GlobalFoundries wins $3.1B in CHIPS Act subsidies for NY, Vermont
syracuse.com
syracuse.com
Sheesh.
Ultimately (multimately?) the collective mindset is of the investors and execs who directly, financially benefit from those reasons.
I know this is a narrow lens with which to view pub+corp financial decisions. But it keeps producing such stunningly accurate pictures and I find it hard to not use it.
Yes labor is cheaper in Asia. But the other factor is the availability of a certain kind of labor force. You need a lot of people that are highly skilled to operate these facilities. There isn’t that kind of workforce available in NA today.
I think you're right and I'm not wrong. Wile picking apart the complexities, the drive to maximize profit will be a factor popping up again and again.
While the middle class sure has shrunk, the life those in it live is markedly more materialistic than in the past. Fifty years ago there was no Temu, Alibaba, or Amazon TYEVRRTY brands to deck out facet of your life once you clear the cost of basic living. Houses are expensive as ever, but filling them has never been so cheap.
https://www.aei.org/carpe-diem/yes-the-us-middle-class-is-sh...
It cannot be stated enough that people who aren’t domain experts should not be using stats to push narratives because lots of nuance is lost when just numbers are shown.
Real dollars.
> It cannot be stated enough that people who aren’t domain experts should not be using stats to push narratives because lots of nuance is lost when just numbers are shown.
Agreed, so its really important for everyone right now that you personally refrain from commenting further.
Per capita disposable real income
https://fred.stlouisfed.org/series/A229RX0
Real median family income
You've been caught outright lying and you have no address for it other than calling me the idiot?
Please, leave.
The internet/social me is so hyper focused on those at the bottom that they have lost sight of what its like just a few levels up. But it's critical to understand in order to craft functional solutions.
IMO it's still fine to subsidize - everyone else (Taiwan, SK, China, MY) is doing it against WTO regulations, so we may as well
Of course it is.
> everyone else (Taiwan, SK, China, MY) is doing it against WTO regulations, so we may as well
You have it backwards. The US was/is/will be doing it so taiwan,sk,china, MY) is doing it. The biggest violators of WTO regulations is the US. And the WTO is pretty much defunct because of the US. The biggest and most egregious mercantilistic country is the US. Not china or any of the country you listed.
The sad thing is, the rest of the world should be subsidizing far more to offset unfair help US corporations get.
"Meanwhile, part of the money will be used to modernize the Essex Junction campus. Officials say the upgrades will enable the Vermont operation to become the first high-volume manufacturing facility capable of making gallium nitride semiconductors, which are used in electric vehicles, power grids, smartphones and more."
You'll note that in the submitted article, GloFo is promising to do exactly that ("In return for the subsidies, GlobalFoundries said it would invest about $12.5 billion in the projects, most of which would be spent to expand the company’s Fab 8 in Malta, in Saratoga County."). Basically it seems like GloFo made a pretty hard nosed decision based on financing (guess they were just a few billion short last time) back in 2018, and now that they have those missing billions, they're going to go ahead.
Based on these numbers, it does seem likely this would allow GloFo to bring online 7nm. But getting much past that (5nm and lower) seems uncertain. That said, having additional domestic 7nm production (crucially, 7nm that does not displace existing 14nm+ production) would be useful.
So assuming the construction jobs are temporary and the manufacturing jobs is what remains, this works out at around $2.066 million per employed personnel. Assuming a federal income tax rate of 20% and a 30 year tenure, this means the personnel should have a take home pay of $344k/year. And this is just for the scheme to break-even.
I think this IRA (the act) and CHIPS act are going to be just another wealth transfer where the "work" being done just to check boxes to be eligible for the money getting sloshed around.
There are other economic benefits too.
But even if your simple calculation was correct and all there was to this story, what you’re missing in your post is that America as a nation has decided we need to produce semiconductors here for economic and national security purposes and so therefore subsidizing their manufacture is a normal thing that would occur.
> America as a nation has decided we need to produce semiconductors here for economic and national security purposes
a few decades ago we decided to move manufacturing jobs overseas because paying people who had families and bought "cars and lattes" here was just too expensive. Why reneg on that commitment?
