WRT to lack of a skilled workforce, here is an interesting anecdote. I remember back in the late 90's, Intel had to fire most line workers in their FABS, and hire people with Ph.D.'s in solid-state physics.
I actually knew one of these people who were fired: She was our housecleaner. And--like the supper-smart garbage man of the Dilbert Cartoons, she was very smart. Smarter than me. I know because she helped me solve some problems I couldn't solve on my own.
Why was she cleaning houses? Tragic story. No doubt she could have gotten a Ph.D., but she was older, had some health problems which wouldn't let her work 60-80 hours a week. And she was black, perhaps discrimination was a factor too.
I'd hate to even think of how smart you have to be to work in FABs today, but let me tell you, not even $8.5 billion is going to create more of these people. Best you can hope for is you can pay them enough to get them to work for you.
It wasn't just intel, it was every semi-conductor manufacturer in the valley (hence the inability to find other work).
They closed because it was cheaper to build in other countries, or to outsource from contractors who build in other countries (where organized labor doesn't exist). The U.S. lost thousands of high-paying (and tax-paying) labor positions and atrophied the skills that went with them. Intel profited from it.
These people were disproportionately minorities, disproportionately well-represented by unions, and had made a lot of progress in improving their working conditions re: use of terribly corrosive chemicals. All of that backslid when labor went off-shore.
Now, the taxpayer has to pay Intel $8.5B to bring back manufacturing capacity to the U.S.; nice job, if you can get it. It'll be really interesting to see who takes these jobs, and how quickly we can rebuild the muscles that Intel shareholders profited from decomposing.
TSMC is paying around $23/hour to manufacturing technicians in Arizona. They’re also sending people to Taiwan to get trained and apparently it’s brutal enough that most people drop out of the program.
You can do better than that flinging burgers at Dicks here in Seattle.
That’s wild. For something that requires a trip to Taiwan for training, which I imagine makes it not an easy job, why does it pay so little? I’d think retention would be important if the training is that intensive.
It's because in Taiwan that's standard compensation for this field, and for that specific project it's TSMC. They don't want to pay US rates if they can avoid it, and it's possible that their company would be unprofitable if they had to.
> They don't want to pay US rates if they can avoid it, and it's possible that their company would be unprofitable if they had to.
Ha, ha, ha. No.
Let's see, from Wikipedia. 2022 data:
- Number of employees: 73,090
- Net income: US$27.67 billion
Which gives us: 27.67e9/73090 = 369,407.57
So, just looking at their net income (which already takes into account the salary costs of said employees), they could afford to pay every employee US $370,000 a year before being unprofitable.
Between US $50,000 and US $370,000 there is quite some margin for improvement. And clearly, the low wages they pay have nothing to do with the risk of being unprofitable.
Semiconductor manufacturing is very capital intensive so running the company as a nonprofit is a nonstarter.
You've presented historical data to counter the of argument that wage/salary growth MAY lead to potential unprofitability solely on the basis of one year's profit numbers. That's literally driving forward looking in the rearview mirror because it says very little about how profitable the company would be if it raised wages/salaries. At best it may be a first order approximation of how profitable the company would have been in 2022, if it paid people more then. However, even for 2022 the calculation isn't as simple as dividing the profit by the number of employees and keeping the company profitable.
Hiding behind "it's complicated" is an over-used excuse to avoid a more critical look at a problem.
A one year point is a crude approximation, but it does illustrate the order of magnitude mismatch between what they could pay their employees vs what they actually pay them, which was the short point being made.
More broadly, TSMC had no problem shelling out $9.9 billion to shareholders that same year (or $123,000+ per employee). So the argument of saving every penny because of the "capital intensive" nature of their business is also out the door.
And complaining about a single year estimate in the case of TSMC is barking up the wrong tree. They've had net incomes in the billions at least since the beginning of the 2000s.
So no, in the case of TSMC, they have no reason to pay wages below what is considered a "living wage" in Phoenix, Arizona.
Our markets, not even remotely isolated to semiconductor, are saturated in these bloated old businesses that are running on the razor's edge of financial ruin, yet every quarter are paying out catastrophic amounts of money in stock buybacks and generous compensation packages for the executives running them into the ground. It's beyond fucking parody at this point.
Also I wonder what the excuses will be once all the underdeveloped nations do what China did and actually develop. We have a finite number of exploitable countries on the planet with workers willing to work for pennies to assemble products. At SOME POINT this party is going to end, it has to.
The effect of globalization is that the west is bringing the rest of the world over the poverty line at the cost of deteriorating ourselves. Hard to say how this will end.
Ok then perhaps offer a better approximation, let's say 50% of profit instead of the 100% share. That is still a very decent wage and is on top of the existing labour expense which profit has already accounted for
Companies have absolutely non incentive to do this. TMSC turned that profit in 2022 with wages as-is, why would they spend more on wages if they don't need to?
Don't get me wrong, I wish companies were incentivized to do right by their employees. That's just not how the world works, companies only need to do the bare minimum to get the job done and leave as much profit on the table as possible.
- what if the EU writes a rule and then fines you for breaking it as a percentage of revenue? You can't have no money available for the future. You need a huge amount of money available for the future, as otherwise a company that pays its workers less (but still retains them) will beat you eventually
- why would anyone invest in you for the chance of no return? It's a high risk strategy to put $1m on a number in roulette for the chance of making a fortune; it's a ridiculous one to put $1m on a number in roulette for the chance of getting your money back
As a tangential point of comparison $23 per hour is a common rate for nannies/baby sitters in Atlanta Georgia without a degree or development certificate. One we use is a former teacher who disliked the work.
You may not have been making pizza where the $23/hr employees were spending their money.
Plus, they can only eat so much pizza. Having more of them switching to pizza making would not necessarily raise their wages, i.e. a glut of pizza makers should depress pizza making wages.
they already have that, it's called dominoes. there's still a market for tattooed freaks with culinary opinions throwing dough and poking a fire with a stick
It's wasn't just the semi-conductor manufacturers either.
The PRC had the supply chain from the bottom up (to some extent funded by the western consumers and corporations), whereas the US is trying to get reindustrializd from the top down, without first building a solid fundamental. To make the tough jobs easy, you must have the easy jobs done well first.
Exactly. That's why this has everything to go wrong. You cannot create the talent and the supply chain needed for this with $8B. The US needs to solve much more fundamental things like their schools and the local supply chain to even have a shot of creating a successful chip business again.
Recall, it takes years to build these fabs. Fortunately, people will be more likely to spend years in grad school training for these jobs, if they know that when they graduate there will be fabs to hire them.
Rebuilding is a chicken and egg problem, but it’s not as hard as defeating the axis powers in WWII. If this country has the Will to do something, it’s gunna get done.
This is harder than defeating an enemy militarily. Defeating someone militarily is relatively simple to do; and every country figures it out from necessity. It is an expensive process, but ultimately mainly about deciding that the high price is worth it (and if the country can afford it/has the industrial base to sustain the effort, but neither of those things can be changed in a conflict).
Building a profitable industrial chain is significantly harder to do and much rarer to achieve. The US certainly has the people to do it, but it isn't clear that the political trade-offs will be acceptable.
Also remember that the US was at the top of its industrial power during second WW. This time has passed long since. Nowadays it would have a hard time outproducing China and Russia, so I don't think that even a world war would be a solution (not considering the fact that a new WW could be the end of the world itself).
> They closed because it was cheaper to build in other countries, or to outsource from contractors who build in other countries (where organized labor doesn't exist). The U.S. lost thousands of high-paying (and tax-paying) labor positions and atrophied the skills that went with them. Intel profited from it.
This doesn't make sense, Intel did and still does most of its manufacturing in the US, didn't it? (See: https://en.wikipedia.org/wiki/List_of_Intel_manufacturing_si...) I assume the thing that changed if there was a major loss of jobs was automation, not outsourcing. It's a lot easier to keep a clean room clean if you don't need to let people (with their hair and dead skin particles) in.
Their DoD and Dod-adjacent business (read: high-nanometer) processes are largely in the U.S.
Their consumer and server business (read: low-nm) processes are largely international.
The wikipedia page you linked evinces this statement.
The phrase "most of its manufacturing" is a Simpson's Paradox statement. It's true, but not in a way that's interesting. High-nanometer processes are easier to automate.
I went down a bit of a rabbit hole to try and find manufacturing stats per fab, and it's pretty difficult to find.
First, it's worth noting that most of the <300nm fabs in the U.S. are really new. The Oregon facility was historically the most relevant fab, Arizona seems to be (potentially?) supplanting it from a design and capacity POV.
But the Israeli fab really shouldn't be discounted, they employ 12k people in Israel. I can't find numbers on production output, but that headcount is a similar OOM to the Oregon plant. Most of their successful, recent designs came from Israel, too. The Ireland fab employs 4.5k people. There's 22k in Oregon, unclear on the breakdown of manufacturing and R&D/non-manufacturing roles.
As I understand it from said rabbit hole, they do a lot of design and "proofing" manufacturing of low-nm processes in Oregon, but rely on Ireland and Israel to scale-up.
It seems that the recent (i.e. post-9/11) Arizona plants are more geared towards high-volume production. Regardless of what calculations went into those decisions, they're a hedge against political instability in Israel.
Add the numbers get bigger and the risks increase, the number of "cheap labor" countries where investments in large tech infrastructure are safe is shrinking every year. Maybe South America? Intel has (had?) a fab in Costa Rica...
South America is very underrated. People still think about the region in 20-30 year old stereotypes, but most countries have gotten much more stable, economics have improved drastically. Workforce is highly educated, different countries share a very similar culture and mostly speak the same language, which means that a lot of things can be scaled much easier. Of course, there's also Portuguese, which is still somewhat similar, and Quechuan languages speakers who learn Spanish as a second language, but this doesn't change the equation much.
The only thing the region lacks is investment and ecosystem to attract and protect it.
Venezuela's perpetual political/economic fuck-ups (going on 125 years at this point? [0]), Argentina's recurring currency fuck-ups, some really nasty left-wing vs right-wing spats between countries, and a generally weak rule of law / judiciary (in comparison with executive branches) deserve mentioning too.
South America could stand to learn a LOT from ASEAN -- stability = international investment = economic growth = happy people = stability.
I hope it sorts itself out! And I know Columbia and Brazil are developing some impressive technical industries, especially since they share North America timezones. But it should be honest about the headwinds.
The problem is that the “stability” and invesment interventions from the USA has typically come with some rather unpleasant strings attached. I think it’s either patronising or ignorant to suggest that various Latin American countries policy decisions weren’t made with that in mind.
>They closed because it was cheaper to build in other countries, or to outsource from contractors who build in other countries (where organized labor doesn't exist). The U.S. lost thousands of high-paying (and tax-paying) labor positions and atrophied the skills that went with them. Intel profited from it.
How about asking the workers in other countries who benefitted from this transaction if they were happy with the arrangement? Or do only Americans matter? Maybe you think foreigners are fit only to till dirt fields as subsistence farmers?
> How about asking the workers in other countries who benefitted from this transaction if they were happy with the arrangement?
I'm sure they were happy with the arrangement, they benefitted from it in the short-term. You should speak with Foxconn workers today, though. The story is more nuanced.
> Do only Americans matter?
This is a weird claim to bestow on my original post.
Labor conditions matter. The balance of power of power and profits between labor and capital matters.
I promise you, semiconductors did not move production to ${foreign_country} out of the goodness of their hearts, to better the living conditions of ${foreign_country}'s impoverished underclasses.
They did it because the balance of power (and profits) had shifted towards labor in this country in the 40s, 50s and 60s, and the population of ${foreign_country} was cheaper to exploit.
It's also worth pointing out (again) that a disproportionate of people in manufacturing in California semiconductor industry were 0th or 1st generation immigrants (from the Philippines, Mexico, China and so on) or internal refugees from the Jim Crow South who migrated to California for military work during WW II. These were people who were literally at most 1 generation removed from subsistence farming.
> Maybe you think foreigners are fit only to till dirt fields as subsistence farmers?
Again, a weird claim to stick me with.
Humans working in manufacturing should be free to negotiate living wages, safe and healthy working conditions, reasonable time off and retirement policies, illness/disability insurance, and so on.
The reason U.S. companies prefer "foreigners" (domestically and abroad) is not because foreigners don't deserve these things as much as any other person, it's because they know they can get away with exploiting them for a few decades before they develop class consciousness.
In the last few years, workers in China have been striking to demand what workers in California fought hard for 70-80 years ago.
Entirely coincidentally, Foxconn began "diversifying" its manufacturing capacity into India and other countries. Do you think it's because they want to help uplift people from subsistence farming? :)
There's a certain irony in the point being made by that person because they think it means organized labor is good, and lack of it is cheap and bad.
Those workers could get the job done just the same without the overhead of labor unions, and this person still thinks that the 'cheapness' means that organized labor is magically better.
You won't get an earnest answer though. Perhaps some nonsense about how these workers would be even better off with organized labor (until their jobs move to the next, cheaper bidder, of course).
That’s the power of slave labour. Global economy is really modern day slavery. When you are making trillions in USD in the USA, paying someone in china $2 a day would’ve been an Egyptian pharaohs dream.
Those "slaves" have generally become quite wealthy. The median wage in Taiwan is close to the UK (it has been higher in the past), and China has moved out of poverty and steadily improving which is a pretty reasonable proxy for all of Asia (India has some catching up to do, but they'll get there).
This is the same tired argument that was made when the US pushed these jobs off the continent - if the very low wage jobs are allowed exist; eventually enough wealth will be generated that nobody needs to do them. Those sweatshops are in fact a path to prosperity. In some sense it is a cosmic win that all the capital was developed in Asia because they needed it more, but that probably wasn't the sort of charity that policymakers intended at the time.
>>Yup nowadays we import the product not the slaves.
I think you may be undermining what slavery was .
I have met folks who work in workshops in India that export stuff to USA and other developed nations. Those workers make a whole lot more money than their neighbors who produce for the domestic market and they have better working conditions. Their overall quality of life, while nowhere close to G8 standards, is so much better. And their community benefits from their increased wages.
The people who flagged this comment must believe that someone working at McDonald's for low wages is the same as someone being held as property, their family members terrorized, raped, beaten, whipped, murdered, etc. at the whim of their legal owners.
It's amazing to me the number of people ranting at each other about this, when it seems like straight up BS. Intel's current and past manufacturing sites are not in low cost of living locations: https://en.wikipedia.org/wiki/List_of_Intel_manufacturing_si... There are two exceptions: one in China, one in Malaysia, but that is two out of dozens in the US/EU/Israel.
And even then, Malaysia has a bigger GDP PPP per capita than Chile, Bulgaria, Uruguay, and only slightly behind Greece! Quite a bit above Mexico too! They aren't a low-cost country.
>> Honestly it blows my mind they were able to give control of one of the most important industries in the world over to a foreign country like that.
The engines of capitalism only look 1 quarter ahead. And the politicians who support them only look up to the next election. Unless you are majority or largely controlled by your founders, who care about building a good legacy.
Sounds like there is a market opportunity for long term disrupters. We are seeing it on the high end (SpaceX, Tesla) and on the low end a bit (Origin USA). Maybe if you can examine each industry infected by MBAs and see which ones have had enough quality fade caused by their rot to maybe disrupt?
Market investment is ultimately determined by plausible narrative, and by the national narratives at the broadest level.
That is, if your industry is tuned in to the investment climate, the things being pursued match the things that people are saying "will make the country great", and are backed up by legislation and financing deals.
In the previous era, the US was focused on a deindustrializing narrative: the things that made America great were "clean, high-tech" industry, high graduation rates and four-year degrees, and an outsourced empire that brought sprawling supply chains together "just in time".
The new model has brought back the industry, so it needs an emphasis on concrete job skills, versus academic credentialing. It's in-sourced so the supply chain has started in on a radical shift. It emphasizes new energy sources with few foreign dependencies, moving the geopolitical stance towards isolation. The approach to the national balance sheet also has to change, but precisely how lacks for consensus.
Like with the previous shifts there were some reasons to take the narrative in a certain direction: late 60's America had many environmental concerns, and fell into an energy crunch in the next decade. "Smart bombing" the Middle East to secure oil supplies brought together the national industries towards a common goal, and the money supply got a reset early on with the end of Bretton-Woods, that helped propel the Boomer generation towards homes-and-families participation within the system.
Today we're still putting together the pieces of that narrative, but it's central to the political climate: the old two-party system is focused on exhausted narratives that don't actually excite ordinary people to vote. Therefore the candidates are rushing to put together platforms that rewrite the script and mobilize new demographics.
Exactly. It's why authoritarian and/or single-party nations have so much more potential to succeed. It's why China did so well for a while. However, in practice, as we've seen with China and others, authoritarianism only works well when the people at the top are really smart and don't have some major character flaws (i.e., the "benevolent dictator"). Eventually, you get a dictator who's a narcissist or moron or fruitcake and it all falls apart. In that case, the best case is that the inner circle will murder him in his bathtub and select a better leader before he ruins everything.
