News Intel's CHIPS Act award package exceeds $10 billion, payout expected within two weeks: Report

[Admin]

Intel is in talks with the U.S. government over a $10+ billion subsidies + loans package.

Intel's CHIPS Act award package exceeds $10 billion, payout expected within two weeks: Report : Read more

 

[PEnns]

A few thoughts on this subject.

I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?

And does a behemoth like Intel need that much industrial welfare to build factories here...while Intel is busy opening factories outside the US (Germany, Israel, etc come to mind) while getting similar welfare and tax cuts there as well?

 

[ezst036]

It's a great day to be a lobbyist for a special interest. I clearly chose the wrong career path.

 

[spongiemaster]

A few thoughts on this subject.

I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?

I have never heard about anyone complaining that other countries shouldn't payout subsidies. They happen all the time in many industries. Who specifically are you talking about when you say the US?

Leading edge fabs reportedly cost about $20 billion each. $10 billion isn't nearly as much as it sounds when applied to the process of building fabs. TSMC, which isn't even a US company, has requested $15 billion from the CHIPS act.

When the PC market bottomed out a year ago, Intel delayed/cancelled a number of their fab construction projects to cut costs. Semiconductor production is a vital industry today, and it is in our interests that these projects continue on schedule.

 

[thisisaname]

A few thoughts on this subject.

I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?

And does a behemoth like Intel need that much industrial welfare to build factories here...while Intel is busy opening factories outside the US (Germany, Israel, etc come to mind) while getting similar welfare and tax cuts there as well?

Looking at Intel's share price then yes they need all the help they can get. Though

 

[tooltalk]

I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?

Sure, the US is just giving back some of its medicine to China.

There are different kinds of subsidies prohibited under China's WTO 2001 Accession Protocol: export subsidies, or import substitution. Otherwise, nobody really cares how your govt pisses away taxpayers money domestically -- so long as they don't cross borders or distort international trade. China never really bothered to comply with these rules and there was really nothing the WTO's ineffective dispute system or anybody could do to stop China. So instead, the US is now reciprocating China's illegal subsidies with unilateral actions of their own -- illegal industrial subsidies and export control.

 

[Constellar]

Yes, Tooltalk, you're correct -- the WTO is hardly a very effective enforcement arm. In fact, back in 2000, China was banned from doing forced technology transfers if China wanted to join the WTO.
However, there's nothing that says that Chinese JVs or men in the middle (the intermediary liaison who acted and acts on behalf of the Chinese government) can't imply that IP must be transferred as a condition of doing business in China. And indeed, the latest report from the commerce department aptly demonstrates that the number one concern of American tech companies doing business there is the transfer of their IP; contracts aren't signed so there's no paper trail, but it becomes known that the technology has been transferred when the American concern builds its factory on Chinese real estate. They must do this; they must agree to transfer their IP, or suffer being left out of this large international market. And there's nothing the WTO can do about it... 🙁

 

[scottslayer]

I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?

Wait until you find out that the Chinese companies with or without subsidies are really technically owned by the government and have to jump when they say frog.

 

[tooltalk]

However, there's nothing that says that Chinese JVs or men in the middle (the intermediary liaison who acted and acts on behalf of the Chinese government) can't imply that IP must be transferred as a condition of doing business in China.

The fact of China's restrictive regulation, "Foreign Equity Joint Venture Law" that allows forced tech transfer in itself is a violation of the WTO rules. This was already called out many times before. The latest, for instance, in 2018, the EU Commission complained in WT/DS549 that:
...
In particular, the European Union considers that🙁1) The Regulations for the Implementation of the Law of the People's Republic of China onChinese-Foreign Equity Joint Ventures ("JV Regulation") operating separately or together withother listed instruments, notably the Law of the People's Republic of China on Chinese-ForeignEquity Joint Ventures ("JV Law"), is inconsistent with China's commitments under Paragraph7.3 of Part I of the Protocol on the Accession of the People's Republic of China2 ("AccessionProtocol") and Paragraph 1.2 of Part I of the Accession Protocol, which incorporates the commitments under Paragraph 49 and Paragraph 203 of the Report of the Working Party onthe Accession of the People's Republic of China to the WTO3 ("Working Party Report"). This is2 WT/L/432.3 WT/ACC/CHN/49.WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1- 5 -because China conditions the right of a foreign investor to invest in China upon the transferof certain technology to the joint venture with a Chinese partner

China's 2001 WTO Accession Protocol:
General Provision, Section 7. Non-Tariff Measures, Paragraph 3:
(3) China shall, upon accession, comply with the TRIMs Agreement, without recourse to theprovisions of Article 5 of the TRIMs Agreement. China shall eliminate and cease to enforce trade andforeign exchange balancing requirements, local content and export or performance requirements madeeffective through laws, regulations or other measures. Moreover, China will not enforce provisions ofcontracts imposing such requirements. Without prejudice to the relevant provisions of this Protocol,China shall ensure that the distribution of import licences, quotas, tariff-rate quotas, or any othermeans of approval for importation, the right of importation or investment by national and sub-nationalauthorities, is not conditioned on: whether competing domestic suppliers of such products exist; orperformance requirements of any kind, such as local content, offsets, the transfer of technology,export performance or the conduct of research and development in China.