Tech giants join call for funding U.S. chip production(reuters.com)
reuters.com
Tech giants join call for funding U.S. chip production
https://www.reuters.com/article/usa-semiconductors-idUSL1N2MX2MK
300 コメント
If the US tax payer gets a significant stake in the chip fab venture, I would be OK with this. We want to secure national security via chip manufacturing and you want billions of dollars? Give us some upside.
I don't want to hear it creates jobs, it generates blah blah blah, a real equity stake and possibly repayment of the capital. Creating jobs should be a happy by-product of subsidizing an industry that is probably more well capitalized than any other in existence.
According to (https://startupanz.com/5-tech-giants-hold-588b-cash-reserves...) Amazon, Apple, Google, and Microsoft had 526 billion dollars between the four of them in cash reserves. They have over half a TRILLION dollars in cash. If this were life or death, they could afford anything.
But the calculus is offload risk onto the tax payer (despite being a shareholder directly in all those companies or indirectly via mutual funds/etfs), I don't want to be left holding the bag with no upside beyond the general sentiment of 'national security was secured' while private companies reap all the benefits.
I don't want to hear it creates jobs, it generates blah blah blah, a real equity stake and possibly repayment of the capital. Creating jobs should be a happy by-product of subsidizing an industry that is probably more well capitalized than any other in existence.
According to (https://startupanz.com/5-tech-giants-hold-588b-cash-reserves...) Amazon, Apple, Google, and Microsoft had 526 billion dollars between the four of them in cash reserves. They have over half a TRILLION dollars in cash. If this were life or death, they could afford anything.
But the calculus is offload risk onto the tax payer (despite being a shareholder directly in all those companies or indirectly via mutual funds/etfs), I don't want to be left holding the bag with no upside beyond the general sentiment of 'national security was secured' while private companies reap all the benefits.
Government subsidies protecting industries rarely pay off in a peaceful world to the entire country. I personally get nothing out of Chevron getting tax breaks. However, if those incentives meant supply was harder to disrupt, and in a war time the country has better access to fuel, then it does seem like a worthwhile trade off.
In this case, the risk is that China literally takes over (one way or another) the vast majority of supply of semiconductors to specifically harm western companies (or countries in a war setting). In that scenario, are you still worried about unequal kick backs or are you happy that the nation has access to the chips it needs for industry and defense?
In this case, the risk is that China literally takes over (one way or another) the vast majority of supply of semiconductors to specifically harm western companies (or countries in a war setting). In that scenario, are you still worried about unequal kick backs or are you happy that the nation has access to the chips it needs for industry and defense?
The ones who should be very worried and willing to pay for this "protection" are exactly the huge companies that have a lot in stake. It is completely absurd that they still want to reach for the taxpayer to pay for protecting their monopolies.
The country too has a stake here, and one that's perhaps even larger.
In a war scenario with China it doesn't matter since no chips produced under the war will be used.
The risk isn’t war between China and the US, but China and Taiwan, which China has 100% chance of winning. That then makes the the US extremely dependent on China for semiconductor supply.
You’re making the assumption that the U.S. would just let China attack Taiwan unchallenged. There’s an enormous risk of war between China and the U.S., if China invaded Taiwan.
10 years ago I would agree without challenge that the US would defend Taiwan if necessary. Less sure about that these days.
Even if we would go to war, its probably a war we would prefer not to have to fight even if the weapons used stay conventional. It's the kind of situation that changes the course of history in a big way for the loser.
Nobody wants to be the Spanish after the defeat of the Armada of the 21st century.
Even if we would go to war, its probably a war we would prefer not to have to fight even if the weapons used stay conventional. It's the kind of situation that changes the course of history in a big way for the loser.
Nobody wants to be the Spanish after the defeat of the Armada of the 21st century.
US world order centres around its word.
If allies can't depend on US to defend them then it opens up all sorts of possibilities none of which are in the best interests of the US or those that value democracy.
For example closest allies like Australia for example would have no choice but to capitulate and bow down to China's whims. This would include ending the Five Eyes security arrangement and allowing Huawei to operate the 5G backbone infrastructure.
If allies can't depend on US to defend them then it opens up all sorts of possibilities none of which are in the best interests of the US or those that value democracy.
For example closest allies like Australia for example would have no choice but to capitulate and bow down to China's whims. This would include ending the Five Eyes security arrangement and allowing Huawei to operate the 5G backbone infrastructure.
> US world order centres around its word.
Crimea begs to differ...
Crimea begs to differ...
The idea that China has a 100% chance of winning is laughable and plain wrong.
There are so many dynamics involved e.g. Japan needing to defend the Senkaku Islands, India, UK and EU member states being involved and the fact that you an increasingly united front within APAC.
Also China's military is a lot of smoke and mirrors. They simply can't match the F-22 and F-35 in the air or the Ford class aircraft carriers in the sea. And US is looking to build a missile defence system on Guam to prevent long range attacks.
There are simply too many factors in play to give any percentage of winning.
There are so many dynamics involved e.g. Japan needing to defend the Senkaku Islands, India, UK and EU member states being involved and the fact that you an increasingly united front within APAC.
Also China's military is a lot of smoke and mirrors. They simply can't match the F-22 and F-35 in the air or the Ford class aircraft carriers in the sea. And US is looking to build a missile defence system on Guam to prevent long range attacks.
There are simply too many factors in play to give any percentage of winning.
The US hasn't even committed to defending Taiwan. I doubt the US would militarily intervene. The risk of escalation is too high. If China is committed to taking it, they will get it. The response would be economic, and I'm not confident enough of the world cares, or isn't already beholden to China for it to matter.
>Ford class aircraft carriers
Isn't there only one Ford class carrier? And it is still not fully ready, and it is in the Atlantic, so at this point is not ready to play a part in any South China Sea conflict.
>Ford class aircraft carriers
Isn't there only one Ford class carrier? And it is still not fully ready, and it is in the Atlantic, so at this point is not ready to play a part in any South China Sea conflict.
At this point there is very little economic sanctions US could impose on China that Trump didn't already either try or talk about. And anything with teeth will never work whilst US companies build everything in China. So for me a short military dispute is more likely.
No one is expecting war this year. There will be 3 Ford Class carriers by 2030 and 5 by 2040. As well as the Nimitz class which are still better than what China has today.
No one is expecting war this year. There will be 3 Ford Class carriers by 2030 and 5 by 2040. As well as the Nimitz class which are still better than what China has today.
China has too much USD denominated debt to last against a protracted trade war.
That's not really true - china uses the USD they own to peg the RMB to enhance their export.
In times of war, this USD debt is going to be a liability for china, since the US can just refuse to repay it (and after all, what else is china going to do about? Declare war again?).
In times of war, this USD debt is going to be a liability for china, since the US can just refuse to repay it (and after all, what else is china going to do about? Declare war again?).
https://www.lynalden.com/global-dollar-short-squeeze/
Kind of explains the problems with China having too much USD debt. Even without times of war.
Kind of explains the problems with China having too much USD debt. Even without times of war.
> At this point there is very little economic sanctions US could impose on China that Trump didn't already either try or talk about. And anything with teeth will never work whilst US companies build everything in China.
This is a contradiction. It leaves open the possibility of sanctions sufficient to induce US companies to stop building everything in China.
In the long term the cost of this is negligible or produces a net benefit. Maybe some things cost more if it would have been cheaper to make them in China, but that isn't necessarily true outside of China's cross-subsidies which you're then still paying for, and even if they do you get the countervailing economic benefit of repatriating some of the production. (It's also plausible that sanctions on China would move production to places like Mexico and Brazil which are still cheaper than the US, but then you're back to no significant long-term cost increase and a benefit from diversifying production.)
The main cost is in the short term, because things would cost more. But they would cost more by the amount of the tariffs. Which go to the government, which it can then give back to the domestic population in various ways. Which could produce a domestic benefit, if China ends up paying any of the tariffs. If there is a $1 import tariff which pays for a $1 tax reduction for the middle class, but the tariff is paid $0.75 by the domestic buyer and $0.25 by the foreign manufacturer, you just transferred $0.25 to the domestic population.
The only way you even get a short-term domestic cost is if manufacturing actually does start moving out of China. Because then you have a $1 tariff which causes people to be willing to pay $0.25 more for a product made in Ohio or Mexico. Which costs you the $0.25 and then you don't get the $1 to offset domestic taxes. But it costs China $5, i.e. the full value of the sale and not just the amount of the tariff or the marginal cost of manufacturing it elsewhere. It costs them more than it costs the US. Which gives the US more negotiating leverage to get whatever concessions they want.
This is a contradiction. It leaves open the possibility of sanctions sufficient to induce US companies to stop building everything in China.
In the long term the cost of this is negligible or produces a net benefit. Maybe some things cost more if it would have been cheaper to make them in China, but that isn't necessarily true outside of China's cross-subsidies which you're then still paying for, and even if they do you get the countervailing economic benefit of repatriating some of the production. (It's also plausible that sanctions on China would move production to places like Mexico and Brazil which are still cheaper than the US, but then you're back to no significant long-term cost increase and a benefit from diversifying production.)
The main cost is in the short term, because things would cost more. But they would cost more by the amount of the tariffs. Which go to the government, which it can then give back to the domestic population in various ways. Which could produce a domestic benefit, if China ends up paying any of the tariffs. If there is a $1 import tariff which pays for a $1 tax reduction for the middle class, but the tariff is paid $0.75 by the domestic buyer and $0.25 by the foreign manufacturer, you just transferred $0.25 to the domestic population.
The only way you even get a short-term domestic cost is if manufacturing actually does start moving out of China. Because then you have a $1 tariff which causes people to be willing to pay $0.25 more for a product made in Ohio or Mexico. Which costs you the $0.25 and then you don't get the $1 to offset domestic taxes. But it costs China $5, i.e. the full value of the sale and not just the amount of the tariff or the marginal cost of manufacturing it elsewhere. It costs them more than it costs the US. Which gives the US more negotiating leverage to get whatever concessions they want.
redis_mlc(1)
Don't make the same mistake of under-estimating China in 2021, that the US made of underestimating Japan in 1941.
To see the mind-set of the US/Europeans in the 1940s, take the time to watch the miniseries "The Singapore Grip". The British in particular were very dismissive of the Japanese. They sent a whole two(!) battleships off to destroy the Japanese invasion fleet. The Japanese polished them off in about an hour and a half. [I see that moment as the point when the whole British Empire died. But it took the British another 15 years to recognise that death.]
To see the mind-set of the US/Europeans in the 1940s, take the time to watch the miniseries "The Singapore Grip". The British in particular were very dismissive of the Japanese. They sent a whole two(!) battleships off to destroy the Japanese invasion fleet. The Japanese polished them off in about an hour and a half. [I see that moment as the point when the whole British Empire died. But it took the British another 15 years to recognise that death.]
China has been testing their recently-deployed DF-21 and DF-26 "aircraft-carrier killer" missiles. They're basically non-nuclear ICBMs that come straight down, from above, a battleship, dead center, at Mach 2+. It's basically a 4,000 mile hole punch for warships. The only reason nobody's really talking about them yet is because they're ambiguously running afoul of the Intermediate-Range Nuclear Forces Treaty, which we're no longer part of. Also, they haven't actually been used in combat. But presumably they have enough to sink our navy twice over, and are shipped in a standard 40' shipping container.
Getting in a naval battle with China may likely someday become "getting in a land war with Russia".
> https://www.scmp.com/news/china/military/article/3098972/chi...
Getting in a naval battle with China may likely someday become "getting in a land war with Russia".
> https://www.scmp.com/news/china/military/article/3098972/chi...
China only has 100% chance of winning in a war with Taiwan if the west and allies do not join.
From some commentaries I read, China has a near 100% chance of winning in war with Taiwan even if US and allies join. This is mostly to do with mainland China's relative proximity to Taiwan and the few relative number of air bases US has on Japan and how far away Hawaii is.
You do know that there is the concept of carrier strike groups which involve you putting a bunch of planes on an aircraft carrier and sailing it to the region. Just like UK's HMS Queen Elizabeth is doing as we speak.
Also there are US air bases in Phillipines, Singapore, South Korea, Australia, Guam etc. This is going to be a regional conflict not just between US and China.
Again. Anyone who says there is a 100% chance of winning is delusional and ignores the history of war on this planet.
Also there are US air bases in Phillipines, Singapore, South Korea, Australia, Guam etc. This is going to be a regional conflict not just between US and China.
Again. Anyone who says there is a 100% chance of winning is delusional and ignores the history of war on this planet.
China's DF-21/DF-26, assuming they work half as good as they're claiming, will likely largely nullify the advantages of carrier strike groups.
Being able to sink any hostile warship within 2000 miles of the Spratly Islands is a significant deterrent to external military intervention in the region.
Being able to sink any hostile warship within 2000 miles of the Spratly Islands is a significant deterrent to external military intervention in the region.
Carriers are dead, thanks to hypersonic missiles. As carriers obsoleted battleships in WWII, hypersonics have obsoleted carriers in the 21st century.
Wars are not single battles. If China were to attack (and capture) Taiwan the war would not just be over. The West could attack mainland China and attempt to retake Taiwan.
Attacking mainland China seems like a great way to end up in a very bad Nuclear conflict.
China declared decades ago that they follow a No First Use policy in regards to nuclear weapons.
Of course, whether that holds true if boots land on their soil, who knows.
Of course, whether that holds true if boots land on their soil, who knows.
declarations are pointless, but the US is unlikely to put boots on land in china. The last Korean war, the US decided not to do it (invade into chinese territory), and china was much weaker back then.
To take Taiwan China will need air supremacy as well as naval supremacy lack of either one will make it close to impossible. Think about what it took to do d day possible and that was a much shorter crossing and the combined resources of the allies with full air and naval supremacy.
This is what I was thinking...
These corporations are the ones whom benefited from exporting the production infrastructure at the expense of the labor market. Now, they want the labor market to fund the redevelopment of the infrastructure for their benefit.
I'm confused as to why the US government needs to be involved capital investment when these companies are boasting historic profit margins.
These corporations are the ones whom benefited from exporting the production infrastructure at the expense of the labor market. Now, they want the labor market to fund the redevelopment of the infrastructure for their benefit.
I'm confused as to why the US government needs to be involved capital investment when these companies are boasting historic profit margins.
I emotionally agree as you are correct and it is infuriating, but on the other hand it is the responsibility of the federal government to protect (subsidize, trade policy), and regulate domestic production of vital goods. Companies exported manufacturing because the government, elected by its citizens, did nothing to stop them. On some level it is very much the tax payer responsible for recalibrating the imbalance even if they aren’t to blame.
>"Companies exported manufacturing because the government, elected by its citizens, did nothing to stop them."
Another way to look at this is to say that other countries are now more appealing places to manufacture certain goods than the USA is. Everything is relative, and other countries have agency too.
Another way to look at this is to say that other countries are now more appealing places to manufacture certain goods than the USA is. Everything is relative, and other countries have agency too.