The point here was that your assumption of the economic effects of the subsidies didn’t include other meaningful factors.
Because it was dumb, changing away from a path when you see it is a dead end is a good thing to do.
Also I’m not sure “we” (to the extent that there even is an “we” here, there are always winners and losers with these sorts of policies so I bet the whole country didn’t agree) ever intended to move high-tech manufacturing away from the US. I think we want to outsource the bad jobs and keep the good ones. Of course it is a game everybody is playing, we’re shifting our strategy to hopefully more effectively keep the high-tech stuff.
If you want a more visible and recent datapoint, look to the perennial fights in the UN over the opposite, where a country that promised not to devalue their currency devalued their currency. Note that these discussions generally start from a point where everyone understands why it might be desirable to devalue one's currency, pumping exports & the real economy while dumping assets. This is macroeconomics 101 stuff.
The surprising thing is not that high tech manufacturing left, it's that for a while it was actually able to compete with a money printer for access to talent and resources.
Until the recent turnaround, it was understood the west was moving to a service industry. Someone Else(tm) (read: China) would manufacture everything (the "dirty", "cheap" work) and we would provide the service (the "clean", "expensive" work).
Of course, an economy can't be valuable if it can't actually make anything. As it stands, the US can't even make chopsticks by itself let alone microprocessors.
I actually have significant doubt CHIPS will be successful in bringing back microprocessor manufacturing, and more broadly bringing back manufacturing in general to the west at all, but we have to start somewhere if we don't want to be beholden.
Anyway, US manufacturing output still seems to be second in the world, around 1/2 that of China with 1/4 the population. Microprocessors are already made in the US, Intel (despite their struggles) is still making plenty of chips here.
I’m not really sure what the plan is with Global Foundries, in the sense that they presumably won’t keep up with TSMC or even Intel… but maybe 7nm will be the next or next-next generation automotive chip node or something.
This is what the west was trying to do before: Providing services like microprocessor design for the manufacturing industries overseas.
But of course, simply drawing stuff on paper for others to peruse doesn't actually produce value. It's the act of making something that produces value, and we finally realized that grave error.
Not to mention the people doing the manufacturing work will inevitably accrue the know-how to also just do the designing themselves too, and then we in the service industry really are worthless fools.
>I’m not sure what you mean by “can’t even make chopsticks by itself,”
I mean that quite literally. I know Georgia (the state, to be clear) has (or had) a robust disposable chopstick manufacturing industry, but nearly every disposable chopstick I see sold or given out are Made In China these days.
If we can't (or won't) even figure out the means to making some wooden sticks, we definitely aren't manufacturing microprocessors.
> But of course, simply drawing stuff on paper for others to peruse doesn't actually produce value.
Intel actually manufactures quite a bit in the US. The bulk of their fabs are here, and they ensure they can produce the wafers with good yields in the US. Once they've got the process down, the other fabs kick in. And even then, I believe a fair amount of the mass production is still in the US. It's the packaging that is mostly offshored.
So no, not just designing on paper.
I'm aware they have fabs (mostly R&D) in Oregon and have manufacturing fabs planned in Arizona, New Mexico, and I recall Ohio, but I've mostly heard praise of their Israel fabs and all the CPUs I've ever bought from them have said some variation of "Made in Costa Rica/Malaysia/Vietnam".
To be fair my latest purchase, a 14700K, says "Manufactured in US with global content." which is a slight improvement, but that could just as well mean "We shipped chips in from Israel and soldered a heat spreader on it." and it still ultimately says "Final assembly in VN." (Vietnam) right under it.
Made in USA this is not (yet?).
https://www.intel.com/content/www/us/en/support/articles/000...
>> I’m not sure what you mean by “can’t even make chopsticks by itself,”
> I mean that quite literally. I know Georgia (the state, to be clear) has (or had) a robust disposable chopstick manufacturing industry, but nearly every disposable chopstick I see sold or given out are Made In China these days.
But these are different things. “Can’t make chopsticks by itself” is clearly not true, I could just go make a pair of chopsticks if I wanted. You can find expensive hand-made chopsticks from the US. The US might not have a huge production of disposable chopsticks, but making really simple things at scale is a place where we don’t have a competitive advantage, and I wouldn’t be surprised if we have a relatively low demand for chopsticks, so this doesn’t seem surprising or indicative of anything in particular.