Benevolent dictator is still just a dictator. As he grows older, he cares more about staying in power than following current trends. China wanted to prevent this with their 10 year rule for the general secretary but Xi changfed that and that was his biggest mistake.
Democracy's weakness (politicians focusing just on next election cycle) is also its biggest strength. It allows change and adaptation.
No, a benevolent dictator is the best form of rule. If he cares more about staying in power than anything else, then he's not benevolent.
There have been many historical examples of benevolent dictators. I can't think of any in modern history. Xi certainly isn't, and never was.
Democracy can avoid the problem of dictatorial systems by allowing the people the ability to get rid of bad rulers, at the expense of usually getting crappy rulers who only focus on the next election cycle, and frequently getting sociopathic narcissists in power.
Yes, you certainly can. It's happened many times in history, thanks to hereditary rule (i.e., they inherited these positions, they didn't actively seek them). Queen Elizabeth I of England reigned for 40 years and is considered by historians to be a very good ruler. Marcus Aurelius of Rome was also considered very good.
The problem wasn't these rulers, it was what happened after they got old and died and their shitty kids replaced them.
It has? Russia has a dictator now who's obviously some kind of narcissist, and not nearly as smart as he thinks he is. His hold on power is tenuous at best, and there's a good chance he'll be deposed before long.
>> i find this rise in nativistic and jingoistic sentiment weird. comparative advantage exists for a reason - we are not going to be the best at every single step of every single industry.
There are more considerations than just profits. Consider how domestic PPE plants closed down in the US because even US gov institutions wanted the cheapest product, and went overseas. Then when COVID hit, we had no local supplier for PPE.
This is common sense and has nothing to do with nativism or jingoism. The offshoring was an action of pure selfish greed at the expense of the working class people who built the industry.
> Now, the taxpayer has to pay Intel $8.5B to bring back manufacturing capacity to the U.S
The tax payer had nothing to do with it. This is yet another example of the government taking our money (or borrowing our future money) and spending it in ways that we never agreed to and had no input on.
Find me a candidate that had any input on this Intel investment that campaigned on giving billions to Intel to onshore chip manufacturing.
Maybe they do exist, but I don't remember it coming up.
Also to clarify, local elections wouldn't have helped here. Congressional and presidential elections are a different beast, The Machine (reference to the University of Alabama) heavily influences elections and elected officials. I do vote, but I have little faith that such a massive and heavily funded political system allows my vote to count for more than winning a seat. I've been regularly disappointed by those I've voted for when they inevitably ignore or break promises they campaigned on and make decisions that often fly in the face of the very principles they originally claimed to stand for.
If this is Biden's initiative, then the alternative is Trump? I'm sure there could be a technocratic rational non-idealogical third party that would get a bunch of HN voters but does any viable third party actually exist?
Fixing our education system is a lot bigger problem then we've ever been able to tackle as a country by popular initiatives.
The fact that Trump and Biden are the two candidates we've been offered is a sign of a much more fundamental, and disappointing, problem.
I don't think anyone would agree that those two are the best candidates this country has to offer, and most people I've talked to about the election feel stuck picking between which one is less bad.
You sound like you’re agreeing with the statement. What is your syntactic point here? That the taxpayer has nothing to do with the decision making is irrelevant the point you responded to. They still pay for it.
Technically we haven't paid for new spending in tax dollars since Clinton was in the White House, its hard to say taxes pay for something when its paid for with debt.
That said, my point was that the tax payer isn't really paying for it when the tax payer has no say in what is being paid for. If the taxes are collected either under false pretense, or no pretense at all, for what the money will be spent on then the citizen is only responsible for paying the tax bill. The money is the government's at that point, and responsibility for how it is spent at that point stops at their desks.
If the tax payer were truly the one paying for this, we would at minimum have a voice in the program. At best, the government would propose the plan and leave it up to the tax payers to fund it in almost a kick starter type of approach. A simple vote would make more sense IMO, but if we are to pay for it with tax dollars and the government refuses to run a surplus, tax payers (should) have to kick in more money to pay for it.
Acknowledging the complexity inherent in how the U.S. gov't finances initiatives.
However, eventually, the buck stops at the taxpayer.
Yes, the federal gov't issues bonds to finance their activities (i.e. deficit spending), but the creditworthiness of the U.S. is intrinsically supported by the federal government's capacity to collect taxes from its citizens.
Eventually, "we the people" foots the bill. It might be amortized over decades and deferred more years still, but it's still a debit to "we the people" of $8.5B in the ledger.
I'm honestly not sure if that is the case anymore. With a purely fiat system we really can't afford to pay off the debt, doing so would remove money from the money supply and could lead to an economic contraction.
I'm no sure what would happen economically if we paid off federal debt in any meaningful amount. I'd be really curious if you have any insights into what that would look like.
I do think we can pay off the debt. It would require an increase in taxation that would cause an S&P 500 contraction.
When it comes down to it, it'll be a political choice between cutting Social Security benefits (absolutely no way this happens) and a highly progressive tax on the country's wealthy.
I don't think the first one is going to happen, and our two party system is so totally dominated by the country's wealthy population that we'll never even see a vote on the second during peacetime.
One route is to "grow" our way out of debt, and those hopes are pinned on some blend of nuclear fusion and "AI, AI, smth smth, AI".
Failing that strategy, I think that spiraling U.S. debt is one of the features that greases the slide towards WW III. :/
Last time around, we needed WW II to rebalance power between asset owners and renters in this country – it literally required a global, existential struggle to get wealthy people to pay taxes. I'm afraid we're on the same track today.
> I do think we can pay off the debt. It would require an increase
> in taxation that would cause an S&P 500 contraction.
I was very worried about the huge deficits from the Reagan era. But when Clinton was elected, and he raised taxes, I thought we were done for.
Surely, raising taxes would cause the economy to contract more, which would lead to even less government revenue, a higher deficit, ever more impossible to service, etc etc....
Well. Imagine my surprise a few years later when the deficits turned into surpluses.
What I had forgotten to take into account is that raising taxes causes the interest rates to go down--if the government isn't borrowing billions and trillions of dollars, i.e., if the demand for debt goes down, the price of debt (i.e. the interest rate) also goes down.
So an upper middle-class guy may have gotten his taxes raised by a few thousand dollars--but he just refinanced his mortgage from 10% to 5% and saved a thousand dollars a month. (Yes, interest rates for mortgages were that high, and higher. My Dad bought a house at $14% interest rate in the 80's).
I remember reading an article in the Wall Street Journal by a guy who was scared to death of the surpluses--in a few decades, he said, we'll no longer have any 30-year government bonds. How will Fannie May and Freddie Mac be able to subsidize 30-year mortgages? How are we going to use Black-Scholes to calculate the correct value of derivatives if we don't have a measure of the zero-risk interest rate??
Alas, the supreme court threw away Gore, and installed Bush as president, where he solved those "problems" in very short order.
I think one part that’s missing from this narrative that’s otherwise solid is that the Clinton administration raised taxes while simultaneously expanding globalization (NAFTA, expanded ties with China).
Nowadays, we’d be raising taxes while globalization is contracting. On-shoring is inflationary, because the same goods as before cost more.
Raising taxes in an inflationary environment is scarier than raising taxes in a deflationary environment.
> Raising taxes in an inflationary environment is scarier than raising taxes in a deflationary environment.
I know it can be scary, but, we are going to have to muster the courage to try unorthodox things--like actually paying the bills. Raising taxes in an inflationary environment can be a very beneficial move. Why? Higher taxes reduce demand, which helps fight inflation.
This takes some pressure off of the Fed. The Federal Reserve only has a very few policy tools to control inflation or to stimulate the economy: basically they can either rase rates or lower rates.
But if inflation is being controlled by increased taxes, the Fed doesn't have to raise interest rates as much--or even at all--to control inflation.
And a lower interest rate means that companies can afford invest in things which will increase profits and will raise the productivity of its workers. Which fights inflation.
In addition, higher taxes means lower deficits, which means the government isn't hoovering up all the money available for investment. It will issue fewer bonds, and people who would have bought those bonds will have to start investing their money in actual productive businesses. Which also helps inflation.
It doesn't have to be a doom spiral--we can spiral up if we just stop buying into the notion that we can get out of this if only we make the deficit large enough.
I mean I totally agree with you, I just don't think there's political willpower to swallow the pill and actually pass legislation that would increase taxes.
Because, all else equal, capital owners (who set the policy agenda in Congress) would prefer to keep their wealth continue rolling the dice until they can't anymore.
Its easy to forget--but we are the many; they are the few. And Trump hasn't quite succeeded in rendering our votes moot. Capital owners can only control congress by persuading us that we should let them.
I believe its a very good thing that we have billionaires--look at what China's economy did once they let some people become billionaires. But in China or anywhere else, there are only billionaires because we believe that their existence benefits us--that we are better off if there are billionaires around.
If it doesn't benefit us to have them around, eventually we will all figure that out and change things so that once again they do benefit us.
This award isn't about innovation, the best way to do things, or job requirements.
This about supply chain security and national defense. So many of our components are made overseas and under governments who are not close allies. This is in order to operate things in our country.
When you have the FABs in the US and under US control you can handle international foreign policy and the security of the nation differently.
The chip supply chain is a lot shorter and more concentrated than the mining supply chain. If you're thinking of "rare earth" metals in particular, it's probably better to focus on the refining rather than digging out of the ground. Between South America, West Africa, and Australia there are lots of mines for most of the metals, but only refining in China (because it has been highly subsidized by both monetary and regulatory means since the 90s). Silicon refining is similarly bottlenecked even though the high quality input material is mostly US sand.
Refining is dirty and dangerous so it has been pushed out. Used to work for a Canadian gold mine in Montana in the mid 90's. Most of the friends I graduated with went overseas for new mines or were Environmental engineers focused on cleaning up messes from the late 1800's early 1900's.
What's a few inland lakes of acid residue toxic metal soup along with tailings piles classified as low level radioactive waste between friends though?
These are still being created today, not just as a practice from the 1800's.
It is the price of technology, better to address these as we progress rather than pushing them out of mind and sight and kicking the can down the road for future generations.
There's substantial wafer capacity in the US, from silane production, through polysilicon granule production and wafer making. There are several different wafer makers in the US with both 200mm and 300mm wafer capacity.
Some of the silane and polysilicon companies are US owned, but I don't think that any of the wafer makers are US headquartered anymore.
We HAVE have to focus on the rare earth part or you are basically just giving China the whole thing as they control more then 90% of refinement (and almost all of mining)
Fair enough. But then the question is: How did this happen in the first place? If the Pentagon is playing out scenerio after scenerio after scenerio, how did we allow ourselves to be so embarrassingly venerable?
And now the taxpayer is on the hook for $8.5B and growing?
This is way bigger than trade policies. Intel was the world leader in chip-making until fairly recently. Steve Jobs wanted them to build the iPhone chips because they were a generation or two ahead of any other fab in the world. Today, Intel is no longer leading the world in chip fab process.
Intel at the time wasn't interested in fabing ARM chips, and the rest is history.
Intel and American fabs fell behind for a number of reasons. Some of it is tied to our education system and the kinds of people we are training. Some of it is probably related to Intel turning their nose up at the iPhone chip making, losing billions upon billions of money they could have put into R&D. Some of it is a story of American corporate culture not innovating enough.
> Intel at the time wasn't interested in fabing ARM chips, and the rest is history.
Fun fact, in the late 90's, Intel was the biggest manufacturer of ARM chips. I was there at the time, and I wrote lots of software to aid in their design.
What happened to Intel was twofold: The first problem was that Robert Noyce, Andy Grove, And Gordon Moore died. Each one was a once-in-century intellect, and it took Intel a while to be able to find somebody who could remotely fill those shoes.
The second problem was Intel was making so much money on x86 chips, that dedicating any fab capacity to anything else--including chips for Apple's iPhone, would for years have had such a huge opportunity cost, that the shareholders would have sued, and with cause. Because literally (not metaphorically) anything they would have manufactured instead would have had a drastically lower profit margin, and the stock would have tanked.
I suspect that the only reason Intel made a foray into ARM chips in the first place was to head off anti-trust accusations, and once the political heat was off, they dropped them like they were hot.
By the time the market shifted, almost a generation of mediocre management had left Intel less paranoid, and therefore, less likely to survive.
> would for years have had such a huge opportunity cost, that the shareholders would have sued, and with cause.
I've been considering the Intel issue (had family there) and the other post in the thread mention the decade of misses.
This actually seems like one of the most reasonable rationales that I don't hear mentioned very often. You might want to do something, yet your hands our tied, because the investors will sue for poor leadership.
I don't think it was that Intel didn't have enough capacity to manufacture more. Intel was a manufacturing-first company that beat out "high end" and specialized competitors by economies of scale. Over the long term, the strategy was to build as much high performance silicon as possible.
The problem looks like they went down the typical dinosaurification route that their vanquished high end competitors the likes of DEC, Sun, HP, SGI, IBM, etc., which was to switch from manufacturing as much as possible, to protecting high margin x86 parts. Their x86 PC and server organization out-muscled their manufacturing organization (either that or finance did), and so the ended up being very reluctant to adopt GPGPUs or ARM mobile because those were a threat to x86. By the time they realized they'd missed the boat in those markets, they put out these ridiculous x86 mobile cores and x86 GPGPUs that were costly failures.
This pattern of protecting profit margins on high end products while fixed costs every generation increase and performance increases so low end grows up and erodes high end, causing further retreat and protectionism, is exactly what happened with those aforementioned big iron companies. When the bean counters look at the state of things without an understanding of the technology trends, that's the logical thing to do, but they paint themselves into this corner.
Intel might have just been saved by the bell with Dennard scaling breaking down around the time they were losing their manufacturing advantage. That meant that instead of competitors on a generation or two process lead wiping the floor with them as they did to the minicomputers, it was a much smaller disadvantage and they've been able to somewhat hold on.
It seems that what happened to Intel was a lot worse than just missing Andy Grove's paranoia...
- They missed the mobile market
- They missed the gaming market
- They missed the AI/ML market
- They got multiple generations behind TSMC and Samsung in the fab business
- They lost a whole bunch of market share to AMD, including datacenter
The NY Times article is paywalled, so I can't read it, but I have to wonder what kind of fabs they are meant to be building for our (taxpayers) $8.5B ? I wouldn't have any faith in them building a SOTA fab at this point.
Actually, Intel has been consistent with their specialized CPU DNN libraries and whatnot for years. MKL and the likes are pervasive in modern deep learning stacks. Pretty sure they've captured as much of the AI/ML business as CPUs possibly can.
Also, by gaming do you mean gaming consoles or gaming PCs? Because Intel is popular in gaming PCs also.
Sure, but those are CPU libraries, but what has grown NVIDIA into a $2T company wasn't building CPUs - it was building processors specific to this new and exploding field of ML/AI, which grew out of them building processors (GPUs) specific to the growing field of realtime PC-based gaming...
Is the problem that Intel saw themselves too narrowly as in the CPU business rather than as in the compute business? I've no idea - it'd be interesting to hear the inside story of how all these missed opportunities went down.
You're missing the point - it's not about comparing Intel to anyone else, but rather about Intel's missed market opportunities. They make processors but missed all the new market opportunities for processors.
Any Steam hardware survey (the most relevant for gaming PC contexts) will show Intel handily beating AMD at around 66% to 33% for CPU[1], so your claim that Intel is somehow not popular is bunk.
Intel doesn't have and has never had a GPU line worth writing home about, so I don't know why you would bring up something Intel never had to say Intel is unpopular in gaming PCs.
They missed the GPU market (AI/ML/Gaming) and the console market. Hence they lost all of that to Nvidia and AMD. Both of those companies now have a bigger market cap than Intel.
How is this so difficult to understand? It is very simple, not obtuse, unless you are autistic.
Nvidia market cap is $2.26 Trillion.
AMD market cap is $290 Billion.
Intel market cap is $178 Billion.
AMD and Nvidia used to be a tiny fraction of Intel.
You guys are getting autistically stuck on this irrelevant detail about CPU popularity in gaming PCs and missing the bigger topic of the discussion. But even in that niche, Intel has lost significant market share to AMD.
2. And when Andy Grove was at the helm, Intel did not miss opportunities like that. E.g. when Intel's memory chip business started losing market share to the Japanese (who were at the time a low-wage country), they were able to transition to CPUs in time.
Yeah, but what I meant is that these can't all be explained by not being paranoid (letting the competition creep up on you), or even by not having an exceptional CEO.