> Amazon, Apple, Google, and Microsoft had 526 billion dollars between the four of them in cash reserves.
Presumably they would cooperate and do something about it if they saw the current situation as too risky?
Presumably they would cooperate and do something about it if they saw the current situation as too risky?
They are doing something -- forming a lobby group to get the government to pay for it. That's much cheaper than actually paying for it themselves.
It also gets the actual foundry a pretty sharp knife to cut through the pesky red tape/law when they do start looking for prospective sites.
Good point, see: https://marianamazzucato.com/books/the-entrepreneurial-state
I mean, in theory taxes are that significant stake, but of course in practice it doesn't really work like that.
The subsidizing of this should be limited to speeding regulatory reviews. It should at least be economically viable with private capital to have this plant. If not, why not? What's so expensive that you can't open a plant profitably where there is a shortage?
The tax payers need to start demanding something in return for tax money gifts, and bailouts.
These companies move manufacturing overseas because they don't want to pay family members/neighbors a decent wage, or other business incentives like lax polution standards.
Now they want struggling Americas to build them a new cozy home in the country they abandoned. (You know what I mean by abandoned. The last thing the wealthy boys will ever do is move these wealthy executives to these cheaper countries completely.)
I'm at the point---go ahead and give them billions. Give them land. Take off any tariffs. Yes--a complete 180 from my opening sentence.
I feel computer chips are very important, and we do need factories here.
It seems like every few years a big prospering industry takes tax payer money. I'm always hoping they might show a bit of gratitude, but no. We bailed out "big stupid banks" (quote by Jamie Diamond), and the banks just turned around raised fees for everything.
I don't want a lot. Just some compassion with prices. If you sell drugs (Pharmacutical jab) to another counties at a huge discount; give poor/middle class Americas the same deal? Johnson & Johnson were the only drug company that didn't take millions in grants for Covid research. You would think by taking millions in gifts, the manufactoring information would be freely available to any American? (I am so glad they found a vaccine. I am still angry over my prescription price dole out each month.)
Oh yea, I'm not one sided. I felt AOC, and others, took demands to far with Amazon a few years ago.
It's almost like when we do get a say in a private business decision, we go overboard? We are so used to big businesses stepping on us, we over demand?
But yea, I'm completely disenfranchised. Give them money, and incentives.
It will be interesting to see what our inflation rate will be in a few years.
I heard a big wig stock guy say today he is worrying the dollar might not be used as a bench mark in other countries in a few years if we don't stop spending like drunken sailors.
I'm all for spending when it benefits the poor, and middle class. It doesn't seem to ever trickle down.
The homeless encampments are just getting bigger in my county. I see too many frantic people filling up moving vans. Instead of happiness over the opening, I'm seeing a lot of misplaced anger when I go out.
(Sorry about rambling.)
These companies move manufacturing overseas because they don't want to pay family members/neighbors a decent wage, or other business incentives like lax polution standards.
Now they want struggling Americas to build them a new cozy home in the country they abandoned. (You know what I mean by abandoned. The last thing the wealthy boys will ever do is move these wealthy executives to these cheaper countries completely.)
I'm at the point---go ahead and give them billions. Give them land. Take off any tariffs. Yes--a complete 180 from my opening sentence.
I feel computer chips are very important, and we do need factories here.
It seems like every few years a big prospering industry takes tax payer money. I'm always hoping they might show a bit of gratitude, but no. We bailed out "big stupid banks" (quote by Jamie Diamond), and the banks just turned around raised fees for everything.
I don't want a lot. Just some compassion with prices. If you sell drugs (Pharmacutical jab) to another counties at a huge discount; give poor/middle class Americas the same deal? Johnson & Johnson were the only drug company that didn't take millions in grants for Covid research. You would think by taking millions in gifts, the manufactoring information would be freely available to any American? (I am so glad they found a vaccine. I am still angry over my prescription price dole out each month.)
Oh yea, I'm not one sided. I felt AOC, and others, took demands to far with Amazon a few years ago.
It's almost like when we do get a say in a private business decision, we go overboard? We are so used to big businesses stepping on us, we over demand?
But yea, I'm completely disenfranchised. Give them money, and incentives.
It will be interesting to see what our inflation rate will be in a few years.
I heard a big wig stock guy say today he is worrying the dollar might not be used as a bench mark in other countries in a few years if we don't stop spending like drunken sailors.
I'm all for spending when it benefits the poor, and middle class. It doesn't seem to ever trickle down.
The homeless encampments are just getting bigger in my county. I see too many frantic people filling up moving vans. Instead of happiness over the opening, I'm seeing a lot of misplaced anger when I go out.
(Sorry about rambling.)
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up side is similar to what we see with vaccine manufacturing. When we need it, we have access to it. When we don't need it, we can sell it.
With good regulation and unionization this can lead to great wealth distribution in the US along with worldwide economic power.
With good regulation and unionization this can lead to great wealth distribution in the US along with worldwide economic power.
[deleted]
These industries squeezed the blood out of US suppliers to compete on cost. I don't think a correct solution is the government building capacity and supply chains.
IMHO a more sustainable strategy is the government taxing the environmental and human rights externalities of off-shore production.
IMHO a more sustainable strategy is the government taxing the environmental and human rights externalities of off-shore production.
1. I suspect that you don't realize that Taiwan is a (to
many) surprisingly first-world place. "environmental and human rights externalities" is not a very large issue in this context. It's not like mainland China/PRC.
2. I think both e.g. US and EU should have their own chip-manufacturing infrastructure. We need more robustness at a global scale in this area.
3. Taiwan needs (and deserves) US/EU support. TSMC has turned into a geopolitical play - it seems like Taiwan feels like they need it to avoid a PRC invasion.
2. I think both e.g. US and EU should have their own chip-manufacturing infrastructure. We need more robustness at a global scale in this area.
3. Taiwan needs (and deserves) US/EU support. TSMC has turned into a geopolitical play - it seems like Taiwan feels like they need it to avoid a PRC invasion.
Taiwan needs support yes, but the US isn't helping. Poking China by sending warships to patrol its borders makes us the bad guys. If China did what we do we would have WW3 instantly.
The us is navigating international waters that China is trying to claim as theirs in fact they claim territorial waters from all their neighbors international treaties be damned. Thus they are in conflict with everyone around them.
It almost sounds like you are saying that if China sailed ships in international waters it would start a war. They do that all the time, and have been doing so for decades. Did I miss a world war?
Before there is an inevitable response “But, China doesn’t patrol 100km off the coast of US” - yes, also China has no allies with defense treaties near US, ie Mexico and Canada. In fact, China has just one ally - North Korea.
Yes, and this not only because of fiscal reasons, but because it is the ethical thing to do.
It's ethical how? By making rich Americans even richer, and removing one of the few ways developing countries can enter the global market?
If a developing country handled all environmental regulations, etc. there would -still- be a profit to be had, unless shipping winds up negating that profit. Logically speaking a less developed country will still have lower overall wages.
While this means the countries may develop slower, they will likely/hopefully wind up with less concentrated wealth (hiring more workers instead of a few people pocketing all the profits.)
I would hope that such taxes would be used towards environmental or humanitarian efforts, to be a proper 'offset' tax.
Doing so will likely result in some short term shocks, but a more sustainable society overall. My hope is that when prices would go up in such a scenario, consumers would again care about how long something lasts in big enough numbers that we have a less disposable society.
While this means the countries may develop slower, they will likely/hopefully wind up with less concentrated wealth (hiring more workers instead of a few people pocketing all the profits.)
I would hope that such taxes would be used towards environmental or humanitarian efforts, to be a proper 'offset' tax.
Doing so will likely result in some short term shocks, but a more sustainable society overall. My hope is that when prices would go up in such a scenario, consumers would again care about how long something lasts in big enough numbers that we have a less disposable society.
Which “developing” countries are running world class fabs these days? Taiwan and South Korea are definitely first-world countries, as much so as the US.
This type of government/corporate collaboration is similar to how other traditional industries like autos, oil & gas, steel, etc., usually operate. That's because the capital cost of building factories and supply chains exceed the private sector's ability to tolerate the risk of such investments. And a big reason why the risk is so high is because the business is both unpredictable and low margin.
This has never been an issue in the semiconductor industry until now. Demand was always increasing and margins have been high enough to allow them to self-fund. If semiconductor companies now need subsidies to expand then we are probably past the "exponential growth" era of semiconductors. Technological gains will be much slower and much more consistent with traditional industries rather one that what we're use to.
This has never been an issue in the semiconductor industry until now. Demand was always increasing and margins have been high enough to allow them to self-fund. If semiconductor companies now need subsidies to expand then we are probably past the "exponential growth" era of semiconductors. Technological gains will be much slower and much more consistent with traditional industries rather one that what we're use to.
The problem with this governmental intervention is that you can't have it both ways. These companies want the governmetn to step in to hlp them with their problems, but let's take a look - are they going to contribute back once the government has intervened? What are they really proposing, a 20% revenue tax on consumer products that are sold with these new US sourced chips? No. Of course not. God forbid they actually pay taxes to fund the government services they're asking for.
Just to play devil's advocate, what would the world look like had there been massive investment 5-10 years ago? The benefits would probably have been a chip shortage that wasn't and we'd be free to complain about other things.
In this world, obviously, we would be complaining about the government subsidising unprofitable chip factories with billions of tax credits. Since we wouldn't have a chip supply crisis, we wouldn't know what its like to have one :D
Unless they put the fab in Texas and it went offline with all the other fabs in the power outages? Or went bankrupt, like the previous "let's onshore an important piece of high tech" plan, Solyndra?
If it was started 5-10 years ago, would it have survived the change of administrations?
If it was started 5-10 years ago, would it have survived the change of administrations?
I would take a chip shortage over subsidizing them.
> God forbid they actually pay taxes to fund the government services they're asking for.
That unironically makes complete sense.
If they were going to pay taxes to fund the subsidy, why have the subsidy in the first place?
(My conclusion: don't subsidize, don't pick winners and losers.)
That unironically makes complete sense.
If they were going to pay taxes to fund the subsidy, why have the subsidy in the first place?
(My conclusion: don't subsidize, don't pick winners and losers.)
Investments and funding can come in a variety of packages, some better or worse than others. Even something as simple as the government providing or backing loans can go a long way. The Energy Department's loan program has helped speed up investment in solar and has turned a profit- making it easier for production to move to the US doesn't always mean "giving" money away.
I guess my point here is that the devil is in the details, and an organization as large as the US Government has a lot of different options for incentivizing or assisting in starting up new industries.
https://www.csmonitor.com/Business/In-Gear/2016/1017/Solyndr...
I guess my point here is that the devil is in the details, and an organization as large as the US Government has a lot of different options for incentivizing or assisting in starting up new industries.
https://www.csmonitor.com/Business/In-Gear/2016/1017/Solyndr...
It is funny that the US intelligentsia complains about China as being dominated by government, but there is nothing really big done in the US without huge costs for American tax payers, frequently without any retribution. This is clearly the next step: the US corporations created the "big enemy" China by exporting jobs there during the last 40 years, now they want the same taxpayers to pay for rebuilding the US industrial base that they destroyed, because they're afraid of the competition. It is really a con business.
It's getting really tired to blame companies for acting like rational agents against the natural laws of competitive global markets.
Being against free trade works for an economy right up until it has fully squandered its competitive advantage (derived in great part in the modern world by leveraging comparative advantage) and then GDP and the tax base start collapsing. And then capital flight happens when the combination of protectionism and necessarily increased taxes to sustain government programs makes it prohibitive to conduct business, compounding the vicious contractive cycle.
Retarding an economy with protectionist policies is a losing strategy in the long term. The only way to win is education and retraining. That's it.
Being against free trade works for an economy right up until it has fully squandered its competitive advantage (derived in great part in the modern world by leveraging comparative advantage) and then GDP and the tax base start collapsing. And then capital flight happens when the combination of protectionism and necessarily increased taxes to sustain government programs makes it prohibitive to conduct business, compounding the vicious contractive cycle.
Retarding an economy with protectionist policies is a losing strategy in the long term. The only way to win is education and retraining. That's it.
If we narrowly pursued our comparative advantage without government investing in tech all along we'd be just trading in furs and stuff.
We did just like China starting out, rather than be stuck undeveloped, enslaved to comparative advantage, we stole trade secrets from the more powerful nation, heavily subsidized R&D, and education (as you point out as a good thing), etc. See for instance "Slater the Traitor" as the British knew him:
https://en.wikipedia.org/wiki/Samuel_Slater
If the WTO existed back then we might have gotten invaded and blockaded over it.
All the Asian tiger countries avoided almost all of our free trade advice and did heavily protectionist policies in order to achieve their rapid development. Most of the countries that bought into it remained third world, pursuing their comparative advantage as an undeveloped nation against developed ones, which seems to basically be shorthand for having their natural resources looted.
The book Bad Samaritans goes into how that development occurred in S. Korea, and other similar countries that successfully broke out of the comparative advantage trap:
https://www.amazon.com/dp/B003Z9L4NA
We did just like China starting out, rather than be stuck undeveloped, enslaved to comparative advantage, we stole trade secrets from the more powerful nation, heavily subsidized R&D, and education (as you point out as a good thing), etc. See for instance "Slater the Traitor" as the British knew him:
https://en.wikipedia.org/wiki/Samuel_Slater
If the WTO existed back then we might have gotten invaded and blockaded over it.
All the Asian tiger countries avoided almost all of our free trade advice and did heavily protectionist policies in order to achieve their rapid development. Most of the countries that bought into it remained third world, pursuing their comparative advantage as an undeveloped nation against developed ones, which seems to basically be shorthand for having their natural resources looted.
The book Bad Samaritans goes into how that development occurred in S. Korea, and other similar countries that successfully broke out of the comparative advantage trap:
https://www.amazon.com/dp/B003Z9L4NA
> If we narrowly pursued our comparative advantage without government investing in tech
Why are you holding government R&D as mutually exclusive of free trade policy and an open economy?
> we'd be just trading in furs and stuff.
Asinine straw man.
> rather than be stuck undeveloped, enslaved to comparative advantage, we stole trade secrets from the more powerful nation, heavily subsidized R&D
Either/or fallacy once again.
> All the Asian tiger countries avoided almost all of our free trade advice and did heavily protectionist policies in order to achieve their rapid development.
This statement is laughably false. Hong Kong, Singapore, South Korea, and Taiwan are practically famous for having leveraged free trade and open economies to catapult to economic stardom.
On the whole, this is a stunningly poor counterargument. It's so lacking in sense that it reads like it was generated by GPT-3.
Why are you holding government R&D as mutually exclusive of free trade policy and an open economy?
> we'd be just trading in furs and stuff.
Asinine straw man.
> rather than be stuck undeveloped, enslaved to comparative advantage, we stole trade secrets from the more powerful nation, heavily subsidized R&D
Either/or fallacy once again.
> All the Asian tiger countries avoided almost all of our free trade advice and did heavily protectionist policies in order to achieve their rapid development.
