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Comment by clove | Hacker News Reader

Honest question: Why are all these chip companies building fabs in first-world, expensive countries (e.g., Japan, the US, Italy)?

Wouldn't building a fab, say, somewhere in Africa, be a lot cheaper?

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No. You also need stable government and good infrastructure (electricity, water supply, transportation etc). Most importantly, you need highly educated human resource in this field. (Importing workers from other countries doesn't make sense as you would have to pay high wages, negating the cost advantage you are seeking). Note also that you need supportive government policies - fabs consume huge amount of water and the treated water released back still is unfit and polluting. Water is a really a tricky issue in many countries because you need it for agriculture and everyday use, and this can often become a contentious political issue. Most governments are not willing to standup to farmers and ordinary citizens if there is a water shortage as they know that's a battle they can't often win politically.

Thanks for your answer.

So for the first-world countries, what makes the current counties being targeted the chosen targets? Why Italy instead of Israel? Why Japan instead of Germany?

Geopolitics, lobbying and money. Businesses go where their government can get them the best deal, and to countries whose government most accommodate their needs. Israel and Japan are close allies of the US. Japan is willing to invest a lot of money too in fabs. The Anglosphere distrust the Germans and the French, and vice versa.

Israel has an Intel fab already

Wikipedia's list of fab lines https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat... has 4 in Italy, 3 Intel ones in Israel and 2 by an Israeli firm named Tower Semiconductor, which on its page has 2 in the US plus there's a joint venture with more. To get an idea about how this can go in the less cutting edge market, all but one of their fab lines was purchased from another company or in one case acquired through a merger.

> You need stable government

So yes, Italy is the obvious choice :-).

Italy is footing the bill (40%), Intel can use its own money to do what it wants. But what it wants is stock buybacks and dividends, so they have no money left for R&D.

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