Visions of a US Computer Chip Boom Have Cities Hustling (nytimes.com) 41
Many local governments see a silver lining in the shortage of semiconductor chips that has contributed to a slowdown in the global economy. From a report: The shortage of computer chips has zapped energy from the global economy, punishing industries as varied as automakers and medical device manufacturers and contributing to fears about high inflation. But many states and cities in America are starting to see a silver lining: the possibility that efforts to sharply increase chip production in the United States will lead to a busy chip factory in their backyard. And they are racing to get a piece of the potential boom. One of those towns is Taylor, a Texas city of about 17,000 about a 40-minute drive northeast of Austin. Leaders here are pulling out all the stops to get a $17 billion Samsung plant that the company plans to build in the United States starting early next year.
The city, its school district and the county plan to offer Samsung hundreds of millions of dollars in financial incentives, including tax rebates. The community also has arranged for water to be piped in from an adjacent county to be used by the plant. But Taylor is not alone. Officials in Arizona and in Genesee County in upstate New York are also trying to woo the company. So, too, are politicians in nearby Travis County, home to Austin, where Samsung already has a plant. Locations in all three states "offered robust property tax abatement" and funds to build out infrastructure for the plant, Samsung said in a filing. Congress is considering whether to offer its own subsidies to chip makers that build in the United States.
Where Samsung's plant will land remains anyone's guess. The company says it is still weighing where to put it. A decision is expected to be announced any day. The federal government has urged companies like Samsung, one of the world's largest makers of the high-tech components, to build new plants in the United States, calling it an economic and national security imperative. Intel broke ground on two plants in Arizona in September and could announce the location for a planned manufacturing campus by the end of the year. This could just be a warm-up act. The Senate passed a bill to provide chip makers $52 billion in subsidies this year, a plan supported by the Biden administration that would be Washington's biggest investment in industrial policy in decades. The House has yet to consider it. Nine governors said in a letter to congressional leaders that the funding would "provide a new, powerful tool in our states' economic development toolboxes."
The city, its school district and the county plan to offer Samsung hundreds of millions of dollars in financial incentives, including tax rebates. The community also has arranged for water to be piped in from an adjacent county to be used by the plant. But Taylor is not alone. Officials in Arizona and in Genesee County in upstate New York are also trying to woo the company. So, too, are politicians in nearby Travis County, home to Austin, where Samsung already has a plant. Locations in all three states "offered robust property tax abatement" and funds to build out infrastructure for the plant, Samsung said in a filing. Congress is considering whether to offer its own subsidies to chip makers that build in the United States.
Where Samsung's plant will land remains anyone's guess. The company says it is still weighing where to put it. A decision is expected to be announced any day. The federal government has urged companies like Samsung, one of the world's largest makers of the high-tech components, to build new plants in the United States, calling it an economic and national security imperative. Intel broke ground on two plants in Arizona in September and could announce the location for a planned manufacturing campus by the end of the year. This could just be a warm-up act. The Senate passed a bill to provide chip makers $52 billion in subsidies this year, a plan supported by the Biden administration that would be Washington's biggest investment in industrial policy in decades. The House has yet to consider it. Nine governors said in a letter to congressional leaders that the funding would "provide a new, powerful tool in our states' economic development toolboxes."
Re:Lesson: When you offshore your manufacturing (Score:5, Insightful)
to save a few bucks, you give those people power over you. The MBAs that piloted the ship into the reef are only trained to look at dollars and cents, and not the big picture. And I'm not even saying they should - that's where government needs to step in.
Oh, it's not just the MBA's. Let's tell the truth and shame the Devil, as we say down South.
Execs propose offshoring to reduce costs and improve profits.
Boards agree.
Banks like the increased cash flow.
Consumers buy the cheaper stuff.
Pretty much everyone involved is to blame for offshoring. It takes a crisis of some kind to show why, in the long run, it's a bad idea for companies, employment, and national sovereignty.
Consumers were never given a choice (Score:3)
Execs propose offshoring to reduce costs and improve profits.
Boards agree.
Banks like the increased cash flow.
Consumers buy the cheaper stuff.
Pretty much everyone involved is to blame for offshoring. It takes a crisis of some kind to show why, in the long run, it's a bad idea for companies, employment, and national sovereignty.
I generally agree with your broader point, but believe the details to be incorrect.
