember that US official policy since the 70s is the "One China Policy" which admits that Taiwan is a part of China and that only attempts to reunify by force will be responded to(*). So the US needs to move supply chains out of PRC/ROC, but moving them to S. Korea, Japan, or dozens of other friendly nations is an acceptable goal from a national security standpoint.
* - I'm not a fan of this, but it is what it is. I didn't realize it until recently.
- The United States did not explicitly state the sovereign status of Taiwan in the three US-PRC Joint Communiques of 1972, 1979, and 1982.
- The United States "acknowledged" the "One China" position of both sides of the Taiwan Strait.
- U.S. policy has not recognized the PRC's sovereignty over Taiwan;
- U.S. policy has not recognized Taiwan as a sovereign country; and
- U.S. policy has considered Taiwan's status as unsettled.
Next time you read a news story about this issue, take note of the fact that PRC officials use the term "the One China policy" while US officials use the term "our 'One China' policy".
There has been widespread bipartisan support for the military-industrial complex for as long as Eisenhower (correctly) warned about the military-industrial complex.
Partisan disagreements just tend to make the headlines more often.
Corporate welfare and bailouts are also big ones.
If it happened, which it didn't.
As for the gas - it's quite probable that even before the war Russians were selling it at loss, purely to stay relevant. Which means China buying it hurts Russian economy more than keeping away. And of course it benefits China.
Besides - what exactly would be the point of isolating Russia altogether? A new USSR? Because that's precisely what Rashists want. China wants a pacified, but functioning vassal state instead. Or perhaps states, because there's no reason really for anything east of Ural to remain with Russia.
This undermines any other function of what people think a government is there for and the system that government operates under. If people were told anything else, they were told a lie.
There are different people operating under more effective set of rules, and they can pit countries against each other to sweeten the deal of operating within that country.
Its just simply a more effective set of rules than whatever people were taught in their civics class, or by an animated sheet of paper singing about how bills are formed.
American Laws & Regulations prohibit domestic semiconductor manufacturing without Government subsidies.
I think people here have argued the strengths/weaknesses of each approach. The best solution is likely some nuanced mix of the two, but nuanced policy is hard to create and I rather we eat the costs of any of the two approaches that are more likely to be adopted today rather than continue to take no action.
Are there controls on what suppliers charge? If not, what prevents them from charging as much or more than would be spent on subsidies? If so, what prevents suppliers from just choosing to opt out of the transaction entirely?
Tariffs alone would only allow for domestic balancing of those subsidies but lose you the global market. So again, what would you recommend instead.
What would you recommend?