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Let’s rebuild the US microchip industry – not give it a $50bn-plus check

Bernie raises good points. Yet I'd split some hairs with his thesis. We have lost many of the foundry jobs to overseas foundries for a number of reasons. Some were good. In other cases, our big chips foundries got muddled. Intel was the global leader in process and lost it, regardless of where they put their foundries. Conversely, not mentioned by Bernie, is the stellar growth in high paying chip design and design tool jobs in the US. In other words, what has happened in chip making mirrors what has happened in many other industries - The US outsources the manufacturing and expands in the high value design, IP creation, branding, etc. endeavors.

Even TSMC, who operate a foundry in Oregon, say the costs are much higher than in Taiwan. No doubt TSMC will continue to operate foundries in the US for political reasons and for geo diversity. Note also TSMC got a lot of local Taiwanese government funding in the earliest days, based on Morris' vision. That's smart, investing in a brilliant vision rather than our approach reacting to a problem. Bernie is still reacting.
 
US Agriculture is in some ways the socialist utopia of effective government planning. They pay farmers not to produce and we still produce so much corn that most of it can be devoted to ethanol production and there’s still plenty of corn left for livestock and other uses. The effect of government incentives and interference is a heathy, competitive industry.

I think they think the CHIPS act can do for semiconductors what the Department of Agriculture did for agriculture. They are wrong.

US agriculture has the right geography, with water, flat land with good soils, fertilizers, cash crops, and a network of rivers to use for transport. Our competitors lack some or all of these advantages. So it’s a can’t lose situation. The subsidies and incentives are essentially cherries on top.

Whereas with semiconductors, the US is like a wounded person who might live or die. The source of the wounds are hard to find and the bullets hard to extract. The government doesn’t have a diagnosis, no surgery kit. Just money.

So Bernie is right, I think, but being right is insufficient. What’s missing is a strategy. What strengths will CHIPS act build on? What weaknesses will it reduce? Nothing is wagered with this act, and nothing will be gained.
 
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benb said:
US Agriculture is in some ways the socialist utopia of effective government planning. They pay farmers not to produce and we still produce so much corn that most of it can be devoted to ethanol production and there’s still plenty of corn left for livestock and other uses. The effect of government incentives and interference is a heathy, competitive industry.

I think they think the CHIPS act can do for semiconductors what the Department of Agriculture did for agriculture. They are wrong.

US agriculture has the right geography, with water, flat land with good soils, fertilizers, cash crops, and a network of rivers to use for transport. Our competitors lack some or all of these advantages. So it’s a can’t lose situation. The subsidies and incentives are essentially cherries on top.

Whereas with semiconductors, the US is like a wounded person who might live or die. The source of the wounds are hard to find and the bullets hard to extract. The government doesn’t have a diagnosis, no surgery kit. Just money.

So Bernie is right, I think, but being right is insufficient. What’s missing is a strategy. What strengths will CHIPS act build on? What weaknesses will it reduce? Nothing is wagered with this act, and nothing will be gained.
Click to expand...
Excellent points. Thanks. Indeed 'being right' is the challenge. Being right or wrong doesn't apply to any complex issue. Most right and wrong notions derive from ideology or religion, in other words preconceived ideas, not from facts. Whether its the left or the right, advocates cherry pick facts to support their position. In the case of CHIPS, I cannot imaging how we can get the right talent into the government admin and regulation of the CHIPS act. Industry will pay up big time to get the best talent.
 
Ah, good question. Yes, I took the easy way out to find fault with others. Again, I'll take the easy way out and discuss the industry as a whole. The answer is "it ain't broke, don't fix it". The US semi industry, and really the whole tech industry constantly re-invents itself, creating new winners and losers. While that statement is cliche, it serves to guide polity, regulation, and government involvement. (Disclaimer I'm politically centrist and NOT against the role of government. Witness James Webb telescope where our government led an international team. Hats off to all.) Now to answer your question more directly: Do we seek to secure (as is no spy-ware, and no supply interruptions) the chips needed for military equipment? Or do we need to make sure Detroit keeps their factories running and people employed? We may debate these goals. And we may debate specific remedies. So if I held elected office, I would ask the stakeholders to come up with their specifics needs and requests, and then evaluate. BTW: Companies like Apple, Google, Microsoft, NVIDIA, Qualcomm, AMD, Tesla and even Intel and Meta are busily designing (not making) chips and then building massive wealth creation companies with high paying jobs and platforms that create wealth for millions of 3rd parties. Apple, as one example, has 23 million developers world wide. YouTube has created millionaires. Yes, with this wealth creation comes income inequality. But that is another topic.
 
