Biden should invest in TSM, not Intel

[Arthur Hanson]

As a full time investor, you invest in winners and stay away from losers, especially losers that have been going downhill. Biden should be putting money into TSM building US fabs with their proven track record on finances and integrity. Gelsinger of Intel may or may not become a great executive, but he is still unproven, although he seems to have a decent, but not a great plan for a turnaround. TSM is a beyond proven winner with a financial and performance record that is unmatched, combined with a level of integrity that is far beyond their competition. Going with third best, behind Samsung and TSM makes no sense as at best, they are several years away from being truly competitive at the top end at best, in an area that moves forward at lightning speed. Wasting resources and time in a world desperately facing many environmental, economic and social challenges is not only wrong but a sign of gross incompetence. A true world leader will seek the best solutions, no matter where they come from. This is not only a wise decision but one that shows we are truly a world power that seeks collaboration and cooperation over conflict.

 

[jms_embedded]

The government shouldn't "invest" in companies, in the sense of realizing capital gains.

As to the role of government in facilitating critical industries... that is certainly up for debate. MITI did in Japan prior to the 1970s/80s, and Taiwan did in the same timeframe prior to launching TSMC/UMC. I presume Korea and China probably had similar efforts... and in all cases it bore fruit -- at least to start semiconductor industries in Far East countries.

I don't know what kind of "investment" you are referring to. If it is the CHIPS Act (and I have to admit I am not familiar with the details) then government money should be company-agnostic and any company, as long as it meets the requirements, should be eligible for this. It shouldn't be a matter of picking and choosing, saying "Oh, I don't like you, you're not a competent, forward-looking company and even though you meet the guidelines, No Soup For You."

As a taxpayer, I would hope that Congress and the Executive Branch would come up with a clear set of goals and a strategy that leverages taxpayer funding in the best way to meet those goals. Just handing out tax credits to encourage on-shore fab construction doesn't seem (to me) like the best approach, but maybe it's the easiest.

R&D in strategic areas like packaging, semi equipment, etc. seems better, but that's just my 2c.

If you want to solve the supply chain issues, especially as they affect national security, then you have to lower the barrier for the marketplace (semiconductor companies and customers) to make those decisions in a way that makes sense economically. Tax credits to help compensate for on-shore inventory costs, perhaps, if what you want is to encourage companies to be more resilient in cases of rapidly-changing demand. Or other little incentives to drive long-term investments that would not otherwise be made because the economics don't quite work out without them.

I don't know the answer, I'm not an economist or an expert in the semiconductor industry. But I do know that saying "tax dollars should go to TSM not Intel because Intel has been stumbling in the past few years, and we should bet on winners" is not the answer.

 

[Michael Domnitei]

Government shouldn't pick winners and losers among any companies but give incentives like tax breaks and 0% loans. Also, the government should NOT give credits to companies which use unions (ex: EV manufacturers) and no credits to non-union companies because that is legalized discrimination since in all cases there are American citizens working.
Regarding Intel, they shot themselves in the foot years ago when they laid off the most senior and experienced engineers (thanks to HR strategy & algorithm), the Intel engineers no longer work 60-90 hours/week, so they will never catch up with TSMC or others which work much harder and keep experienced people even if they have to pay them big salaries.

 

[Daniel Nenni]

Biden should seed invest, not bankroll.

 

[AAPL]

Intel upping the dividend by 5% and continuing the buybacks while Pat has his hand out for Chips Act dollars and getting 2 billion in subsidies for the Ohio fabs. Priceless.

 

[Arthur Hanson]

Intel upping the dividend by 5% and continuing the buybacks while Pat has his hand out for Chips Act dollars and getting 2 billion in subsidies for the Ohio fabs. Priceless.