If you are in the business of making CPUs, and obviously aware of how fast things move in the tech world, then how can you not be aware of industry trends going on like smart phones, gaming and AI? If you are somehow late to see the trend then double down and catch up. What about getting behind on process nodes/generations? This used to be one of Intel's core strengths, and you'd have thought they'd have institutionalized the things you do and don't take on in a new process to keep the change manageable.
So, I wouldn't say it just a matter of not having Andy Grove - it seems like a matter of having incompetence at many levels.
This is exactly what it is. With the added issue that, in all likelihood, $8B is not even enough to start making a change. The US gov would have a better time giving these $8B to startup companies in the chip space. Intel will just squander this money and give some of it to shareholders.
It's also interesting that Intel made some specific bad technical choices.
(ie, not investing in EUV, assuming SAQP would work forever, ignoring the consequences of everything being power-limited...)
This kind of decision is hard, because it's a technical-economic tradeoff, and the latter is more voodoo than math. And that's not even addressing whether you get surprised by things like the LLM boom...
> It's also interesting that Intel made some specific bad technical choices.
That's like saying Saudi Arabia made some bad policy decisions. If you are in Saudi Arabia, nothing has a higher return on investment than petroleum. If you invest in anything else, you are leaving money---A LOT of money--on the table.
The result is that capital is drained out of any other business, and the country gets so dependent on just one industry that when the oil runs out, it is a major crisis.
Put yourself in the place of an Intel CEO. You've just invested $4 Billion in a fab. People will by absolutely every single x86 chip that fab will make ~$40 billion over the course of the technology node's life time.
Or, you could make chips for the iPhone, which maybe, perhaps would be a hit? And even if Apple's wildest projections come true, you'll make $8 billion instead of $40 billion, because Apple is not going to pay for Intel to pocket a 90% profit margin, when it could just go to TSMC.
So you are a CEO, and wondering how on the next earnings call you are going to justify turning an asset worth $40 Billion into one worth $8 billion....
What would you do? Build two fabs and make $48 billion, or build two fabs and make $80 billion?
It might be hard to remember now, but Intel was in the position NVIDIA is today: they could sell absolutely every x86 processor they could make, at pretty much any price they cared to name.
So even if Intel could have built another fab (which, btw, it couldn't, the world only graduates so many solid-state physics Ph.D.'s per year) but even if they could, they would STILL have used it to make x86 chips. Literally (not metaphorically or hyperbolically) nothing else they could manufacture would have as high a return on investment as making x86 chips did.
I don’t buy this completely. AMD’s 64-bit humiliation of Intel wasn’t that far in the past, and they knew GPUs were important. They could have hedged their bets a bit more on the basis of sound business management without incurring shareholder wrath.
Google/Alphabet and Facebook/Meta sunk billions into ventures that aren’t half as profitable as your hypothetical 8B deal, and shareholders haven’t sued yet.
Of course the founders have majority voting shares, but that doesn’t prevent them from being sued. It only prevents them/their designated CEO from being fired.
Theres a few differences between Intel and Google here. The first two points are from Peter Thiel:
1. Google really didn't know what to do with its excess money, which was why it was just stockpiling it and not using it to invest in its own business.
Intel, by contrast, always knew (at least in the Noyce/Grove era) what to do with its money.
2. Google's "side projects" were false-flags and smokescreens to make it look like it wasn't a monopoly. (Thiel says it much better himself in his article and speech titled "competition is for losers"-highly recommended).
Intel did a similar thing around the turn of the century, when it started making ARM chips--not because they were the most profitable thing they could be doing but because they didn't want to look like a monopoly.
And, of course, you really hit the nail on the thumb here:
> Of course the founders have majority voting shares
Yeah. The executives of google and facebook just don't face the same accountability from the shareholders that the execs of any honestly-governed public company does.
Its a two-edged sword: if google or facebook needs to spend a lot of money to pivot, they have the flexibility to do that in a way which other companies don't. However, the flip side implication is that, e.g. Zuckerberg can just spend $10 billion on a huge project, without being at all held accountable if it fails.
Right, and the ironic thing is that the founder having majority voting shares was allegedly justified by the idea that it would solve the innovators dilemma by not having the founders ("proven" capable of building successful products) being accountable to the short-term whims of the shareholder.
That said... my original point was that the shareholders don't sue in such situations. Rather, they just vote out the board (and hence CEO). If they could sue the board/CEO for not making as much profit as theoretically possible, they would have already sued Meta or Alphabet already despite having only minority shares. Proving to a court that the board/CEO isn't acting in the shareholder's best interest isn't as easy as comparing the projected returns of two mutually-exclusive deals -- they can argue that the ostensibly less profitable deal actually has great long term benefits.
I was a physics student who took a nanofab class, fell in love, and desperately wanted to go down this path... until I learned about how complete and utter dogshit the wages were. I kept in touch with two classmates who stuck with it a bit longer. The free market had to beat them over the head a bit longer to get them to let go, but it eventually succeeded. Intel was absolutely printing money for investors the whole time, of course, and now that the material consequences of their poor management have come home to roost they are getting bailouts. Yay, capitalism!
Our education system over-produces qualified scientists, but if semiconductors are a road to not having a house or family and if it pays 5x better to sell ads or stocks... you get what you pay for.
Perhaps. But the more likely correct answer is: The MIC doesn't make chips. They couldn't and wouldn't push for something that didn't deepen their pockets.
Similar mistake is being made right now by restricting sales of chips. It forces people to make their own. It is just a matter of time the consequence comes … like many other decisions made by some big wigs before …
Absolutely correct; same for banning any other tech sales to China. I’m not sure it’s terrible policy, though. It’s only speeding up the inevitable a little.
The pentagon is run by politics just like the rest of the country. The US wanted to move industry to other countries, so the Pentagon just played the party like they're used to do, and got the promotions and bonuses. Everything else is a second thought.
It is a joke but it's also true. The entire Japan South Korea Taiwan situation is at a high risk, if actual conflict breaks out, Taiwan is out, and SK and Japan become trickier on shipping insurance costs alone, assuming they choose not to get involved (they probably will)
Japan cannot get involved unless the US is directly attacked, their constitution and laws governing use of the JSDF are very explicit in forbidding any use other than defending themselves or the US.
If (when?) Taiwan gets China'd, that by itself cannot serve as a casus belli for Japan.
I have no intimate knowledge with regards to South Korea's laws and will thus refrain from commenting there.
>Japan cannot get involved unless the US is directly attacked, their constitution and laws governing use of the JSDF are very explicit in forbidding any use other than defending themselves or the US.
Japan can change this on a whim with one meeting of the legislature. You think Japan can't change its own laws?
>If (when?) Taiwan gets China'd, that by itself cannot serve as a casus belli for Japan.
Wrong. I don't know that they would, but Taiwan is a huge trading partner and great friend of Japan, in fact Japan's closest friend in the whole region. It's quite conceivable that Japan would get involved.
All that shit is irrelevant. The prime Minister of Japan is actively talking about defending Taiwan if it's attacked. The people of Japan probably won't complain. The US won't complain. South Korea won't complain. And that's not even counting a casus belli that might make it justifiable (e.g. some Japanese citizen in Taiwan gets harmed, or chind sends missiles to US based in Okinawa)
What exactly do you think is the punitive remedy for Japan breaking clauses in thosd documents in that political scenario?
Laws are just words on paper. They are irrelevant without people to follow and enforce them.
It is very common for Constitutional laws to be suspended in the event of war. Even without suspension, all it takes is a leader with enough support to ignore the law.
Nearly all Prime Ministers and their cabinets in recent history have suffered overall unpopularity and especially so in anything that might even remotely imply the potential for using the JSDF beyond its nameplate purpose.
Which is to say, no: No Japanese leader has had the kind of support necessary to ignore the law.
A militarily powerful China has also never attacked Taiwan before, so you're on sketchy ground asserting a prediction of popular support based on historical precedent.
China would attack US bases in Japan and that would trigger whatever needs to be triggered for Japan to enter the war. There’s no way that China would try and invade Taiwan while also not trying to stop the US from intervening.
I mean, if we are going to assume “China attacks Taiwan” means “China attacks US bases in Japan” we might ad well assume it means “China preemptively carpets Japan with nukes rendering any Japanese response irrelevant”, but in any case, no one is arguing that Japan would either not react to an actual attack on Japan that left them capable of response or would require Constitutional changes to do so. But “Japan” and “Taiwan” are still different things.
Since the US would come to the defense of Taiwan, it would use assets in the region so that includes naval and air assets. The air assets are based in locations such as Guam and Japan (among others). The US would launch sorties from those bases amongst others.
Can you think of a scenario in which China would attempt the worlds all-time largest amphibious invasion of Taiwan and then let the US just fly missions and drop in supplies or attack Chinese assets and not respond to the bases themselves? It seems incredibly unlikely to me.
There aren't any nukes that need to be involved here. Certainly there are potential scenarios in which those do get used, but neither the Chinese nor Americans have any strong desire to escalate a conventional war into a nuclear war. The scenario you are assuming would also include China and the US nuking each other and so that scenario itself is a bit silly whereas China attacking US air bases in the lead up to or during an invasion of Taiwan without escalating to nuclear weapons is a pretty serious scenario.
I get your point about Japan not being able to change their constitution so quickly and I don't disagree, but I think any scenario in which Taiwan is invaded and the US comes to its defense will drag Japan in to the war sufficiently enough that it will justify whatever it needs to do.
The US will never come to the defense of Taiwan. The US and China will never go to war with each other. Nuclear powers do not fight each other directly, they do it through proxies, like we are doing with Ukraine vs. Russia.
The U.S. might send money and materiel, they might get the U.N. to issue statements, but an actual shooting war between China and America? Forget it. It will never happen, because if it did happen, life would not be worth living anywhere on earth for the next 50,000 years.
And even sanctions are highly doubtful. Personally, I really like being able to design a circuit board and get it fabricated and shipped to my front door from China for $25. And massively interrupting the trade flow between China and the U.S. would lead to a world-wide depression which would make 2008 and the great depression look like boom times.
Surely Taiwan knows this, and I suspect that is why TSMC wants to build fabs outside of Taiwan.
That's a silly anecdote and I have a hard time believing chip fab line workers are too much different from those in other types of high-tech (where I spent 15 years working on test automation & quality systems). Some smart folks, for sure, but almost zero roles required even actual engineering background. A lot of management had strong technical education, but the vast majority of line workers are just following simple instructions.
I could be wrong about how fabs work, of course, and would love to learn more.
Having seen a few 'high tech' places myself: there's high tech, and then there's _high tech_.
Assembling a motherboard is to semiconductor fabs as flying a toy drone is to landing a Boeing 747. One you can learn in an afternoon; the other takes years to learn.
> Assembling a motherboard is to semiconductor fabs as flying a toy drone is to landing a Boeing 747.
I disagree. I live next to a fab and have coworkers that have worked the fabs.
Humans in fabs are taken out of the loop as much as possible. That's because when dealing with nanoscale structures, human error is simply too common.
One of my coworkers worked at the fab during a period where they had humans running the forklift that moved the wafers from one stage to the next. That was cut out because the tiny bumps caused by a human operating the controls caused imperfections in the chips that decreased yield (the metric that matters most for a fab). They ultimately removed that work and job and replaced it with robots to carefully move the wafers.
What's complex about a fab ends up being not the frontline work, but rather the layer or 2 in the back (like designing the lithography filter for a given chip). That stuff happen outside the actual plant.
> Humans in fabs are taken out of the loop as much as possible.
This. We are talking about Atom scale here. I have as much admiration for skilled mechanics as the next guy. I heard about a lathe operator at Patek Phillip who could turn an arbor to within 1 micron precision, just by listening to the pitch the cutting tool made when trimming it down.
And when chip features were on the micron scale, humans in the loop made sense. But chip feature are ten thousand times smaller than that now--4 orders of magnitude. Anything that doesn't need a Ph.D. in solid state physics to do is going to be automated.
I'm probably revealing exactly which fab, but one issue the fab had is when it was built it was placed fairly close to the interstate. That did no matter when they were at something like 500nm. However, as they slowly pulled the node size down they started noticing random errors within their chips. It took a while to track it down but it turns out semi trucks driving past the interstate were causing defects in the chips.
They ended up installing shock absorbers everywhere to counteract this problem.
There are still, though, lots of working fabs at much larger process sizes. And some for things that won't ever modernize to a smaller one. Like parts that handle lots of power, or chips for RF purposes, etc.
I think we agree? The point is that a semiconductor fab (like a 747) is so highly automated that you don't need a bunch of low- or medium-skilled folks to drive forklifts; you need a few high-skills folks to design, monitor, debug & optimize the huge system(s).
I think you underestimate the amount of people with high school education doing very precise, skilled work right now. Do you think skilled machines tend to have PHds or even bachelors?
Im not saying its as simple as CNC. I am saying that I doubt you need an IQ of 130 or a PHD. Start investing in the people whose labor were undercut. In fact a skilled machinist or technician seems like a much closer match (in terms of skill and willingness to do the job) than some with an electrical engineering PHD or something.
One of the most critical aspects of engineering is making it so advanced high tech things can be manufactured by the least skilled and least number of skilled people possible.
Don't confuse that with the workers not being skilled - many are, but just like good software, you want your designs to run well even when executed by the worst hardware.
Actually engineering often means need more skilled workers as the unskilled work was replaced. 1 person running the machine who understands more of the engineering as opposed to 100 with a saw.
Making PhD engineers operate/maintain/monitor a wire bonding machine seems expensive.
I worked in an R&D fab (albeit, as an intern, many years ago) with an abnormal number of PhDs around (the fab was essentially a small scale test bed for new products and processes - everything tested there first before scaling up overseas). I think we had a 5:1 ratio of techs to engineers. This was in a fab that basically did nothing but R&D and low volume manufacturing for defense.
It's comparable to any kind of high-tech manufacturing where you have engineers designing/testing stuff (and designing the tools to make and test the stuff in the first place) while there have to be techs/mechanics/machine shop workers to actually do the work of making it. It's inefficient and expensive to put the engineers on that task, while they'll still need to do it from time to time.
You cannot learn to assemble a motherboard using modern manufacturing equipment in an afternoon. Pick-and-place operation is a week-long course alone (specific to that machine, and assuming you are already familiar with the process), and there are at least a screen printer and reflow oven involved as well.
> Assembling a motherboard is to semiconductor fabs as flying a toy drone is to landing a Boeing 747. One you can learn in an afternoon; the other takes years to learn.
What are the conditions and steps necessary to engage autopilot during landing? What are the failure conditions, and the steps necessary during a malfunction when autopilot is engaged?
On a clear day with perfect conditions ground control can probably get you on the ground and you walk away safely. The plane may not be safe to fly again, but you walk away. When there is bad weather (common) or other mechanical issues you need a lot more training, and of course if you want the plane to survive to fly again you want some more training.
The only hard part is contacting ground control in the first place. Radio frequencies change all the time.
It doesn't help that the union culture is opposed to promoting smart people. If you work an assembly line you are not better than anyone else on the line, so their position makes sense - smart people are not worth more. However it also means smart people that want to move to management (want - if you are content that is your choice) find things worse: you are required to start at the bottom and your previous experience doesn't count for anything (including the pension)
The decline in American manufacturing happened alongside a decline in union membership in manufacturing. If unions were the causal factor, why do these trends coincide rather than oppose?
Alternative theory: Protectionism industrializes and trade liberalization deindustrializes. Alexander Hamilton's protectionist policies weren't just successful at industrializing the USA, he and his successors were correct as to why they were successful. The relatively recent shift to trade liberalization, by contrast, had the generally accepted effect of such policies on the industrial base. Of course, assets got pumped along the way and that's what really mattered to the people in charge.
Unions were gutted because the labor market grew beyond international borders, but the labor movement didn't (thanks to western capitalists making war on socialists.)
True, but Pat Gelsinger isn't a good example of what public policy we should pursue to help Joe six-packs enjoy a middle-class life. Gelsinger is one of the few people I would follow blindly into the maws of hell itself; his intellect is exceeded only by his ability to lead.
I am a little bit fascinated by the way that many people seem to think so highly of Gelsinger, and I even think it is possible that he will succeed in leveraging that to make Intel competitive.
However, just from his public persona of wildly optimistic sales/marketing pitches and showmanship, while outsourcing their own manufacturing to TSMC, I have a very bad impression.
Then his claims of Intel zettaflop machines by 2027 honestly make me think he is totally delusional, but maybe that does not matter.
Just in case they are paying attention, I would love to relocate and go to work for Intel. Following simple instructions sounds terrific, to me. Where do I send my resume?
You're missing the broader point here which is that TSMC pays roughly $50k/year for people with these skills. Sure, you may be able to find the talent pool, but at what price?
I think an important question here is: how exactly can TSMC afford to pay $50k for people with these skills? And why is that impossible in the US? I think this comes down to relative cost-of-living differences: the US is just too expensive to live in these days. Taiwan is not a super low-cost-of-living country by any means, but the US has gotten ridiculously expensive compared to most other peer nations, and this means it's pricing itself out of the market with anything where it needs to compete.
