News CHIPS Act Spurs $200 Billion Investments in U.S. Semi Industry

JTWrenn

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Labor in Mexico is about the same price as China now. Mexico has a long history of electronics assembly. Why don't we make the chips in the US and do the packaging and assembly in Mexico for the North American market?

Quality control would be the big issue. I think we should be working on a work transition pipeline for coal workers to start making chips. Grunt work but much cleaner and less dangerous. If we could make the pay similar it would be a good way to push a more holistic transition away from coal.
 
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DavidLejdar

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Quite ambitious, considering that the U.S. was already struggling to keep up a supply of infant formula by itself, huh? The shortage of which was made worse by there having been import restrictions, after the easing of which imports from Europe helped some.

Labor in Mexico is about the same price as China now. Mexico has a long history of electronics assembly. Why don't we make the chips in the US and do the packaging and assembly in Mexico for the North American market? There is no good reason the parts that make up my cellphone need to cross the ocean multiple times. I'm sure something similar could be done in Europe. Make the chips in Germany and do the assembly in eastern Europe. Keep things more local when possible. Both markets are plenty big to support it.

Not really that big a market globally though. E.g. a few years ago, NA and Europe had around 200 million smartphones shipped each per year. Worldwide the total number was nearly 1,500 million.

Also, Apple smartphones have a market share of 57.58% in the U.S. So, with a total yearly smartphone revenue of around $80bn in the U.S., that's less that $40bn to be had on the smartphone market, out of nearly $450bn globally.

Which isn't to say that it wouldn't make sense for a bit more localized production, nor does it mean that every of the mentioned companies is in it for the smartphones (only), with there also e.g. the internet of things. And having to rely on the goodwill of Xi, sure not necessarily great.

But Washington's idea that an electronics company should as if a commune garden sell stuff only locally, the income won't necessarily be that big to pay for modernisation of that garden every few years (something which in certain technological branches is quite needed), and therefore not necessarily have much to export when their product ends up generations behind and not necessarily cheaper than someone producing 10x as many items every day, with their suppliers also churning out a lot more and therefore being able to afford lower margin per item (even if initial material costs are all the same everywhere), and so on.
 

umeng2002_2

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It's bad to have all of your high tech products assembled a few miles from your enemy or in your enemy's country. There are no problems with Taiwan other than it's so close to China and China wants to invade it. It's almost as bad as having all of you antibiotics manufactured by Ch...

I hope this isn't just for new nodes. The entire car industry was crippled from the lock downs due to chip production issues... not some like making tires or engines. This has way more impact than just laptops and phones.
 

bit_user

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It's a good move, but it's going to require some follow-up investment. It can't be a one-and-done infusion, or the new fabs will eventually close and not get replaced.

Also, we really need funding of academic research to go along with it, if we're to truly achieve and maintain leadership in silicon fabrication and similar fields. Does anyone know if the CHIPS act includes anything of the sort?
 

bit_user

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Labor in Mexico is about the same price as China now. Mexico has a long history of electronics assembly. Why don't we make the chips in the US and do the packaging and assembly in Mexico for the North American market?
Foxconn had plants in Mexico, a long time ago. I presume they're still around. There are North/South rail corridors that support some of this trade. And there's NAFTA, which I think makes it fairly frictionless.
 

bit_user

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I think we should be working on a work transition pipeline for coal workers to start making chips.
Hmmm... none of the new plants seem to be located in West Virginia. One is in Idaho, which I think is another big coal state.

I'm not sure it's such an easy transition to make, but I support the idea of providing retraining for whatever field someone wants to go into. When we're talking about losing entrenched industries, you have to think not only about existing workers, but also what has the potential to keep their kids from moving away and ideally even drawing in new workers. If the local economy sees growth, it could create other job opportunities for ex-coal workers, such as in construction.

Quite ambitious, considering that the U.S. was already struggling to keep up a supply of infant formula by itself, huh?
That's not due to lack of manufacturing capacity. That's because a major production facility got halted for inspections due to contamination concerns, after some infants died. Apparently, there wasn't nearly enough slack among the competing producers, which is why the shortage happened. The worst shortages were in specialized formulas, and maybe there was little or no competition in some of those niches?

Not really that big a market globally though. E.g. a few years ago, NA and Europe had around 200 million smartphones shipped each per year. Worldwide the total number was nearly 1,500 million.
But, probably the USA/Europe handsets were higher-end & higher-margin than most of the rest. The majority of the world's cell phones only cost around $100 and probably have very thin margins.
 
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