This statement is laughably false. Hong Kong, Singapore, South Korea, and Taiwan are practically famous for having leveraged free trade and open economies to catapult to economic stardom.
On the whole, this is a stunningly poor counterargument. It's so lacking in sense that it reads like it was generated by GPT-3.
> This statement is laughably false. Hong Kong, Singapore, South Korea, and Taiwan are practically famous for having leveraged free trade and open economies to catapult to economic stardom.
The state played a heavy role in all of them:
"The four countries were inspired by Japan's evident success, and they collectively pursued the same goal by investing in the same categories: infrastructure and education."
https://en.wikipedia.org/wiki/Four_Asian_Tigers
Re: protectionism and South Korea I think Ha-Joon Chang covered the development of their steel industry (a later big force behind their "free trade" auto industry) for an example of extreme protectionism in the book I linked. Samsung is practically corporate-state.
Once capabilities are developed and become a comparative advantage for a state, they encourage free trade in them and attack others' subsidies as being protectionist by benefiting the upstart state's local industry instead of pursuing comparative advantage in menial labor, natural resources, etc. (Chang's book Kicking Away the Ladder is about this I think).
The state played a heavy role in all of them:
"The four countries were inspired by Japan's evident success, and they collectively pursued the same goal by investing in the same categories: infrastructure and education."
https://en.wikipedia.org/wiki/Four_Asian_Tigers
Re: protectionism and South Korea I think Ha-Joon Chang covered the development of their steel industry (a later big force behind their "free trade" auto industry) for an example of extreme protectionism in the book I linked. Samsung is practically corporate-state.
Once capabilities are developed and become a comparative advantage for a state, they encourage free trade in them and attack others' subsidies as being protectionist by benefiting the upstart state's local industry instead of pursuing comparative advantage in menial labor, natural resources, etc. (Chang's book Kicking Away the Ladder is about this I think).
What happens to all the people who can't (for whatever reason) work office jobs/work in the "knowledge economy"?
> US corporations created the "big enemy" China by exporting jobs there during the last 40 years
I've noticed that for the most part every time a corporation export jobs it's the corporation's fault. Whenever a corporation brings jobs to the US the politicians get credit for good policy.
I've noticed that for the most part every time a corporation export jobs it's the corporation's fault. Whenever a corporation brings jobs to the US the politicians get credit for good policy.
Ah yes, blame the faceless free market or the bumbling gmen.
It is better to blame culture and values.
From the cultural left, if you believe that nationalism is immoral and everyone is a global citizen with nation-states being obsolete and even illegetimate ideas, you can't expect someone to have a sense of loyalty to his fellow citizens and not outsource. After all, why deny good jobs to the poor in other countries who benefit from them? Isn't it bigoted for a company to want to keep jobs in America? So that's why the left is strangely silent on these trade deficits, and attacks anyone who raises concerns about them as "nativist".
On the economic right, if you believe that profit maximizing behavior leads to pareto-maximizing outcomes, why would you interfere with a company that decides to boost profits by outsourcing?
It is the cultural right, economic left that remains shaking their heads at what are obviously foolish, self-destructive policies, but they are generally locked out of power in this country, and so the national firesale continues.
From the cultural left, if you believe that nationalism is immoral and everyone is a global citizen with nation-states being obsolete and even illegetimate ideas, you can't expect someone to have a sense of loyalty to his fellow citizens and not outsource. After all, why deny good jobs to the poor in other countries who benefit from them? Isn't it bigoted for a company to want to keep jobs in America? So that's why the left is strangely silent on these trade deficits, and attacks anyone who raises concerns about them as "nativist".
On the economic right, if you believe that profit maximizing behavior leads to pareto-maximizing outcomes, why would you interfere with a company that decides to boost profits by outsourcing?
It is the cultural right, economic left that remains shaking their heads at what are obviously foolish, self-destructive policies, but they are generally locked out of power in this country, and so the national firesale continues.
A cynical take... considering how short-sighted public corps are with quarterly shareholder valuations, this is an unintended side-effect at best. At worst, it could be that your comment "the US corporations created the 'big enemy' China" was intentional.
Intentional or not it doesn't matter. If you do something wrong and lose money, they won't save you if you declare that it was all unintentional. But big companies have bad policies (sometimes criminal) and use this excuse all the time.
Couldn't this be a positive long term benefit of Corona? A push back against globalisation and more domestic production in each region of the world.
Globalization has benefits too, like preventing world war due to heavy interdependencies.
The same discourse was made before WW1, and we all know how that turned out. As far as I could tell the world was even more globalised back then, at least for the elites.
> As far as I could tell the world was even more globalised back then
It was not. How could it be? Cheap and fast long range transportation, the Internet, mass consumerism,interconnected financial systems...
What could possibly make you think the world was more globalised in the 1910s than 2020s?
And yes, many people said a war is impossible due to the globalisation. I guess what they missed was telling it to the people in charge ( many of whom,like the Kaiser and Tsar didn't want a war, but felt pressured and like it was inevitable).
It was not. How could it be? Cheap and fast long range transportation, the Internet, mass consumerism,interconnected financial systems...
What could possibly make you think the world was more globalised in the 1910s than 2020s?
And yes, many people said a war is impossible due to the globalisation. I guess what they missed was telling it to the people in charge ( many of whom,like the Kaiser and Tsar didn't want a war, but felt pressured and like it was inevitable).
European economies were fairly integrated, though. Not as much as today, but enough that the war caused a massive disruption to everyone involved.
Europe of 1914 was actually much more liberal than people tend to think. With the exception of Russia and Turkey, which required passports from visitors, you could travel passport-free around the entire Europe, settle down and work wherever you wanted.
There were many railway lines crossing the borders and cargo flows among countries were fairly heavy. The social elite was used to sending their kids abroad to study languages and spending vacations in fashionable foreign resorts.
Europe of 1914 was actually much more liberal than people tend to think. With the exception of Russia and Turkey, which required passports from visitors, you could travel passport-free around the entire Europe, settle down and work wherever you wanted.
There were many railway lines crossing the borders and cargo flows among countries were fairly heavy. The social elite was used to sending their kids abroad to study languages and spending vacations in fashionable foreign resorts.
If there was enough of a concentration of power then those things don't matter as much, but even then they'd be considered deterrents to war. Given we mostly have democratically elected governments now war will be much harder to sell.
> What could possibly make you think the world was more globalised in the 1910s than 2020s?
For example borders were a lot more porous in the late 1800s - early 1900s compared to the 2020s, Ellis Island could have never happened today, when you have children from El Salvador or Guatemala kept in cages for basically doing the same thing that children from Calabria or Sicily were doing back then.
For example borders were a lot more porous in the late 1800s - early 1900s compared to the 2020s, Ellis Island could have never happened today, when you have children from El Salvador or Guatemala kept in cages for basically doing the same thing that children from Calabria or Sicily were doing back then.
That was either one way emigration, or roundtrip rich people travel. Hardly a sign of globalisation.
> A push back against globalisation and more domestic production in each region of the world.
There are many countries that have always wanted to be self reliant but the powers be can't allow it. Coz it's sets a bad example that countries can exist without certain giants. I don't think they are about to allow that
There are many countries that have always wanted to be self reliant but the powers be can't allow it. Coz it's sets a bad example that countries can exist without certain giants. I don't think they are about to allow that
For damned good reason. "Self reliant" countries tend to behave like complete assholes internationally even by the standards of Realpolitik. North Korea is one of the most
Autarkous nations on earth.
The "victimized by a conspiracy" anthromorphization is also deeply wrong. They cannot be oppressed - they do not have rights.
Governments are fundamentally made of coercion. Without it they are an empty pile of words, a rules card for poker when the deck is being used for blackjack or building houses of cards. The coercion may be used to support rights like "not being murdered" but granting it rights to further human rights is like trying to increase a number by multiplying a negative number by a grearer than one positive number.
To sum it up if you apply the "corporation as a sociopath" conception governments are basically so alien to be cthulu. Corporations are at least made of people essentially, at least until the first AI run no human owner corporation is founded.
The "victimized by a conspiracy" anthromorphization is also deeply wrong. They cannot be oppressed - they do not have rights.
Governments are fundamentally made of coercion. Without it they are an empty pile of words, a rules card for poker when the deck is being used for blackjack or building houses of cards. The coercion may be used to support rights like "not being murdered" but granting it rights to further human rights is like trying to increase a number by multiplying a negative number by a grearer than one positive number.
To sum it up if you apply the "corporation as a sociopath" conception governments are basically so alien to be cthulu. Corporations are at least made of people essentially, at least until the first AI run no human owner corporation is founded.
Globalization is a good thing. It is directly responsible for the almost complete elimination of global poverty.
It has been great for the global poor. Terrible for the western middle class.
Isn't it a net benefit to everyone if each country pursues its comparative advantage though?
I don't see why becoming some sort of Juche state would help anyone.
I don't see why becoming some sort of Juche state would help anyone.
Globalization is not what happened during the last few decades. Investing your entire supply chain in China is not globalization. Corona is causing a push back against sinicization.
If the world actually did have globalized production, the pandemic, which originated in China, would probably have hurt relatively less.
If the world actually did have globalized production, the pandemic, which originated in China, would probably have hurt relatively less.
To all those saying that those companies can afford it themselves, remember that there are reasons they don't. The economics don't add up. Companies tend to do what is in their economic interest to do.
Something like this can change the economics, which could be a good thing.
Something like this can change the economics, which could be a good thing.
>> To all those saying that those companies can afford it themselves, remember that there are reasons they don't.
Automotive chips for example tend to be produced on older nodes, not fancy 14nm and below at TSMC. I'm not talking about SoC used in infotainment but all the micro controllers all over the car.
There is really zero incentive for a chip maker to expand capacity of old nodes since they are obsolete in some sense. It doesn't pay to upgrade to a new node without a product that demands something from the new node, and even then it's still an obsolete node. Think 130nm, 90nm, or even 45nm, the world could use more capacity at all of those but would you really want to invest heavily in any of those?
I suspect the end game for most of the industry is commodity priced chips at every "last node" where that term means the last node that doesn't require X, and X is a technology change like immersion lithography, multi-patterning, material change, or EUV. With that kind of environment nobody can afford to increase capacity much.
I'm not arguing for government funding here, just pointing to what I suspect is one of the problems.
Automotive chips for example tend to be produced on older nodes, not fancy 14nm and below at TSMC. I'm not talking about SoC used in infotainment but all the micro controllers all over the car.
There is really zero incentive for a chip maker to expand capacity of old nodes since they are obsolete in some sense. It doesn't pay to upgrade to a new node without a product that demands something from the new node, and even then it's still an obsolete node. Think 130nm, 90nm, or even 45nm, the world could use more capacity at all of those but would you really want to invest heavily in any of those?
I suspect the end game for most of the industry is commodity priced chips at every "last node" where that term means the last node that doesn't require X, and X is a technology change like immersion lithography, multi-patterning, material change, or EUV. With that kind of environment nobody can afford to increase capacity much.
I'm not arguing for government funding here, just pointing to what I suspect is one of the problems.
I used to work for OnSemi, so take the following for what you will.
On sells a variety of components -- some are completely commodity and are produced in super cheap fabs in Malaysia. Some are mid-tier and are (or were) made at fabs in Phoenix or Pocatello. And some are high-end and come out of the Gresham fabs that they bought when LSI went fabless.
There's value in producing the commodity stuff. Obviously they're not going to enter a bidding war with TSMC for cutting edge manufacturing equipment to make commodity voltage regulators. But they still invest in fab technology at the lower end.
I don't think ONN is particularly special in this space. They had plenty of competitors and they worked to distinguish themselves on cost, depth of their product catalog, and ability to execute.
On sells a variety of components -- some are completely commodity and are produced in super cheap fabs in Malaysia. Some are mid-tier and are (or were) made at fabs in Phoenix or Pocatello. And some are high-end and come out of the Gresham fabs that they bought when LSI went fabless.
There's value in producing the commodity stuff. Obviously they're not going to enter a bidding war with TSMC for cutting edge manufacturing equipment to make commodity voltage regulators. But they still invest in fab technology at the lower end.
I don't think ONN is particularly special in this space. They had plenty of competitors and they worked to distinguish themselves on cost, depth of their product catalog, and ability to execute.
By having in-country fabs, have you just pushed the problem to some sort of precursor materials or parts?
For that matter, I wonder how a government-subsidized fab could compete with an old overseas fab making lower end parts that has been long-ago paid for?
For that matter, I wonder how a government-subsidized fab could compete with an old overseas fab making lower end parts that has been long-ago paid for?
Can you please elaborate? I struggle to discern the ultimate effect of private capital versus government funds in this situation. Ideally, a business’ problems are handled by itself, not via the federal government using taxpayer monies.
The basic argument is that domestic production of integrated circuits isn't economical for American businesses. Having a more flexible supply chain is beneficial to these companies (e.g. when a global pandemic hits), but the required investment outweighs these benefits.
On the other hand, the government potentially has a lot to lose if domestic companies are completely unable to produce hardware needed for critical infrastructure. The government also benefits from these companies expanding their supply chain to include domestic production, so the companies are asking the government to provide enough capital/tax breaks to make domestic production viable, and they're trying to convince the government that this provides enough value to the USA for it to be worth it.
But this is being pushed by lobbyists paid for by giant corporations, so it's fair to be skeptical. In reality, the $50B number probably sits somewhere between "the bare minimum needed to make this viable" and "a handout pocketed by greedy corporations".
On the other hand, the government potentially has a lot to lose if domestic companies are completely unable to produce hardware needed for critical infrastructure. The government also benefits from these companies expanding their supply chain to include domestic production, so the companies are asking the government to provide enough capital/tax breaks to make domestic production viable, and they're trying to convince the government that this provides enough value to the USA for it to be worth it.
But this is being pushed by lobbyists paid for by giant corporations, so it's fair to be skeptical. In reality, the $50B number probably sits somewhere between "the bare minimum needed to make this viable" and "a handout pocketed by greedy corporations".
In a vacuum, sure. But these companies are competing with foreign governments using taxpayer monies to make a product.
Cheaper just to buy from the foreign government? sure. But if a product is considered core to survival it may be good to have domestic production. Whether it's food, weapons, computer chips, water supply, etc.
Cheaper just to buy from the foreign government? sure. But if a product is considered core to survival it may be good to have domestic production. Whether it's food, weapons, computer chips, water supply, etc.
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Obviously there is a difference in that private capital invests in what will help that particular company, while government funds should go toward what benefits the nation as a whole. A company might say "we won't bother investing, let our competition invest, and we'll just get the components from whoever will sell them to us cheapest." That can make sense individually (and especially in the short term), but as a whole (whether talking about industry as a whole, or nation as a whole), they are worse off.
Essentially, a prisoner's dilemma.
There is also the fact that American companies are competing against Chinese companies, where the government can subsidize various Chinese companies and initiatives. China is communist, of course, which does sort of favor this sort of thing. If the US was to close itself off to China, then it's a lot easier to be 100% capitalist as in your ideal scenario.
