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United States

US Senators Close To Announcing a $52 Billion Chips Funding Deal (reuters.com) 81

Posted by msmash from the shape-of-things-to-come dept.
A group of U.S. senators are close to unveiling a $52-billion proposal Friday that would significantly boost U.S. semiconductor chip production and research over five years, Reuters reported today, citing sources briefed on the matter. From the report: Senators Mark Kelly, John Cornyn, Mark Warner and Tom Cotton have been negotiating a compromise measure to address the issue in the face of rising Chinese semiconductor production and shortages impacting automakers and other U.S. industries. Sources said there remains at least one sticking point over whether to include a provision on labor rates.

The chips funding is expected to be included in a bill the Senate will take up next week to spend more than $110 billion on basic U.S. and advanced technology research to better compete with China. The proposal includes $49.5 billion in emergency supplemental appropriations to fund the chip provisions that were included in this year's National Defense Authorization Act, but which require a separate process to garner funding, according to a draft summary seen by Reuters. Democratic Leader Senator Chuck Schumer, also involved in the talks, said Thursday the Senate will take up the technology bill known as the Endless Frontier Act next week in a package of legislation that would include efforts to "invest in the American semiconductor industry, ensure that China pays a price for its predatory actions, and boost advanced manufacturing, innovation, and critical supply chains."
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US Senators Close To Announcing a $52 Billion Chips Funding Deal More

US Senators Close To Announcing a $52 Billion Chips Funding Deal

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  • This type of investment is what will make America great, to coin a phrase. Long-term, forward thinking. The future is high tech, not hanging on to outdated or old manufacturing processes. Keeping coal mines open doesn't help, pushing boldly to the future does.

    • Re:This is what America can do (Score:4, Insightful)

      by wosehi6883 ( 7985292 ) on Friday May 14, 2021 @12:05PM (#61384578)

      Yes it is really forward thinking to gift multi-billion-dollar tech companies with billions of dollars extracted from the middle and working classes. People are insane. This isn't progressive, this is Corporatism at its finest. Where is rsilvergun?

      • Re: (Score:3, Insightful)

        by eaglesrule ( 4607947 )

        Yes it is really forward thinking to gift multi-billion-dollar tech companies with billions of dollars extracted from the middle and working classes. People are insane. This isn't progressive, this is Corporatism at its finest. Where is rsilvergun?

        Probably busy lecturing someone about how corporations, and by extension a few oligarchs, should be in complete control over our online public square.

    • Re:This is what America can do (Score:5, Insightful)

      by Tailhook ( 98486 ) on Friday May 14, 2021 @12:19PM (#61384640)

      This type of investment is what will make America great

      If by 'great' you mean funding the family and friends and political allies of Washington elites, then yes, this is 'great.' This money will vanish into the pockets of Potemkin companies that deliver nothing beyond PR. 99% of it won't leave the borders of the Beltway and parts of Maryland an Virginia.

    • Re: (Score:3)

      by e3m4n ( 947977 )
      as long as they dont build a facility and just hand it over to some already monopoly like amazon or google. It should be corporation neutral, willing to charge the same prices to any proposed buyers of the products. Thats usually where the devil in these details lie. We dont need Amazon, Google, Halliburton, or Lockheed-Martin scoring this gig.

    • Re: (Score:1)

      by ohasten ( 409417 )
      So corporate welfare.

  • Gift or loan ? (Score:3)

    by Alain Williams ( 2972 ) <addw@phcomp.co.uk> on Friday May 14, 2021 @11:53AM (#61384520) Homepage

    Clawing the money back over the next few years would be fair to the tax payer.

    • you never get money back from this sort of thing. I wrote about this on another thread. If the gov't's going to get into the semi conductor business fine, but it should directly profit from it instead of just handing money to a company like Intel that just did $84 billion in stock buy backs.

      Imagine not having to pay taxes because your gov't is profitable.

  • is this state capitalism? (Score:5, Insightful)

    by OrangeTide ( 124937 ) on Friday May 14, 2021 @11:53AM (#61384526) Homepage Journal

    Why raise money through investors, as is standard practice in capitalism throughout history, and the origin of the very name capitalism? When instead you can mandate tax revenue be funneled into a private organization.

