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Comment by bilekas | Hacker News Reader

> It has also received some $30 billion in government subsidies to help

That's such an incredible amount of money. It would be fair to say they are really just an arm of the government right ?

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Not to say you’re wrong, but “TSMC seeks $15 billion in US subsidies for Arizona chip plant”[1] and the fact they may get a sizeable share of the EU’s $46 billion subsidy pot [2], suggests that this is just the sort of money that governments are willing to spend to secure access to one of the 21st century’s most critical resources.

If anything, given China will not have access to ASML’s latest tech and will need to develop much of the tech itself, the $30 billion seems a bit low for a whole “network” of fabs.

[1] https://finance.yahoo.com/news/tsmc-seeks-15b-subsidies-want...

[2] https://www.reuters.com/technology/tsmc-feeling-good-about-p...

Yes, just as much as airlines are an arm of the US government:

> U.S. airlines avoided broad bankruptcies and cuts with the record $74 billion in government Covid-19 aid (https://skift.com/2021/07/29/federal-aid-saved-u-s-airlines-...)

Or the US semiconductor industry > Most of the money is going into industry and supporting industry investments. Of the $52.7 billion in subsidies, the bulk of that will end up going to private companies. (https://www.scientificamerican.com/article/nearly-53-billion...)

Of course there's more examples for almost any country.

I'm not debating your conclusion. I think it is spot on. I am calling out the tone though as if this was not the norm for all the mega corps/mega industries.

Yes but no government puts listening devices into their planes to spy on passengers considering they have full control.

Wait, that's actually a good idea. Probably likely that one of China/Russia/N Korea/Iran have done this.

..a good idea from the perspective of an authoritarian government. Not saying it's good for airplanes to do this.

What about the CHIPS act and its $52 billion in subsidies and tax benefits? Is Intel just another arm of US government now? And EU will do the same. I believe it's understandable that every political block wants to be independent in such important technologies.

There is a pretty strong argument that there are a set of companies that the USG considers "too big/important to fail" given the roles they have played in defense and associated industries. Boeing and Lockheed certainly, Microsoft and Intel and Dell most probably.

Without Intel, the CIA and NSA can't do CIA and NSA stuff. I think they're safe.

I can't see them changing their domain controllers and sharepoint out for macs and mediawiki any time soon, any more than I can see them flying A330s.

Dell???

Agree on Intel, MS, Boeing. And there are others.

But how is Dell strategic?

Want your government to buy Lenovo instead of Dell?

Don't they mostly buy HP? For example, I remember see HP trash sitting on the desk in that famous Bin Laden raid photo.

Snowden was working under contract at Dell for the alphabet boys. Dell is not just a HW manufacturer but also a service provider, like IBM.

> CHIPS act and its $52 billion in subsidies and tax benefits?

This is a fair point, and I don't know or will assume but is all of that going to 1 company ?

It should be safe to assume they are pumping money to other companies, such as SMIC and, more recently, Moore Threads. Although they are years behind and, for example, MTT S80 is at 750Ti levels in lots of aspects, it's quite astonishing the advancements they made in such short amount of time.

TSMC spends $36B annually on capital by itself. It’s hard to fathom how massive they have become, few government budgets can keep up with such tech costs.

I mean they're clearly vital to China, but private industry receives tons of subsidies in the U.S. too, 'defense' contractors, fossil fuels, farming... It's a pretty normal thing for a government to do regarding sectors it considers important. Obviously that buys them influence, in China and in the US alike.

Every Chinese company is an arm of the government, whether they have state funding or not. Look at what happened with Jack Ma and the Ant Financial IPO. If the CCP can exert this level of control over a $280B company is anyone out of reach?

Government definitely is above the Corporations in the China. Perhaps the reverse in the US

The US Chips and Science Act gives $52bn in subsidies and $24bn in "tax credits" to semiconductor companies.

You think Intel, AMD and NVidia aren't?

It's a carrot not stick model over here, but they're absolutely arms of the government and this is squarely in the realm of industrial policy. Everything else is pretend.

Intel is supposed to capture how many billions from the CHIPS act (alone - then add in state subsidies) and NVidia can't sell it's most powerful GPUs to China (they have capped memory bandwidth of 600GB/s).