Execs propose it, but in the case of software, the savings never actually materialize. Sadly, we make management this high stakes gamble. So an exec gives in to the swan song from Tata, Infosys, or whoever is top dog today and decides to outsource. He/she is given a forecast that looks appealing and even realistic. They sign the contract, but everything misses deadlines. Their talent turns over very quickly, there are
Re:Lesson: When you offshore your manufacturing (Score:5, Insightful)
No, it is the MBAs, it is how they are trained in school, at least they were when I completed my MBA in 2008
There is a constant drumbeat that begins with "enhancing shareholder value" (this is substituted for any Ethics that an MBA may encounter in school), and it is enabled by "increasing profits by reducing costs" and reinforced by repeated "real world examples" of offshoring, fables about "cream of the crop foreign tech wizards" and scare stories about "US Students failing to pursue STEM careers".
The reality is that the cream of the crop is only 1% of the foreign tech resources out there and you are more likely to meet these people in sales presentations and the first month of coverage, when they disappear to other contracts and are replaced with know-nothings who attempt to act like they are the smart guys you met during sales presentations.
I, having worked in technology for 20 year BEFORE going back to school to earn an MBA, spoke out about my own experience and was roundly shouted down by classmates, instructors and textbooks, which only sought to extend the fables they so dearly clung to.
My own experience is with tech contractors and offshoring of technical jobs, but it clearly extends to offshored products as well.
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There is a constant drumbeat that begins with "enhancing shareholder value" (this is substituted for any Ethics that an MBA may encounter in school), and it is enabled by "increasing profits by reducing costs" and reinforced by repeated "real world examples" of offshoring, fables about "cream of the crop foreign tech wizards" and scare stories about "US Students failing to pursue STEM careers".
Maybe, but this can also be seen as a testing ground not just in one's beliefs, but in making a good argument for your beliefs. A lot of the work has already been found, it just needs to be presented in one's own words.
Re:Don't forget about the politicians (Score:2)
Don't forget about the politicians. In exchange for supporting billion dollar trade deficits with foreign countries, they get cushy business contracts and board positions that pay millions to their family members. Don't worry, it's not a bribe because the money is going to someone in their family instead of directly to the big guys.
Re:Lesson: When you offshore your manufacturing (Score:5, Insightful)
I don't know. I mean, where we're at now? Yes. Government needs to step in. But the whole MBA nightmare that we find ourselves in could have been avoided if business planners had grown a brain stem sometime between the implementation of MBAs as the ONLY driver of business and our result today and added another layer to the decision making process. MBAs are numbers people. And numbers matter to a degree. But letting numbers drive literally EVERY decision is suicide. Sure, short term growth is great, but if it's at the expense of future business or the death of your own society, how is THAT good for business or anything related to it?
There needs to be some big-picture people involved in decision making processes. Right now it seems our society is too now to next quarter focused for that to ever actually happen.
Re:Lesson: When you offshore your manufacturing (Score:5, Informative)
While lower costs, increased short term profits and less expensive products are the "carrot", we cannot forget the "stick" side of the argument.
If a company decides to stick to its guns and continue to support local workers, their families and communities, like say Corning did throughout most of its history, they will become the target of activist share holders like Carl Icahn, and will be forced to seek a path to lower costs (abandoning workers and communities for offshoring), regardless of what the actual leadership wants to do. [seekingalpha.com]
Be assured that the business press will sugarcoat the expected outcomes and sell, sell, sell the idea regardless of lowered product quality and negative impact to the affected communities. [globalriskinsights.com]
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What you heard during the 1970s and 1980s was asking people to become better educated or retrained was unfair. So when we had all these skilled jobs of the 1990s, CNC, programming, office applications, there were few people to take advantage of these, which lead to an incredible rise to importing skilled labor.
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Chips during a blackout. (Score:2)
One of those towns is Taylor, a Texas city of about 17,000 about a 40-minute drive northeast of Austin. Leaders here are pulling out all the stops to get a $17 billion Samsung plant that the company plans to build in the United States starting early next year.
Beef up that power grid and they're in business.
Re: Chips during a blackout. (Score:2)
So you call them wafers? Or are those biscuits? Or crackers? Or are you just being a fanny?
Educated workers. (Score:3)
Austin is a place some people want to move, but you have to pay them. UT is a party and art school, not known for technical people. Taylor is not one of the, or near, a gated lake community that people move north of Austin to live.
So you donâ(TM)t have a local educated work force. You are not in an area to attract an educated work force. This is area where people are poorer than Texas in general, much less educated, and very few are college educated. And it does not even have any of the demographic advantages of Austin.
But as long as all they are doing is wasting local tax money to bribe Samsung that is their huskiness we just donâ(TM)t want to see the fiasco that was Wisconsin and the flat panel TV plant, with Abbott claiming all the jobs it creates.