Losing out on a big percentage of advanced chip making capacity could be catastrophic for the US economy and technological advancement. And military.
This is not an "investment" in future tax revenue via jobs, although jobs are nice.
The big one everyone remembers is the set of grants giving to incumbent providers to expand access to broadband (25 Mbps down/3 Mbps minimum) to everyone in the country - a promise that, despite three rounds of grants in the billions, has not materialized.[1]
[1] https://www.jsonline.com/in-depth/news/2021/07/14/weve-spent...
Another solution: Move the manufacturing to a near-shore and friendly country (ie: Mexico or Puerto Rico) and keep the design part in the US. But of course, that wouldn’t be as politically popular and wouldn’t create the extraction opportunity (which lots of companies will want to benefit from).
In terms of nearshoring - that’s a good idea too but I think the workforce training would be even more difficult than it has been in the US and it would be less popular politically as you said. (Side note: PR is part of the US - maybe you meant Costa Rica)
Puerto Rico isn't a foreign country, it's a territory of the United States. Regardless of that, semiconductor fabrication is one of, if not THE most complex form of manufacturing.
It's not enough to simply build a fab in Mexico, the supply chain of materials and highly skilled labor that runs these fabs needs to exist there too. That's not to say that it can't exist somewhere like Mexico, but currently it doesn't and it would take longer to build up.
So while moving it to Mexico would remove the geopolitical risk problem, putting it there instead of the US would only give the advantage of cheaper labor but at the cost of taking much much longer to ramp up.
You think people will stop buying NVidia GPUs, AMD GPUs, PS5, XBox, Nintendo Switch, iPhone, Pixels, Samsung Galaxies, and a litany of major automotive parts from Microchip/STMicro/etc. etc.?
Because none of these are made in the USA. The only major chips made here are Flash/RAM by Crucial, CPUs by Intel, and some lower-tech (but still important) chips by TI. The vast majority of chips, well over 60% of the worldwide supply, is made by TSMC IIRC, and another huge chunk are made by other companies located in Taiwan.
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Furthermore, Taiwan is a close ally who has extremely friendly relations with USA. Yes, there's a war-risk with China here, but Taiwan fairly competes with us. I don't think anyone has a single piece of anti-Taiwan hate inside of them.
Its not a protectionist thing. Its purely the "what if China attacks Taiwan" thing. Economically speaking, trade with Taiwan and USA is a good thing. Geopolitically, trade with Democracies is a good thing, and trade with a century+ old friendly nation is a good thing.
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Taiwan can create this tech because they are smarter than us and outcompeted us on this subject. Its not "low tech", its extremely difficult chemistry, high-end PH.d stuff here.
Taiwan is basically the Vulkans from Star Trek. They're smaller, more technologically advanced, but weaker militarily. They're so obviously good allies that its unthinkable to do anything against them. We need a "just in case" plan if trade between our nations gets interrupted because chips are a strategic good, but... cutting them off would mean that they ally with someone else and that's even worse.
TI makes plenty of pretty high-tech chips, just not necessarily bleeding edge digital logic processors. Their real high-tech stuff are analog devices, something far less sexy to people on HN but still incredibly crucial.
Yeah, important but not as much of a headline as 20% more GHz or FLOPs for some reason.
It’s not that they are intrinsically superior Vulkans as you’ve described.
It’s a temporary distortion caused by Intel trying to rest on their laurels and drip feed advancements.
Even if we magically wave a wand and give Intel next-generation lithography today, they still don't have the capabilities to take orders from customers and translate them to designs.
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Its not Intel who needs to catch up to TSMC. Its a 3rd party fab like GloFo who needs to catch up for USA to recapture that market share.
I'm happy that GloFo is getting some scraps and investment from this CHIPS act, its the right move. But I have my doubts that we'll reach the technological level of TSMC / Taiwan any time soon. But whatever we get its still better than nothing.
ASML began to ship its first High-NA lithography tool to Intel late last year ,and the machine will be fully assembled in Oregon in the coming months. [1]
[1] https://www.anandtech.com/show/21264/asml-to-ship-multiple-h...