    Is this more too big to fail horseshit? How many of us own a small business that doesn't get sweetheart deals from the government, where we're on a knifes edge of going under until we've put in enough time and effort to stabilize our own business through loans and consistent revenue. Some of us only manage to get our business going through our own personal investment, and don't even have the resources of publicly listed company let alone a massive government.

    It's just more of the same playbook from our "leaders". Paying farmer to not grow too much corn. Subsidizing oil during periods of record profits. And so much more of the same old shit.

    • Re:is this state capitalism? (Score:4, Insightful)

      by iggymanz ( 596061 ) on Friday May 14, 2021 @11:58AM (#61384548)

      It's corporate fascism, we've had that for a long time. Government in pockets of large corporations, making a legal, political, military and economic structure for their benefit not citizens.

      • Re: (Score:2)

        by NFN_NLN ( 633283 )

        > It's corporate fascism

        "Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power." - Benito Mussolini (1883 - 1945)

        All the other 'stuff' you were fed was political hype to bring in actual fascism. Government branches working with media, social media, big tech and big pharma to milk and control the population, that IS fascism.

        • Re: (Score:1)

          by ac22 ( 7754550 )

          Fascism seems to have a bad name nowadays ...

        • A single out of context quote from Mussolini, with a scoop of right-wing cant does not equal anything like a valid explanation of what fascism is. In fact, it leaves out the most important parts - which has to do with the role of Maximum Leader.

          The standard modern work establishing a working definition of Fascism is Stanley G. Payne’s Fascism: Comparison and Definition.

          He provides a short list of six characteristics, none of which have to do with "corporations". All fascist movements have six common p

    • Yes, but your small business probably doesn't push politicians to give them money, and imply a gift to them. Is Intel too new to the chip game to be able to invest in it itself? Or did they simply close down all its manufacturing to send it to China. They've been so second class of late that they are now cheaper than AMD. So we have to support them, or else they might not remain so wealthy.

      • Clearly I've been doing it wrong. I should have privatized profits and socialized losses. Why should I pay for my own bad business decisions when the government can bail me out. Sold all my core technology to China? No problem, let's get America to re-invest in us!

    • This is a consequence of our mixed economy and the government having to operate in a capitalist economic framework. The alternatives are the government does more via direct action, like say building federally owned chip fabs and research centers (something I would support). The opposite alternative side is really do nothing and let private industry dictate the market (which chances are they will continue to offshore and outsource this capability in the name of profitability) or tax cuts and de-regulation

      • Really? Federally-owned chip fans, so that politicians can dole out production time to political friends and groups that they need to gain the support of?

      • It's true, there's really no good solution if the free market doesn't naturally want to secure our chip production. The best thing might be for the government to fund any research that's required at public institutions only (no privatizing the IP), and if physical machinery is needed then provide super cheap loans with lots of strings attached. Unfortunately, building the technical talent must start at the grade school level which is lacking in this country and takes time to correct. We'll have to import ta

    • Re:is this state capitalism? (Score:5, Insightful)

      by hackertourist ( 2202674 ) on Friday May 14, 2021 @01:16PM (#61384812)

      Standard practice in capitalism is how we ended up in this mess in the first place. Left to the invisible hand of the market, businesses like the chip fabrication industry consolidated until there were 2-3 major players left, the only ones who had deep enough pockets to finance the next generation fab facilities ($10B a pop) every 3 years. Left to the invisible hand of the market, these fabs tended to be concentrated in little clusters in SE Asia, until a crisis demonstrated the problem with leaving everything to the invisible hand etc.

      Clearly the invisible hand isn't going to solve this issue, and governments have to step in.

      I'm sorry you're having a hard time keeping your business going, but if you go under that's a local problem. If TSMC goes under because the PRC decides to invade Taiwan, that's everybody's problem. It's high time the government faces the problems that were created by unfettered capitalism and clearly cannot be solved by more capitalism.

    • It's not capitalism, but mercantilism, where the state serves the interests of business, rather than requiring businesses to create value for their customers and investors. It is the opposite of a free market when the government uses its influence to favor one business or industry over another.