Essentially, a prisoner's dilemma.
There is also the fact that American companies are competing against Chinese companies, where the government can subsidize various Chinese companies and initiatives. China is communist, of course, which does sort of favor this sort of thing. If the US was to close itself off to China, then it's a lot easier to be 100% capitalist as in your ideal scenario.
If Google thought they could get a solid return on investing $50B rather than holding cash, they would do so.
The fact they are holding it as cash is an indication they are not bullish on the fundamentals.
The fact they are holding it as cash is an indication they are not bullish on the fundamentals.
"To all those saying that those companies can afford it themselves, remember that there are reasons they don't."
This sounds a lot like "God moves in mysterious ways and has a plan for everyone, everything happens for a reason". No actual analysis and reasoning required.
This free market religion is what gave us 2008 and will keep giving.
This sounds a lot like "God moves in mysterious ways and has a plan for everyone, everything happens for a reason". No actual analysis and reasoning required.
This free market religion is what gave us 2008 and will keep giving.
I'm confused, my comment you replied to was the opposite of free market religion. Also kind of the opposite of "mysterious ways."
Ah yes, the free market utopia every libertarian dreamed of existed in 2008. There were only just over 100,000 pages of federal law and regulations. Not to mention state and local laws.
I see, if we had 0 pages of regulations, then banks would be ethical, then they would not create CDOs and then synthetic CDOs and destroy globaln economy.
Strawman argument.
You mean the one about 100,000 pages? How is that of any relevance to CDOs?
Fannie Mae and Freddie Mac
> Companies tend to do what is in their economic interest to do
It will be in their economic interest when the PLA will show up at TSMC's door. Of course, that won't probably happen in the next few quarters, so on that you are correct, it's not in their short economic interest.
What these companies are basically doing is asking the US government to subsidise the costs incurred by geo-politics.
It will be in their economic interest when the PLA will show up at TSMC's door. Of course, that won't probably happen in the next few quarters, so on that you are correct, it's not in their short economic interest.
What these companies are basically doing is asking the US government to subsidise the costs incurred by geo-politics.
>It will be in their economic interest when the PLA will show up at TSMC's door.
Not necessarily, maybe those companies can just make a deal with the CCP to keep access to TSMC's fabs.
Not necessarily, maybe those companies can just make a deal with the CCP to keep access to TSMC's fabs.
Taiwan Army can use scorched earth tactics to make sure that it does not happen.
It doesn't matter what the economics adds up to when the government is printing trillions of dollars and spending it on 'what it thinks needs to happen', whereupon trillionaire companies can lobby for some of that money.
Perhaps these companies should create a fund to start a few foundries etc. because they can definitely afford it.
Perhaps these companies should create a fund to start a few foundries etc. because they can definitely afford it.
Rather than advocate for a specific conclusion, I'd like to propose a way of looking at this problem:
What matters is a society's capacity to produce. Not whether something is "fair", not whether an industry deserves this or that. Not whether some cherished economic theory is being honored.
Specifically, what matters is the creation and support of productive ecosystems, which are networks of credit, knowledge acquisition and transfer, skilled workers, skilled product managers, and supplier/vendor/retailer relationships.
A key part of these productive ecosystems is jobs. If you want to learn how to build bridges, you do not set up schools to teach engineering, you fund the building of bridges, and people will figure out how to build them on the job, and the demand for civil engineers will pull students to study this and then universities will open up programs to cater to that demand. The jobs come first. Only 5% of China's population attends university, yet they are able to build all the infrastructure they need because they have a laser like attention to creating jobs. They will even build bridges for America, as long as Chinese workers get to make them. They will build a port for anyone who wants it, as long as Chinese workers are the ones building the port. The entire Belt and Road initiative is an attempt to import infrastructure jobs by sending workers all over the world to build infrastructure, as long as China gets to build it. They know that half these projects will default and not make any money, but what they get out of that is a skilled workforce, and with a skilled workforce they can do anything. They will let American companies set up factories in China as long as there is a knowledge transfer as part of the deal. That all their state owned enterprises are losing money is not important, the acquisition of skills and the creation of productive ecosystems is what matters. I wonder when the US will realize this.
Western economic thinking is focused on P&L, rule of law, etc, and assumes as an article of faith that in such an environment, productive ecosystems will just arise all on their own, like rats being created from piles of trash. It will just happen, because in the past it just happened. So we are focused on abstract principles, but what the last 30 years has shown us is productive ecosystems being destroyed right and left as production migrates over to Asia.
Apparently these abstract principles don't work in all cases, so people are going to need to abandon their faith in free markets just as much as they need to abandon their concerns over some fat cat getting a subsidy -- unless they want their nation to completely deindustrialize.
However abandoning our faith in what worked before still leaves as muddied the concerns of what will work now, because it's not so clear that Asia's economic model can be successfully copied. Latin America tried to adopt this model in the 1970s -- a policy of import substitution, production subsidies and taxes on consumption. But it didn't work. Similar policies were tried in Africa in the 1980s and they also didn't work. So apparently you need more than just a policy of subsidizing production. What is that X-factor?
One proposal is that the X-Factor is human capital. Whether cultural or genetic or literary, for some reason China has human capital for which these policies work well but in Latin America/Africa they don't. Another proposal is that the X-Factor is exports - it's not enough to just subsidize production you need to subsidize exports as well. A third proposal is that the X-Factor is state organizational capacity (a kind way of saying "less democracy, more centralization"). A fourth is nationalism -- being willing to sacrifice some of your own wealth for the benefit of the nation, rather than say boosting your bonus by outsourcing. And last, there is the notion of practicality. The West is often quite fanatical in holding to beliefs that no longer work, because our wealth has made us take for granted so much that we have the luxury of rigid moral views when other nations are just focused on acquiring skilled jobs.
Whatever that X-factor really is, Latin America and Africa didn't have it but the East Asian nations do, even though all of these tried to subsidize investment.
What I think is worthwhile is to start adopting explicit policies to nurture productive ecosystems rather than insisting that more of whatever we believed before is needed now. Because we are rapidly deindustrializing, the foreign sector already owns 40% of the nation's productive capacity and very little is still produced in the West at all. Clearly the old beliefs need to change.
What matters is a society's capacity to produce. Not whether something is "fair", not whether an industry deserves this or that. Not whether some cherished economic theory is being honored.
Specifically, what matters is the creation and support of productive ecosystems, which are networks of credit, knowledge acquisition and transfer, skilled workers, skilled product managers, and supplier/vendor/retailer relationships.
A key part of these productive ecosystems is jobs. If you want to learn how to build bridges, you do not set up schools to teach engineering, you fund the building of bridges, and people will figure out how to build them on the job, and the demand for civil engineers will pull students to study this and then universities will open up programs to cater to that demand. The jobs come first. Only 5% of China's population attends university, yet they are able to build all the infrastructure they need because they have a laser like attention to creating jobs. They will even build bridges for America, as long as Chinese workers get to make them. They will build a port for anyone who wants it, as long as Chinese workers are the ones building the port. The entire Belt and Road initiative is an attempt to import infrastructure jobs by sending workers all over the world to build infrastructure, as long as China gets to build it. They know that half these projects will default and not make any money, but what they get out of that is a skilled workforce, and with a skilled workforce they can do anything. They will let American companies set up factories in China as long as there is a knowledge transfer as part of the deal. That all their state owned enterprises are losing money is not important, the acquisition of skills and the creation of productive ecosystems is what matters. I wonder when the US will realize this.
Western economic thinking is focused on P&L, rule of law, etc, and assumes as an article of faith that in such an environment, productive ecosystems will just arise all on their own, like rats being created from piles of trash. It will just happen, because in the past it just happened. So we are focused on abstract principles, but what the last 30 years has shown us is productive ecosystems being destroyed right and left as production migrates over to Asia.
Apparently these abstract principles don't work in all cases, so people are going to need to abandon their faith in free markets just as much as they need to abandon their concerns over some fat cat getting a subsidy -- unless they want their nation to completely deindustrialize.
However abandoning our faith in what worked before still leaves as muddied the concerns of what will work now, because it's not so clear that Asia's economic model can be successfully copied. Latin America tried to adopt this model in the 1970s -- a policy of import substitution, production subsidies and taxes on consumption. But it didn't work. Similar policies were tried in Africa in the 1980s and they also didn't work. So apparently you need more than just a policy of subsidizing production. What is that X-factor?
One proposal is that the X-Factor is human capital. Whether cultural or genetic or literary, for some reason China has human capital for which these policies work well but in Latin America/Africa they don't. Another proposal is that the X-Factor is exports - it's not enough to just subsidize production you need to subsidize exports as well. A third proposal is that the X-Factor is state organizational capacity (a kind way of saying "less democracy, more centralization"). A fourth is nationalism -- being willing to sacrifice some of your own wealth for the benefit of the nation, rather than say boosting your bonus by outsourcing. And last, there is the notion of practicality. The West is often quite fanatical in holding to beliefs that no longer work, because our wealth has made us take for granted so much that we have the luxury of rigid moral views when other nations are just focused on acquiring skilled jobs.
Whatever that X-factor really is, Latin America and Africa didn't have it but the East Asian nations do, even though all of these tried to subsidize investment.
What I think is worthwhile is to start adopting explicit policies to nurture productive ecosystems rather than insisting that more of whatever we believed before is needed now. Because we are rapidly deindustrializing, the foreign sector already owns 40% of the nation's productive capacity and very little is still produced in the West at all. Clearly the old beliefs need to change.
I don't know how you can justifiably call Africa a has-been. Africa is by far the youngest continent in the world, with 60% of the population below 25. The median age is 19. The fertility rate is incredibly high. Most likely, Africa is the continent of the future.
> I don't know how you can justifiably call Africa a has-been
Please read comments you reply to.
Please read comments you reply to.
+1. I'd also guess that these companies getting together to start a joint venture is not really feasible, due to anti-monopoly laws.
It's only a monopoly if the government says you are using market position anti-competitively and/or against the common good. If the US government says that chip production capability is now a national focus, companies can expect government cooperation for a joint venture.
> It's only a monopoly if the government says you are using market position anti-competitively and/or against the common good.
No, its a monopoly if you have market power.
It’s only illegal if you are abusing market power.
No, its a monopoly if you have market power.
It’s only illegal if you are abusing market power.
This is a much better investment than more f22
Well, TSMC had 2020 revenue in the 30 giga-$ range. Even a few 3% sales tax on that revenue would pay for a 5 giga-$ investment in 5 years. (or a few F-35's / year)
That's grossly optimistic numbers, given US labor costs, startup costs, etc, but it's also potentially a reasonable investment that would be sustained by domestic and international purchases (one would hope).
That's grossly optimistic numbers, given US labor costs, startup costs, etc, but it's also potentially a reasonable investment that would be sustained by domestic and international purchases (one would hope).
TSMC (Taiwan Semiconductor Manufacturing Corporation) is a foreign company that operates entirely overseas - why would the US have authority to tax them? If anything I'd imagine they'd be against this proposal.
Sorry, I wasn't clear. I meant that "A US-led TSMC-like foundry (since we're talking about funding a US chip production facility) would be a good source of tax income that might justify a federal startup investment."
Ahhhh, makes sense. Also, after reading further, it appears I was wrong - TSMC has some operations in the US including some in Arizona - plus their interest in maintaining friendly terms with the US in order to preserve the existence of Taiwan is also an angle.
What still worries me is that ramp up time for fabs like these are on the scale of years - if we assume a fab started right now, we'll be making semiconductors in ~2 years at the earliest (very optimistic)? It seems like the root of the issue seems to be the inventory tax and accounting rules - perhaps an exception for the semiconductor industry would help rather than even a single domestic fab (which could be impacted by natural disasters as well).
What still worries me is that ramp up time for fabs like these are on the scale of years - if we assume a fab started right now, we'll be making semiconductors in ~2 years at the earliest (very optimistic)? It seems like the root of the issue seems to be the inventory tax and accounting rules - perhaps an exception for the semiconductor industry would help rather than even a single domestic fab (which could be impacted by natural disasters as well).
> What still worries me is that ramp up time for fabs like these are on the scale of years - if we assume a fab started right now, we'll be making semiconductors in ~2 years at the earliest (very optimistic)?
TSMC announced the Arizona fab in May of 2020. They estimate it will be at volume production by 2024. The challenge is that it's not just building the fab, but also the lead times for all of the equipment involved, getting the specialists in to install+calibrate, then doing some initial runs to work out issues before going to volume production.
TSMC announced the Arizona fab in May of 2020. They estimate it will be at volume production by 2024. The challenge is that it's not just building the fab, but also the lead times for all of the equipment involved, getting the specialists in to install+calibrate, then doing some initial runs to work out issues before going to volume production.
Totally correct, by 2024 a 20k wpm N5 fab will not be able to break even unless wafers would cost $50k+.
Who will be billed for this negative equity?
TSMC's economists certainly know what they do when they put a $12B investment: this can only happen with US government guarantee, thus taxpayers paying.
Who will be billed for this negative equity?
TSMC's economists certainly know what they do when they put a $12B investment: this can only happen with US government guarantee, thus taxpayers paying.
Well, we dumped a lot of money into the F-35 to fill a perceived strategic gap in fighter jets that had not yet arrived. This was many years before we actually received such a jet. This kind of long-term investment of lots of money for (arguably) public good is what federal governments are _for_, in my mind.
A 250M$ - 1G$ investment / year is big, but if it's self-sustaining in a couple years, that's a huge win.
A 250M$ - 1G$ investment / year is big, but if it's self-sustaining in a couple years, that's a huge win.
Sales tax gets passed on to consumer and is regressive, pretty bad choice.
What are the geopolitical consequence of a de-coupled chip supply chain? Recall TSMC is headquartered in Taiwan, which has been a point of contention in US-China relationship since the 1950s. Please discuss civilly.
In game theoretic terms - If you feel like the only leverage you have over your opponent is about to be obviated by some other approach (i.e. domestic chip fabrication becomes dominant within the decade), then there could be some increase in tensions.
My implication here being that China is aware that they are capable of making an unstoppable strike against all TSMC's leading edge fabrication capacity, and that this action would be far more harmful to the strategic positioning of the US than to any other nation on earth. The ability to execute this option is time-limited by the US wishing to grow domestic capacity.
Whether this implication holds in reality is something I am very much open to suggestion on. I am fully aware that the US military's response to such an action is probably the leading reason it is not something we have seen occur already. I am also unsure if the impact of all 7nm node loss is substantially greater for the US vs any other country.
My implication here being that China is aware that they are capable of making an unstoppable strike against all TSMC's leading edge fabrication capacity, and that this action would be far more harmful to the strategic positioning of the US than to any other nation on earth. The ability to execute this option is time-limited by the US wishing to grow domestic capacity.