Sadly, our president is not in any way qualified for the job as is our vice president. He has proven inept at best at allocating resources. It is up to the tech sector to provide the best products, tools, and solutions to the pressing challenges before us Many of our greatest products out of the tech sector are despite the government, not because of it. Now private companies are doing better than the government at a fraction of the cost, as the space race, which uses a whole host of technologies is proving by delivering better results at a fraction of the cost. It is time to do everything we can to eliminate barriers to new technologies entering the marketplace. The money spent in Viet Nam, Syria, Iraq, and Afghanistan would have been far better spent on developing low cost education and training on a worldwide scale to the benefit of all. In education and training, the tech sector has been and has proven the best in this area. The tech sector is all about improving processes at a rate and scale once thought unimaginable.

 

[tooLongInEDA]

Sadly, our president is not in any way qualified for the job as is our vice president. He has proven inept at best at allocating resources. It is up to the tech sector to provide the best products, tools, and solutions to the pressing challenges before us Many of our greatest products out of the tech sector are despite the government, not because of it. Now private companies are doing better than the government at a fraction of the cost, as the space race, which uses a whole host of technologies is proving by delivering better results at a fraction of the cost. It is time to do everything we can to eliminate barriers to new technologies entering the marketplace. The money spent in Viet Nam, Syria, Iraq, and Afghanistan would have been far better spent on developing low cost education and training on a worldwide scale to the benefit of all. In education and training, the tech sector has been and has proven the best in this area. The tech sector is all about improving processes at a rate and scale once thought unimaginable.

An excellent point - what could have been done with the money spent on the wars.

 

[lilo777]

We have been over this many times. Do we really need to go over it again and againg? I believe you mentioned before that you own TSMC shares. And now you want US Government do the same? As I said before, US Government does not invest for profits (they have a money press for this), they invest for security and prosperity of its people. Investing in Taiwan does not fit their charter.

 

[fansink]

We have been over this many times. Do we really need to go over it again and againg? I believe you mentioned before that you own TSMC shares. And now you want US Government do the same? As I said before, US Government does not invest for profits (they have a money press for this), they invest for security and prosperity of its people. Investing in Taiwan does not fit their charter.

lilo777, since it’s undeniably obvious, that TSMC fabs in US have much greater probability of providing security and prosperity for the US, than the admittedly failing Intel, your comments are suspect.

Additionally, Investing in TSMC (TSM) is independent of such probability.

 

[fansink]

As a full time investor, you invest in winners and stay away from losers, especially losers that have been going downhill. Biden should be putting money into TSM building US fabs with their proven track record on finances and integrity. Gelsinger of Intel may or may not become a great executive, but he is still unproven, although he seems to have a decent, but not a great plan for a turnaround. TSM is a beyond proven winner with a financial and performance record that is unmatched, combined with a level of integrity that is far beyond their competition. Going with third best, behind Samsung and TSM makes no sense as at best, they are several years away from being truly competitive at the top end at best, in an area that moves forward at lightning speed. Wasting resources and time in a world desperately facing many environmental, economic and social challenges is not only wrong but a sign of gross incompetence. A true world leader will seek the best solutions, no matter where they come from. This is not only a wise decision but one that shows we are truly a world power that seeks collaboration and cooperation over conflict.

Shame on you? Arthur Hanson, for wanting the US to invest in winners, like TSMC, as opposed to investing in losers like Intel. Just because Intel may be a loser to TSMC, doesn’t mean they’re losers to everyone. Sometimes, not often, the losers, like Intel, with a helping hand out, may become less of a loser.

 

[lilo777]

lilo777, since it’s undeniably obvious, that TSMC fabs in US have much greater probability of providing security and prosperity for the US, than the admittedly failing Intel, your comments are suspect.

Additionally, Investing in TSMC (TSM) is independent of such probability.

FABs are important for country security but so is its R&D capabilities. "Investing" in TSMC does not address the latter. And R&D is just as (if not more) important than the FABs. So it has to be an American company(ies). And here are a few other relevant points:
* Taiwan is going to unite with China sooner or later. In fact, according to official US position (confirmed just a few hours ago) Taiwan is part of China.
* There are countries that invest in foreign companies via their sovereign funds. US dooes not have such fund. That’s the luxury that only countries with budget proficits can afford.
* The political reality is that any US government that invests in a foreign company over a domestic one is going to be sent packing in no time.

