This is not going to end well - our kids and grand kids will be paying for it.
It’s more of an insurance policy than a subsidy. Intel needs a reason to build in the U.S., and grants tip the ROI scale on their side to make it happen.
It shouldn’t even be an option for Intel to continue manufacturing in other countries. It should be “move manufacturing back to the US or the Fed will take ownership of the whole company and do it for you.”
(And maybe it’s sort of an unspoken assumption that if they don’t take this carrot, then the US really would use the stick to force their manufacturing back into the US).
I know there's talk about TikTok either selling to a USA owner or leaving, which seems pretty monumental too. Not quite an expropriation since the state wouldn't be taking control of it, but somewhat similar.
I mean, if Intel is only motivated to build in the USA when it gets a fat check rather than out of conviction, I think that's a problem too, no? Does this mean that whenever maximizing (short-term) shareholder value is at odds with national sovereignty the USA will have to hand them out a check?
I don't know that this is what's going on here, perhaps Intel really is committed to the USA beyond the individual gain of its executives and shareholders. It's worth noting though, there's some prominent examples in US history where this hasn't been the case. Banks for example got really rich at the USA's expense in the years leading to 2008.
They have already used their excess profits - many $10's of billions of dollars in recent years, for stock buybacks, but apparently they really, really need this money from taxpayers to stay a going concern.
It’s no different from grants to build renewables, farms, housing, munitions, whatever the government wants done in the country.
However, it is a very indirect way of getting what the government wants, prone to manipulation.
The more direct option is to contract and purchase the finished product.
The general problem is twofold. First, it can be more financially efficient to spend on incentives then finish product. Second, much of the public do not trust their representatives to perform this analysis and negotiate in good faith.
Is a 25 billion Upstream incentive cheap compared to the Chip Price premium the government would have to pay to have the same incentive?
The other question is who benefits from domestic chips and if the government is the right person to pay.
If you are so sure go make millions on the stock market and stop complaining!