Whether this implication holds in reality is something I am very much open to suggestion on. I am fully aware that the US military's response to such an action is probably the leading reason it is not something we have seen occur already. I am also unsure if the impact of all 7nm node loss is substantially greater for the US vs any other country.
Interesting to think about.
On one hand, this could cause other countries to pay more attention to the situation, since -they- will still be dependent on TSMC and may not have the US doing all the posturing.
But that's assuming we wound up truly 'de-coupled'. TSMC tends to be the leader in fab tech, and I am fairly certain any near term plans will involve providing incentive for TSMC to build more fabs in the US.
On one hand, this could cause other countries to pay more attention to the situation, since -they- will still be dependent on TSMC and may not have the US doing all the posturing.
But that's assuming we wound up truly 'de-coupled'. TSMC tends to be the leader in fab tech, and I am fairly certain any near term plans will involve providing incentive for TSMC to build more fabs in the US.
Same reason Foxconn is a proponent for manufacturing in America. If the shift is happening and you can't control it, may as well hedge by being part of it.
I think the main question is how much of the US support for Taiwan comes from the chip supply chain, vs ensuring that china needs american permission to trade
US corporations have recently been given a corporate revenue tax cut, from 35% to 21% (and beyond this they apparently enjoy a bunch of loopholes bringing their taxes much further down). Surely that is more than enough for them to be able to bankroll chip fabrication in the US - individually or together.
Isn't this simply an attempt at "double-dipping"?
"Please subsidize us! The humongous corporate income tax deduction you gave us is not nearly enough!"
Isn't this simply an attempt at "double-dipping"?
"Please subsidize us! The humongous corporate income tax deduction you gave us is not nearly enough!"
This was kind of expected due to the shutdowns required by most countries during the chaos of COVID. Of course we need our infrastructure to be more robust, but no use crying over spilt milk.
There have been calls for some time to treat semiconductor manufacturing as in the interest of national security. The funding and policy isn't onerous to do so, and "never let a crisis go to waste." Something similar was already done for rare earths [1].
[1] https://www.google.com/search?q=rare+earth+us+national+secur...
[1] https://www.google.com/search?q=rare+earth+us+national+secur...
That's not an incorrect way of thinking! If we need it to be effective for self-defense and existence, it probably needs to be protected as such.
For sure. It's clear that in many cases (from pandemic experience), resiliency and supply readiness should be prioritized above cost efficiency.
I would call it technically correct but useless only because of how ill defined and exploitable national security is as a notion to bypass all objections by turning everything into an existential threat. Everything is in some degree important to national security - entertainment is a matter of national security because bored soldiers are less vigilant.
Something similar was "thought of" for rare earths but I don't think anything practical has come of that yet. Opening new mines in the US is not a process I'd call quick. It's more in the "I'll believe it when I see it" column. You think getting a pipeline across the Midwest is difficult? Just try strip-mining in Alaska.
But yeah, if the government is serious about securing supply chains, then it's not enough to have semiconductor manufacturing here, one also needs to be able to source the inputs closer to home (quartz, etc).
And I'm not even sure it requires government to directly fund the manufacturing/mining - it would be enough if government took a "not-hostile" attitude towards the environmental and engineering approvals, and then incentivized domestic sourcing.
But yeah, if the government is serious about securing supply chains, then it's not enough to have semiconductor manufacturing here, one also needs to be able to source the inputs closer to home (quartz, etc).
And I'm not even sure it requires government to directly fund the manufacturing/mining - it would be enough if government took a "not-hostile" attitude towards the environmental and engineering approvals, and then incentivized domestic sourcing.
I'd have thought the same as you, though I very recently heard some hopeful news on that front: https://www.marketplace.org/2021/04/30/the-u-s-is-trying-to-...
The relevant part is kind of buried but tl;dr: new mines do take a while (but are in the works). Luckily, there are old mines that can be productively restarted:
> “Our mission as a company is to restore the full supply chain,” said James Litinsky, CEO of MP Materials, the new owner of the U.S.’s only rare-earth mine, located in Mountain Pass, in California’s Mojave Desert.
> “We are probably further ahead than people realize.”
> MP Materials restarted the mine in 2017; the previous owner, Molycorp had declared bankruptcy a few years prior.
> “It was mismanaged for some time,” Litinsky said. Mountain Pass’ reserves are particularly rich in rare earths and now supply, in unpurified form, 15% of the rare earths consumed globally each year.
The relevant part is kind of buried but tl;dr: new mines do take a while (but are in the works). Luckily, there are old mines that can be productively restarted:
> “Our mission as a company is to restore the full supply chain,” said James Litinsky, CEO of MP Materials, the new owner of the U.S.’s only rare-earth mine, located in Mountain Pass, in California’s Mojave Desert.
> “We are probably further ahead than people realize.”
> MP Materials restarted the mine in 2017; the previous owner, Molycorp had declared bankruptcy a few years prior.
> “It was mismanaged for some time,” Litinsky said. Mountain Pass’ reserves are particularly rich in rare earths and now supply, in unpurified form, 15% of the rare earths consumed globally each year.
Well, couldn't they stop the buybacks for a little while and invest their bazillion dollars of cash themselves?
I feel like in about 4 years time there's going to be a massive bust in chip prices from massive oversupply based on the plans for chip manufacture around the world?
I agree, there's going to be a massive oversupply of chips. If the US, EU, China, and also the current chip producers all increase output that's way too many chips.
I recently watched a youtube video predicting a semiconductor bust that https://www.youtube.com/watch?v=Z7QkIECEkVc, though I don't quite understand if the differing say <7nm versus mid range 14~28 nm chips will have differing oversupply in the future.
I recently watched a youtube video predicting a semiconductor bust that https://www.youtube.com/watch?v=Z7QkIECEkVc, though I don't quite understand if the differing say <7nm versus mid range 14~28 nm chips will have differing oversupply in the future.
> But economics works on incentives.
> The economics don't line up.
Suppose you're Google. You know what's cheaper than investing $100m in a new chip manufacturing company? Lobbying for the government to invest $100m in the chip manufacturing company.
This is why "the economics don't line up", and "the incentives don't align". No shareholder would want you to do the financially irresponsible thing of investing in a risky, capital-intensive venture when governments can do that for you.
As a result, companies have the incentive to invest in lobbying rather than actually fund the chip production themselves. Essentially the companies believe that chip production will result in $X/yr, but investing in it themselves would be $Y/yr, whereas they could just invest in lobbying for $Z/yr, where $Z << $Y.
> The economics don't line up.
Suppose you're Google. You know what's cheaper than investing $100m in a new chip manufacturing company? Lobbying for the government to invest $100m in the chip manufacturing company.
This is why "the economics don't line up", and "the incentives don't align". No shareholder would want you to do the financially irresponsible thing of investing in a risky, capital-intensive venture when governments can do that for you.
As a result, companies have the incentive to invest in lobbying rather than actually fund the chip production themselves. Essentially the companies believe that chip production will result in $X/yr, but investing in it themselves would be $Y/yr, whereas they could just invest in lobbying for $Z/yr, where $Z << $Y.
I'm not sure I see the problem, government is for these cases where every player individually has a cheaper option for the short term, but one that might not be as good for the city/state/country overall. I don't want Google to spend a hundred million dollars on chip production for just themselves that would add to the price of their products - but not their competitors - and also not help out the broader market situation... it's not in my interest for every company to go their own way here, either.
ROI of investing the money vs Lobbying is ~ $100 to $1
[1] https://www.bloomberg.com/news/articles/2021-04-23/google-am...
[1] https://www.bloomberg.com/news/articles/2021-04-23/google-am...
Ummm if the government does the investing they get all the returns. If google does the investing they get the returns. If they are lobbying rather than investing, this suggests they think the ROI would be negative.
That's not how government funding of sports stadiums work, why would fabs be any different?
>Usually, the local government owns the stadium, while the team and its ownership control the revenues. This arrangement leaves taxpayers on the hook for maintaining the stadium year after year, team or not.
From here: https://www.johnlocke.org/policy-position/publicly-funded-st...
The problem for sports stadiums seems to be a monopsony relationship. That wouldn't be true for a fab, which can sell to anyone.
It seems like this relationship is desirable because a sports team can't benefit from all the profit they generate, for example at restaurants near the sports stadium, whereas the city can, by taxing those businesses. I suppose there might be an equivalent relationship with respect to a fab, but I'm not sure what it is.
From here: https://www.johnlocke.org/policy-position/publicly-funded-st...
The problem for sports stadiums seems to be a monopsony relationship. That wouldn't be true for a fab, which can sell to anyone.
It seems like this relationship is desirable because a sports team can't benefit from all the profit they generate, for example at restaurants near the sports stadium, whereas the city can, by taxing those businesses. I suppose there might be an equivalent relationship with respect to a fab, but I'm not sure what it is.
Is this for US companies only? I mean if all they want is Fabs in US surely the funding should be available for TSMC as well?
Otherwise why should TSMC invest billions in US while having US government handing out money to American companies competing against TSMC with their own money?
Otherwise why should TSMC invest billions in US while having US government handing out money to American companies competing against TSMC with their own money?
>Otherwise why should TSMC invest billions in US
I don't want to seem politically ignorant but isn't the entire existence of Taiwan is simply dependent on the US wanting it to exist. If the US didn't provide billions in defense -- TMSC would be a Chinese FAB pretty fast. I see your point but I'd imagine the extra layer of geopolitics is propping up this odd situation.
I don't want to seem politically ignorant but isn't the entire existence of Taiwan is simply dependent on the US wanting it to exist. If the US didn't provide billions in defense -- TMSC would be a Chinese FAB pretty fast. I see your point but I'd imagine the extra layer of geopolitics is propping up this odd situation.
TSMC would blow their fabs up if China invaded. China might not mind though since some the us government has forced TSMC to not sell to some Chinese companies. Probably would be good for their semi industry.
This coalition seems to want both research and physical infrastructure across many process nodes. Fabs are expensive, so I hope Assembly-Test-Mark-Pack gets a look too. Not sure what happens to research IP sourced from domestic investment, or how this doesn’t overlap existing defense supply chain efforts.
From their letter: “Manufacturing incentives funded by Congress should focus on filling key gaps in our domestic semiconductor ecosystem and cover the full range of semiconductor technologies and process nodes – from legacy to leading-edge – relied on by industry, the military, and critical infrastructure.”
So... give us your semiconductor ecosystem gap analysis, SIAC :)
Source: Former semiconductor analyst / planner when domestic fabs went out of style.
From their letter: “Manufacturing incentives funded by Congress should focus on filling key gaps in our domestic semiconductor ecosystem and cover the full range of semiconductor technologies and process nodes – from legacy to leading-edge – relied on by industry, the military, and critical infrastructure.”
So... give us your semiconductor ecosystem gap analysis, SIAC :)
Source: Former semiconductor analyst / planner when domestic fabs went out of style.
I wonder what the "strings attached" will be. Perhaps the back doors the FBI has always wanted? Sounds like a double fleecing of the taxpayer. We get to give them subsidies and they get to give law enforcement an easier vector to spy on us. What a deal!
Even if this consortium constructs a North American fab, a single natural disaster near that fab could wreak the same follow-on effects in the headlines today; the underlying problem isn't only that we've outsourced our critical manufacturing, but also that we keep so little buffer that any disruption could cause today's headlines.
The MBAs running US manufacturers need to scrap their JIT strategies, build some warehouses, and start keeping a store of the essentials. If a tangible good is essential to your business continuity on a 6 or 12 month horizon, then your business should not outsource the maintenance of this lifeline, regardless of whether your supplier is domestic.
The MBAs running US manufacturers need to scrap their JIT strategies, build some warehouses, and start keeping a store of the essentials. If a tangible good is essential to your business continuity on a 6 or 12 month horizon, then your business should not outsource the maintenance of this lifeline, regardless of whether your supplier is domestic.
> The MBAs running US manufacturers need to scrap their JIT strategies, build some warehouses, and start keeping a store of the essentials.
Just the other day here on HN I read an account from a founder who did just that- in early 2008. He ended up having a warehouse full of raw materials and no cash to make payroll. That's one way a business dies.
So, this talking point sounds good, those damn MBAs and their JITs!, but carries its own set of risks. It's important for each business to balance those risks and arrive at their own decision. It's not as cut-and-dry as one would necessarily think.
Just the other day here on HN I read an account from a founder who did just that- in early 2008. He ended up having a warehouse full of raw materials and no cash to make payroll. That's one way a business dies.
So, this talking point sounds good, those damn MBAs and their JITs!, but carries its own set of risks. It's important for each business to balance those risks and arrive at their own decision. It's not as cut-and-dry as one would necessarily think.
cash it the most important thing that should not be done JIT. ;-)
A few months into the pandemic. a Texas manufacturer of N95 masks offered to ramp up capacity and start cranking out millions of N95 masks so long as hospitals and the government were willing to sign a multiyear contract to continue to buy masks from him at pre-pandemic prices after the pandemic ended. No one took him up on his offer. He said without a long term contract there would eventually be a supply glut and all of the buyers would just go right back to the offshore suppliers who would undercut him by a few cents per mask. At the time, I thought he was crazy, but it looks like he was exactly right.
This is exactly where the government should operate with emergency stockpiles.
Buy stuff and sit on it for half it's shelf life, and when it's done sell it at just a little bit under fair market cost.
E.G. Buy N95 masks with a 5 year shelf life, hold them for 2, and rotate it out of the warehouse so the warehouse always has newer stuff and places that use it like construction and hospitals have a price stabilized source.
Buy stuff and sit on it for half it's shelf life, and when it's done sell it at just a little bit under fair market cost.
E.G. Buy N95 masks with a 5 year shelf life, hold them for 2, and rotate it out of the warehouse so the warehouse always has newer stuff and places that use it like construction and hospitals have a price stabilized source.
Isn't one of the problems that JIT was made to solve that there is a tax on inventory? That the government punishes you for maintaining slack in the manufacturing chain by taxing it?
I would expect that it depends on the state.
Yes, tax policy compounds the problem; if you have a warehouse of goods, you're already risking that your tangible goods will be damaged by mold, rodents, fire, severe weather, improper employee handling, theft, or changing market conditions. Now on top of that the IRS treats your inventory as if it's an appreciating asset, and Sarbanes Oxley makes you out to be an enron-class criminal if you claim to hold any value there -- because it's not as easy to audit as other financial instruments as stores of value.
We could definitely retool our regulatory policy if we want to improve our posture in the trade conflict.
We could definitely retool our regulatory policy if we want to improve our posture in the trade conflict.
> Isn't one of the problems that JIT was made to solve that there is a tax on inventory?
Then hold that inventory in Canada or Mexico or India or China? This isn't a hard problem.
Then hold that inventory in Canada or Mexico or India or China? This isn't a hard problem.
This came up a while back and no one seemed to be able to say what tax is paid on inventory. The best we could work out was you need a warehouse and warehouses are taxed as they are real estate.
JIT is about freeing up capital (which in the 80s when JIT came in was expensive). It also reduces waste a lot.
