You are currently viewing SemiWiki as a guest which gives you limited access to the site. To view blog comments and experience other SemiWiki features you must be a registered member. Registration is fast, simple, and absolutely free so please, join our community today!
Whenever the US government has a bail out or offers capital, it should take proportional ownership. All free handouts do is encourage further waste, inefficiency and even fraud in some cases. The government has done this in the past and it worked out well for the government even made money on the investments. Handing out free money leads to perpetuating failure. I have no problem with the US supporting Intel, but it should be in exchange for shares. This imposes discipline on any transaction on both parties towards being successful instead of a straight give away with no penalties for failure. If the taxpayer ultimately takes the risk, they should also get the reward. I have no problem with supporting Intel, but not giving them a free lunch. The taxpayer deserves to get a significant number of Intel shares with a risk premium based on Intel's record. All free lunches do is to perpetuate failure and punish the hard working who pay for the free lunch or subsidy.
I totally agree with the logic against "free money", but I think federal stakes in private business creates it's own share of issues as well. Just thinking about it for a second, how would they go about purchasing these shares? straight from intel and diluting the stock more? If the government assumes large stakes in Intel (assuming Intel gets just a fraction of the $52 billion from the CHIPS act) then you have to worry about conflicts of interest as well. Also you seem to say that the taxpayer will reap benefits from this, but how? Would we receive some of the gains from dividends or capital gains?
In conclusion, I totally agree that letting the government give our money away is inefficient and painful to watch as a taxpayer. However, there are a myriad of complications with providing funding in the form of taking equity in the company. I do not have the answer for any of these questions and as a wise man once told me, "criticism without offering any alternative solutions is just b***hing", genuinely curious about any possible solutions to these potential issues though.
"Handing out free money leads to perpetuating failure". Why do you use this language to describe Intel? Is not Intel by far the most profitable American semiconductor company? It's not clear to me who needs each other more: US government or Intel? I am pretty sure that Intel would be able to raise capital elsewhere if the wanted to. Why would they prefer to get it from the government (with much more strings attached)?
"Handing out free money leads to perpetuating failure". Why do you use this language to describe Intel? Is not Intel by far the most profitable American semiconductor company? It's not clear to me who needs each other more: US government or Intel? I am pretty sure that Intel would be able to raise capital elsewhere if the wanted to. Why would they prefer to get it from the government (with much more strings attached"
I think at this point Intel getting capital from the government is the method with the least "strings attached". The question is should the funding be distributed in a manner that allows for more accountability and efficiency in the allocation of funding. While Intel might not be the best case of receiving GOVT money and using it inefficiently, recent American history is littered with examples of how free money is not allocated as efficiently as money with more :strings attached.
I think at this point Intel getting capital from the government is the method with the least "strings attached". The question is should the funding be distributed in a manner that allows for more accountability and efficiency in the allocation of funding. While Intel might not be the best case of receiving GOVT money and using it inefficiently, recent American history is littered with examples of how free money is not allocated as efficiently as money with more :strings attached.
I agree that free money should come with conditions. But if the government were to get an equity in return AND impose the conditions would Intel be interested in such deal?
Are there specific references to the CHIPS Act which support OP's concerns? If not, I don't think this is a relevant discussion.
In the abstract, it's a debate with little consequences. I don't like the fact that the US federal government gives out large subsidies / tax breaks / contracts to numerous companies for programs that I dislike far more than any concerns I have about semiconductor funding. Fossil fuel subsidies and ethanol subsidies and contracts to build an expensive border wall come to mind.
Let the numbers talk, look at sales growth, net profit and figures on management's effectiveness in use of capital. All these figures speak for themselves and are independently audited. These are among the key figures that any investor, individual, fund or government should look at. Long term effective use of capital is everything in the benefit to any organization and society it resides in and the world in general. Waste and inefficiency benefit no one. Resources can only be spent once and in the real world there are no "Do Overs". Not making companies, governments or individuals accountable is a first step down a steep slope. Any help must include a financial structure that demands accountability and return on equity is the proven form that has made this country great.
Let the numbers talk, look at sales growth, net profit and figures on management's effectiveness in use of capital. All these figures speak for themselves and are independently audited. These are among the key figures that any investor, individual, fund or government should look at. Long term effective use of capital is everything in the benefit to any organization and society it resides in and the world in general. Waste and inefficiency benefit no one. Resources can only be spent once and in the real world there are no "Do Overs". Not making companies, governments or individuals accountable is a first step down a steep slope. Any help must include a financial structure that demands accountability and return on equity is the proven form that has made this country great.
Let the numbers talk, look at sales growth, net profit and figures on management's effectiveness in use of capital. All these figures speak for themselves and are independently audited. These are among the key figures that any investor, individual, fund or government should look at. Long term effective use of capital is everything in the benefit to any organization and society it resides in and the world in general. Waste and inefficiency benefit no one. Resources can only be spent once and in the real world there are no "Do Overs". Not making companies, governments or individuals accountable is a first step down a steep slope. Any help must include a financial structure that demands accountability and return on equity is the proven form that has made this country great.
You think of government as an investor which they are not. If they were and they were looking into all the things you mentioned, they might have been better off by investing in the likes of Lululemon than in semiconductor companies.
Money with out dicipline ends up pure waste in most cases. The more dicipline the lest waste and better return. Money given without conditions or equity is not investing, it's gambling. There is always risk, I have lost substantial money in invidual investments, sometimes temporarily, sometimes permanantly, but I don't go in blindly with no research or conditions that must be met. I expect the government that takes my money in taxes to treat it the same way. If the government says its an investment manke sure it is structured as an investment, when the government doesn't do this, most so called investments are either boondoggles or a waste of money.
Money with out dicipline ends up pure waste in most cases. The more dicipline the lest waste and better return. Money given without conditions or equity is not investing, it's gambling. There is always risk, I have lost substantial money in invidual investments, sometimes temporarily, sometimes permanantly, but I don't go in blindly with no research or conditions that must be met. I expect the government that takes my money in taxes to treat it the same way. If the government says its an investment manke sure it is structured as an investment, when the government doesn't do this, most so called investments are either boondoggles or a waste of money.
Could be wrong about this... but I would argue that the Govt has never treated taxpayer money in the way we would like it to be treated. IE constantly wasting/inefficiently spending money, this is what happens when a organization has zero real world accountability. As much as I would love for the Govt to use our money wisely, I have a feeling the funding granted in the CHIPS act will be, as you put it, gambling.