@hist78, thanks for the link. I'm not happy that Intel threatened to pull out of the Ohio plant investment and that Intel is getting the lion's share of these government programs. It seems the thinking (or rather reacting) here is fear based - OMG china; OMG auto plants shutdown; maybe OMG votes in a swing state. Fear does not generate good decisions or investments.
 
www.cnbc.com

U.S. chip industry split over CHIPS act benefits to Intel

Several U.S. semiconductor firms are deliberating whether to oppose a package of chip industry subsidies.
www.cnbc.com www.cnbc.com

If Intel does get the $30 billion subsidies (the possible maximum amount speculated in the article), those Intel's US competitors are mistreated by the government badly. There are so much more innovations and hard work in the US semiconductor industry are done by those Intel's peers and competitors. It will be bad for the future of US semiconductor industry.
 
Ugh! $30B is too much money to invested wisely. These investments can only work: 1) With the world's best talent; 2) Over a number of years. A large number, $30B, puts us in the Dilbert zone. Talent and fiscal responsibility fall by the wayside.
 
www.politico.com

Intel, others seek weaker China rules in chips bill

Chipmaking giant Intel and its peers have been pressing lawmakers to not constrain their business in China as they authorize billions of dollars in subsidies for the firms to produce computer chips in the United States.
www.politico.com www.politico.com

Intel and Pat Gelsinger want not only to get free taxpayers money, up to $30 billion, but also the freedom to move money to China for whatever it sees a good fit.

It's very ugly. I can't believe it.
 
hist78 said:
Will this heavily Intel oriented Chips Act and the subsidies strategy actually punish innovation and discriminate against those well managed companies?

Click to expand...
Well, I am not sure "well managed" actually applies to those companies. They successfully managed to run US semiconductor manufacturing to the ground which is the reason the government came up with the CHIPS act idea. It is clear why the government is looking at manufacturing as a priority (US semiconductor design is doing fine). It is also clear why Nvidia and AMD might not be happy about it. I am sure the lobbyists are enjoying the situation.
 
hist78 said:
www.politico.com

Intel, others seek weaker China rules in chips bill

Chipmaking giant Intel and its peers have been pressing lawmakers to not constrain their business in China as they authorize billions of dollars in subsidies for the firms to produce computer chips in the United States.
www.politico.com www.politico.com

Intel and Pat Gelsinger want not only to get free taxpayers money, up to $30 billion, but also the freedom to move money to China for whatever it sees a good fit.

It's very ugly. I can't believe it.
Click to expand...
This might be a mischaracterization on your part. The article says that the companies are trying to avoid new constraints on their activity in China. It does not say that they want to be able to use the government funds in China (I am pretty sure those will have to be spent in US).
 
hist78 said:
To @benb and @Fred Stein,

If you were the Congressman, Senator, or US President, what would you like to do with the US semiconductor manufacturing and the industry as a whole?
Click to expand...

The semiconductor ecosystem is worldwide and very complex. We all depend on each other. Thinking that bringing semiconductor manufacturing (fabs) to a specific country is going to solve geopolitical supply problems is absurd. What you will have is empty fabs like China does and they have spent hundreds of billions of yuan trying to solve address this problem.

www.yahoo.com

China corruption: Executive who oversaw main semiconductor industry fund under investigation

The former chief executive at the company that manages China's main semiconductor industry investment fund has been put under investigation by the Central Commission for Discipline Inspection (CCDI), the country's top anti-corruption watchdog. The investigation of Lu Jun, who stepped down as...
www.yahoo.com www.yahoo.com

I can assure you that once we have overcapacity, which is the natural course of business, it will be MUCH harder to get Federal funds to support those half filled fabs. And what about the rest of the semiconductor ecosystem? Do they also get money from the CHIPs Act? How about the companies who compete with the big CHIP Act winners? The lawyers will win once again.
 
lilo777 said:
Well, I am not sure "well managed" actually applies to those companies. They successfully managed to run US semiconductor manufacturing to the ground which is the reason the government came up with the CHIPS act idea. It is clear why the government is looking at manufacturing as a priority (US semiconductor design is doing fine). It is also clear why Nvidia and AMD might not be happy about it. I am sure the lobbyists are enjoying the situation.
Click to expand...