And yet, it's Taiwan who won. We gotta give them props for that, and we can also thank the gods that it was a close ally of the USA who got so good at it.
https://www.datacenterdynamics.com/en/news/ibm-sues-globalfo...
The goal is not wealth transfer.
If you want that, move to Europe.
Because I personally believe that this is a decent deal; I hate the idea and it still reeks of protectionism to me, but I think this serves US (taxpayers!) interests decently well.
I especially like the investment matching aspect, where the necessary commitment from the company is much larger than the grants, so in the end, they are dropping money into that fab (fudging numbers only gets you so far), and its in their best interest to make it work out.
I'd be very careful with characterising this as "wealth transfer", because it seems significantly less questionable than most defense spending to me and even that I wouldn't label as "wealth transfer".
Out of personal curiosity: Are you similarly opposed to agriculture subsidies, or do you consider those less problematic (magnitude is somewhat comparable at ~20billion$/year)?
European here, we could and should close our borders for agricultural goods that we can grow ourselves (and you Americans should ban alfalfa exports from California, while you're at it). Ag subsidies are only required because there's no way an US or European farmer can compete with Russian, Ukrainian, South American or African labor and land costs, but we still need farmers to ensure we're self-sufficient and don't end up like many developing nations did once Russia blockaded Ukrainian grain exports.
Just consider the Polish protests against Ukrainian grain, or the recent German protests against cutting fuel subsidies for agriculture. It just costs too much political capital to do anything about this...
The same applies to so many other types of agriculture. Nobody wants to let farmers go out of business for decades now in the Western world. And the rate of "natural attrition" hasn't matched the rate of technological efficiency improvements.
There is of course agriculture that isn't as efficient because higher human labor required for things like picking and sorting. But the automation for that is slowly coming.
For certain agricultural goods perhaps, but the Midwest is the most productive region for agriculture on the planet. Russia and Ukraine have vast areas of land, they focus on wheat because they mainly have marginal land and a limited growing season and wheat is perfect for that. Most of Africa and much of South America (Argentina being a notable exception) have terrible soil and require significantly more fertilizer to grow crops at scale. Labor is cheaper in those regions but that’s only one factor and it’s why so much farm labor has been automated in the US.
but they are the single largest exporter of grain overall, mostly corn from the midwest and California produce. the Green Revolution hit hard, and most farms are now huge consolidated enterprises. by comparison, in a lot of the world, most farms are smaller and often single family, and in many cases still using old world techniques -- e.g. non-trivial numbers of people plowing their fields with oxen, etc.
I personally think that its quite difficult to make protectionism happen in a way where you don't prop up an inefficent industry with continuous infusions of tax dollars in the end...
We have national defense concerns and zero faith in intel.
EDIT: This makes it "defense spending" in a civilian line item.
[1]: https://www.intel.com/content/www/us/en/corporate/usa-chipma...
This is about creating strategic independence.
So what you would need to ask would be more like: Is the subsidiy higher than it needs to be to lure chipmakers into the US? And that is much harder to answer...
On the other hand they could just not complete what they promised and we would be in a bad position: https://www.theverge.com/2019/4/10/18296793/foxconn-wisconsi...
Others have said about trickle down economics (this can be debated).
Read Chip War by Chris Miller
https://en.m.wikipedia.org/wiki/Chip_War:_The_Fight_for_the_...
The other economic benefit is moving one part of the supply chain here may enable more of the supply chain to be completed here. For some of the hardware companies I work with, if you have to make a few parts in China, it's vastly cheaper and more flexible to do the whole assembly there.
We give giant science grants all the time, tons of money for infrastructure, etc, what makes this one immediately go into X dollars / jobs created * tax generated?
You'd need to split the pay between all 6.7 newly created roles, meaning they only need ~$60k take-home or so each - which is right around the US mean salary.
[1] https://www.oxfordeconomics.com/resource/chipping-in-the-us-...
Also, did you not account for capital costs? I know that at Intel fabs, labor costs are significantly lower than capital costs.
Consider, for example, that ASML charges $0.5B for a single unit.
