The US Is Investing Big in Chips. So Is the Rest of the World. (wsj.com) 45
A mega-spending package to grow U.S. semiconductor production must reckon with a tough reality: The world is already awash in chip-making incentives. From a report: What makes the U.S. effort unique is the enormous one-time sum -- roughly $77 billion in subsidies and tax credits -- earmarked to boost American manufacturing of the ubiquitous tech component. But other countries, especially in Asia, have doled out government dollars and offered favorable regulations for decades. And they plan for more.
China has prepared investments of more than $150 billion through 2030, according to one estimate. South Korea, with an aggressive array of incentives, aims to encourage roughly $260 billion in chip investments over the next five years. The European Union is pursuing more than $40 billion in public and private semiconductor investments. Japan is spending about $6 billion to double its domestic chip revenue by the end of the decade. Taiwan has around 150 government-sponsored projects for chip production over the past decade, with its leader pushing for more localized manufacturing of semiconductor equipment.
China has prepared investments of more than $150 billion through 2030, according to one estimate. South Korea, with an aggressive array of incentives, aims to encourage roughly $260 billion in chip investments over the next five years. The European Union is pursuing more than $40 billion in public and private semiconductor investments. Japan is spending about $6 billion to double its domestic chip revenue by the end of the decade. Taiwan has around 150 government-sponsored projects for chip production over the past decade, with its leader pushing for more localized manufacturing of semiconductor equipment.
Diseconomies of Dyscale. (Score:4, Insightful)
Diseconomies of Dyscale.
With the end of globalism and the beginning of pandemic inspired hyperprotectionism, we're in the reverse of the old economy of scale trend. What chipmakers are going to need in the future is at least 6 separate factories making the same thing as the other 6; at best the longest supply chain will be continental, at worst, a small company might need contracts with 195 factories in 195 countries to be able to bring a product local.
Three, which sounds good (Score:3)
It looks to me like there are three major regions - Asia, Europe, and the Americas. We're headed toward a future where a single typhoon in southeast Asia doesn't destroy or shut down most of the world's semiconductor supply.
Remember when hard drive manufacturing ceased in 2011, because stuff like this happens?
https://static01.nyt.com/image... [nyt.com]
Much like the world isn't totally dependent on one country for milk, or for wheat or rice, we'll have at least three regions producing the things modern life depends on
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That is a valid reason, but if that was our only concern, the US could give money to make Asian factories typhoon-resistant for a lot less than $77 billion.
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That is a valid reason, but if that was our only concern, the US could give money to make Asian factories typhoon-resistant for a lot less than $77 billion.
Would those factories also be resistant to disease, war, political upheaval, famine?
No, they would not be.
A single point of failure will never match the resilience of proper redundancy.
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Yeah, that's the direction I'm headed. "War" and "political upheaval" are bigger concerns that can last longer than typhoon damage. Those are the real reasons.
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The name of the game here is...National Security.
You can never count on countries that a "friendly" to you...to always be "friendly" to you.
If you want to risk being some other country's bitch....just be dependent on them for things that are fundamentally necessary for your economy and your defense.
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China's invasion of Taiwan, maybe more places is going to do more than a typhoon.
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It's not money that's driving this, it's political concerns.
Right now the two big chip players are Intel and TSMC. TSMC operates almost entirely out of Taiwan. If China invades Taiwan, the world gets cut off from TSMC.
Right now everyone is concerned that if the Russia's invasion of Ukraine goes well enough for Russia, China might decide that they can get away with invading Taiwan.
Intel also likes to diversify their manufacturing and build fabs all over the world. It's a great strategy for them, and reduces
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What do you do when Columbia closes the Darien Gap? What do you do with serving Africa or Australia?
At least three does indeed close the physical vulnerability. But there is also a significant political vulnerability, which is why I said a minimum of six, a maximum of 195. Someplace between there is the answer.
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> What do you do when Columbia closes the Darien Gap?
The Darien gap is already closed, by the jungle.
The Darien gap is an area of jungle where there are no roads.
Fortunately, we can move things around even where there are no roads because these guys https://en.wikipedia.org/wiki/... [wikipedia.org] came up with a cool way to do it.
> But there is also a significant political vulnerability, which is why I said a minimum of six
When the world is dependent on Taiwan, sure.
If your country does something to get embargoed b
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There used to be a known but unwritten principal in engineering that single source parts were just plain bad engineering not matter how good a fit in some regard.
Then big money took over.
Design has been downhill ever since
Re: Diseconomies of Dyscale. (Score:2)
Doesn't seem right. (Score:5, Funny)
Investing big in chips, but not also fish? Missed opportunity.
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Probably should have said: Investing big in chips, but not also cows? Missed opportunity.
Big salsa would like a word.
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Investing big in chips, but not also fish? Missed opportunity.
CFOs the world over calculated that the costs of all the newspaper required would be ruinous.
Oh they are there (Score:1)
Investing big in chips, but not also fish?
The fish are the taxpayers on the hook for paying for all of these massive corporate bailouts.
It's not just the subsidies... (Score:3)
... it's the labor costs. At least in the US. The US government and various state governments can toss all the tax abatements and inducements to Intel and others as much as they wish. Intel, et al, will have showpiece fabs in the US, but they'll always be called by the siren song of cheap labor. Even if Taiwan is invaded by China (and perhaps ESPECIALLY if they're invaded), most chip production will eventually end up in India, the Phillipines, etc. It always comes down to "How can we produce this at the absolute cheapest cost".
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There's not much "labor" in a chip fab.
Maybe you're thinking of PCB assembly.