Personally, I think America's reliance on cars and its suburban layout is a big part of this. Workers in Taipei don't need to own a car to get to work, and the overall infrastructure cost per capita is much lower.
I worked at a non-semiconductor tenant company in a semiconductor research campus/facility.
Parking lots tell the story. There was a pecking order for the lots, which made it easy to classify. The best off working people were the trades guys. The plumbers and electricians were high-skilled and well paid. Like guys commuting 2,000 miles and buying a second $90k F-250 to drive around town in.
The bigshots were Teslas, BMWs, big SUVs. There were a few corvettes and a Ferrari.
The Fab engineers and workers were all driving old Hondas and Hyundais.
One of my good friends from high school was a mechanical engineer at IBM and a master at some super-critical process for mainframes. They moved to a different architecture and his entire team was just nuked from orbit before they even knew what was happening. He was selling real estate for awhile and eventually got back into engineering.
I don't think you can draw conclusions from that, considering you have absolutely no idea who is in massive debt for those vehicles. Especially with tradesfolk because the vehicle is a business expense.
People making good money tend to not, as a cohort, drive 8 year old cheap cars.
And of course ymmv between companies, regions, facilities or projects. There are software people trapped maintaining stupid legacy insurance code and similar dreck too.
There's something off in this thread, which seems to posit that all of this is about Intel moving fab capacity back to the US and away from unreliable places.
While you could convince me that too much money would attract the wrong type of people, you would be hard pressed to find more competent people by offering less money. (I'm not dismissing that there are other motivations involved, just the ability to grow a talent pool by offering less.)
Once you have a "good life" you start looking for other things than money. I know a few people who have quit a good job they didn't like for one that paid a little less but they liked more. Though there is a limit to how far someone can go down in pay before they don't like the new job because of pay.
Too much money in what context? It can be an extremely effective motivator for solving a business problem - hire smart people to work on it, they'll happily go work for double their pay.
A baby can't be made in one month just because you had the money to hire 9 surrogates.
Many processes do not scale just because a money spigot turned on. What most often does scale as quickly as monetary availability is fraud, waste and abuse.
There are thousands of items on the agenda in the present day, everything from better open source LLMs to moon-base railway designs, so even if 99% of these turn out to be duds that can’t be budged, there are still sufficiently many remaining to absorb all bonafide super-geniuses on Earth several times over.
In this particular item on the agenda, chip fabs, it is not clear spending more money one time will produce a result, much less a faster result by attracting "bonafide super-geniouses." One might respond that "you can't win if you don't play" which would lay bare the gamble.
Chip fabs is just one of ‘many processes’ which was what I was replying to. It’s practically irrelevant if even 99% of all processes have this characteristic. There’s way more than enough remaining to occupy all available people who could actually speed up large complex projects by 10x.
Of course if they were somehow disproportionately forced to only ever work on chip fabs for the rest of their lives, then that would create huge waste, but this doesn’t seem likely.
If there was an ‘abundant supply’ most of them wouldn’t be considered such any longer, just regular geniuses, because the population average would have been raised up.
Could her health problem stem from the fact that she worked at the chip fab? Those places are notorious for using chemicals that are harmful to humans.
You should hire the very smart people to figure out how to make the jobs doable for average people. Surely there must be a way to configure line work to not require a PhD...
Anything which doesn't require a Ph.D. in solid-state physics to do must be automated, because only machines can handle/manipulate/transport the wafers with enough precision not to damage them.
Well, I was there in the late 90's and don't recall that anecdote. Most of the people in the fab shuttle the lots from station to station. Some even look at porn and get high while waiting (that's my anecdote, clean room alarms went bananas when he lit up). And robots that zip around the ceiling and drop down in dangerous areas do the rest.
Mind citing your anecdote? I realize I wasn't in every fab, but it's not rocket science, even on 300mm and beyond.
chuckle Asking for further justification is always fair play, and I don't mind being checked....but I'm kind of a loss as to what to cite. It wasn't something I read in a book, it was lived experience.
But, I mean when you say:
> clean room alarms went bananas when he lit up
you might have answered your own question...that stuff may have flied when we were at 180 nanometers, but lets face it, there's only so far down the road of Moore's law you can travel with people who smoke in a clean room...
There's thousands of people working at D1X. They are not all PhDs. Your initial post is just some made up BS polluting hacker news. I really like this site, but if you want points for storytelling, go to slashdot or reddit.
Aren't the vast majority of line workers in a fab people with a bachelors degree (or less)? The process engineers might be PhDs, but not most of the folks working in the fabs. Also, fabs are becoming more and more automated, so less people are needed overall.
Well, even back in my grandfather's day (he was a millwright for Ford) working on
the line required more mental skills than most people realized. Remember when Elon Musk finally gave up trying to 100% automate his factories? He said "we undervalued the abilities of humans."
If manufacturing cars is so complex you can't train monkeys, or build robots, to do it, how much harder must it be to make chips?
Making things that small, that precisely, repeatably, profitably, by the millions and billions, is spectacularly complex. And with each process node, the complexity grows even faster than Moore's law does.
Eventually, it gets to the point that even to tell somebody how to do something, you need to do it using the language of advanced physics, the kind of physics which requires you to spend studying 60-80 hours a week, for 5-7 years in grad school to learn. As the gen-X proverb goes, reality bites.
Right now one of the biggest blockers in on-shoring semiconductor fab at any kind of reasonable price-point and timescale is the lack of a skilled workforce. This legislation has dual objectives: train new people to get into sophisticated manufacturing AND to build out the actual infrastructure itself. That almost guarantees it won't be the most efficient way to actually get these chips on American soil. Whether we look back in 20 years and think "wow glad we took that hit upfront" is anyone's guess.
> Whether we look back in 20 years and think "wow glad we took that hit upfront" is anyone's guess
Globalization is breaking down quickly. Chips are crucial to national security and our economy. The supply chain for advanced chips is heavily dependent on East Asia which is a geopolitical powder keg and a demographic time bomb. The only thing more expensive than whatever we end up with is chips unavailable at any price because East Asia devolves into a war stricken basket case. We needed to have been starting this panic training/building 10 years ago but better late than never!
"because East Asia devolves into a war stricken basket case"
The past decade of American media has been promoting this new cold war narrative as if there is inevitably going to be a major war with China.
If there is war in East Asia then the whole international economic system will collapse, people will be starving in the streets. That's if it's not a nuclear Armageddon and we're left to rubbing two sticks together. Nobody will care about chips if there is a war. That will be really far down the list of actual concerns
The world is so interconnected and everyone depends on everyone so much that there is basically no point in planning for this scenario
> The world is so interconnected and everyone depends on everyone so much that there is basically no point in planning for this scenario
There's always a point in planning for a scenario if you think the risk is high enough and there is something you can do to better prepare for it.
In this scenario, the ones most impacted immediately will be the ones most dependent of the global economy. If you can't get the basics like food, water, and shelter if war with China breaks out then sure you'll be in a bad spot. But is it really an impossible task to prepare at all?
I mean .. if you want to waste a bunch of money and prepare for an unlikely war then it still doesn't make sense to worry about chips. You probably should build fallout shelters and secure things like domestic fertilizer production and the make sure agricultural equipment can be entirely made domestically
Even in the most benign case, if China is for whatever reason peacefully cut off from the global economy and we haven't been nukes into the stone age - having to move back to 22nm chips is going to be the least of our problems. To put it in perspective.. this is going to be a world where we no longer have cellphones and toiletpaper (b/c those are all made in China) and most equipment/machinery/refrigerators/washing-machines/cars/trains will overnight become at least in part unrepairable. Basically ever sector of the economy depends at least in some small part on the Chinese supply chain.
Preparing for supply chain issues during wartime and peacetime look very similar other than defence spending. Simplifying supply chains and reducing dependencies helps whether your concern is war, a pandemic, or economic change.
We put chips in almost everything today. If we can live without chips them so be it, but assuming we'd rather not feel the full impact of have zero chips for whatever reason we'd be smart to start building some level of manufacturing capability at home.
We already saw toilet paper supply chains crumble and all it took was a (potentially over-) reaction to a potential global pandemic. It wasn't a war with China that made it clear we really could do some good with a simplified toilet paper supply chain, it was scientific concern amplified but scared/concerned politicians and herd mentality when the public realized they weren't prepared for such a possible future.
What your proposing would basically entail countries indefinitely subsidizing a huge fraction of their economies so that everything is made domestically. You would just keep doing it and keep waiting for a war. It would be incredibly inefficient and make things significantly more expensive and your nation would fall behind (see North Korea). More importantly, by eliminating economic interdependence you create a much more dangerous world where demagogues can easily start wars b/c they can be sustained by these independent domestic economies
But even in this horror parallel reality of yours, cutting edge chips would still be very far down the list of things that are important. Can you provide basic sanitation without anything made in China? Transport? Medical care? Can you feed your nation? Can you maintain your nations basic infrastructure?
Having to go back a few generations in chips is just irrelevant at the scale of disaster you're envisioning
Why do you assume it must be driven by subsidies? Changes in demand can move the needle too, if our consumers prioritize domestic production it wouldn't matter if technically someone could import it for cheaper.
If you are going government intervention, they could reach for tariffs and import taxes rather than subsidies. Forcing prices high enough for domestic production is painful at first but would eventually work all the same.
I fully agree with you that too much of our current infrastructure is dependent on China and other countries. It isn't really a problem if we aren't concerned with major shocks though. It sounds like the difference is that I see the risks high enough to invest in domestic production if possible, you see that solution as unrealistic and that we're better off avoiding/preventing all shocks.
I meant "subsidy" in a more general sense. All goods will be more expensive. More people will be in poverty
Imagine how much more expensive everything would be, and now imagine the cumulative amount of money that represents. Money that could be used to fund education or improve people's lives, or even build armaments if you really are worried about the commies. You're in effect paying an huge "tax"/premium indefinitely for a threat that's very theoretical. In so doing youre seriously slowing down the rate of progress and prosperity
But that goes a bit away from the original point. That even if you want to have a self reliant north Korean model for the economy, chips are not a sensible place to start. You'd probably want your local hospital to be able to run without anything made in China. Going back to 22nm (circa 2014 tech) would be a minor annoyance.
Subsidies and tariffs have very specific meanings. They get at the same goal of increasing domestic production, but one increases government spending while the other increases government revenue through an import tax. Ultimately the domestic consumer pays either through taxes or increased prices, but they are very different mechanisms.
Its overly simplistic to assume that a subsidy will increase prices and harm the economy. We have been subsidizing corn for decades and it has kept prices artificially low. Prices for corn and downstream products like beef are artificially low specifically because of federal subsidies.
If a subsidy creates domestic jobs it could have a net benefit. The ultimate question is what metrics are impacted and at what rate. If domestic jobs are created fast enough to increase demand for employees, wages could rise faster than prices.
I have no idea what the end result would be, but that's ultimately my point. Economic models are just that, models. Models are based on analysis of past events and assumptions if the future. We don't know what we don't know, and we often don't recognize how inaccurate models are when we simplify them down to a handful of measurements.
To your original point, hospitals do seem reasonable to focus on with regards to stability through simplified supply chains. Chips may help there, our hospitals are dependent on a huge amount of tech today. Paper, silicon, and metal products would also likely be high on the list as they are often treated as consumables - the consumable nature of those products may make them more important than chips.
I mean that just goes against the very basics of economics.. Adam Smith, comparative advantage - and goes against the failed history of protectionist policies. You're basically advocating a version of mercantilist theory in the 21st century.. it's incredible anachronistic. But it's hard to argue when you're dismissive of all models
But I'm glad you see that chips are not really the top priority if this was really an issue of national safety. So one then has to wonder what are the real drivers of these jingoistic policies
I may have dove down to many rabbit holes there, sorry if I did.
To wind it back a bit, are you disagreeing that with the idea that subsidies are meant to reduce consumer prices and tariffs are meant to increase prices on imported goods?
Or are you disagreeing with my argument that economics isn't that simply and pulling one lever can have multiple impacts that together may move prices in an unexpected way?
the first point is semantic, but sure. In effect a tariff functions as a subsidy for domestic companies. If it's a net income or expense is kind of irrelevant and matter of taxation or putting the expense on consumers...
To the second point... it's so vague to be meaningless. What you're advocating is basically mercantilism - which is widely seen as ineffective and counterproductive since.. the 19th century. "unexpected ways“ .. is it like the law of gravity and always going to hold? Probably not. But when you are talking about blocking international trade across whole sectors of the economy then it seems like a valid simplification. If you want to argue mercantilism is going to be a net benefit to the domestic economy then the onus is on the advocate of the outdated theory. All past historic experience points to the opposite and to the development of a stagnant backwards economy
Mercantilism is a top-down approach, I was never promoting that. My earlier comments specifically called out what may be possible if consumers prioritized domestic products, the government only came into the conversation when you raised concerns over subsidies.
With regards to subsidies and tariffs I disagree the distinction is semantic and unimportant, though it likely is irrelevant here since I started with the concept of a change in demand at the consumer level.
Is it? I don't know if there's a concrete way of measuring "amount of globalization", but I'd guess that right now we're probably the most globalized we've ever been. "More things that you use are made outside your own country" has only been growing, and with the advent of full remote companies that also includes much more software than before -- it used to be that only huge corporations would offshore software development, now everybody can do it.
Ask me in 20 years. There are a lot of worring signs right now that things will get bad, but nobody really knows.
When the Soviet Union broke down 30 years ago the US decided the biggest worries were small countries (Iran in particular), and things like 9/11 proved they were right. However Russia is now attacking Ukraine and many think that countries like Poland or Latvia (both in NATO) are next. China is setting up so that they could take military action to take Taiwan, and other countries in the area. Nobody knows for sure if either of these predictions will come to pass, but there are signs that should worry you.
Global trade as a percentage of global GDP peaked somewhere around 2011 and has been steadily declining.
If you look at the US in particular the relative value of imports and exports is down about 30% from the peak 10 years ago. That's a big change for such a short duration
And simultaneously the US has been ploughing massive amounts of capital into domestic manufacturing construction. Money that would have previously been invested into China or elsewhere, is now staying domestic (with a lot of capital also going to eg Mexico).
What do you mean when you say that the money would have previously been invested into China?
Was the US federal government previously funding fab development in China?
That is to say, it seams like this investment is to meet a very specific need, and wouldn't have happened otherwise. Similarly those paying aren't the same either.
You could proxy a measurement of "amount of globalization" by disruptions in global shipping of food, energy, manufactured goods, etc. Covid caused disruptions, Houthi attacks in the Suez Canal disrupted shipping, Panama Canal is facing issues with water due to drought.. US continues to withdraw from Naval security commitments from the Bretton Woods era
Physical goods are much more complicated to move around the globe than code
> US continues to withdraw from Naval security commitments from the Bretton Woods era
Would you mind listing all the naval security commitments - from the Bretton Woods era - that the US has withdrawn from (eg over the past decade or so, anything relevant to "continues to")?
I'm not aware of any meaningful reduction in US naval security commitments. If anything the US is as busy as ever with its global naval security efforts. It's hyper busy everywhere: from Latin America, to Australia, to Europe, to the Middle East, to Asia.
The notion that the US has stepped back at all is entirely unsupported by the actual facts. It's just a weak myth being posted endlessly since Trump began spouting isolationism in 2015-2016. Meanwhile, in actuality, the US just spent another hundred billion dollars on a foreign war in two years.
> The notion that the US has stepped back at all is entirely unsupported by the actual facts.
40 years ago the US Navy was equipped and staffed to patrol the global oceans. Now, the US has a relatively few massively powerful forces of naval power projection but is woefully understaffed and under-equipped to maintain the global order against multiplying chaos. This is unlikely to change at all let alone be fast enough to influence outcomes. Growing sentiment after decades of the war on terror is for the US to be hesitant to intervene internationally, and while that isn’t current policy it’s predictive of future policy. It’s not at all clear that it would be popular in the USA to, for instance, go to Moldova’s defense.
> the US just spent another hundred billion dollars on a foreign war in two years.
The vast majority of this was accountancy fictions about the value of stockpiled obsolete materiel we couldn’t sell but had to pay to maintain or pay to scrap. We have demonstrably not gone all in on supporting Ukraine and Congress is currently strangling any attempt to do so. This is another sign of the US inevitably devolving into an unreliable defense partner.
Globalization is breaking down because of actions being led by the US. It is not some inevitable process that we have to pre-empt, rather it is actively precipitated by our actions.
- The US has almost everything it needs in North America to be self-sufficient. Food, energy, natural resources, manufacturing, trade.
- The US is tired of being involved in the Middle East.