So, Biden would be wise to invest in TSMC over Intel but only when it comes to his own money but not the taxpayer's money.

 

[tooLongInEDA]

FABs are important for country security but so is its R&D capabilities. "Investing" in TSMC does not address the latter. And R&D is just as (if not more) important than the FABs. So it has to be an American company(ies). And here are a few other relevant points:
* Taiwan is going to unite with China sooner or later. In fact, according to official US position (confirmed just a few hours ago) Taiwan is part of China.
* There are countries that invest in foreign companies via their sovereign funds. US dooes not have such fund. That’s the luxury that only countries with budget proficits can afford.
* The political reality is that any US government that invests in a foreign company over a domestic one is going to be sent packing in no time.

So, Biden would be wise to invest into TSMC over Intel but only when it comes to his own money but not the taxpayer's money.

The Americans have been voting - knowingly or otherwise - for governments which favoured technology growth in Taiwan, China and South Korea for the last 20 years, so I would dispute your "will be sent packing" point. Not at all certain.

Secondly, TSMC arguably supports as many - if not more - US R&D jobs through the fabless companies it serves as there are in Intel in the US. TSMC arguably delivers lower prices and more competition than Intel can. You're portraying this as a simple zero sum game. It isn't.

Thirdly, isn't it individual US states and not the national government who are "helping" with the TSMC fab in Arizona ?

Separately it occurs to me that a lot of US influence on technology and where investment goes is based on their ability to enforce their export control laws around the world. This has gone unquestioned for the last 50 years. And allowed them to shut down HiSilicon at the stroke of a pen. But it is less certain how long this can continue in a world with declining US economic power and political authority. Who know whether as China develops they may try to introduce a similar policy ?

 

[fansink]

FABs are important for country security but so is its R&D capabilities. "Investing" in TSMC does not address the latter. And R&D is just as (if not more) important than the FABs. So it has to be an American company(ies). And here are a few other relevant points:
* Taiwan is going to unite with China sooner or later. In fact, according to official US position (confirmed just a few hours ago) Taiwan is part of China.
* There are countries that invest in foreign companies via their sovereign funds. US dooes not have such fund. That’s the luxury that only countries with budget proficits can afford.
* The political reality is that any US government that invests in a foreign company over a domestic one is going to be sent packing in no time.

So, Biden would be wise to invest in TSMC over Intel but only when it comes to his own money but not the taxpayer's money.

TSMC is likely responsible for more R&D revenue in the US than Intel, so again, your comments are highly suspect, and suddenly weighted towards China, suspiciously.

Further, you now seem more concerned with political optics than with US security and prosperity of its citizens.

 

[lilo777]

The Americans have been voting - knowingly or otherwise - for governments which favoured technology growth in Taiwan, China and South Korea for the last 20 years, so I would dispute your "will be sent packing" point. Not at all certain.

Secondly, TSMC arguably supports as many - if not more - US R&D jobs through the fabless companies it serves as there are in Intel in the US. TSMC arguably delivers lower prices and more competition than Intel can. You're portraying this as a simple zero sum game. It isn't.

Thirdly, isn't it individual US states and not the national government who are "helping" with the TSMC fab in Arizona ?

Separately it occurs to me that a lot of US influence on technology and where investment goes is based on their ability to enforce their export control laws around the world. This has gone unquestioned for the last 50 years. And allowed them to shut down HiSilicon at the stroke of a pen. But it is less certain how long this can continue in a world with declining US economic power and political authority. Who know whether as China develops they may try to introduce a similar policy ?

I am not sure what you are talking about. How much money did US government give to China, Taiwan and South Korea for, basically, anything? Of course US "supports" technology growth everywhere (until it starts threatening US superiority as was the case with 5G and China - then the approach chanes drastically.
TSMC supporting some US R&D jobs is not the same as US having their own R&D capable of developing leading edge silicon processes.
We have to clearly separate the conventional meaning of "investment" (as in investing capital for profits) from the "investment" by the government. The latter has very little (if anything) to do with the former. It's more similar to "investing" into human capital where you "invest" but you don't get any profits (in monetary terms).