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There's not much "labor" in a chip fab.
Maybe you're thinking of PCB assembly.
Plenty of workers in a chip fab. Just because the production process is mostly automated doesn't mean that there aren't plenty of human workers. Technicians, office staff, HR, etc. Go to any chip fab. You'll find plenty of cars in the employee lot.
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You'll find plenty of cars in the employee lot.
Most belong to the CEO.
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> There's not much "labor" in a chip fab.
They need cheap desperate overworked visa workers to fix the robots.
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The labor cost is inconsequential when you think about the cost of shipping and logistics that go into it.
The real problem is taxes and regulations. Hence why most of the $77B isn't really money spent, in the sense that it is cash transfers, it's basically tax incentives (basically reducing income for the government). This would be great, give tax breaks to every manufacturing company in order to re-shore them, but they would also reduce spending accordingly.
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... it's the labor costs.
Chip fabs have INSANE profit margins. So higher labor costs are not a problem. Also, you really want highly qualified labor for extremely precise work.
hooray! (Score:2)
Not like this country could do something useful with that money. Like pay for schools. And more decent cops. Maybe forgive some of the student loans? Start a national health care system.
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Look at the bright point... we're likely going to see a glut of cheap microprocessors on the market once it is flooded by oversupply from all these new chip fabs coming online over the next few years.
That should help to bring down prices significantly. After having to pay $1,000 for a mid-range GPU from scalpers last year, it will be refreshing to see them going on sale for around $250 once we get a nice AMD/Intel/Nvidia price war.
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There are different ways this could break. If China goes ahead and takes Taiwan (and damn the economic consequences) and the US is not prepared to produce chips any other way, believe me, there will be a lot less money for schools and cops let alone writing off loans.
What worries me a little though is this process of reversing globalization (e.g. by divesting from Taiwan) by protecting us fr
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What worries me a little though is this process of reversing globalization (e.g. by divesting from Taiwan) by protecting us from the full consequences of a sudden economic divorce might actually make it more likely to happen. Preparing for it makes it less unthinkable.
I think you're too late on that. Russia invading Ukraine got everyone thinking about China invading Taiwan. China is probably well underway with hypothetical plans, while calculating how well the Russian invasion needs to go for them to feel comfortable invading Taiwan.
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Good thing the invasion is going badly and the Russian economy is circling the drain then.
China won't want that as their economy already isn't doing so well.
The West needs to double down and provide even more weapons to Ukraine, and even stronger sanctions on Russia. Really show China what the price will be.
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Collaboration... (Score:1)
It's almost like if all the countries got together and worked together they could save billions of dollars by forcing corporations to pay for the cost of doing business.
I mean, it's not like these chip manufacturers are spending billions of dollars on stock buy backs instead of investing in their business.
Onshoring is a prelude to war. (Score:5, Interesting)
Those that read their history will see things not exactly repeat but they do rhyme. That's a paraphrase of something attributed to Mark Twain, someone known to repeat bits of wisdom he heard before.
One school of thought is that by intertwining the economy of one nation with that of others there will be peace. The idea is that no nation would go to war with another nation that they depend upon for their own well being. The problem is that no such trade will be equal. We see this between Russia and Europe. Russia might depend on Europe for food in exchange for Russian fuel but it appears that Russia is betting that Europe will run out of fuel before Russia runs out of food. Also, if Russia is successful in taking over Ukraine then Russia will no longer be dependent on Europe for food.
With microelectronics we have a similar problem between China and the rest of the world. China was able to make itself a monopoly on microelectronics through a number of trade policies over decades. China may not have all the micro-chip manufacturing under its control but they know that a large portion of this capability lies very close to them geographically. They might cut themselves off from food and fuel imports in a time of war but they also could create favorable trading with the likes of Russia and India.
Politicians, if they studied their history, will know that nations have lost wars out of a lack of resources needed to fight a war. In World War Two both Germany and Japan were desperate for fuel to power their large battle ships. Shortages of food started to be a problem as well for Germany and Japan. In a modern war we might not see food and fuel shortages but shortages in night vision equipment, guided missile, radar systems, communication equipment (radios, telephones, network gear), and navigation systems (those that use global position satellites and those that use the sun and stars to navigate), as well as the electronics we use for engine control systems.
A side note on the onshoring of production in a time of war was the production of hemp in World War Two. Shortly before the war the federal government prohibited all hemp growing in the USA out of fear people might smoke it instead of make rope. When war came the possibility of importing rope was gone. That forced the federal government to issue licenses to grow hemp for the ropes needed by the military. This meant hemp fields popping up all over the USA, and a great number of these seeds being introduced into the wild. Hemp now grows everywhere, and it is because the government tried to be rid of it.
Nations cutting off ties shows that they anticipate the potential for war. The "meddling" of one nation into the affairs of another nation is often the cause of war, such as disputes over valuable commodities like food, fuel, and luxuries. If nations pull in such "meddling" then perhaps such relationships will become more friendly. If Japan didn't cut the USA off from hemp rope imports then maybe there would not have been cause for war. Bombing Pearl Harbor though kind of made that a moot point.
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USA oil blockades; especially with oil needy Japan was bound to start a war and it did. Good thing it happened too; if Japan actually helped Germany with East Russia like they were supposed to...
Is the plan just fabs (Score:2)
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Tax Credits are not the same as a handout (Score:3)
Good. Chipmaking has gotten too centralized. (Score:2)
There needs to be some movement in the other direction: A push to make chip manufacturing internalize some of the advantages of chips themselves. Maybe someday making a chip will be as simple as using a chip, and will happ