- The US is tired of protecting the oceans and trade for everyone else.
- The US is tired of China stealing its tech, being protectionist, becoming an adversary, not being friendly to US companies, meddling in US trade, etc.
- The US is tired of NATO not stepping up to the plate. It won't back out, of course, but would love for Europe to care more about its own security.
There are so many reasons the US is pulling back. Both the Trump and Biden presidencies are completely on board with it. It's fully bipartisan, and it's going to accelerate.
The US is going to near-shore, friend-shore, and to every extent possible, onshore what it needs.
To anyone outside the US, we don't all agree with these blanket statements.
Personally I am embarrassed that we were ever involved in the middle east, am willing to see our resources spent protecting natural resources if we can afford it, want a stronger NATO and only see that happening by us leaning further in, and think the only thing bipartisan about our two presidential candidates is that there is no way they are our two best candidates for the job.
Good reasons that will raise costs for everyone and lead to measurable impacts on the pace of quality of life improvements. A world that moves towards near-shoring out of security concerns is a world that is long-term poorer. That's real medical innovations, improvements in tech, education, climate that will be delayed because of our new cold war. We are already seeing climate impact in the EV car market where we are hamstringing our own policy efforts.
Globalization does not necessitate middle east involvement.
> - The US is tired of China stealing its tech, being protectionist, becoming an adversary, not being friendly to US companies, meddling in US trade, etc.
WTO already has the mechanisms to deal with this, the CHIPS act is hurting out standing with our allies because of its blatantly protectionist provisions.
> - The US is tired of NATO not stepping up to the plate. It won't back out, of course, but would love for Europe to care more about its own security.
> Good reasons that will raise costs for everyone and lead to measurable impacts on the pace of quality of life improvements
Do we really need to be stuck on a treadmill of always having to make our lives better? People don't know the word "enough," that's a real problem.
There's obvious issues with how current quality of life is distributed, but I'd propose that we don't need to increase QoL with new inventions simply to make sure that we don't ignore those worst off.
Say that to people with cystic fibrosis or muscular dystrophy who are getting real, lifesaving treatments now that were simply not available a few years ago.
Never mind that the world is not constant - we need innovation on the climate front if we want to stay in a stable environment that doesn’t require more sophisticated adaptation.
Making those worst off better without making everyone else poorer would be much faster with globalized trade.
I am sorry you have become so skeptical of progress, but I and others will continue working so that a rising tide lifts everyone, including you.
> Say that to people with cystic fibrosis or muscular dystrophy who are getting real, lifesaving treatments now that were simply not available a few years ago.
Its an unfortunate fact of life that we can't build a utopia with no illness or suffering. We have developed many solutions for different medical conditions over my lifetime and I'm truly happy for those helped. Over the same time, though, we've discovered and named even more. We continue to develop new medications for diseases that didn't exist in text books not long ago, and there's good reason to believe that pharmaceutical companies invent new disease classifications to get fresh funding for a medication they already have on the shelves.
I'm not saying we shouldn't help those in need, only that we can't run down that path forever with a hope that if we can just solve one more condition we'll have it all licked.
> Making those worst off better without making everyone else poorer would be much faster with globalized trade.
I'm not actually sure if this is the worst answer. We frequently hear about the widening wealth gap, fixing that certainly would mean making some poorer.
> Never mind that the world is not constant - we need innovation on the climate front if we want to stay in a stable environment that doesn’t require more sophisticated adaptation.
I wholeheartedly agree with the sentiment behind this, I just start from a different point. I think our best chance of helping reverse the problems we cause to the environment is to first remove the worst offenders of what we do today rather than start from innovating and replacing them. I think a big mistake in the green energy movement had been assuming that it would be untenable to reduce total energy use and that we must instead replace all current use and match the current rate of growth in energy consumption.
> I am sorry you have become so skeptical of progress, but I and others will continue working so that a rising tide lifts everyone, including you.
I'm actually not skeptical of progress, I may need to rephrase things if it comes across that way. I just view progress differently than I think many do today. Progress is often talked about as starting with what we have today and adding to it to make tomorrow better, i.e. always intervening more and never questioning how we got here. Put another way, I view progress worth having as progressing towards specific goals whether that means innovating our way out of it or backtracking to find another path. I don't view progress as an incremental approach that must always push ahead without giving time and consideration to removing when we realize pur current path is fundamentally wrong.
These links all reference process in specific areas with little or no context otherwise. For example, pointing to grain production increases does not acknowledge the required dependence on chemical inputs, water use, or infrastructure to move grained from large growth areas to those who actually eat it. Pointing to cancer treatment, while hugely important to those battling cancer, says nothing of what will plague us if we ever succeed in eradicating cancer.
If you have links or explanation of how we could possibly get to a world with no illness or suffering I'd be very interested. I'm also not expecting anything as that first depends on somehow already knowing what we don't yet know, like what will kill people once we cure cancer.
> US led NATO expansion lead to the war in Ukraine, and Europeans are paying the price.
As an Eastern European, I cannot thank the US enough for pushing NATO. It makes me feel safe. I'm just sad that they could not get Ukraine into NATO before all this madness started.
NATO doesn’t take countries with active border conflicts and for good reason. I am glad that NATO did not take Ukraine then, even if I am open to it once this conflict resolves.
I am generally not sympathetic to Turkey but I think the Cyprus issue is complicated and the former military junta, now Cyprus Republic, has given very few reasons for Turkish Cypriots to trust that they will be safe under its regime.
I also think that Western international institutions are systemically biased in favor of Greece and other more western nations, which is pretty obvious by the disparate response to Greek invasion of Cyprus vs Turkish.
The prospect of regional wars or worse makes you feel safe ?
Do you think that if Ukraine was not being courted by US that it would've been invaded like that ?
Multiple political analysts, US ones included, say that this would not have been the case.
Wars are only good for those in power, in both sides.
> Do you think that if Ukraine was not being courted by US that it would've been invaded like that ?
Invaded? Probably not. Becoming a second Belarus? Yes. Overall it would have meant a Russia - NATO border closer to me. I prefer an Ukrainian - Russian NATO border far, far more.
> The prospect of regional wars or worse makes you feel safe ?
Membership in NATO prevents regional wars, because it increases the risk for Russia. Standing alone, a country like Finland or Poland can respond only with conventional weapons, which they don't have too many considering the scale of Russian war against Ukraine. By attacking a NATO member, Russia risks with a nuclear response from other alliance members up to a global nuclear war.
Russians understand and react to power, and NATO represents that. When a Russian fighter jet intruded Turkish airspace while flying sorties in support of Assad's regime in Syria and got shot down by Turkish air defense, Russian officials came to apologize instead of ramping up the usual "we'll nuke everything!" rhetoric. Demonstrate credible force and they'll backtrack.
> Do you think that if Ukraine was not being courted by US that it would've been invaded like that ?
The premise of your question is upside down. Ukraine was courting the US to get security guarantees such as NATO membership, not vice versa. The notion that Eastern Europe had to be somehow tricked into EU and NATO is deeply misguided. Instead, these have been the main foreign policy goals for most countries in the region, the holy grail.
The alternative for Ukraine was to become an oppressive dictatorship like Belarus has become under Russian influence. That would've meant that Russia would've moved in their armed forces, installed nuclear weapons and prepared to use Ukraine as a staging ground for further invasions westwards - everything they've done in Belarus so far.
Instead of seeing Kyiv under missile attacks, we'd be seeing the same happening 1000 km westwards in Warsaw. How far towards Paris and London do you prefer to let this thing creep before tackling the problem? Until Picadilly Circus?
> US led NATO expansion lead to the war in Ukraine, and Europeans are paying the price.
This is the Russian propaganda of 2 years ago, and we know it is a lie because Putin went on camera and told us so himself. When asked by Tucker Carlson why he invaded Ukraine he gave a half hour history lecture telling us about its history of Russian occupation. Putin justifies his murderous invasion by pointing to former borders of historical Russian entities -- which by the way would not just include Ukraine but Latvia, Moldova, Estonia, Lithuania, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Armenia, Azerbaijan, Georgia, and parts of Germany, Finland, Japan, Mongolia, Romania, and Poland.
Every child in Eastern Europe knows this to be the real case, and only Americans who have no serious understanding of Russian and have generally never even visited believe this hogwash about NATO.
Putin even said in 2002 that Ukrainian NATO membership was a matter between Ukraine and NATO only: "At the end of the day the decision is to be taken by NATO and Ukraine. It is a matter for those two partners."
You cannot dismiss something as "propaganda" or with a reason "Putin said so". In the same interview Putin said that if the US had not broken the promise to Gorbachev to not expand the NATO eastward, the war would not have happened.
I am not an American with no serious understanding, I live in an area that used to be Soviet Union.
Everybody knows you should not corner a wild beast.
> In the same interview Putin said that if the US had not broken the promise to Gorbachev to not expand the NATO eastward, the war would not have happened.
Yet this contradicts his statements in 2002 that it was not a big deal and not his business. He only changed positions when he viewed the Russian economy as big enough to wage war and take territory.
There was also no such promise, this is a complete myth.
Russia is doing what it has always done: try to steal more clay. They have been doing this for a thousand years, far before NATO. Russia was neither cornered nor threatened.
It seems like you are way too invested in this and unable to think clearly. I'm sorry if it has affected you negatively, it is a terrible situation for everybody except the elites.
However, blame is never black or white. It cannot be all Russia's fault.
> However, blame is never black or white. It cannot be all Russia's fault.
Most crimes are a single party's fault. One is the criminal, and one is the victim. Saying it is impossible for it to be all Russia's fault is logically fallacious. Russia chose to invade and commit mass murder. Russia needs to be held to account for that.
This is pure ad hominem. My statements are not emotional at all. Ukraine committed no offense against Russia. Georgia committed no crime against Russia before they aided Abkhazian and South Ossetian rebels. Putin committed these offenses unilaterally against these. Russia chose to steal territory and murder hundreds of thousands of people. These are not emotional statements, they are factual ones.
It is in fact your claims which are clouded by emotionality -- obvious sympathies for Russian propaganda.
> You cannot dismiss something as "propaganda" or with a reason "Putin said so".
If provided without evidence? Yes, you can. What's presented without evidence can be dismissed without evidence.
> Everybody knows you should not corner a wild beast.
Nobody cornered Russia, Russia decided that it wants its old colonies back. Most of them were wise enough to long before ask NATO to protect them this time, Ukraine unfortunately had trusted Russia when it said it will honor Ukraines independence and now pays a heavy price for it.
> In the same interview Putin said that if the US had not broken the promise to Gorbachev to not expand the NATO eastward
Gorbachev called that a myth in 2014 when Putin used it as an excuse to invade Crimea. USSR's minister of foreign affairs Shevardnadze and minister of defence Yazov have said the same thing. Source, excerpt from an interview to ZDF: https://twitter.com/Jesuitchild/status/1749887239226617873
This talking point is a shining example of propaganda. Gorbachev and Shevardnadze have gone as far as explaining why even in theory, such promise couldn't have been made. It's a complete fabrication.
Billions are already starving. You just never hear about them. Millions are starving today on American streets. Yet we do nothing but sit on our hands, play hot potato between generations, point fingers, start culture wars, start class wars.
It’s all quite boring. Nobody is interested in solving the issue. Only a rat race to see who can con the next person(s).
Some days this monologue from Westworld rings true:
“ I think humanity is a thin layer of bacteria on a ball of mud hurtling through the void. I think if there was a God, he would’ve given up on us long ago. He gave us a paradise and we used everything up. We dug up every ounce of energy and burned it. We consume and excrete, use and destroy. Then we sit here on a neat little pile of ashes, having squeezed anything of value out of this planet, and we ask ourselves, “Why are we here?” You want to know what I think your purpose is? It’s obvious. You’re here along with the rest of us to speed the entropic death of this planet. To service the chaos. We’re maggots eating a corpse”
Millions of Americans suffer from "food insecurity" i.e. "reduced food intake and disrupted eating patterns at some time during the year." [1] This is very bad, but, there are also food stamps, soup kitchens, food banks, school lunches, family members, and random good samaritans that prevent actual famine amongst those populations because there is no shortages of food present. This is very distinct from real mass starvation where millions of people are dying of hunger in a famine where there is insufficient food available which is what I believe the GP is referring to.
The battle is already lost if we can only feed the people Alice today through a global, centralized food industry.
Such a system is doomed to fail eventually, there's no way around it. Not to mention the fact that its just a big shell game with everyone trying to hide the true external costs of industrial agriculture. The larger we build that system the harder it will fall unfortunately, and if there are no local food producers left in business we're all screwed like the Soviets after they realized killing all the people who knew how to farm was a bad idea if you also like to eat.
I imagine we’d have that skilled workforce if companies paid enough.
I’m a former construction contractor who reinvented myself as a software developer.
Each time I run into one of my former peers in the construction industry I hear the same complaints from them. “We can’t hire any good help.” Yet they are still paying the same non living wages that they have for 30 years.
I don't think that dynamic is the same in construction and in semiconductor manufacturing. Certain parts of the chip-building supply chain just plain don't exist in the USA, and so no one in the USA currently has those skills. It's not like there are lots of folks with the skills in the USA but they're all leaving the industry for higher paying jobs.
The reason there are not a lot of folks with the skills in the USA is because 30 years ago, the US labor market did not appropriately reward those parts of the chip building supply chain. Same dynamic as not paying construction workers enough, just with a greater time lag.
I think the distinction is still important, in that the time lag is large enough to have changed the current dynamics, even if they still match on longer timescales. Raising salaries a bit could stem the outflow of construction workers, and raising salaries sufficiently could bring folks like the prior commenter back into the industry. But as more time passes this gets less and less effective, because there's no one left in the industry to retain and no one with recent enough knowledge to pull back in.
What skills are they, specifically? I'd like to see companies like Intel make a resource describing them, at least, and at most, offer to pay training costs and offer a job at the end of it.
That depends. When I was young and the weather was nice the physical labor job sounded really nice. However physical labor also means when it is -1C and raining, or 40C with no clouds. Now that I'm older my body isn't willing to do that and the office job is a lot nicer (but my doctor keeps telling me to stay active)
To be clear, I'm not saying we can't have this skilled workforce. Merely that we don't have it today. So the pipeline to employ Americans for these jobs is going to require increasing the funnel of people who learn the skills, become junior engineers, learn more on the job, then become senior engineers. That's a long pipeline to beef up the numbers.
Not saying this with snark, but how many of those former peers work for companies with a clear pipeline to train people? Usually when I hear complaints like "We can't hire or keep good help" it's correlated with a company who isn't willing to invest in developing their workforce.
Not sure where in construction he was, but I've worked framing crews before, and the boss would hire anybody (not disabled) who said they were willing to work hard. It isn't hard to teach someone the basic tasks and most people could catch on in just an hour. Most people though realized it was physically hard work and quit in a week (even though this should be obvious).
Plumbers and electricians have a good start from nothing apprentice program. They are sometimes hard to get into, but I know a few people who have gotten in over the years.
If you are training people and they aren’t staying, isn’t the implication that you aren’t paying them enough? Those union apprenticeships are often hard to come by because 1) they pay quite well compared to other viable options and 2) people don't want to leave because of #1. If the job is demanding, the pay should be commensurate. The exception is if it’s rewarding on some other axis (e.g., socially).
Hope you’ll excuse the somewhat off-topic nature of my comment: I’d be curious in hearing your story how you transitioned into software development from construction - would you mind passing along contact information or reaching out to me? I’m in a similar boat and thinking long and hard about my options!
Happy to provide evidence from woke literature if you are interested in evidence of any aspect of how it works. They are pretty straightforward about it, but incredibly wordy.
Those are extremely biased, to put it mildly. Also random YouTube videos are not scientific evidence.
DEI has become a new conservative talking point but so far I haven't seen any evidence that such programs do anything to restrict hiring "white and Asian male[s]" as you put it. I've noticed some people complaining about what they imagine DEI means which is just the same old "affirmative action" complaints recycled.
I'm not saying there are not some cases of DEI-induced discrimination - the world is wide after all - but that isn't what DEI policies/programs say in their text or how they're intended to work. I have never seen anyone saying we should lower standards to meet some kind of "quota".
Again I want to point out that the numerous conservative attacks on affirmative action constantly claimed it was a quota system despite that being a flat-out lie. That makes me skeptical about this current round of conservatives blaming everything from the airline pilot shortage to fab personnel issues on "DEI".
You are trying to dismiss my claim by making a moral claim about your opponents instead of formulating an argument for why my claim is wrong or an inquiry.
To your claim there is no evidence. Here are some videos of top executives saying DEI enforce hiring & performance outcomes using Marxist oppressor/oppressed hierarchies:
—- CEO of IBM @ArvindKrishna admits to using coercion to fire people and take away their bonuses unless they discriminate in the hiring process.