JIT is about freeing up capital (which in the 80s when JIT came in was expensive). It also reduces waste a lot.
Business idea: caching layer for kit manufacturing.
You have a warehouse that stores stuff, and sells it to manufacturers when JIT runs into issues.
You have a warehouse that stores stuff, and sells it to manufacturers when JIT runs into issues.
This exists, those are called distributors. Its just that the fluctuations are too large now.
This is what bringing back supply chain looks like. I am not against it. What is happening is not great, but you know the whole necessary evil thing.. this is it.
This will start with Tech, but will extend to other domains.
This will start with Tech, but will extend to other domains.
Will extend, or already has extended?
The gas pipeline shut down is currently showing this to be an issue for refined fuel. The hurricane that squatted on top of Houston a couple of years ago also shows that to be true as well. We also saw that in toilet paper as well.
The gas pipeline shut down is currently showing this to be an issue for refined fuel. The hurricane that squatted on top of Houston a couple of years ago also shows that to be true as well. We also saw that in toilet paper as well.
The EU and US each spending billions to subsidize semiconductor fabs on their soil. Let's pray the Chinese don't figure out EUVL and crack the bottom of the market.
People mention how building new fabs in the U.S would be a worthwhile yet extremely costly and risky investment that require a monumental undertaking that could only be done through massive tech firms and the U.S government.
What I don't see mentioned too often is promoting chip design. Compared to building a fab, making a startup that simply designs chips should be straightforward but through my initial research into it, that's not the case. Tech cos like Google and Amazon have already begun endeavors into in-house fabless chip design through ex.: TPU and Graviton, but hardware startups seem to be few and far between (there are a few like SciFive and Cerebras, but it's not like they are exactly ubiquitous).
In part it has to due with the huge complexity of modern day chips and the fact that if any new startup wants to be competitive it requires hiring talent with deep and niche industry experience.
I think what's more of an issue is accessibility for newcomers into the space. From what I've read, the top 3 EDA companies control the vast majority of their market and license their tools for hundreds of thousands of dollars. These tools aren't accessible to the majority of students and most likely fledgling startups. I know these tools are extremely complex, but it always stuck me as odd how IDEs like VS Code and the ones made by JetBrains are free or are priced so that the vast majority of developers (whether as individuals or as companies)can afford it, while the top of the line EDA tools are only accessible by established players. I know there is an open source effort to change this, but there's a long way to catch up.
Maybe things will change. AMD started out reverse engineering Intel chips and now are beating Intel in most metrics. Hopefully hardware becomes more hyped over time just as machine learning and software startups have.
What I don't see mentioned too often is promoting chip design. Compared to building a fab, making a startup that simply designs chips should be straightforward but through my initial research into it, that's not the case. Tech cos like Google and Amazon have already begun endeavors into in-house fabless chip design through ex.: TPU and Graviton, but hardware startups seem to be few and far between (there are a few like SciFive and Cerebras, but it's not like they are exactly ubiquitous).
In part it has to due with the huge complexity of modern day chips and the fact that if any new startup wants to be competitive it requires hiring talent with deep and niche industry experience.
I think what's more of an issue is accessibility for newcomers into the space. From what I've read, the top 3 EDA companies control the vast majority of their market and license their tools for hundreds of thousands of dollars. These tools aren't accessible to the majority of students and most likely fledgling startups. I know these tools are extremely complex, but it always stuck me as odd how IDEs like VS Code and the ones made by JetBrains are free or are priced so that the vast majority of developers (whether as individuals or as companies)can afford it, while the top of the line EDA tools are only accessible by established players. I know there is an open source effort to change this, but there's a long way to catch up.
Maybe things will change. AMD started out reverse engineering Intel chips and now are beating Intel in most metrics. Hopefully hardware becomes more hyped over time just as machine learning and software startups have.
> but hardware startups seem to be few and far
back then I used to watch all the videos of https://millcomputing.com/docs/belt/ as that seemed promising, but they seem to be stuck in the hardware production and writing a compiler for that architecture.
back then I used to watch all the videos of https://millcomputing.com/docs/belt/ as that seemed promising, but they seem to be stuck in the hardware production and writing a compiler for that architecture.
If this truly comes to fruition, it would be a prime mover in displacing Chinese global hegemony and stave off its bullish nature.
China maintains economic well being by donating the chip market and also the supply chains.
The Quad has emerged to dislocate Chinese tyranny in the Indo-Pacific, and US chip takeover will be one of the last strokes in China’s downfall.
China maintains economic well being by donating the chip market and also the supply chains.
The Quad has emerged to dislocate Chinese tyranny in the Indo-Pacific, and US chip takeover will be one of the last strokes in China’s downfall.
This crosses into nationalistic flamewar. We don't want that on HN, regardless of $nation. It leads to predictable, nasty discussion that kills the curious conversation which this site is supposed to be for.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
The demand to always be curious and never angry is itself a limitation on the natural unfolding of curiosity. Sometimes the most interesting questions can only be asked by people who are aware of their own anger and the mutual anger of others around them.
I might question that a bit, but it's an empirical question that one could talk about. I don't think we've ever asked people not to get angry, though - that would be not to be human. The request is to not allow it to drive one into internet comments in a predictable way. That's also a lot to ask, but at least it's doable.
Can anger lead one to explore and learn things that wouldn't have happened without the anger? Sure it can, and comments coming from that place are more likely to be on topic here. But that's already a later stage of a pretty complex process. I'm talking about the split-second moment that we all experience when a flash of anger first arises, where we're reacting adversely to something we've heard before and are propelled to respond immediately with something we've said before. A lot of internet comments, including HN comments, are generated in that state, and they aren't distinguished by curiosity.
Can anger lead one to explore and learn things that wouldn't have happened without the anger? Sure it can, and comments coming from that place are more likely to be on topic here. But that's already a later stage of a pretty complex process. I'm talking about the split-second moment that we all experience when a flash of anger first arises, where we're reacting adversely to something we've heard before and are propelled to respond immediately with something we've said before. A lot of internet comments, including HN comments, are generated in that state, and they aren't distinguished by curiosity.
I'm all for having both govt and private structures to support on-shore manufacturing. The outsourcing of the USA's manufacturing core is a strategic blunder of historic scale. While we thought we were exploiting cheap Chinese labor, the CCP was actually thinking in 5-, 100- and 500-year plans to exploit our quarterly-profits myopia. and we fell for it.
But here, I find it particularly ironic that these companies want all the protection of govt regs like Section 230, insulating them from responsibility of content they host and platform, but now want the govt to step in, far too late, and fix the shortage that is harming them.
They are all "libertarian" scolds about govt interference, until they could use some.
Since they collectively have something on the scale of more money than the USG, and they think the USG is a waste of time, they should implement such a consortium themselves.
I say that not merely out of annoyance at the hypocrisy, but I really think that such a consortium of FAANG, Intel MS, Tesla, Micron, and others could much more rapidly and effectively setup such an innovative chip fab co-op or some other structure, and could really kick ass in global manufacturing.
If they really believe their patter, they should just do it.
The best time was 10 years ago, the second best time is now.
But here, I find it particularly ironic that these companies want all the protection of govt regs like Section 230, insulating them from responsibility of content they host and platform, but now want the govt to step in, far too late, and fix the shortage that is harming them.
They are all "libertarian" scolds about govt interference, until they could use some.
Since they collectively have something on the scale of more money than the USG, and they think the USG is a waste of time, they should implement such a consortium themselves.
I say that not merely out of annoyance at the hypocrisy, but I really think that such a consortium of FAANG, Intel MS, Tesla, Micron, and others could much more rapidly and effectively setup such an innovative chip fab co-op or some other structure, and could really kick ass in global manufacturing.
If they really believe their patter, they should just do it.
The best time was 10 years ago, the second best time is now.
If the US government subsidizes them they should also make their services cheaper for US companies.
Hah - one can hope. But really, is there a chance that could happen? I'm not sure if there's any precedent.
Hah - one can hope. But really, is there a chance that could happen? I'm not sure if there's any precedent.
50b would be better spent founding Taiwan entering un and it's emancipation ,and going explicitly to defend them along with Eu instead of wasting money for Intel buybacks, 50b in that industry is nothing, America and free world need Taiwan independence ( and i'm saying that not because Taiwanese ,i'm European but Europe is weak in those geopolitics play and need us for sure)
Globalization is inevitable , resistance is futile, in 300y we will have the world finally united and democrat with some due exception
Globalization is inevitable , resistance is futile, in 300y we will have the world finally united and democrat with some due exception
It would be nice for them to be in the UN.
Can we still build some stuff in the continental Americas? Yes please to all solutions for producing modern stuff.
Can we still build some stuff in the continental Americas? Yes please to all solutions for producing modern stuff.
Sure but probably tsmc and Samsung are the company that can build them in usa, good relations , interdependence , continuous innovation is necessary from USA in the long run , national safety (for us) will be better served with Taiwan in UN and asking Samsung and tsmc to distribute fabs to avoid risks like china , drought, earthquake, .. this distributiin already start to happen
I was replying to the parent, who wants them in the United Nations, as a recognized country on the world stage.
I would also like competition among fabrication providers, and each fabrication provider to have a factory on the same continent I live on, even if it isn't in the same country (which does happen to be the US).
I would also like competition among fabrication providers, and each fabrication provider to have a factory on the same continent I live on, even if it isn't in the same country (which does happen to be the US).
I think this is fine, as long as the companies are paying taxes.
It would be really frustrating to have to listen to companies that refuse to pay taxes ask for tax money.
It would be really frustrating to have to listen to companies that refuse to pay taxes ask for tax money.
It would only help with 10nm+. I don't think throwing the money into the industry could solve the shortage of 10nm-. The real problem is lack of top 20% engineers in this industry. The salary for hardware engineer is uncompetitive with software engineer in US.
IBM use to manufacture PowerPC chips in New York and Vermont. They may still, but I'm not sure.
AFAIK the Vermont plant is owned by GlobalFoundries and is still operational.
I think GlobalFoundries pretty much abandoned the idea of actually improving their tech (https://www.anandtech.com/show/13277/globalfoundries-stops-a...).
I'm not sure what's changed since then.
It may work for GF, but it's not enough for national security interests - critical parts of the supply chain depend on a potentially hostile foreign power (and it's not just silicon).
I'd say the US should invest in TSMC, and push to expand manufacturing capabilities to domesticate some production - but good luck convincing taxpayer's that that's a good idea.
I'm not sure what's changed since then.
It may work for GF, but it's not enough for national security interests - critical parts of the supply chain depend on a potentially hostile foreign power (and it's not just silicon).
I'd say the US should invest in TSMC, and push to expand manufacturing capabilities to domesticate some production - but good luck convincing taxpayer's that that's a good idea.
Been 34 years since Sematech and all that 80's industry bailout. Just switch out Japan for China.
https://en.wikipedia.org/wiki/SEMATECH
https://en.wikipedia.org/wiki/SEMATECH
The problem with outsourcing semiconductor munufacture (as well as other things)and then trying to re-introduce local manufacture again means that the US is in roughly the same place as China is. Both the US and China are starting from scratch in building up new indigenous semiconductor fabs.
The US doesn't have the spare trillions to throw at the problem, whereas China does. Forcing China to build their own fabs by banning sales of US chips has been the US shooting itself in the foot.
The new US semiconductor manufacturers will be out-competed and and outsold by the new Chinese semiconductor manufacturers.
US semiconductor manufacturing will go the same way as US paper production, US tools production, US textile production, US contsruction-materials production, US auto production, US shipbuilding production, ....., (You get the idea).
The US doesn't have the spare trillions to throw at the problem, whereas China does. Forcing China to build their own fabs by banning sales of US chips has been the US shooting itself in the foot.
The new US semiconductor manufacturers will be out-competed and and outsold by the new Chinese semiconductor manufacturers.
US semiconductor manufacturing will go the same way as US paper production, US tools production, US textile production, US contsruction-materials production, US auto production, US shipbuilding production, ....., (You get the idea).
Why would firms like TSMC be members of this lobbying group? https://www.chipsinamerica.org/about/
TSMC is planning to spend $12bn in the next decade on the fab they're building in Arizona (which I believe has some level of US government subsidy). I am sure they would be quite happy to get further government $$$ for their operations.
(TSMC also owns WaferTech and their US fab in Washington state).
(TSMC also owns WaferTech and their US fab in Washington state).
TSMC is currently headquartered on land which is:
* undergoing a drought and they're having to truck in water to sustain their operations.
* claimed by a powerful country different than the one currently controlling it.
Sounds like a lot of risk that they probably would otherwise not want.
* undergoing a drought and they're having to truck in water to sustain their operations.
* claimed by a powerful country different than the one currently controlling it.
Sounds like a lot of risk that they probably would otherwise not want.
TMSC would be the one of companies building / operating fabs. You can argue it's against Taiwan interests, but again they gonna have more leverage if they own US fabs.
Possibly hedging their bets. If China invades and conquers Taiwan, presumably the heads of TSMC would be able to flee to America and keep a chunk of their investments.
Does anyone know if AMD is just not mentioned or is not even part of this group?
If not, why not? Do they think they are better suited under their current arrangement with TSMC and perhaps Global Founderies?
If not, why not? Do they think they are better suited under their current arrangement with TSMC and perhaps Global Founderies?
I found the lobby group and AMD's logo is there... They're probably not mentioned just because they're a blip on the radar compared to what AWS, GCP, and Azure buy from Intel still.
https://www.chipsinamerica.org/about/
https://www.chipsinamerica.org/about/
[deleted]
This sounds great, as long as all the organizations putting money in get commensurate equity in return.
If not, that's going to be a hard pass from me.
If not, that's going to be a hard pass from me.
[deleted]
We can call the effort 'Sematech'.
I think the government just needs to change incentives so that companies stop offshoring everything. Tariffs are much maligned for increasing costs for consumers, but that seems like the most efficient way for getting companies to make stuff here.
Instead of corporate welfare like these rich companies clearly want, why don’t we take the tariff money and use that to fund regular welfare, such as some of the programs Biden is suggesting.
Or maybe we could just take all the tariff money and divide it equally amongst all citizens? That should offset the tariff for the average person, while still allowing us to get companies to figure out the problem for themselves.
That approach can be extended to taxes on pollution as well. Capitalism does work, and we need to recognize that, but it has to be guided and regulated appropriately, or it gets really greedy really fast.
Instead of corporate welfare like these rich companies clearly want, why don’t we take the tariff money and use that to fund regular welfare, such as some of the programs Biden is suggesting.
Or maybe we could just take all the tariff money and divide it equally amongst all citizens? That should offset the tariff for the average person, while still allowing us to get companies to figure out the problem for themselves.
That approach can be extended to taxes on pollution as well. Capitalism does work, and we need to recognize that, but it has to be guided and regulated appropriately, or it gets really greedy really fast.
When the 3060s are flying off the shelves at $1000+ and AMD raised their prices by 50% over the previous generation, why the fuck is there any need for government funding? It's an obscenely profitable business.