Also, if US wanted just to get TSMC FABs in the US, the government could do it without paying anything. They could apply political pressure, impose import tariffs or do any number of other things. In fact they already forced TSMC to build a FAB in Arizona and they did not pay a cent.

It sounds like some people are arguing to turn US into Taiwan's manufacturing base, similarly to how US are using China. I see why Taiwan could be interested in this but why would US be?

 

[lilo777]

TSMC is likely responsible for more R&D revenue in the US than Intel, so again, your comments are highly suspect, and suddenly weighted towards China, suspiciously.

Further, you now seem more concerned with political optics than with US security and prosperity of its citizens.

I am not concerned with political optics. I just mentioned the political reality which explains why US government is doing what it is doing. Expecting them to act differently is just naive.

 

[fansink]

government is doing what it is doing. Expecting them to act differently is just naive.

What has the government been doing that has you suddenly interjecting foreign policy, politics, and naivety?

 

[lilo777]

What has the government been doing that has you suddenly interjecting foreign policy, politics, and naivety?

The government is working on the CHIPS act that is expected to be voted for in the congress and signed by Biden shortly. This is not much different from US Government bailing out US car manufacturers but not the foreign ones. CHIPS act being developed by government and approved by congress obviously involves politics. The reasoning for this act stems from foreign policy. I am not sure why you are saying that I was the one who interjected them into conversation. To exclude them from this conversation would indeed be naive in my opinion.

Does anyone here (including Arthur) seriously believe that there is even remote possibility that the congress may vote for and Biden approve CHIPS act that would allocate money for TSMC but not for Intel, Global Foundries, Micron and Texas Insruments (in whatever combination)? And if nobody believes that then what exactly are we disussing?

 

[fansink]

As a full time investor, you invest in winners and stay away from losers, especially losers that have been going downhill. Biden should be putting money into TSM building US fabs with their proven track record on finances and integrity. Gelsinger of Intel may or may not become a great executive, but he is still unproven, although he seems to have a decent, but not a great plan for a turnaround. TSM is a beyond proven winner with a financial and performance record that is unmatched, combined with a level of integrity that is far beyond their competition. Going with third best, behind Samsung and TSM makes no sense as at best, they are several years away from being truly competitive at the top end at best, in an area that moves forward at lightning speed. Wasting resources and time in a world desperately facing many environmental, economic and social challenges is not only wrong but a sign of gross incompetence. A true world leader will seek the best solutions, no matter where they come from. This is not only a wise decision but one that shows we are truly a world power that seeks collaboration and cooperation over conflict.

Not putting words in other’s mouths, but I believe ~everyone agrees that the intelligent way to divide the CHIPS Act pie, is to proportionately invest in those companies having the greatest probability of successfully reaching the US’s goals.

We can debate the proportionality amounts, but not the proportionality logic.

I think the proportion should be heavily weighed to the companies worldwide share of advanced node production.

 

[scottyouminlin@gmail.com]

* Taiwan is going to unite with China sooner or later. In fact, according to official US position (confirmed just a few hours ago) Taiwan is part of China.

This is definitely not true, you may have misconceptions on how democratic system running in Taiwan.

 

[jms_embedded]

Not putting words in other’s mouths, but I believe ~everyone agrees that the intelligent way to divide the CHIPS Act pie, is to proportionately invest in those companies having the greatest probability of successfully reaching the US’s goals.

We can debate the proportionality amounts, but not the proportionality logic.

No thanks. I'd rather a big chunk of it go to universities for targeted research, or DARPA-style / X-Prize-style efforts to solve key problems without placing any restrictions on who is most likely able to solve them. Because nobody knows who is most likely to solve them; maybe it's some small startup.

And what are the US "goals" in the semiconductor industry? Goals for what? Building fabs? Building fab equipment? Improving packaging technology? Redesigning key circuit elements to take up less silicon area by improving compatibility with smaller process geometries? Improving EDA tools? Creating economic incentives for supply chain resilience?