So is every black or hispanic person trying to get a job in tech or maybe thinking of going back to school to get another degree is a closet communist trying to… destroy institutions? Asking for a friend.
Either you can cherry-pick non-white candidates among the US population or you can claim that there aren't enough skilled candidates in the US and hire H-1Bs from abroad - you cannot have both. Beggars cannot be choosers.
I understand you are trying to use the woke activist tactic of insinuating that it’s racist to oppose woke communist redistribution and indoctrination schemes.
That’s not an argument and not an inquiry. Eg what you could ask is
“What makes you confident DEI is Marxist?”
It institutes DEI commissars (in Russian: a soviet) in every company like Stalin did to redistribute outcomes through equity from Marxist oppressor categories to oppressed categories while aggressively destroying dissent.
The issue is there are few opportunities for junior people to start their careers. There is no shortage of talent but where do we start? I’ve been applying for jobs in the semi conductor industry but haven’t had any luck because ever Is looking for senior staff but nothing for newcomers.
In most of the west (with few exceptions) is that you should waste at least a decade training yourself with little information of what's useful to learn.
Then, you'll be talked down for being poor and lost. And whatever money you make will be put directly in the hands of your landlords, that profits off scarcity.
Or we are going to be training Junior engineers with outdated skill sets and build outdated infrastructure.
Sometimes top down planning works, but I think I would personally need to trust the leadership and the incentives.
Unfortunately incentives on these are typically to do bare-minimum so you can meet the criteria to get subsidies. Sure the chips will be usable, but you spent a multiplier of the cost it takes to get it, and the chips aren't cutting edge.
I'd a bit more interested in some moonshot idealism than just some military buildup.
It really doesn't matter if it's a bit out-dated, you cant create senior engineers without them being junior. All seniors trained on currently 'old' methods by definition of time passing
We learned from the pandemic that a huge amount of the world's manufacturing economy depends on the availability of old and outdated chips. Being competitive in cutting edge CPUs and GPUs is only one facet of the problem. Incrementally addressing chip production needs seems better than doing nothing for longer in an attempt to solve everything at once, or a riskier leapfrog attempt that's likely to fail.
I don't buy this for a minute. It's very easy to train people to work in factories and there are lots of Americans willing to do it if the pay is right. These companies are just complaining so they can get more federal handouts to offset the higher labor costs of onshoring.
Is it that the work is impossibly skilled or that there’s only so much demand to go around and the capital costs to build a state of the art fab is just astronomically high?
I don't think Intel is going to train a new skilled workforce. Their domestic hiring is minimal. Like the rest of tech these bills are leveraging work visas that ensure the Corp has feudal control over their workers.
The right thing to do is to block these big waves and force global competition.
Right now the high-end fabrication competition is TMSC, Samsung, and Intel. All three are supported by nations. The idea that we should just let the freemarket handle the issue doesn't feel grounded in practicality.
This is a re-shoring of strategic capabilities not a labor move. The labor will most likely be imported as it doesn’t really exist in the US at the scale needed with an eventual eye towards more domestic labor. Expect large numbers of imported skilled labor in the short term.
> In awarding financial assistance for planning or establishing a Manufacturing USA Institute, an agency shall give special consideration to such institutes that
> contribute to the geographic diversity of the Manufacturing USA program,
> are located in an area with a low per capita income,
> are located in an area with a high proportion of socially disadvantaged residents, or
Oh yes, the bill has all kinds of nice ideas in it.
But then there is reality. And reality is that there isn’t some giant labor pool of fab workers in the US — yet.
- President Joe Biden signed the CHIPS and Science Act into law one year ago, and semiconductor companies across the U.S. have promised to spend $231 billion on building chip manufacturing hubs on American soil.
- Now, as the shovels hit the ground to begin construction, companies are realizing how difficult it is to find talent.
- Taiwan Semiconductor Manufacturing Company said it had to delay production at its $40 billion Arizona plant due to a lack of workers in the U.S.
/s should hopefully be obvious, but it does seem like anytime AI gets mentioned, it's clear cut to remove all US jobs away within the next 3-5 years, so it's ironic seeing a "lack of a skilled workforce" comment.
Well, you can chase short term profit and send your designs off to TSMC, or you can own your own foundry. This is exactly why it's in the interest of the US government to ensure that Intel doesn't totally abandon US manufacturing just like AMD did years ago.
It was not obvious to Intel leadership that the future of manufacturing was to become a contracted fabricator of the design of other companies. Vertical integration and total control over both design and manufacture of chips was the obvious (and, until recently) successful path. What board would keep an Intel CEO that presented the idea of shifting the primary focus of the company to manufacturing the designs of other companies whose products are in direct competition to Intel?
Intel is a perfect example of why companies need to regularly kill their old selves in order to survive. But it's also a perfect example of why so many companies fail to do so, since it often involves making what appears to be a terrible decision at the time, and convincing a bunch of people who know better to back you up. Very few leaders have the clout to pull this off.
The success of TSCM was the result of an interesting confluence of events: including the existence of ARM; Apple deciding that they were going to design their own hardware and outsource its manufacture; Nvidia developing CUDA; and the machine learning/AI revolution that drove demand for Nvidia cards.
If you take away any of those pieces, I think TSCM doesn't become the powerhouse it is today.
It's TSMC. Their rise is waaay before Apple or ARM. Plug and play fab model made getting into semiconductor design as a start-up possible. Broadcom, Qualcomm, Nvidia, Conexant etc all used TSMC in 90s, way before smart phones and ARM-mania. Intel saw this coming but they were ahead and they didn't worry about it. At the end they got stuck at getting bad yield from their FinFETs, which is invented by Intel, while TSMC and Samsung moved forward. Iphones would have been using Intel processors if Intel had a competing product to be honest. They screwed that up too. TSMC and Samsung just had the right mindset and focus, and a lot of smart and hardworking people.
+1 this.
Intel let MBA-think drive too many decisions (ie EUV). Maybe there was some misperception there, even cultural bias.
Pat's biggest real change has been to push the company towards process leadership. They always had good designs, though perhaps also damaged by MBA-think there too.
Still not sure about the decision to get out of non-volatile memory, though perhaps that was just a scope decision. Obviously, you could make a pretty amazing AI device with a whole bunch of NVM in-package...
Short term profit focus is arguably what led to Intel's engineering decline in the 2010s, despite what you say. An HN comment once recounted how they had spun off engineers into a another company and then merged with it again in a play to avoid pension obligations. That led to at least one frustrated engineer leaving and wishing them "good luck with 10nm".
You often see other comments talking about how underpaid these highly educated workers are. Things seem hopeful that with Gelsinger at the helm, they may continue on the right path.
And yet the US has been the biggest pusher of comparative advantage economics for everyone else via the world bank and imf. What is good for the goose is apparently not good for the gander.
Though I totally agree with the strategic imperative I just wish the rest of us non US countries would wake up to it and stop allowing Western countries to extract economic rent by capturing strategic monopolies on energy, goods and services.
How do you come off with a straight face attempting to compare a bunch of fabless design houses with a company that actually owns the infrastructure and processes to make tangible products, even if not the prevailing sexiest thing?
You're living in a bubble if you think the biggest money printer in the world actually cares about the historical performance of your cherry-picked stock comparisons.
Not 100% sure what you mean or why you're so antagonistic. Who's the money printer in your comment?
Why are my stock comparisons cherry-picked? The companies I listed make money from chips. Besides - any investor can compare any two companies for market cap, revenue, and profit, even if one makes chips and the other sells sugary drinks.
My response was nothing more than a reflection of your remark echoed from a very different perspective.
The money printer I'm alluding to is the US federal government. They own the proverbial money trees that $8.5B in grants will be plucked from.
The US federal government is also the investor. They couldn't care less that the companies you're attempting to compare against "make money from chips". If the government wants money, they print it, end of story. Furthermore, these irrelevant companies aren't getting $8.5B big bucks for the simple reason that they don't have the independent capacity to make their own semiconductor products...they're fabless design houses, dependent on other companies' infrastructure and processes...more specifically, a certain most excellent company whose bleeding edge infrastructure and processes are physically located at the doorsteps of its greatest economic adversary.
What the US federal government more immediately cares about are sufficiently advanced fab owner operators, more specifically, those rooted deeply in domestic soil...and who better to incentivize than a domestic former alpha dog who ate his own breakfast. Intel isn't leading at the margins anymore, but they're certainly not out of the game.
If you're still not seeing the bigger picture, then I'd recommend reading this recently discussed[1] short story by Arthur C. Clarke to get a relevant feel for the underlying threat landscape.
I'm not an accountant but they should be able to capitalize expenses incurred when it's an investment, ie, since it's not really a normal expense profit should not be affected.
I'm not sure how that works with R&D engineering salaries - that might impact their profits even if it's an investment.
I feel like a large technology company should spend a large but consistent amount of money on R&D - I don't like wild swings either way.
Also not an accountant, but i believe you two are talking differently about gaap and nongaap profit. The latter can immediately write of R&D, where as GAAP has rules around deprecation of investments.
Intel can save a lot of money by getting rid of incompetent folks in higher management, closing a lot of projects/teams that do not add value, a lot of middle management, simplifying processes that slow down the teams that are actually doing job, changing culture where working 10hr/wk is not tolerated. They need to do some variation of what Elon did to twitter. I have seen many of these things first hand.
> closing a lot of projects/teams that do not add value
I hear what you're saying, but that's also kind of how they got in trouble isn't it? They had an ARM license and a good implementation (at the time) StrongARM, but they shut that down just before smart phones hit. Intel is notorious for shutting down projects like that just before they could have been profitable so they can "focus on their core competencies".
> They need to do some variation of what Elon did to twitter.
Doing to Intel what Elon did to Twitter sounds like a disaster. Yes, Intel needs a shakeup, but don't completely destroy it. It's the largest chipmaker in the US and has actual fabs. I think Gelsinger is on the right track, but it's going to take time.
> They need to do some variation of what Elon did to twitter.
What nonsense. Since Elon's purge Twitter has had and endless number of persistent issues that frankly are amature hour level bugs.
He filtered developers by demanding they bring a printout of source code and explain it to him, when it's clear if you've ever seen him talk in detail about software he actually understands almost nothing about the process and details of writing code. This is both an ineffective and unfair way of deciding whether or not to fire someone.
He also lost about half of Twitter's advertisers in a matter of weeks.
I believe in fairness and honesty, so I will say Elon is exceptional at selling investors and customers on a technological vision. Saying his mindset and approach would have made Intel far more successful in recent decades is preposterous.
I'm a foreigner native to one of the many nations where American influence led to the sale of sate enterprises, free trade, market liberalization, and overall loss of local companies to the hands of USA firms
It's wild to see the same thing happen to the USA now, and to see their government be the ones handing out taxpayer money and caring about national sovereignty over liberalization and "market efficiency".
Unfortunately no, it's socialism for us too - just the wrong end of it. The government and their friends are the socialism winners, the rest of us are the socialism losers.
But we do it to ourselves at the ballot box every time, and very reliably.
I don't know what the heck you are talking about. Socialism is not the kind of bs like capitalism or communism, it has no winners nor losers everyone is in the same boat.
Anything else is just some crooked politicians, could be billionaires but don't have to, getting more rich and powerful and say whatever they have to say to keep it this way.
>I don't see how socialism is any different. It is still the state taking from one person to give to another.
Socialism is when workplaces are owned and managed by the people who work there, rather than private investors. It has nothing to do with taxes, or welfare, or "the state" doing one thing or another -- that is a uniquely American conflation.
Unfortunately a lot of that influence was done with the exact purpose of handing the markets to the US companies. I am not anti market and there are definitely good arguments in its favor (e.g. a better cheaper product even if imported will allow you to invest the money in something else) but it's a delicate topic and in reality almost no country operates like this.
Also even free market proponents draw the line somewhere. They will always advocate privatising healthcare but never the police or the army. Somehow it's important that keeping people healthy is economical and efficient, but not upholding the law.
I liked that US govt approved the Chips ACT, but I'm skeptic whether that will actually meaningfully change the manufacturing ability in-house.
The problem with US corporations is they are run by MBA management who are experts in stock price manipulation instead of manufacturing and engineering. So you could spend 100s of Billions and they don't materialize into much.
We see the same troubles at Boeing.
US has over-optimized for finance shenanigans at the cost of hard engineering.
SpaceX is perhaps something that truly stands out in terms of radical engineering mindset. If the same funding was applied to NASA they wouldn't have achieved a 10th of what SpaceX did.
Some corporations are just very inefficient. Intel being one of them.
I am for public funds being invested into companies only if they meet certain milestones, and new funding is only done if previous milestones are met.
Otherwise it goes from tax payers to some exec's pocket.
Dividends don't make you any money because the rest of the passive-aggressive investors downvote the stock price by exactly the dividend amount when dividends are given.
If everyone agreed to maintain the stock price when dividends were issued, the dividends would be useful.
the rest of the passive-aggressive investors downvote the stock price by exactly the dividend amount when dividends are given
This is the expected result if markets are correctly pricing stocks. The value of a company is its assets plus its future income streams. When a company pays a dividend, its cash assets decrease, so the value of its stock should decrease by that same amount.
I don't know what to make of all these strange objections to completely normal and rational business processes. People describe them as if they are somehow a bad thing.
The only thing your description is missing is that while the total market cap goes down, the individual share price should go up because the number of outstanding shares is smaller. This is how the company transfers value to the shareholder that has not sold their stock.
I'd much rather dividends be issued on random dates to random shareholders so that the market cannot predict when they happen, just a bunch of random people anonymously get dividends deposited each time, and as long as you stay invested for a long time you get dividends at the same average rate as everyone else.
Intel could have (and has) funded building fabs themselves, but if we are advocating for a free market solution, why would they build it in the US vs somewhere cheaper? Forcing their hand to do it inside the US does not seem like a fair free market solution either. There has to be either a carrot (subsidy), or a stick (tarriffs and embargoes) to nudge them to bring it back home; neither is a clean free-market solution. The additional money is to bridge the gap and cover the unfavorable conditions for conducting the business in the US.
I just question whether the government is backing the right horse. Intel has been losing market share in every segment for years despite once having everything in their favor: a head start, a strong brand, mountains of cash. They failed to capture the mobile phone and tablet market altogether. And the govt thinks Intel can make AI chips that compete with Nvidia?
I don't think the goal is even to compete, even though maybe it's being sold that way. The goal is to have a domestically controlled source of relatively high tech chips. It doesn't matter if they're subpar
Intel built D1X and it took forever to get working and even longer to become profitable (if it even is yet). It was a 10 year 10 billion dollar project.
D1X was like their entire capex budget.
They just flew too close to the sun and imploded with too many technical challenges.
Corporations should only return cash to investors (via dividend or stock buyback) if they do not have a high yield way to invest the money internally. A large stock buyback is the corporation admitting they do not have good uses for the cash. If Intel would take these grants, tax credits, and low interest loans and turn around and increase their dividend or do a large stock buyback then this would be a simple wealth transfer from the US to Intel stock owners. Even without this cash flow, these large grants feels like this unfairly benefits Intel shareholders at the expense of US Tax payers.
Intel's last stock buyback was in Q1 2021, which was $2.4B. There were $14B in buybacks in 2020 [0].
I'm not sure if this was your intent, but it sounds like you're describing the world as it actually works.
Companies execute stock BuyBacks when they don't have better internal Investments, and that's a good thing!
Intel doesn't care about more us-based Fabs, nor are they high yield. This is why the US government has to pay them if the US government wants those things to exist.
> I'm not sure if this was your intent, but it sounds like you're describing the world as it actually works.
This was in fact my intent.
I would just like to highlight there are alternative ways besides grants to encourage Intel to open US based manufacturing. Ultimately it's the tax payer that is funding this grant, so it's important they feel like they are getting a good deal. I think it's also telling that Intel didn't invest the $8.5B themselves when they clearly had the cash just a few years ago.
1. It's telling because if Intel thought this was a good investment then they would have made it without the grants. The stock buybacks show they had the cash to do it recently.
2. Alternatives to giving grants: Tax credits, low interest loans, import duty, law, executive action, threaten anti-trust lawsuit, purchasing shares, leverage intelligence agencies, nationalize. The most straightforward way would be to extend the regulations around exporting critical technologies to make it unfeasible for new chips to be manufactured overseas. There's pros/cons for all choices.
To me, unless a company is Nvidia, a stock buyback screams “we have no vision for the company’s long-term growth, let’s just prop up our options/shares for short term personal gain”.
That said, I’m not a fan of pointless acquisitions either…
Would executives actually do buybacks if they didn’t have company shares? I suspect not!
At the same time, a company shouldn’t get to underpay employees, do layoffs, and stock buybacks all in the same year…
> Corporations should only return cash to investors (via dividend or stock buyback) if they do not have a high yield way to invest the money internally.