AMD tiptoed around x86 designs in "mainland" China through a complex subsidiary agreement - and none of those designs were the most complex (they were reduced in various ways).

The gloves are off and we've stopped pretending it's a free market.

> That's such an incredible amount of money.

For reference, Huawei reported a revenue of $92 billion last year.

I might be biased by my time there but I never got the impression that Huawei particularly cared about anything beyond business. Sure, the ownership structure meant management could take a more long term view but finally it was still about the bottomline.

Pretty much all companies in China are required by law to co-operate with the government. They don't need a warrant or anything like that. There is no such thing as a truly private enterprise in China.

Plus, as paranoid as the CCP is, they probably have agents in these big businesses keeping track on things.

Hmm, that sounds a lot like the Twitter files story :)

It is true, but normally CCP is not worried about private companies. Many times, they would ask private companies to help in developing an area, creating jobs. Sometimes private companies are asked to take over a bankrupted company to save jobs at the cost of private company, very few companies would say no because they know they are going to be rewarded later. It is very interesting dynamic in business sector.

If CCP does have agents in those big businesses, there would be no recent bad news from the real estate companies.

Musk has pocketed $5bn and that excludes "government contracts".

It would be fair to say they are really just an arm of the government right ?

Absolutely?

At this point we are definitely treating SpaceX as the US space agency and not a private business. People were outraged when Musk was considering whether to continue supporting Ukraine with StarLink. Imagine if he refused to do the same when China cuts the cables to Taiwan, someone will probably try to charge him with treason, only to realize that a private business has no obligation to do so.

Support as in keep charging $500 for $1500 equipment and allowing use that wasn't agreed on at the outset?

Government contracts are work done in exchange for money. They are not subsidies as much as you might wish for them to be.

If the government buys 1000 pens because it literally needs them to do its job, it isn't subsidizing the pen industry.

In the case of Musk, that isn't true. The COTS contract awarded half the money ($150M) without any hardware built--it was up-front. This amounted to more than the total amount Elon invested and more than covered Falcon 1, meaning he never had to spend his own money.

But it was a contract for work yes? That sounds more like a pre-payment than a grant.

If presenting a PowerPoint you already made is work (for $150M) then sure.

Others got the same (or better) deal no?

I believe the deal here was very unusual--not unless they had someone with government power directly pulling big strings. In this case Griffin.

Part of the money being given up front doesn't make it a subsidy either...

The COTS program required the development of an appropriate vehicle after a competitive process to evaluate different proposals. You're acting like it was money to cover his previous costs and not money intended to pay for the development of the thing they were being contracted for, along with associated milestones for further payments. And hell, not like they were the only ones to get that money or even the ones to get the most money, they were the only ones to actually manage to deliver.

Why is it that only when it comes to a Musk company people act like these are unique contracting methods? You can easily find this info using the very thing you're using to post deceitful half truths.

Edit: Actually it isn't even a half truth, it's outright wrong, the initial payment SpaceX got was $23M. Everything else was dependent on milestones and design reviews, with NASA being able to cancel any time for non-performance (as they had done with one of the other companies under the program). The end result was NASA paying slightly less than half the development cost that SpaceX incurred.

https://arpa-e.energy.gov/sites/default/files/Lindenmoyer_%2...

Look at the actual COTS agreement wording: https://www.nasa.gov/centers/johnson/pdf/189228main_setc_nnj...

page 34 details the milestones.

The first 12 milestones are paper design / powerpoints. Half the money before any hardware development at all.

Mike Griffin structured it this way for Elon.

Look, I get that you're trying to be malicious, but you could do a better job than that. They literally describe what the criteria for successful design reviews are in Appendix 3.

Hint: Design reviews are not "powerpoints". They're typically several hundred to several thousand page technical documents.

The point is Elon didn't risk his own money as is oft dramatized. In fact they were mostly spreadsheets and PowerPoints to obtain that money which could then be used for build out.

that excludes government contracts

> That's such an incredible amount of money. It would be fair to say they are really just an arm of the government right ?

If so, then every major US bank, oil, car, tech, transportation, banana, etc company is just an arm of the government. It's not just trillions in subsidies that we've provided for them over the past few centuries. We've fought wars to help these industries. The US government committed genocide against native, asians, middle easterners, etc to help these companies and industries.

It’s kind of space industry. Does US government own Starlink? Yes and no.

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