Looks like the military industrial complex is about to be expanded with the semiconductor industry.
About to be? They have been involved for the last 30 years. The most public of these was their backdooring of the Clipper chip in the mid-90s
https://www.cryptomuseum.com/crypto/usa/clipper.htm
https://www.cryptomuseum.com/crypto/usa/clipper.htm
Why not look at why companies prefer to build fabs in dictatorships, authoritarian regimes or other unstable places instead of just throwing tax payer money at it?
To me it looks like they take high taxes from everyone and use that money to pay companies to stay in the country? Doesn't that sound like neo-communism?
And U.S. chip tech leadership then ends.
"The iPhone maker said last month it will lose $3 billion to $4 billion in sales in the current quarter ending in June because of the chip shortage,"
The IPhone maker has $3 to $4 billion in incentives to fund its own factory
The IPhone maker has $3 to $4 billion in incentives to fund its own factory
I was curious about the cost and looked it up, the estimates I found were in the $5-15 billion range. Not that it's out of reach or anything, but it's quite a bit more than $3-4B.
For example, this TSMC fab planned in Arizona is estimated to cost $12 billion: https://www.forbes.com/sites/willyshih/2020/05/15/tsmcs-anno...
For example, this TSMC fab planned in Arizona is estimated to cost $12 billion: https://www.forbes.com/sites/willyshih/2020/05/15/tsmcs-anno...
But you don’t build factories to fund quarterly profits. It should be normal risk mitigation if you are dealing at that scale to have a plan B. Even if it’s your own plant.
True but that also creates vertical integration, which is something that has caused many problems in the past. I'd like to see these huge companies solve their supply chain problems by splitting themselves up, in the process creating the companies they need to supply them, without owning them outright or restricting them from working with others in the market. Basically spin-offs that are designed to be spin-offs from the start.
Since the current stockholders would have shares in existing company and the new entities, they're not being damaged in the process so they shouldn't be opposed unless maximizing vertical integration is their plan for continued wealth growth.
Since the current stockholders would have shares in existing company and the new entities, they're not being damaged in the process so they shouldn't be opposed unless maximizing vertical integration is their plan for continued wealth growth.
This is a great point, Apple has plenty of capital to fund it's own dedicated fabs (even if operated by TSMC)
I wonder if it’s as simple as that? Presumably making their own fab would mean they had more chips, but then the chips need to get to their production line.
Shipping is a significant problem at the moment.
> Some of the world’s biggest chip buyers, including Apple Inc, Microsoft Corp and Alphabet Inc’s Google, are joining top chip-makers such as Intel Corp to create a new lobbying group to press for government chip manufacturing subsidies.
> “Government should refrain from intervening as industry works to correct the current supply-demand imbalance causing the shortage,” the group said.
What do they think "intervening" means?
> “Government should refrain from intervening as industry works to correct the current supply-demand imbalance causing the shortage,” the group said.
What do they think "intervening" means?
It is always nicer to do things with somebody else's money. Not with out own, right? Even if we have money to spend.
@dang,
> All: this thread got a flash flood of angry-predictable-obvious comments. Please don't post those! They're really bad for this site. The issue with such points isn't that they're wrong, it's that they're not interesting. Nothing predictable and obvious is. We want interesting conversation here, and that comes from curiosity. If you're feeling agitation rather than curiosity, please wait until that polarity flips.
> The interesting things in a story like this are any diffs from what one would have expected.
>https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
> It's a significant move, so there must be interesting diffs. But sometimes one has to hunt for those, or at least wait for them to occur to one. That sort of waiting is key to getting good HN discussion, which is reflective rather than reflexive.
> https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
What "flash flood of angry-predictable-obvious comments" are you talking about? What would an "obvious" reaction to this news be? I understand if the news was something along the lines "startup incubator for black girls goes live" or something, where you have a divide roughly amongst the line of "let's help the underpriviledged" and "we should see beyond race and gender".
But this news? Could you at least point me to some examples?
> All: this thread got a flash flood of angry-predictable-obvious comments. Please don't post those! They're really bad for this site. The issue with such points isn't that they're wrong, it's that they're not interesting. Nothing predictable and obvious is. We want interesting conversation here, and that comes from curiosity. If you're feeling agitation rather than curiosity, please wait until that polarity flips.
> The interesting things in a story like this are any diffs from what one would have expected.
>https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
> It's a significant move, so there must be interesting diffs. But sometimes one has to hunt for those, or at least wait for them to occur to one. That sort of waiting is key to getting good HN discussion, which is reflective rather than reflexive.
> https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
What "flash flood of angry-predictable-obvious comments" are you talking about? What would an "obvious" reaction to this news be? I understand if the news was something along the lines "startup incubator for black girls goes live" or something, where you have a divide roughly amongst the line of "let's help the underpriviledged" and "we should see beyond race and gender".
But this news? Could you at least point me to some examples?
> What "flash flood of angry-predictable-obvious comments" are you talking about?
They're collapsed at the bottom of the page now. Before that, they were the page.
Downweighting low-quality generic subthreads is one of the key things moderators do here to try to improve the quality of the threads—which unfortunately tends to go to the lowest common denominator by default.
p.s. "@dang" is a no-op. I only saw your question by accident. Please send such questions to [email protected] instead (see https://news.ycombinator.com/newsguidelines.html).
They're collapsed at the bottom of the page now. Before that, they were the page.
Downweighting low-quality generic subthreads is one of the key things moderators do here to try to improve the quality of the threads—which unfortunately tends to go to the lowest common denominator by default.
p.s. "@dang" is a no-op. I only saw your question by accident. Please send such questions to [email protected] instead (see https://news.ycombinator.com/newsguidelines.html).
Hm, it certainly looks a lot like "improve the quality of the threads" == suppress industry critique.
"Industry critique" fills virtually every HN thread. With suppression like that, who needs amplifiers?
Most people who see a moderation decision they dislike leap straight to the idea that the moderators secretly hold $VIEW, ignoring (or not noticing) all the moderation decisions going the opposite way. In reality, we just don't care— I don't have words to describe how profoundly we don't care about commenter opinions. All that was sandblasted out of my brain years ago. The weariness that arises at the thought of caring about commenter opinions is enough to make me want to lie on the floor for a week.
The only thing I care about is trying to prevent this place from plunging to the bottom of the internet barrel, and that only because it's my job. That's the true answer, by the way, to all the accusations of $BIAS that people fire from all directions every day: existential weariness has destroyed the ability to care. It turns out that's a decent proxy for neutrality. Not perfect, of course, but enough as a first pass filter.
Most people who see a moderation decision they dislike leap straight to the idea that the moderators secretly hold $VIEW, ignoring (or not noticing) all the moderation decisions going the opposite way. In reality, we just don't care— I don't have words to describe how profoundly we don't care about commenter opinions. All that was sandblasted out of my brain years ago. The weariness that arises at the thought of caring about commenter opinions is enough to make me want to lie on the floor for a week.
The only thing I care about is trying to prevent this place from plunging to the bottom of the internet barrel, and that only because it's my job. That's the true answer, by the way, to all the accusations of $BIAS that people fire from all directions every day: existential weariness has destroyed the ability to care. It turns out that's a decent proxy for neutrality. Not perfect, of course, but enough as a first pass filter.
I think you're doing a great job, but if that job burdens you with existential weariness maybe you should look for something else to do, for your own sake?
This is just a commenter opinion, though, so feel free to not care about it :-)
This is just a commenter opinion, though, so feel free to not care about it :-)
Thanks! - all of you who replied were being kind. Even lvs was being kind—it's all relative :)
I'm fine and didn't mean the comment to sound complainy. The reason I put it that way is that the alternative (going on about how little I care what people post) would have sounded like a putdown, which would be worse.
It's just hard to communicate this phenomenon—the desensitizing effect of sheer quantity on the brain—in a way that captures what it feels like. Having the inside of one's brain sandblasted is the closest I've gotten so far. Imagine that your fingertips were sandblasted for years - they'd get pretty desensitized. Well, that's the reaction I have to commenter opinions.
Note: I'm not saying that makes me/us unbiased; bias has many forms, and "I am not biased" would be a dumb thing to say in any case, since it is often unconscious. I am, though, saying that commenters who rush to "you just disagree with my opinions!" as an explanation for moderator action do not know what they're talking about—not in the putdown sense, but quite literally.
I'm fine and didn't mean the comment to sound complainy. The reason I put it that way is that the alternative (going on about how little I care what people post) would have sounded like a putdown, which would be worse.
It's just hard to communicate this phenomenon—the desensitizing effect of sheer quantity on the brain—in a way that captures what it feels like. Having the inside of one's brain sandblasted is the closest I've gotten so far. Imagine that your fingertips were sandblasted for years - they'd get pretty desensitized. Well, that's the reaction I have to commenter opinions.
Note: I'm not saying that makes me/us unbiased; bias has many forms, and "I am not biased" would be a dumb thing to say in any case, since it is often unconscious. I am, though, saying that commenters who rush to "you just disagree with my opinions!" as an explanation for moderator action do not know what they're talking about—not in the putdown sense, but quite literally.
No doubt a thankless job, but your claims to being unbiased are obviously going to be faced with skepticism when you label industry critique as "predictable" or "mean" and censor it. It's your perception that it fills every thread, but my perception is that the industry cheerleading in this community is wildly untethered. I think you probably wouldn't deny that your goal is to stem generalized negativity, based on the bias that negativity is bad and positivity is good "for discussion." It's not as if that bias has no consequence.
If you were being consistent about this, by the way, you'd be censoring the banal security and bug sanctimony that dominates every thread on that topic. A buffer overrun? Good heavens! An unsalted pw hash? Fetch my inhaler!
If you were being consistent about this, by the way, you'd be censoring the banal security and bug sanctimony that dominates every thread on that topic. A buffer overrun? Good heavens! An unsalted pw hash? Fetch my inhaler!
It's not possible to be consistent because it's physically not possible to read everything, or even close.
I'm sure you're right that there are tropes of reaction in particular areas that deserve to get moderated by the same principles (of avoiding repetition etc.) and I don't doubt that you see some of them more clearly than I do. If you want to help with that, you could let us know when you see them, particularly when they're sitting at the top of a thread, choking out more interesting discussion. Downweighting those is probably the single biggest thing we can do to help discussion quality.
I wouldn't use the word "negative" - that covers way too many things. We're not trying to exclude negativity. We're trying to prevent certain common forms of it from dominating. I don't think it's so hard to understand why—this place would cease to be interesting if they did dominate. Thoughtful critique is always welcome, and we don't label that "predictable" because it isn't.
Re "industry cheerleading in this community is wildly untethered" - such perceptions are conditioned by the passions of the perceiver. If you had opposite passions, you'd have opposite perceptions. The data set has more than enough data points to satisfy all of these. That is by far the most consistent phenomenon I've observed on HN; nothing else comes close.
I'm sure you're right that there are tropes of reaction in particular areas that deserve to get moderated by the same principles (of avoiding repetition etc.) and I don't doubt that you see some of them more clearly than I do. If you want to help with that, you could let us know when you see them, particularly when they're sitting at the top of a thread, choking out more interesting discussion. Downweighting those is probably the single biggest thing we can do to help discussion quality.
I wouldn't use the word "negative" - that covers way too many things. We're not trying to exclude negativity. We're trying to prevent certain common forms of it from dominating. I don't think it's so hard to understand why—this place would cease to be interesting if they did dominate. Thoughtful critique is always welcome, and we don't label that "predictable" because it isn't.
Re "industry cheerleading in this community is wildly untethered" - such perceptions are conditioned by the passions of the perceiver. If you had opposite passions, you'd have opposite perceptions. The data set has more than enough data points to satisfy all of these. That is by far the most consistent phenomenon I've observed on HN; nothing else comes close.
Sometimes a thoughtful critique can be obvious and widely held, as I think it was here. Endeavoring to belabor a simple argument or feign a unique thought process has little intrinsic value. Sometimes a spade is a spade, and that should be OK -- if indeed the goal is to be intellectually honest. But perhaps the goal is to steer the good fortunes of the tech industry and venture capitalists and the investor class, and that certainly would not surprise me greatly on an internet forum run by a venture capital firm.
If it’s not for dang, this place would turn into a 4chan. Thank you, dang!
Hi dang, thanks for the amazing work you do moderating HN.
Reading your words "The weariness that arises at the thought of caring about commenter opinions" got me thinking about how the unique experience (even if perhaps not specially positive) that a moderator has to go through can influence his view of the world. I hope this equilibrium that you seem to have reached makes you happy, I can imagine how moderating can be an ungrateful job.
Reading your words "The weariness that arises at the thought of caring about commenter opinions" got me thinking about how the unique experience (even if perhaps not specially positive) that a moderator has to go through can influence his view of the world. I hope this equilibrium that you seem to have reached makes you happy, I can imagine how moderating can be an ungrateful job.
The ideology of the tech elite is to see themselves as cool, detached, rational observers of the world. So when people feel regular human emotions in response to things, they need some way to deride them for it.
That's a misunderstanding. We're just trying to have an internet forum that doesn't suck in predictable ways. People come to HN for relief from that, in the hope of finding something that's a little more interesting. If they come here and see people yelling the same angry, recycled points over and over again, that's obviously not interesting. It isn't because of emotion per se, and the idea that the people operating this site have any sort of anti-emotional ideology is far off base! I don't identify with that any more than I imagine you do.
[deleted]
Dupe from earlier today:
https://news.ycombinator.com/item?id=27116601
https://news.ycombinator.com/item?id=27116601
On HN, it only counts as a dupe if the previous submission got significant attention. This is in the FAQ: https://news.ycombinator.com/newsfaq.html. Lots of past explanation here too: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
Didn't know that! I always search for links before submitting and many times I've seen a previous submission with little to no traction (and then subsequently not posted it to avoid dupes).
Thanks for searching first! If it's a good article and hasn't had attention yet, we certainly hope you will post it - that's why we allow reposts, to give good articles multiple cracks at the bat.
With the CCp constantly threatening to invade Taiwan, there's a decent supply chain and security justification for this.
How about you spend some of that cash hoard and do it yourself? I would rather the government start dealing with cyber attacks because that's going to affect the east coast something fierce if this crap keeps going.
If the government gives money then it better talk to these companies about where their items are produced.
If the government gives money then it better talk to these companies about where their items are produced.
The reason these items are not produced at home is because of government policies.
I agree that they should be the ones to invest in these fabs, but it also makes sense for the government to make sure that is an internationally competitive move for them to make, rather than forcing them to pour water uphill.
I agree that they should be the ones to invest in these fabs, but it also makes sense for the government to make sure that is an internationally competitive move for them to make, rather than forcing them to pour water uphill.
> The reason these items are not produced at home is because of government policies.
Which policies? I believe you, genuinely curious
Which policies? I believe you, genuinely curious
Trade deals, plus subsidies by other governments are the general categories.
Right. Other governments are always going to subsidize though (unless you work that into the trade deals I suppose).