*It should be noted that this is true due to the tax code rather than some underlying economic principle. Dividends are taxable whereas reinvesting is a tax deduction.
Reinvesting in growth seems more sustainable than extracting all value until the company can't even keep up with its newer competitors.
There's surely a middle ground where a company should return _excess_ profits to shareholders when they're doing well. Intel was too busy paying out hundreds of billions to notice that Apple/TSMC/ARM/AMD/NVIDIA were eating their lunch.
That doesn't mean that lack of funing was the problem.
If the company leadership can't find a way to get a return on the money, why not take it somewhere else?
Intel investors sell and become Nvidia investors.
It seems like people have the blind assumption RnD investment always has profitable returns and is the limiting factor.
There are real institutional differences and limitations to what money can do.
You can't drop a billion dollars on a turd and come back the next day and collect 2 billion dollars. When a company pays a dividend, it is saying that it can't put that money to better use.
The perspective is the problem here. Looking from the angle of "investor" (ie, someone with capital) twists everything into a horrific hellscape. For example:
Suppose I own you, my slave. I can work you for ten years, collecting the profits off your labour - or I can sell your kidneys, liver, eyes and heart for a large up-front profit. One approach is long-term sustainable, the other is not.
But looking at it this way entirely disregards your perspective on the situation. Perhaps you would like to have a say in some of the decision making? Perhaps the owner's profits aren't the be-all-end-all of things?
You can pretend to have a billion dollars and show great concern about how to turn it into two. Or you can accept that for 99.999% of people this is an exploitative system that destroys everything of true value, in the end leaving the one biggest capitalist with a giant bag of money and nothing left to buy with it.
I dont think it twists it. Even if the owner is the employee, the questions and calculus is the same.
If you work for a completely employee owned coop with a profit, would you reinvest it for less money tomorrow?
You can even take money out of it and talk about goods. IF your coop job runs a profit, would you rather get 2 free hams this year, or choose to wait and instead get 1 free ham next year.
I think we would all benefit most if companies were employee owned cooperatives, with everyone who has a role at the company also having a say in the overall direction the company takes.
I'm fine with dividends, but less ok with stock buybacks. I feel like buybacks lead to perverse incentives and even _greater_ levels of short-term thinking.
Wouldn't GlobalFoundries (HQ in New York and supposedly on the "Trusted Foundry" list) have made more sense, since they fabricate chips for multiple different companies, where as Intel only makes them for Intel?
Boosts a competitor, opens up fab capacity for all and moves the needle on the intentions behind the CHIPS act, all at once.
GlobalFoudaries is receiving $1.5B from the CHIPS act. While it might have made sense to try to help them catch up to the competition a decade ago, today we just want to have any domestic capability comparable to TSMC in case China decides to invade Taiwan. Intel and TSMC will be able to get there much more quickly than GlobalFoundaries can. Furthermore, Intel is opening up their Fab to outside customers.
100% right. GF is no longer gunning for leading-edge nodes. They've made their niche in mature nodes for low-power chips and emerging memories (FeFETS, MRAM, RRAM, etc). If you want to get leading edge nodes on American soil, Intel is the best bet.
Correction: Intel has had a Foundry business since 2010 or 2011. Then CEO Paul Otellini pushed hard for it, but had a lot of opposition internally. It then languished after he left until Pat took over.
It never died. It was always there. Pat's just fulfilling the vision Paul had.
You're right on that one, I perhaps should have more accurately said: "Revive". I will say though that the scope of Paul's vision for an Intel foundry didn't shine a light against IFS. There wasn't the same push for increased capacity. More so excess capacity would be given to select customers, and they might maybe increase capacity for big customers like Apple (who were with Samsung at the time rather than TSMC).
It's funny as a side note that their big foundry announcement at the time was making chips for Altera before the merger, and now Altera is parting ways with Intel after 8 years. Time flies.
The alternative is to be dependent on the rest of the world for chips.
The market decided that the most efficient transaction is to offshore all of this infrastructure to geopolitically-compromised areas and pray that China never does what every other emerging power in the history of geopolitics has done.
The actual alternative would be to publicly admit the failure of very loosely regulated free markets and regulate the chip industry instead, but apparently the charade must be kept alive at all costs (to the taxpayers).
> The market chose wrong.
Oh no, the market chose right, but what the "market" wants doesn't align with what the nation requires.
The market chose what it could based on the conditions that exist. Make is easier to people to open new businesses and expand existing ones, and people will do so. Creating hostile environments and then choosing who gets free money to overcome those difficulties is not much of a market.
They throw their weight around to influence geopolitics.
EDIT:
There really does seem to have been this mindset in the 80s and 90s regarding China that they were going to liberalize once we shipped them a bunch of our industry and IP. You can only really believe that would happen if two things are true:
1) You have a woeful misunderstanding of Chinese politics
2) You think that the West, and the US in particular, have some sort of magic that will invariably keep us ahead of the Chinese. Maybe it was racism, maybe it was underestimating the power of collectivism, but there were people who really saw China as nothing more than a workforce that would happily do whatever Western companies wanted them to do, while providing absolutely no competition, forever and ever.
Yes this is corporate welfare, and sadly it's probably necessary. We need to be able and willing to blow the TSMC fabs if China invades Taiwan, and being able to credibly make that threat decreases the chance that they will invade.
Why pissed off? Intel is the one with experience and the US is desperate de-risking TSMC and control more of the chip as chips is one of the most important resources now and in future. Would they give it to Y-combinator startups? If Yes they would be a fraction of it, Intel earned this by being American and being the cornerstone of American Chip business for past few decades
I'm opposed to it here as I am to it happening in China. Except that I felt Huawei phones were superior to everything else I had used from an OS perspective (They made lots of optimizations). I don't Intel as a company in good standing; they've committed personnel, product and corporate fouls. I'd rather see 20 million go to that kid that made his own CPU. I have faith he'd do more to better humanity than Intel.
The US is spinning $1T new public debt every 100 days and there's no credible path to return to a sustainable trajectory. Plus, the poster child for federal corporate welfare-- Boeing-- has not done so well with that largesse, Intel is a rather sad candidate to carry that torch forward.[1]
> The US is spinning $1T new public debt every 100 days and there's no credible path to return to a sustainable trajectory.
How are you calculating this? The full-year deficit is running at less than $1T... You aren't counting it when Treasury rolls maturing bonds over into new debt, are you? That's normal and irrelevant.
There's a few things worth mentioning, since after all that is still a big deficit.
1) Debt service costs are over $1T annually, as the end of many years of ZIRP finally starts to bite. There's no guarantee that we return to lower rates in the future, but it's likely, and that will reduce debt service burden over time.
2) Deficits are calculated inclusive of the costs of debt service, but do not include the impact of inflation on the public debt (which is substantial right now).
3) Deficits can absolutely be sustainable. The economy (i.e., GDP) grows over the long term, and the tax base grows with it. GDP is around $23.3T, and assuming long-run 3% growth, that would mean deficits of $700B are sustainable.
Overall the fiscal picture is not great, but anyone acting like there's an acute crisis is probably doing it for political reasons.
Your link indicates a $1.7T deficit for FY23 which is not "less than $1T". That's roughly twice the figure you offer as " sustainable" ($700B).
It's been widely reported [1] that the US debt reached $32T in June 2023, $33T in Sept 2023, $34T January 2024, achieving those milestones roughly every 100 days. The projections indicate an exponential increase, which doesn't help the case for sustainability.
Sovereign debt and fiat ultimately are confidence games. Being unable to offer credible long-term math is a problem.
You're right, I mistook the year-to-date figure for the full-year projection.
That said,
> It's been widely reported [1] that the US debt reached $32T in June 2023, $33T in Sept 2023, $34T January 2024, achieving those milestones roughly every 100 days. The projections indicate an exponential increase, which doesn't help the case for sustainability.
These figures aren't interesting because they include debt that the government owes to itself (intragovernmental debt). The debt held by the public is presently around $27T.
When actually considering long-run sustainability, you don't just consider the real GDP growth rate (as I did above). You really need to consider several factors:
1) Deficits
2) Nominal GDP (i.e., disregarding inflation)
3) Nominal interest rates
If you have a ton of inflation, you can effectively reduce the debt burden in terms of a % of GDP, since the GDP grows with inflation and the debt does not.
You'll note an explosive increase due to the extreme pandemic deficit spending (and during the financial crisis), but lately it's actually not an "exponential increase".
The bottom line is it's not as though these are uncharted heights, or that we're presently on an uncontrolled exponential trajectory -- but, we have "run out of room", and if we have another crisis, we're going to be unable to engage in the kind of deficit spending that we have in the past without serious consequences.
Nice smooth exponential curve, debt held by public as percentage of GDP through 2053.[1] During the GFC, the projections always flattened over the long term. There's no longer even a pretense of plans to normalize. We've lived for a long time in the "no serious consequences" regime; this set of projections seems different.
This seems to have more to do with population growth projections over the very long run rather than anything that's actually going on in Congress right now.
Bottom line, our taxes need to go up modestly in the coming decades... but only if these assumptions actually prove to be true:
> Inflation slows through 2026 to a rate that is consistent with the Federal Reserve’s long-term goal of 2 percent and then remains at rates that are consistent with that goal from 2026 to 2054.
> Interest rates generally rise over the next three decades, largely as a result of projected increases in federal borrowing and in capital income as a share of total income.
... I doubt it! Look what happens to interest rates in graying countries like Japan.
It's unlikely at this stage it's possible to bootstrap a company that makes CPUs, GPUs, etc, so it seems to me the US government wants to hedge their bets and keep Intel alive for now. $25B in total is a small price to pay for that.
That being said, I would've preferred it's not Intel that gets the life-line.
And all rely on ASML, though some of their EUV stuff was in part tech transfer from a US government collab that included Intel (EUV LLC), and that's why we have still have some security veto over selling EUV machines to China.
The thing is that it’s not leading edge chips that are the most important for most consumer goods like cars and random other products. It’s the trailing edge chips that companies like TSMC is manufacturing on fully depreciated equipment.
While it makes no sense financially for a new company to buy equipment to build trailing edge chips, it’s perfectly logical for TSMC just to keep old fans running
They could force them to license the production to one to three other companies who kick back a percentage of the profits to Intel. That makes two to four suppliers who receive the $25 billion. Then, we have competing firms.
If they think that’s unfair, they can quit asking for our tax dollars to expand their for-profit businesses.
Nobody needs to force Intel to do this, Intel is already doing it. They manufacture other company's designs for hire. Opening up their foundries for use by other companies is part of Intel's current business strategy.
There are only three companies in the world with cutting edge semiconductor manufacturing capability: Samsung, TSMC and Intel.
You just argued with yourself. You said there’s only three suppliers, two of which the U.S. wants to avoid. Then, that Intel is controlling and benefiting from how those projects are manufactured. That means the billions would shore up a domestic monopoly that’s in a tiny oligopoly.
My proposal would use our tax dollars to create plants that use Intel technology, but aren’t under their control, with different business strategies, operational priorities, and money going to other directors. The supplier diversity would increase competition domestically while strengthening us. While not done the same way, my precedents for increasing suppliers are Intel having to license to AMD and IBM licensing to Freescale.
Ok, I misunderstood what you meant. I thought you meant license access to the foundry, like TSMC does.
What you're proposing is that the US stand up a semiconductor fab that can compete with Intel. That's going to be hard!
I think "use Intel technology" is a lot less practical than it might seem. After all, Intel uses ASML technology, and anyone with enough money can buy the machinery (as long as they're not based in China). Intel manufacturing tech is the sum total of all the skill and expertise of Intel's employees.
My employer spent hundreds of millions of dollars on Intel hardware for a major system, and it still hasn't seen the light of day due to complete incompetence on Intel's part. I look forward to seeing how they mismanage this money.
They're getting $5.5bn in tax breaks, and loans for $11bn on generous terms too. Their total support package from the CHIPS money is $25bn. Intel are putting in $75bn, taking the total project to $100bn.
It sounds like the Surface Pro 10 will be a good example. Early reviews of the Snapdragon X Elite sound promising. It wouldn't take much for others to start making competitive offerings as well.
Not all software is compatible with arm64. Specifically I would be worried about attempting to run Windows applications not compiled for arm64, for which there are many. The compatibility layer Windows ships comes at a significant performance impact.
A strong percentage of Intel's current sales are vendor lockin from the historical "Wintel" age (windows + intel). This is a moat Apple finally crossed after great effort, and Windows has made a few attempts to cross.
If chips were sold purely on hardware specs and not software lockin then Intel would have much fewer sales. The US giving grants, tax credits, and cheap loans to Intel only serves to extend the lifespan of a company whose compeitive edge is failing.
These grants are for a completely different side of the business. The fab side, and that side is strategically significant for the US government so it makes sense they put some money in. The rest of the world is doing the exact same as well.
Given that their parts have been, up until the past 5 years, clearly better than AMDs (and any other chip manufacturer), and in the last 5 merely competitive, that’s quite the statement. Nevermind that with Gaudi, they also have the only viable AI accelerator besides Nvidia and AMD.
I understand why Intel is getting these, but would be nice to see this money go to companies that are still innovating and are somewhere in the US coalition/orbit (TSMC, Samsung, etc.)
Intel is still innovating though? What's with everyone acting like they aren't innovating just because they aren't the leading performance x86 chip manufacturer? They're still shrinking node sizes, they've entered the GPU market, they're opening up their fabs to also make chips for other companies...
I think the general perception is that they're playing catch-up rather than meaningfully pushing the limits themselves. Yeah, they moved into the GPU market, but the cutting-edge in GPUs is by NVIDIA. As is the cutting-edge in AI chips. The cutting edge in fabrication is by TSMC. The cutting edge in mobile by Apple.
Intel's bread and butter has always been x86, but not only is it an ISA that's proving non-ideal for a couple new applications (mobile is ARM, AI is in the GPU or NPUs, etc), AMD is really putting up a good fight in that market too, and the crown has been traded a copule times in the past few years.
Bit hard to claim they are shrinking nodes, when Intel 4 claimed to be in production in 2022, but is still MIA except for low volume laptop products.
And Intel 3 still has yet to appear.
I wonder if this is coming from a position of ignorance... Samsung is among the companies of the world that might be producing negative externalities that weigh more than their positive contributions
This is such a horrible approach to succeeding and will not do anything good for anyone.
Those factories will be mostly automated and so the idea that they will come with lots of jobs is misguided. On top of that to the extent this is a good idea the private market have no problem finding the money for that themselves.
The real issue is in the actual materials i.e. rare earth etc which is where the government completely dropped the ball the last 20 years.
8.5B going to the mining industry would make sense not to Intel.
Cool. So, where you getting that labor you smothered out for shareholder value all those years ago? I both hate this but support this. I hate it because no one will learn their lesson and Chicago economics will go on being a theory from autists imposed on the rest of us with constant “externality” costs. Supportive because any fool not indoctrinated into the Chicago school could have seen what happens on a long enough timeline in such a fragile situation and this technology will make or break a nation in the current zeitgeist.
They didn't get the money. Reading the article, the first sentence explains this is just a proposal...but even the commerce.gov headline is misleadingly worded (to your point).
A combination of the stock price already having that expectation built in along with CHIPS intentionally funding domestic overcapacity that has its own maintenance overhead. Chip demand is cyclical, which is why chip fabs aren't built to handle peak demand; it would be too expensive for the times when they aren't running at full production.
> “Ethical responsibility and international law aside, by insisting on investing tens of billions of dollars in Israel, a ‘war zone,’ only miles away from occupied Gaza, Intel is putting its leaders’ fanatic ideological commitment to Israel over financial and fiduciary responsibility. Why else would Intel freeze plans to expand its chipmaking manufacturing in Ohio while throwing those billions into Israel, a state committing genocide?
I've noticed a trend of pay-walled articles lately on HN. Nothing wrong with journalists being paid, but I'm beginning to think that they are self-promoting rather than bubbling up organically.
It's frustrating that Intel is being given truckloads of taxpayer money after spending decades falling behind their competitors due to arrogance and complacency.
I think actually the problem with this program is not the recipient (I mean, Intel is literally the only American company building fabs in the US) but the structure. The problem with US fans is that the skilled Taiwanese workforce is simply willing to work for less and more flexibly.
We could easily solve that problem if we were willing to do what China is doing, which is paying Taiwanese PhDs, engineers, and technicians to come to the US. Give them a streamlined visa and green card process, and pay them a cash bonus to emigrate.
I mean, this is America’s core strength - we have strong Taiwanese communities they could integrate into, a social structure that is ultimately much more positive on immigrants than most places in the world, and incredibly high salaries.
A lot of people talk about training a US workforce, and I totally agree we should embrace that. But there are limits, and ultimately as a country we should encourage skilled immigration whenever and however we can. After all they’ll train locals eventually, even if by proximity.