      Even Glenn Beck admits that we've never had true capitalism in the US. Calling it crony capitalism only disguises the fact that this has already been tried centuries ago and resulted in colonialism and slavery.

    • Re:is this state capitalism? (Score:5, Insightful)

      by tlhIngan ( 30335 ) <slashdot@worf.ERDOSnet minus math_god> on Friday May 14, 2021 @03:34PM (#61385346)

      It's about strategic investment.

      The market has spoken - fabs are lousy things for investors - they cost a lot of money (that money could fund maybe ONE fab at the latest technology node) and if they're not running, they're not repaying that investment.

      Intel failed to upgrade their fabs to the next device node.

      The chip shortage reveals how few fabs there are around the world.

      The US is big and rich enough that for many reasons, they should have their own fab, preferably in the US itself given the dicey political situation with China and Taiwan. This can easily cripple the US economically since Taiwan pretty much makes all the chips.

      And strategically, it makes sense - the military would like a US based supply chain to guarantee the chips have not been modified to spy as well.

      For strategic assets like a fab and chipmaking, it does make sense for the US to ensure a safe supply and make investments where the market has deemed it better to be done offshore. (The requirements for a fab mean things that make running a business expensive in the US aren't issues - clean air and water are required for fabs anyway so it's not really a big issue. It's that running a fab is freaking expensive, which is why the world only has a handful of them.)

      • "If they're not running, they're not repaying that investment."

        Every manufacturer is supply constrained. Every chip you can make you can sell. There are no fabs that could produce something useful but aren't.

        "fabs are lousy things for investors"

        Investors are desperate for things to invest in. Borrowing is ridiculously cheap. Demand is far outstripping supply.

        Any fool could make money in this market if they were actually trying. It's not that fabs are lousy for investors it's that investors are lousy for fab

  • I see (Score:3)

    by nospam007 ( 722110 ) * on Friday May 14, 2021 @11:58AM (#61384550)

    That money will go to companies whose CEOs are >$100 billion worth, those guys need the help of the taxpayer, not only because they don't pay any taxes.

    • GlobalFoundries would be interested in hearing they didn't pay any taxes, especially since some of their fabs are in the US.

  • Actual bill, Endless Frontier Act (Score:5, Informative)

    by jacks smirking reven ( 909048 ) on Friday May 14, 2021 @12:02PM (#61384568)

    Since the summary article is about the shortage and not the bill itself here are some details:

    Full Text: https://www.congress.gov/bill/... [congress.gov]

    Best summary I could find so far:

    Specifically, the Endless Frontier Act proposes an expansion of the National Science Foundation (NSF) with the establishment of a new Technology and Innovation Directorate within NSF to advance research and development in 10 key technology focus areas, including artificial intelligence, semiconductors, quantum computing, advanced communications, biotechnology, and advanced energy.

    The newly-established Technology and Innovation Directorate would receive $100 billion over five years to invest in basic and advanced research, commercialization, and education and training programs in technology areas critical to national leadership. An additional $10 billion would be authorized at the Department of Commerce to support regional technology strategies and to designate at least 10 regional technology hubs, awarding funds for comprehensive investment initiatives that position regions across the country as global centers for the research, development, entrepreneurship, and manufacturing of new key technologies.

    The Endless Frontier Act also establishes a new Supply Chain Resiliency and Crisis Response Program with the national security mission of strengthening critical technology supply chains in the U.S. and with global allies and partners. Additionally, the bill invests in U.S. manufacturing innovation and competitiveness with over $2.4 billion in funding to enhance and expand the Manufacturing USA network to ensure global leadership in the manufacturing of key technologies. To support the country’s national security capabilities, the bill mandates a strategy on national competitiveness and ingenuity in science, research, and manufacturing to support the national security strategy.

    Overall probably a good thing but it also has it's detractors as there has been quite a bit of horse trading going on via amendments. Questionable if this passes both houses even with it's bi-partisan origins.

    • A 200 Billion dollar export subsidy, where dollars from exports end up in a tax haven by some sort or double Dutch or Bermuda sandwich. It is probably more, because depreciation and writeoffs, and debt swaps are also going on. Poor old Europe, no jobs or manufacturing there. Do they cry foul, breach of free trade? No they shut up and take it.