Obviously any barriers to the success of US fabs should be removed, but it's not clear if there's a market for more expensive US chips - if there were, you'd think someone would build it without the need for a subsidy
Obviously any barriers to the success of US fabs should be removed, but it's not clear if there's a market for more expensive US chips - if there were, you'd think someone would build it without the need for a subsidy
> Other governments are always going to subsidize though (unless you work that into the trade deals I suppose).
Often trade deals do include agreements about subsidies.
> it's not clear if there's a market for more expensive US chips - if there were, you'd think someone would build it without the need for a subsidy
They wouldn’t be more expensive with the subsidy.
Often trade deals do include agreements about subsidies.
> it's not clear if there's a market for more expensive US chips - if there were, you'd think someone would build it without the need for a subsidy
They wouldn’t be more expensive with the subsidy.
> Often trade deals do include agreements about subsidies.
Yes but it's complicated when you're dealing with China where the govt is heavily involved in many "private" cos
Yes but it's complicated when you're dealing with China where the govt is heavily involved in many "private" cos
Agreed
I've said it before: there's lots of low-hanging fruit in semiconductor manufacturing. Even ignoring the present shortage, it's been the case for a while that there are gains to be had for a competent tech giant with deep enough pockets to take on manufacturing themselves.
Too many outsiders tend to err on giving the benefit of the doubt, thinking that there's some sort of Chesterton's fence (you can see this in the comments here), but it's just not true. So much of what causes delays that I've seen firsthand comes down to unbelievably inefficient business processes plus the less-than-stellar pool of candidates that the industry overwhelmingly prefers to hire from.
Too many outsiders tend to err on giving the benefit of the doubt, thinking that there's some sort of Chesterton's fence (you can see this in the comments here), but it's just not true. So much of what causes delays that I've seen firsthand comes down to unbelievably inefficient business processes plus the less-than-stellar pool of candidates that the industry overwhelmingly prefers to hire from.
never spend your own money when you can convince the government its in national interest and thus worthwhile for tax dollars!
~Montgomery Burns...probably
~Montgomery Burns...probably
> How about you spend some of that cash hoard and do it yourself?
Because they are for-profit entities with shareholders interest as top priority, and it is much more profitable to use TSMC/Samsung for them. With subsidies, the situation may change.
Because they are for-profit entities with shareholders interest as top priority, and it is much more profitable to use TSMC/Samsung for them. With subsidies, the situation may change.
My exact reaction as well. Or how about all that money used for stock buy backs over the last decade? Intel especially. It's been mismanaged and now it's putting its hand out for government money while having spent billions on stock buy backs. No more but of course it'll happen because the politics of it. Socialism for the rich and corporations, capitalism for the rest of us.
I can't imagine Andy Grove would have supported that.
Stock buy backs are just more tax efficient dividends for investors. If the company is suffering from mismanagement, dividends are good, because it returns capital to investors rather than letting managment destroy it.
Intel has been building fab capacity pretty much always, it's just that their 10nm process doesn't work as intended, and they haven't really been able to fix it, so their development is stalled and their production numbers aren't great and they haven't been able to stop making processors at 14nm to do other things with those fabs. So far, I think we've been hearing of delays on their 7nm node as well, so no good news there.
That said, if there's a market for a 14nm or more fab in the US, Intel has shown they can build that, but they'd probably prefer to spend their money getting 7nm to work than building an old tech fab; spending other people's money on a new 14nm (or whatever) fab in the US is still good for Intel though, so it's no wonder they'd put their hand out to do that.
Intel has been building fab capacity pretty much always, it's just that their 10nm process doesn't work as intended, and they haven't really been able to fix it, so their development is stalled and their production numbers aren't great and they haven't been able to stop making processors at 14nm to do other things with those fabs. So far, I think we've been hearing of delays on their 7nm node as well, so no good news there.
That said, if there's a market for a 14nm or more fab in the US, Intel has shown they can build that, but they'd probably prefer to spend their money getting 7nm to work than building an old tech fab; spending other people's money on a new 14nm (or whatever) fab in the US is still good for Intel though, so it's no wonder they'd put their hand out to do that.
Stock buybacks end up being nothing other than a transfer of wealth from taxpayers to shareholders because anytime something happens the government steps in bails them out because they're too big. Now everyone knows that so there's no incentive for companies to act responsibly. The fact that it's now accepted and normalized is incredibly disheartening to say the least. No government subsidies. Let the capitalists figure it out. Otherwise let's just nationalize everything instead of privatizing profits and socializing losses.
The money printers are going full bore. Why not get it for free?
> Some of the world’s biggest chip buyers, including Apple Inc, Microsoft Corp and Alphabet Inc’s Google, are joining top chip-makers such as Intel Corp
> to create a new lobbying group to press for government chip manufacturing subsidies
None of those companies need subsidies.
> to create a new lobbying group to press for government chip manufacturing subsidies
None of those companies need subsidies.
I'm ok with subsidies if they open up their designs.
Commoditize your complement. To some approximation and with few exceptions, hardware is everybody's complement.
Commoditize your complement. To some approximation and with few exceptions, hardware is everybody's complement.
why? even if they open the designs the CapEx requirements for modern chip making leaves it in the realm of megacaps and governments.
Subsidise chips based on RISC V architecture?
In terms of fairness to these companies, yeah. They're rich and it sucks to give them our tax dollars.
But in terms of maintaining the competitiveness and security of the US, seems like they do.
As a rule, I don't care if giving someone money is fair. I care about whether it causes a general increase in the welfare of our society.
Even as a non-recipient of these subsidies, I might be better off if they existed if they reduce risk to the supply chain I'm downstream of as a consumer. If it's unfair to me but makes me better off, I'm not going to cry over the unfairness.
(Maybe tariffs on imported chips are a better solution, but I suspect that's more politically fraught, and solutions that work are better than solutions that don't.)
But in terms of maintaining the competitiveness and security of the US, seems like they do.
As a rule, I don't care if giving someone money is fair. I care about whether it causes a general increase in the welfare of our society.
Even as a non-recipient of these subsidies, I might be better off if they existed if they reduce risk to the supply chain I'm downstream of as a consumer. If it's unfair to me but makes me better off, I'm not going to cry over the unfairness.
(Maybe tariffs on imported chips are a better solution, but I suspect that's more politically fraught, and solutions that work are better than solutions that don't.)
> As a rule, I don't care if giving someone money is fair.
Sure
> I care about whether it causes a general increase in the welfare of our society.
But by what metric do you measure that? There has been a tech boom in the last couple of decades but the inequality divide has been growing day by day.
Sure
> I care about whether it causes a general increase in the welfare of our society.
But by what metric do you measure that? There has been a tech boom in the last couple of decades but the inequality divide has been growing day by day.
Obviously they don’t need subsidies.
But economics works on incentives. Problem is these incentives are discontinuous and can change on a dime. You can accelerate a change by aligning incentives.
Chip manufacturing is important for products, but its also a security risk. The government should put up support to incentivize these companies to redirect capital towards US manufacturing. Otherwise the incentives for these companies are not going to align on a timeframe that is acceptable to employees and shareholders.
Now we can make all kinds of normative claims about how this should play out, but I honestly don’t have the energy to entertain that kind of conversation anymore.
But economics works on incentives. Problem is these incentives are discontinuous and can change on a dime. You can accelerate a change by aligning incentives.
Chip manufacturing is important for products, but its also a security risk. The government should put up support to incentivize these companies to redirect capital towards US manufacturing. Otherwise the incentives for these companies are not going to align on a timeframe that is acceptable to employees and shareholders.
Now we can make all kinds of normative claims about how this should play out, but I honestly don’t have the energy to entertain that kind of conversation anymore.
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If they thought the risk of building a fav and launching a business was reasonable, they'd already have.
They acknowledge the importance of the issue, but are not willing to take risks in a difficult an foreign (to them) business.
So, mostly worthless words.
They acknowledge the importance of the issue, but are not willing to take risks in a difficult an foreign (to them) business.
So, mostly worthless words.
Their international competitors have subsidies. If the government doesn’t match that then you are asking these companies to pour water uphill.
Wealthiest entities on Earth lobbies government for handouts.
I'm not even being snarky, this is just a lobby group trying to socialize costs to avoid spending their own money. Explicitly: “Government should refrain from intervening as industry works to correct the current supply-demand imbalance causing the shortage,”. The industry is not stripped for cash at all, so if the government is not expected to steer, why should it put up the people's money?
I'm not even being snarky, this is just a lobby group trying to socialize costs to avoid spending their own money. Explicitly: “Government should refrain from intervening as industry works to correct the current supply-demand imbalance causing the shortage,”. The industry is not stripped for cash at all, so if the government is not expected to steer, why should it put up the people's money?
The worst part is that they might get such handouts. I don't understand how, given their mighty fortunes, they haven't achieved 99.9% automation to keep costs as low as in cheap labour countries. If anything I think the EU, US and UK should subsidise research in achieving near full automation. Sucks for low skilled labour but they’ve already been fucked when jobs were moved overseas.
If I understand the situation correctly, the current president is already willing to enact such a law. The lobbying seems to be about pressuring congress into actually passing it. Fair enough, everyone is entitled to lobby for their interests. What I take umbrage with is that they want to turn subsidies into handouts.
It's beyond ironic to call for subsidies but then label oversight as "intervening". Subsidies are interventions. Without a government plan and oversight they are just legalized corruption.
It's beyond ironic to call for subsidies but then label oversight as "intervening". Subsidies are interventions. Without a government plan and oversight they are just legalized corruption.
This is just the PR spiel we're seeing. What they're really saying is the usual: Local cost is too high to be competitive, subsidize or lose jobs. It's a naked power play (or pragmatic statement of fact, depending on your viewpoint). They're just framing it in a way they think will fit the current, protectionist mood.
1. Set up off shore tax havens to not pay tax
2. Lobby government for subsidies
3. Laugh all the way to the off shore bank
2. Lobby government for subsidies
3. Laugh all the way to the off shore bank
protip: the funds are in on-shore banks under offshore business names. this isn't controversial, just something many don't understand as readily available and commonplace.
Protip: Just because something is legal doesn't mean it's ethical or good
I didn't make any statement on that and you are assuming that the lack of signaling means acceptance.
I said onshore banks open accounts for many entity types that are not limited to just humans or just businesses from the 50 states.
The prior poster assumed a bank in another country was necessary, which can be very difficult to open and maintain for a US citizen owner of an offshore company.
I said onshore banks open accounts for many entity types that are not limited to just humans or just businesses from the 50 states.
The prior poster assumed a bank in another country was necessary, which can be very difficult to open and maintain for a US citizen owner of an offshore company.
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> Intel Corp to create a new lobbying group to press for government chip manufacturing subsidies.
Assholes. They don't need subsidies to produce chips competitively in America (since they already do) and Intel is one of the reasons the industry is so reliant on TSMC.
I'd much rather see this money go to founding a domestic TSMC competitor than to Intel. Or even to TSMC to have them build plants in North America.
Fabless design is here to stay, so it behooves the country (and world) to have enough designless fabricators to ensure sufficient manufacturing capacity.
Assholes. They don't need subsidies to produce chips competitively in America (since they already do) and Intel is one of the reasons the industry is so reliant on TSMC.
I'd much rather see this money go to founding a domestic TSMC competitor than to Intel. Or even to TSMC to have them build plants in North America.
Fabless design is here to stay, so it behooves the country (and world) to have enough designless fabricators to ensure sufficient manufacturing capacity.
Yes, let's subsidize a domestic TSMC competitor and pay for it by increasing corporate tax rates / closing loopholes. This is not a snarky comment btw.
It's in the same order of magnitude as the interstate highway system, as long as the chips are sold fairly, I think it counts as infrastructure.
TSMC is a member of this Semiconductors in America Coalition lobbying group already, apparently https://www.chipsinamerica.org/about/
How ballsy for a bunch of corps that barely pay taxes to ask for government subsidies.
I mean you only need to get one agency head, or one head of state / cabinet member, or the majority of congress who votes in unison right now to agree, once
Everyone who works there should be already paying income taxes. Why the double taxation?
Because they are freed from the liability of the business's actions by way of the state allowing liability limiting corporate entities to exist. When the business assumes liability from the owners, it also assumes tax responsibility. If you don't want to pay corporate taxes, don't form a corporation.
How much tax did Bezos pay on his fortune? Not income tax but capital gains, and probably not as much as you'd expect.
If you want the Bezos's of the world to pay more tax, then lobby for that directly. Using the corporate tax as a proxy for "screw rich people" is distortionary and ineffective.
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Do corporations pay tax on their payroll? I'm not understanding what's being doubly taxed here.
Actually, they do. You pay half of the payroll tax and the company pays the other half. This is payroll tax and not income tax, that is Social Security and Medicaid. This is why if you're self employed, there is a self employment tax.
That said, I think that the parent is making a different point. I think the parent's point is that if the owners and employees of a company are paying taxes, then taxing the profit of a company taxes twice, once for the profit and then again for the income that comes from the dividend.
That said, I think that the parent is making a different point. I think the parent's point is that if the owners and employees of a company are paying taxes, then taxing the profit of a company taxes twice, once for the profit and then again for the income that comes from the dividend.
dhduusheff(2)
Apple and the likes need more chips to make more money and they have big coffers. Instead of public subsidizing those fat cats let them take care of that pesky money issue. They can afford it.
Should USA chip production happen? Probably. But it won't happen without gov't subsidies. US labor is wayy more than some slave in a Foxconn factory trying to commit suicide by jumping off the building (hence the nets). I'm not saying I agree with subsidies, or think the USA should foot the bill, but the honest to god truth is that shareholders and board members WILL not approve of US companies paying for all this. No one wants to see their stock price drop.
How do you remedy this? Create a "National Security" issue and have Uncle Sam fund it. The military has the same playbook https://www.youtube.com/watch?v=VSJjlaggbK0 .
How do you remedy this? Create a "National Security" issue and have Uncle Sam fund it. The military has the same playbook https://www.youtube.com/watch?v=VSJjlaggbK0 .
The Fed could possibly buy TSM and provide loan and grants to TSMC to accelerate their plant in Phoenix. I don't know how much that would impact the projected 2024 start of operations. https://www.bizjournals.com/phoenix/news/2021/03/02/taiwan-s... This is an especially good position for Taiwan right now. Also worth noting the concerns around available labor to staff the operation https://www.bizjournals.com/phoenix/news/2021/03/02/taiwan-s... as much of the US lacks effective infrastructure.
The issue with such points isn't that they're wrong, it's that they're not interesting. Nothing predictable and obvious is. We want interesting conversation here, and that comes from curiosity. If you're feeling agitation rather than curiosity, please wait until that polarity flips.
The interesting things in a story like this are any diffs from what one would have expected.
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
It's a significant move, so there must be interesting diffs. But sometimes one has to hunt for those, or at least wait for them to occur to one. That sort of waiting is key to getting good HN discussion, which is reflective rather than reflexive.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...