You forgot a lot amazing American companies who brought many amazing semiconductor products to the market. Many of them are Intel's competitors, such as AMD, Qualcomm, Nvidia, and Ampere Computing to name a few.
 
hist78 said:
You forgot a lot amazing American companies who brought many amazing semiconductor products to the market. Many of them are Intel's competitors, such as AMD, Qualcomm, Nvidia, and Ampere Computing to name a few.
Click to expand...
I did not forget anything. These amazing companies would quickly become much less amazing should China and Taiwan re-unite (one way or another). That's the eventuality US government is trying to address. Technologically advanced nations must have semiconductor tech development and manufacturing capabilities and US have been losing their edge in this field gradually over the recent decades. Giving funds to AMD, Qualcomm etc. is not going to change anything in that respect (although, as we learned there is another version of CHIPS act or another act that might offer funds to chip design companies as well).
 
lilo777 said:
This might be a mischaracterization on your part. The article says that the companies are trying to avoid new constraints on their activity in China. It does not say that they want to be able to use the government funds in China (I am pretty sure those will have to be spent in US).
Click to expand...

Assume Intel has $15 billion capital prepared for its Ohio fab project. If Intel receives $6 billion from US government, Intel will have $6 billion saved in the bank or somewhere and ready to use it for other projects.

Are those $6 billion saved Intel's own money. In a way, it is. But without my fellow US taxpayers' donations, Intel won't have those $6 billion extra hanging around and available to invest more in manufacturing in China.

Intel can't keep portraying itself as a patriotic company but want to have the freedom to invest in China while taking taxpayers' money.

Does Intel really think people are so naive to forget China and its aggression is one of the major reasons why we are having CHIPS Act and the serious discussion on domestic semiconductor manufacturing?

As a taxpayer, my exception is very simple: Intel can taken $10 ~ $30 billion taxpayers' money but must allow US to review its China investment. Otherwise Intel can do more in China as it wants, but don't take a penny from US taxpayers.
 
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hist78 said:
Assume Intel has $15 billion capital prepared for its Ohio fab project. If Intel receives $6 billion from US government, Intel will have $6 billion saved in the bank or somewhere and ready to use it for other projects.

Are those $6 billion saved Intel's own money. In a way, it is. But without my fellow US taxpayers' donations, Intel won't have those $6 billion extra hanging around and available to invest more in manufacturing in China.

Intel can't keep portraying itself as a patriotic company but want to have the freedom to invest in China while taking taxpayers' money.

Does Intel really think people are so naive to forget China and its aggression is one of the major reasons why we are having CHIPS Act and the serious discussion on domestic semiconductor manufacturing?

As a taxpayer, my exception is very simple: Intel can taken $10 ~ $30 billion taxpayers' money but must allow US to review its China investment. Otherwise Intel can do more in China as it wants, but don't take a penny from US taxpayers.
Click to expand...
As a taxpayer, are you sure you want to limit Intel investments in China? Foreign companies (Samsung, TSMC) do not have such restrictions and they may take advantage of this. And in fact they do: TSMC and its peers from Taiwan have invested an incredible 16 trillion Yen (US$119 billion) across 20 new factories, massively bolstering China’s semiconductor industry. It looks like TSMC is being much less "patriotic" than Intel. Could this explain their success? As a taxpayer, you may find youself in a position where you have to pony up even more money for Intel to compensate them for artificially limiting their competitiveness. That said, it is almost inevitable that US government is going to follow the path of China containment.
 
Simple solution, do you back a company that lost its lead and can't gain it back or one that has gone straight up? I'd rather back a company that continues to win rather than a leader that lost its way?
 
lilo777 said:
I did not forget anything. These amazing companies would quickly become much less amazing should China and Taiwan re-unite (one way or another). That's the eventuality US government is trying to address. Technologically advanced nations must have semiconductor tech development and manufacturing capabilities and US have been losing their edge in this field gradually over the recent decades. Giving funds to AMD, Qualcomm etc. is not going to change anything in that respect (although, as we learned there is another version of CHIPS act or another act that might offer funds to chip design companies as well).
Click to expand...

I can assure you that many semiconductor companies will be continuously doing amazing work and releasing amazing products using their own in-house fabs or TSMC, Samsung, or Globalfoundries' foundry services, either in US or somewhere in the world.

Without those fabless companies, we won't have the semiconductor advancement we are getting benefits from today.

In terms China taking over Taiwan, I can also assure it won't happen.
 
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