  • Not another Foxconn/Minnesota deal is it?

  • 52 bil? That's ~160$ for every American. Would you pay 200$ out of your pocket to finance this? Keep in mind this is politically motivated and I think the business case is weak. If this doesn't work it will have nothing on solyndra (waste of a few hundred million). I think government should stay out of business because they have historically made bad choices.

     

  • Building a semiconductor industry isn't just building a fab. The fab has to be profitable, which means that it has to have customers and it has to have a sustainable competitive COGS structure. The reason that hitech manufacturing followed other manufacturing out to Asia et al in the first place is because a) labor costs, b) supply chain considerations - factories making parts tend to move close to the factories using the parts.

    • Like the...automotive industry? ;-)

      • Re: (Score:2)

        by larwe ( 858929 )
        There are a lot of factors at play here. I realize that the reason this handout is being offered is principally (so it seems) because the auto industry can't ship product because they can't get chips for their over-engineered electronics packages. But "making chips for the auto industry" isn't "a semiconductor industry", it's a niche with a few products per process (as in, a few mixed-signal devices, a few analog devices, a few microcontrollers at whatever process node), and it won't hit the same economies

      • Re: (Score:2)

        by Junta ( 36770 )

        You mean the low margin, low volume market that only are getting prioritized because they whined to the government after changing their minds on canceled orders left them totally screwed up on their supply chain?

        There may be other manufacturing businesses that this could attract that could justify it, but the auto industry barely registers as a blip on chip-maker balance sheets.

        • Re: (Score:2)

          by larwe ( 858929 )

          There may be other manufacturing businesses that this could attract that could justify it

          Maybe, but I doubt it - for retail products. The large consumers of semiconductors tend to want cheap labor to assemble the rest of whatever it is they make (not many retail products are a bare PCB). Not too many cellphones or computers are being assembled in the US.

          Now, to me - unless you're going to try and repatriate a big swathe of manufacturing, the only plausible reason for having local semi fabs is supply chain security for the military. And it's a decent reason. The military can and will pay more fo

    • Don't forget the globally-uncompetitive US tax rates.

    • a) The entire semiconductor industry is supply constrained. You couldn't make a functioning but non-profitable fab if you tried.
      b) Labor costs are not a driving factor here.
      c) ASML is a Dutch company

      • Re: (Score:2)

        by larwe ( 858929 )
        You absolutely CAN make a functioning but non-profitable fab, because the people who buy chips need to make a profit on the item they are manufacturing (so their price ceiling is not infinite), and also because chips are not some fungible thing where "making chips" is the same activity for all values of "chip". As I said elsewhere, the economies of scale that are realized by a diverse fab making numerous devices for different industries are simply not in the same universe as trying to have a local fab servi

        • "the economies of scale that are realized by a diverse fab making numerous devices for different industries are simply not in the same universe as trying to have a local fab service a couple of local industries with all the disparate parts they require."

          I never said anything about tiny fabs. It's a billion dollars for the first shovel turn. However, there's demand to support plenty more full sized fabs.

          " what does the nationality of a fab equipment manufacturer matter to this discussion"

          You're the one that

  • It is not a money problem. It is a mind-set problem. The US does not have the mind-set for doing this kind of industrial production anymore. The money will still be gone, but there will be nothing to show for it.

  • "America is nationalizing its microprocessor industry" is what I'm getting out of this. Our unaffordable chips won't sell on the free market, so the government will levy high tariffs on those from other countries in an attempt to force us to buy the far more expensive American-made option, which we were also forced to subsidize into existence.

    • "Our unaffordable chips won't sell on the free market, "
      Everything is selling. The entire industry is supply constrained. The problem is the lack of capacity, but there's no reason semiconductor manufacturers cannot obtain financing through normal commercial avenues.

  • I love how they frame is as R&D, when much/most of the world's top R&D takes place in the US.

    What's hurting us is our lack of industrial capacity. We have plenty of research facilities that do great work -- it's when it comes to actually building the stuff that they look overseas.

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