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.
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.
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.
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...
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...
https://www.datacenterdynamics.com/en/news/ibm-sues-globalfo...
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).
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.
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)
The goal is not wealth transfer.
If you want that, move to Europe.