Beter build a power station first! (Score:5, Interesting)
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Don't those need chips too? :P
Socialism at its finest (Score:2)
Nothing says free markets and capitalism like the taxpayers being forced to hand over money to multi-billion dollar coporations who generally don't pay taxes to begin with.
But then, this is Texas, a well know socialist haven.
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"Forced" is for the shortsighted. "Investment in one's future" is for those who believe they have one..
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"Forced" is for the shortsighted. "Investment in one's future" is for those who believe they have one..
So it's like using taxpayer money for early child care, school lunches, and college education. You know, an investment in one's future.
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In Arizona, cities like Chandler and Gilbert (formerly farming towns outlying Phoenix area) offered tax breaks to Intel and other high-tech firms. [bizjournals.com]
This resulted in a growth boom that was not supplied with basic infrastructure like schools, roads, sewer etc...
Eventually (5-10 year gap) this money was recovered from residential taxes and the building of schools continues to this day
It is a way to spur growth, but the costs are usually pushed back on to the "little guys", who also have to suffer for lack of ba
Re: Socialism at its finest (Score:2)
Being passed on to the consumer is the same as the corporation paying it. As long as there is competition it's fine. Hence the need for enforcement of existing antitrust law.
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Being passed on to the consumer is the same as the corporation paying it.
No it's not. The corporation is pawning off the costs to the consumer. They're acting as a pass through. If the corporation paid the costs those costs would be reflected in the corporate balance sheet.
And, I might add, if those costs are being reflected in the corporate balance sheet but are still paid by the consumer, then either the corporation stops acting like a pass through and absorbs the costs, or they don't get to count tho
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Elephant in the room (Score:4, Interesting)
One thing I see no mention in the article is "seismic" isolation / sensitivity. You just can't build a fab anywhere due the extreme seismic sensitivity of the equipment. If local governments think that throwing enough money to incentivize semiconductor companies to setup shop in their backyard is going to work they are sadly mistaken. Sorry, but you can't ignore geology in this business in spite of huge tax cuts.
Location is only part of the problem. I was the understanding that fabs run on razor thin margins but looks like they are indeed quite profitable [min.news] at around 50%. The original article also didn't mention that the cost of lithography machines is increasing. There is a reason TSMC is investing $100 Billion to increase production capacity because that is what they need to stay competitive as the nm decrease.
I think we're still a decade away from from having more fabs and cheaper chips to help with the supply chain issues.
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One thing I see no mention in the article is "seismic" isolation / sensitivity. You just can't build a fab anywhere due the extreme seismic sensitivity of the equipment.
I don't know how true this is, but considering that Taiwan has earthquakes (just had a minor one, around 4-5, off the shore about last week), and most of TSMC's more advanced plants are in Taiwan, and has been that way since they started, tells me it cannot be a critical factor.
Glut coming (Score:2)
Only fools are still chasing after chip foundries. There have already been enough started to wipe out any temporary shortage caused by the pandemic and create a massive glut in 3-5 years tops. This looks like the railroad boom a hundred years ago - where the rail system in the US got massively overbuilt by everyone chasing the big money. Then most went bankrupt as there was too much competition for too little freight.
Same thing will happen here. Want your own chip foundry? Stick your money in the bank
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Apparently the existing Intel chip foundries are unable to compete with more modern chip foundries that produce chips smaller than 10nm
I would counter, Only fools would rest on their laurels while competitors outpace them in development of new technologies
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First, shortages were already beginning before the pandemic.
Second,besides meeting demand, there is a national security interest in being more self-sufficient in chips. Certainly such considerations do make the system globally less efficient, and I agree at some point there will be a glut, and maybe Intel will ossify in the way that Boeing has (being another quasi-state enterprise since aerospace is a critical defense industry). Just s
With what water? (Score:3)
I suppose we could just stop letting people take showers.
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In all reality, this has been addressed in Arizona for decades, along with prevention and remediation of prior pollution from companies like Motorola [arstechnica.com]
"Counterintuitively, the famously thirsty industry can even improve the local water supply due to a focus on reclamation and purification—Intel has funded 15 water restoration projects in the Grand Canyon State with a goal of restoring 937 million gallons per year, and it expects to reach net positive water use once the projects are completed."
We may be d
add another $270mil to those rebates. (Score:2)
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Foxconn (Score:1)
Redux
Taxes (Score:2)
The fact that all these places are offering tax rebates and other "incentives" proves that the taxes are too high to begin with, and that might have something to do with why these outfits weren't there in the first place.