Absolutely, we should be trying extremely hard to skim the cream of the rest of the world. That's historically been one of our greatest strengths/abilities.
> We could easily solve that problem if we were willing to do what China is doing, which is paying Taiwanese PhDs, engineers, and technicians to come to the US. Give them a streamlined visa and green card process, and pay them a cash bonus to emigrate.
Well actually ... TSMC poached a number of Intel employees (who already had green cards and/or naturalized citizens). If Intel could have paid them more to stay, I'm sure they would have.
I bet that the minute the US rolls up red carpet to Taiwan's hi tech experts will be the minute Taiwan will fight it either soft way (increase the salaries) or the hard way (introduce the laws preventing them from leaving the country). Should Taiwan loose leading position their value and security guarantees will all go down the toilet.
From the position of high value employee making good living: If I get a green card I will move. If I get a visa that ties me to employer and I am at the constant threat of being kicked out then fuck it.
> The Biden administration, equipped with $39 billion in subsidies to distribute,
IMO this is the major problem in American politics (maybe world too)- That we have the government picking and choosing winners before the game is even played.
IMO we should be rewarding the winners in a after a fair game with rules tailored to what we want to incentivize. Eg: A per chip, per TFLOP or other intelligent metric reward AFTER the item is produced and sold on the free market. IMO The government should not be financing or changing the capital structure of any corporation, instead investors should take the risk and use financial structures available to chase the rewards.
But what I'm referring to here is the goal of having American produced chips. If TMSC wants to produce in America, and a foreign government wants to foot the bill, then what would be the issue?
I feel sorry for any startups looking to innovate in this space. It's hard enough competing against established players without them getting billions in free money.
Intel has had the resources to build out fabs in the US for decades. Instead, they've chosen to build elsewhere, and now they're rewarded for it?
They recently announced their $20b facility in Ohio is being "put on hold":
>They recently announced their $20b facility in Ohio is being "put on hold"
I have a friend who lives in Ohio who was very excited about this, and I told him not to hold his breathe, its likely they will do everything they can to get subsidies to pay for it, rather than pay for the majority of it out of their own pocket and re-coup some via subsidy, therefore I suspect they will delay opening until they get more subsidies.
I feel sorry for any startups looking to innovate in this space. It's hard enough competing against established players without them getting billions in free money.
Which startups would be harmed by this type of investment? as a relatively casual observer, I didn't think there was much in way of startups that were looking to go head-to-head with a company like Intel or AMD in chip fabrication.
Any industry wouldn't be "really a startup kinda business" if only a few players are pumped more than everyone else combined by orders of magnitude. Having to scale to everyone's demand is a lot more costly than if the market was fragmented.
Rockets turned out to be expensive not because the technology demanded it, but because the companies were intentionally inefficient, e.g. it was actually fine to build a rocket in a tent with simple tools than to setup a massive clean room facility. This was fine because the government would hand them a blank check with a guaranteed profit percentage, and the handful of commercial customers would just swallow the cost.
However, it isn't as clear if the same applies to semiconductors, since even a bit of dust is indeed a serious problem for producing a chip where the transistors are much smaller than most dust. Until very recently there were no blank checks, every improvement required mostly private investment, so it's less likely that the inefficiencies are intentional.
The big difference there is SpaceX was able to incrementally build up. Falcon 1, Falcon 9, Falcon heavy, Starship. Each step allowed them to prove that it worked and gain investors and government contracts.
Who in their right mind would invest $10b just to build the manufacturing capability without having a well established product? And if you have a well established product are you still a startup?
As much as I agree, and I really do, this is also a company that mentions they have $7.24 billion available for sock buybacks [1].
Sure, maybe they don't actually make any buybacks. This is what's left from $110.0 billion they approved for stock buybacks in the past, not a quantity that's been approved or seemingly needs to be used this year. They haven't bought back any stock since 2021 [1].
One just wishes they'd invested in fab-building earlier. They've spent $152.05 billion in buybacks since 1990 [1], a fab apparently costs anywhere from $3-20 billion [2]. That's say ~10 potential fabs that instead became just checks for investors.
I said this about China trying to make chip investments but it applies to the US too. It’s extremely difficult for government to pick who should be winners with investments like this, and then the question of what is next, x-ray lithography, photonics or something else. I suppose this is quite far into the future and a moot point as the AGI will have moved the humans into a simulation by then to avoid any problems with them.
Often politics and fine print gets in the way. It’s hard to find qualified talented people to build and run a fab Now imagine all the DEI requirements that are added into this grant.
If it is really a national security issue to get onshore fans here in the US they really need to drop all the social equity attachments.
There's one condition in particular that I think should absolutely be part of this: a requirement that Intel offers foundry services on an ongoing basis and giving equivalent access and prices to foundry customers as they give to their own internal customers.
Foundry services are a small part of Intel's business currently, but in the event TSMC is disrupted then Intel would have a near-monopoly on high-end chip manufacturing. Whether Intel is obligated to work with Nvidia, Apple, AMD, etc... could make the difference between those companies surviving or not.
It's in the interests of the American public that money ostensibly spent to mitigate the economic and technological fallout of something potentially happening to TSMC is actually effective at mitigating that risk in a sensible way, or if it's just a huge handout to Intel that they can happily use to dig a deeper moat around their business.
Title on commerce.gov isn't quite what the first sentence says, which is they announced a _proposal_, not a done deal.
U.S. Department of Commerce Proposes up to $8.5 Billion in Potential Direct Funding for Intel Under President Biden’s Investing in America Agenda to Support Multiple Projects in Arizona, New Mexico, Ohio, and Oregon
$8.5 in corporate welfare, out of a total of $39B that "Biden has to spend." - That's about $100 per person in the US. How about just give us each $100 instead, and we can vote with those Dollars for what we want? Maybe we'd rather invest it in food, clothes, shelter, transportation, etc.
I suppose at least the theory is $100/person invested in chips will collectively benefit us more as we will not lose the strategic advantage in chipmaking. Surgical planned economy to cover the gaps in market economy and tragedy of the commons situations.
Strictly speaking that is manifestly false (the "only" part). At the very least, in practice they usually enable a bunch of unnatural markets/behaviors (usually falling under "corruption") that enrich many ancillary parties in addition to the planners, even if they don't enrich the general population (last I checked the west was filled with plenty of Marxist-adjacents who make arguments of such sort, so I suppose it it is not a given for everyone). To be clear, I am not advocating for the grant per se; just describing a theory the other side might be operating under.
In the past 15 years Intel has spent almost $100 billion on stock buybacks. They don't need the money.
This is a pure transfer of wealth from taxpayers to the rich. And they're getting more like $20 billion not once you include loans, etc.
The wealthy make massive amounts of money, take it out for themselves, and then complain that they don't have capital. That's pure junk. And then we wonder why Biden's approval ratings are terrible and why we might end up with Trump again.
We need to make stock buybacks illegal again. They provide no value to everyone but the ultra wealthy.
Edit: Wow, the downvotes are amazing. A company gives away $100 billion then comes hat and in had to taxpayers asking for another $20 billion and we just hand it out. And I'm getting downvoted?
I never understood the anti-dividend and anti-buyback mindset.
I've given quite a bit of money to partially own a business (and I don't mean publicly traded shares, but literally buy a portion of a business). I have an agreement with the operator that I'll get N% of proceeds (as long as the business can handle that percentage). Are you saying that I, as an owner, am not entitled to it? That's rather ridiculous.
Imagine a friend coming to you who says "Hey, I need $50K capital to start a business. Let's be partners - you provide the capital, and I'll do the operations. Oh, and I'll give you whatever money I want, whenever I want. Perhaps none at all. It'll be entirely up to me."
Would you take that deal? Because that's how shares work.
Shareholders, on paper, are partial owners. Yet they do not even have an agreement like I do. The company can decide not to share any money at all with shareholders. IMO, all companies that sell shares to the public should be required by law to give a representative amount of money to these owners.
BTW, my N above is significantly higher than the percentage almost any company pays back in dividends. Intel used to give about 4.5% return via dividends, and that was triple the industry average. They've since reduced it to 1.5% to be in line with the industry.
Buybacks and dividends are not the same thing. Buybacks get preferential tax treatment and are in their entirety manipulative (that's why they were banned under SEC rules until Reagan deregulated capital markets) to the market it serves. Dividends are predictable, have a consistent rate across the years and are pretty much impossible to game the market with, as they return value to shareholders over a longer time period, avoiding temporary volatility.
> Buybacks and dividends are not the same thing. Buybacks get preferential tax treatment and are in their entirety manipulative
OK - answer me this. How can a publicly traded company buy more of its own shares (i.e. to get a higher ownership stake)? Or even buy them because they believe they are undervalued?
> Dividends are predictable, have a consistent rate across the years
Except this is not true. A company decides each quarter how much dividend to pay out. There's usually nothing preventing them from saying "Nah, sorry."
We all know plenty of companies that simply don't pay dividends, no matter how profitable.
> I never understood the anti-dividend and anti-buyback mindset.
I'll try to explain it.
Companies use stock buybacks to give away massive amounts of capital. Capital that they clearly need for their long term health. Then, because they're important to the economy when they have a downturn they come to taxpayers and ask for massive amounts of cash.
This is for example what happened to the airlines which then got over $50 billion or so in bailouts. They spent about 80% of that in the previous few years on stock buybacks. They would have been healthy enough to survive without the bailouts. So what happens is companies give their money away to the rich, constantly fail because of that, and take money away from the poor to cover up for their failure.
Stock buybacks create a conflict of interest where companies can directly manipulate their stock prices. So instead of building the best enterprise, they can pump money into bringing their stock up artificially.
The fact that this overt manipulation of your own stock price is bad was well understood after the Great Depression and that's why it was basically banned by the act that set up the SEC in 1934. The SEC then passed Rule 10b-18 granting companies an exception from the market manipulation rules under Reagan.
That's a pretty clear case of a regulatory agency going against the will of Congress to create basically its own law. It will be interesting to see what happens to Rule 10b-18 if the Supreme Court reverses Chevron in a few months.
> The new CEO banned buybacks.
Of course. After 20 years of stock buybacks where they gave away the vast majority of their cash the new CEO wants money from the CHIPS act which says they cannot have buybacks for 5 years.
It will also be interesting to see if the CHIPS act has any teeth. BAE took the money but is doing buybacks anyway.
My personal position is far more extreme, there should be a clear ban and the SEC should not be allowed to overturn the law as it was written with a regulation. Certainly if the EPA cannot regulate carbon through the same logic, the SEC should not be allowed to do so.
You start a business and have partners who have bankrolled you. They own a percentage of the company. At some point, you want to buy out their share. But the government just banned it. You can only dilute your share, never increase your ownership stake.
Does that make sense? Because that's what banning stock buybacks will achieve.
> Companies use stock buybacks to give away massive amounts of capital.
It's one use of stock buybacks, amongst many. Companies also do buybacks to get a greater ownership stake. They also do it if they think their stock is undervalued.
Banning buybacks is throwing all good options out to prevent a few bad options. It's a kneejerk reaction.
My company has done buybacks multiple times. It barely made any impact on the stock price. The much believed notion that it manipulates stock prices ... needs hard data. Look at all the companies who've done it in the last 30+ years - how many of them saw a significant gain in stock price in the short term?
I can agree that these transactions need to be regulated. But banned? Nope. For me, though, reform is useless unless they solve the problem I mentioned above: That it is currently legal for me to get an ownership stake in a company and not be entitled to anything in return. Shareholders should have a contractual right to returns that is independent of the stock price.
> Companies also do buybacks to get a greater ownership stake.
Greater ownership stake in what? Companies, at least in the US, can't own themselves. Stock buybacks merely reduce outstanding shares effectively increasing the percentage of the company owned remaining shareholders.
If we eliminated stock buybacks tomorrow, little would be lost other than insiders wouldn't be able to use buybacks to unduly enrich themselves and people having to pay some capital gains taxes.
We spent trillions on the war not so long ago, who knows how many billions just spent in Europe, and hundreds of billions on various programs that do not really produce anything, so when I saw numbers like $8.5B from the government these days it's like nothing to me, why is this even a headline? I just can not make sense of it myself anymore.
I think the parent is implying that the government would be better-off subsidizing the startup space or something else, rather than propping up a large incumbent that is failing.
I bet my life that Nancy Pelosi did some trades based on this grant.
Bought way in the money calls or purchased shares... I guess we will find out in 45 days....
Intel failed to keep up with competition due to some really bad decisions
and incompetence.
Now they are bailed out by the Biden administration with a giant
state subsidy. I think this falls under protectionism.
which might cause problems with the WTO.
I would guess the administration will or already have filed it under
"National security" or something similar.
Where does this money come from?
Has it been fully funded by congress? (hopefully)
You're commenting about a press release from the Agency which grants the investments that was published today - so I think it's safe to assume, "Yes, it's back on"
I just don't get it - the country has over $34 Trillion in debt already and we are handing out money to mega-rich corporations who don't need the money (among other things we waste money on).
This is not going to end well - our kids and grand kids will be paying for it.
They would be paying far more if chips suddenly stopped coming out of Taiwan in the future and the U.S. had no onshore capacity to make their own.
It’s more of an insurance policy than a subsidy. Intel needs a reason to build in the U.S., and grants tip the ROI scale on their side to make it happen.
IMO this is a big enough national security threat that what intel is doing is similar to if Lockheed said “we’re going to start selling to Russia instead of the US unless the US gives us nice grants”.
It shouldn’t even be an option for Intel to continue manufacturing in other countries. It should be “move manufacturing back to the US or the Fed will take ownership of the whole company and do it for you.”
(And maybe it’s sort of an unspoken assumption that if they don’t take this carrot, then the US really would use the stick to force their manufacturing back into the US).
An expropriation of this kind and magnitude by the US government would be historic. Has it happened before? I'm curious.
I know there's talk about TikTok either selling to a USA owner or leaving, which seems pretty monumental too. Not quite an expropriation since the state wouldn't be taking control of it, but somewhat similar.
I mean, if Intel is only motivated to build in the USA when it gets a fat check rather than out of conviction, I think that's a problem too, no? Does this mean that whenever maximizing (short-term) shareholder value is at odds with national sovereignty the USA will have to hand them out a check?
I don't know that this is what's going on here, perhaps Intel really is committed to the USA beyond the individual gain of its executives and shareholders. It's worth noting though, there's some prominent examples in US history where this hasn't been the case. Banks for example got really rich at the USA's expense in the years leading to 2008.
and yet INTC has been in business for decades, profitable the whole time, producing chips without this grotesque handout of taxpayer monies.
They have already used their excess profits - many $10's of billions of dollars in recent years, for stock buybacks, but apparently they really, really need this money from taxpayers to stay a going concern.
This is a thing intel didn’t care about doing. The government wants the fab strategically so is incentivizing them to do it. It has nothing to do with intel’s profitability otherwise.
It’s no different from grants to build renewables, farms, housing, munitions, whatever the government wants done in the country.
However, it is a very indirect way of getting what the government wants, prone to manipulation.
The more direct option is to contract and purchase the finished product.
The general problem is twofold. First, it can be more financially efficient to spend on incentives then finish product. Second, much of the public do not trust their representatives to perform this analysis and negotiate in good faith.
Is a 25 billion Upstream incentive cheap compared to the Chip Price premium the government would have to pay to have the same incentive?
The other question is who benefits from domestic chips and if the government is the right person to pay.
I guess in your mind it is not possible for both things to be bad? As long as we have the bogeyman of the DOD budget, any money spent that is even a penny less than the DOD budget is OK, is that how you see things?
People have been repeating this tired trope for decades and yet we persist. The US doesn't even have the worst debt load of developed countries and ones that are significantly worse are still operating fine!
We should give Intel 50bn of taxes, nevermind the roads, schools or anything else! And give Google and Facebook some bns too! And Tesla could always do with more, why not?
PS why not through a few bns at public housing too to preserve mixed society, like Paris? Mixed society is surely worth it... It's only money! And it won't spend itself!
I'm sure Intel will be very happy to bolster their cash savings with this investment. Or have we already forgotten about that broadband investment from way back?
It's more of an inducement to get the company to do what they might not do on their own. Intel doesn't need the CHIPS act, America does, and America is paying Intel to make it happen.
You're not wrong, but having an incredibly important dependence on an industry 100 miles off the coast of China (and the target of their increasingly erratic dictator) is worth paying billions to break.
Well it's a bit like how I see universal healthcare. Would it be worth paying billions for? Oh absolutely. Do I believe the current US Gov could actually take all the money in the world and make it happen in a way I'd be happy with? LOL.
2 - comparing a minor economic investment ($8B on a $23T gdp) to slavery, and the economic system built on slavery, is the stupidest thing I've read this week, so, well, congrats. I guess?
3 - not a naive economic policy; US government investment built silicon valley and that's going ok.