Maintaining supply chain diversity is critical for national security. The US Military does not want to be dependent on foreign manufacturers for its equipment.
Furthermore the business and employees will be paying sales and property taxes, in addition to federal income tax, and will have 2nd & 3rd order effects from their spending.
Simply diving the subsidy by the 1,500 permanent employees doesn't capture the value that's created, along with the strategic value of bringing more chip manufacturing to the US.
Don't forget that TSMC was essentially a government enterprise when it started.
Be cynical if you want, but the one thing that has a 0% track record of effective results is calling every government function wasteful, corrupt, and untrustworthy and responding by dismantling government institutions and investments.
300mm? What dimension is this measuring? I would expect feature size to be 300nm, but 30nm or 3nm is surely more likely.
Twenty bucks says wafer size, since 300 mm wafers are standard.
Edit: Also, here's the press release for the announcement:
https://www.nist.gov/news-events/news/2024/02/biden-harris-a...
Anything made today from the ground up would use 300mm wafers, though. Even slightly older process nodes (55nm, for instance).
200mm was the standard a few years ago.
I swear I read an article about new 200mm lines being setup somewhere. Demand keeps growing even for older lines.
I guess to your point is that 300mm is the standard for any top-end line in the past decade? Which is good info for sure.
It seems to me there should be some kind of rule to prevent these layoffs for companies that receive billions of federal dollars.
[0] - https://vtdigger.org/2022/12/01/globalfoundries-to-cut-up-to...
Companies should think about organizational bloat during hiring. If their revenues are soaring and they’re getting free money from the feds, they should shuffle the people they have into more efficient roles.
I know there are fiscal reasons why this kind of thing happens. But workers in the US do not have the protections to balance it out. Healthcare, unemployment insurance, etc are not sufficiently strong to keep people afloat for the sake of “reducing organizational bloat.”
Recent moves and voices send a clear signal across the world - US is not a reliable security guarantee partner. CHIPS subsidies is a hedge against China taking over Taiwan. US is building onshore capacity to be able to renege on defense promises given to Taiwan at minimum cost. I would be very worried if I was in Taiwan. Im already worried as it is living in Europe and learning article 5 might just be a mere suggestion to US.
I also feel the need to comment that this is corporate welfarism and that is very much contrary to free markets or capitalism. IMO the government should not be choosing winers, but incentivizing everyone who generates a benefit. As an illustration (but not neccesarily the exact policy), what if the government awarded a benefit per TFLOP produced in the USA, or per chip created etc. (up to some maximum). Then a handful of competitors could all participate and benefit from the incentives. As it stands now its $3.1B harder to compete with GlobalFoundaries on the open market, meaning competitors and thus innovation and supply will actually be harmed.
We also see time and again that corporate subsidies are not sufficiently beneficial to constituents to be worth the money.
The best data i can find is on stadiums[1], but also some about when amazon was shopping itself around for incentives.[3]
[1]- https://reason.com/volokh/2023/12/16/virginia-should-refuse-... , https://reason.com/2013/12/21/why-stadium-subsidies-always-w...
[2]: https://subsidytracker.goodjobsfirst.org/parent/tesla-inc is a good resource for seeing how much companies have been subsidized
[3]: https://www.forbes.com/sites/teresaghilarducci/2019/02/27/sh...
I think the market did choose and the choice was "not in the us".
Free markets and capitalism are related but not the same. The government using capital as an incentive for companies to increase output is an example of capitalism.
The bulk of USAs technological progress is Department of Defense investments. Such as ARPANET, computers, supercomputers, pressurized cabins for bombers (converted into passenger jet tech today), NASA projects and more.
USA was only free market in the 1800s. When the 'Robber Barons' turned out to be a bunch of assholes, we regulated away a lot of that bullshit they did.
I don't think oversimplifying this issue helps us discuss it seriously.
Isn't this about being able to build military aircraft and guided missiles w/o any foreign dependencies, not cars?
Regulations are what prevent monopolies and we've forgotten about enforcement of those rules for decades. So we ended up with concentrated monopolies and single points of failures in these critical industries.
Paltry subsidies and no new regulations means nothing will actually change, other than a few billion dollars going from tax payers into some small number of wealthy people's pockets.
I have never thought this to be the case, could you provide some backing to your claim?
Some other info here https://www.economicshelp.org/blog/21726/concepts/why-does-c...
In actuality though, this is almost religious. It doesn't matter than monopolies have always appeared in markets and been dealt with by regulation; believers in free markets will always argue that the actual cases weren't really monopolies or that they'd not have lasted. /Shrug
a) Offer subsidies yourself b) Let other governments dictate the industry that you're crucially depended on
For fucks sake, large commercial (both office and industry) zones should only be permitted when the developers show a viable mass transit solution for their employees. Even if it's just buses, that's still better than thousands of cars.
[1] https://www.mdr.de/nachrichten/sachsen-anhalt/magdeburg/magd...
Hence campuses that are 85% parking lot.
Yeah and that is nuts. We lose ridiculous amounts of valuable land for barely any productive use - every day Germany loses 39 ha for buildings and 8 ha for transportation infrastructure [1], which means streets and parking lots.
Loss of land is an externality that doesn't get priced in anywhere.
[1] https://www.umweltbundesamt.de/themen/boden-flaeche/bodenbel...
But we should also have a Land Value Tax to push people toward using it more productively.
I'm thinking that "excess parking" is usually due to wanting to secure a site with enough expansion potential but also putting it to use in the most cheap way possible (like, you won't verticalize the parking until needed and that would require more planning, permits, etc)
For an Amazon parcel sorter or a wholesaler distribution facility, sure, there are enough towns with desperate populations that can be exploited (and Amazon in particular is infamous for using that leverage).
But a company like Intel that needs highly educated staff? They won't go to some random village hours away from civilization.
It is also <30mi from Albany and ~20mi from Troy.
Loads of small towns aren't hours away from "civilization".
[1] https://www.consumerreports.org/corporate-accountability/ama...
With this in mind do you see the problem with only allowing factories to be built in places accessible to public transportation? The people making such proposals are seriously out of touch with half of the country.
Not every spot on Earth is a dense urban area.
Combine that with the actual size of the Fab, hella lot of walking :)
As for solar panels, the Fab operates 24/7/364 (usually 1 downtime day a year). Which means even with the large amounts of snow that will build-up in the winter, there are always cars in the lot - clearing that is a big job and not sure how to do it with solar panels.
I'm not sure how much sense it'll make in this specific case, but in general, interestingly, with a high albedo (e.g. snow covered or white for some other reason) ground surface, vertically mounted bifacial panels produce very close to equator facing panels with the appropriate tilt. The value of that generation might actually be greater, as it obviously spreads out the profile towards the evening peaks.
For the regular horizontal/tilted ground mounts, NY is quite far north, so you're looking at a mount angle of 43° or so to optimise overall power production, and you can go about 15° more tilt and only lose maybe 1 or 2% of summer production, but increase production in winter when the sun is angled lower. If you go for like 55° to 58° tilt, there's probably not going to be very much snow accumulating on the panels themselves.
Concentrate semi development geographically to realize synergies and economies of scale. Building redundant and competitive production thousands of miles apart in the Northeast/Great lakes, Texas, and the west Coast is not the best idea when you are resource and labor constrained.
Look into the history of TSMC. It became what it is because of direct government investment. I'm sure to some people it seemed like a gamble at the time.
This amount of money is basically trivial on the national level and the upside is tremendous.
You do realize these fabs already exist? There is no redundant or competitive production currently.
So pacing inflation on the cost of childcare? What a joke. Childcare in Vermont is ranging between $15,000-$25,000 per year among families I know. That subsidy covers less than a month.
As the largest private employer in Vermont I think they can do more than that. It’s not like they pay well. I see on their advertisements that night shift operators are paid 21.93 hourly with a shift differential. So day shift makes even less. Looks like shifts are 7 to 7 am and pm night and day.
What a schedule. It’s one thing if you’re a nurse making at least low six figures. But this? Grueling manual labor in those suits for twelve hours a day for a sub livable wage in Vermont and New York.
It was really, really nice having 4 days off. It's a super easy job, basically babysitting machines, more reading the Internet than anything else