News Tensions Mount as Major Chip Players Jockey for US Funding

[Admin]

Intel, TSMC and others are sniping at each other in meetings and filings as they attempt to obtain funding from the US CHIPS and Science Act.

Tensions Mount as Major Chip Players Jockey for US Funding : Read more

 

[Deleted member 431422]

Great way to make everyone else cautious of what US will do. I'd be really reluctand to go into any kind of serious business with US based companies after any such statement, let's add economy war with China. They likelihood of agreements going the wrong way when things don't work out how they wanted is just too high.

 

[bit_user]

If the goals are clear and the bidding process is well-managed, competition should deliver better value for the taxpayers' investment.

The danger is that we'll build a bunch of fab capacity that will sit idle and decay. The original idea seems to be that we want to sustain a certain amount of fab capacity in the US, and taxpayers need to understand and support the kind of long-term commitment that could entail. I worry this last bit of legwork has barely begun, and yet the lack of such support is already starting to jeopardize the initial investment, as companies like Intel seem to be looking for ways to avoid or hedge against building over-capacity.

 

[PlaneInTheSky]

Why would the US taxpayer fund Taiwanse chip companies like TSMC ?

Is the Taiwanese taxpayer funding US chip companies ? I think not.

 

[Giroro]

Intel and TSMC have plenty of money and bloat to build their own factories. If these companies are too shortsighted to diversify their supply chains, then we only need to enable their hubris to reach it's natural conclusion.

We should be investing in lean start-ups and new technology. Anybody who has a realistic shot at disrupting the monopoly. Once there is a diverse and competitive marketplace, then the domestic supply chain problem will solve itself.
50x $1 Billion companies have a far, far, far greater chance of pushing forward national interests than feeding a groaning pig in the muck.

In the very least, Intel and TSMC need to finally be forced to prove why exactly they keep saying a single fab ~$10B should cost more than some entire industries, let alone individual companies. Then we should cure that problem at it's source, before throwing good money after bad. All we have at this point is a vague hope that we can temporarily alleviate a single symptom of a deeply rooted cancer.

Just for fun, here are some companies that a government could buy for $50Billion, which would provide a far better return on investment.

• All of Global Foundries ($35.11 Billion market cap)
• STMicroelectronics ($44.3B)
• Microchip Technologies ($44.49B)
• SK Hynix ($49.19 B)
• Controlling interest in Micron ($64.5B cap)
• Atmel ($3.45B)
• Keysight ($28.7B)
• Foxconn ($46.95B)
• Baidu (49.46B)
• Motorola Solutions ($44.41B)
• Panasonic ($20.5B)
• Toshiba ($13.72B)
• Honda ($43.68B)
• US Silica ($830M)
• Amphenol ($46.17B)
• Halliburton ($32.91B)
• BAE Systems ($33.19B)
• Nintendo ($46.28B)

Realistically, there's fewer than 350 companies on earth which could not have been bought for $50 Billion.

 

[bit_user]

Why would the US taxpayer fund Taiwanse chip companies like TSMC ?

The funding would be for TSMC fabs built on US soil.

According to the article, Intel or their representatives argue that without all the IP based in the US, such fabs are in jeopardy of having their operations disrupted, should something happen at TSMC's HQ. That's a legitimate concern, if the idea is to build a resilient silicon supply chain, and one that can and should probably be mitigated against.

Is the Taiwanese taxpayer funding US chip companies ? I think not.

US companies aren't building fabs it Taiwan, last I heard.

 

[Giroro]

If the goals are clear and the bidding process is well-managed, competition should deliver better value for the taxpayers' investment.

The danger is that we'll build a bunch of fab capacity that will sit idle and decay. The original idea seems to be that we want to sustain a certain amount of fab capacity in the US, and taxpayers need to understand and support the kind of long-term commitment that could entail. I worry this last bit of legwork has barely begun, and yet the lack of such support is already starting to jeopardize the initial investment, as companies like Intel seem to be looking for ways to avoid or hedge against building over-capacity.

It shouldn't be the role of the government/taxpayer to spend an infinite amount of direct funding to sustain a failed business model on life support, forever.
It should be the role of the government to break up monopolies, protect the "little guy" from exploitation of the legal system, and foster a regulated marketplace where the the industries we need can profit and thrive on their own merits.

It doesn't make sense to throw money at any company/companies who have openly stated they are only interested in doing the bare minimum to milk the taxpayer for free money, instead of actually reinvesting that funding to build out a profitable domestic business, which could sustain itself.

 

[Eximo]

Just for fun, here are some companies that a government could buy for $50Billion, which would provide a far better return on investment.

• All of Global Foundries ($35.11 Billion market cap)
• STMicroelectronics ($44.3B)
• ---

Many of those don't really make silicon directly (most order from Samsung, TSMC, etc, just assembly and PCB fab and the like, or further outsource assembly to companies like Foxconn.

And all of the chip fabs rely on ASML for the lithography and production hardware they need to make high end chips.

Basically taking the companies that already have expertise and funding them to buy additional equipment and set up new production lines quickly vs taking a company with zero expertise and waiting 15 or 20 years.

You may also be forgetting what tends to happen to factories over time. Global Foundries was sold off into its own entity. If a US based fab proves unprofitable, they may sell it and it could be acquired by a local company that could take it in a different direction.

I won't say these companies will necessarily pay appropriate taxes, since they really won't, but there is an economic benefit regardless.

#1 Local jobs, which leads to income tax
#2 increased sales of electronics, which leads to sales tax
#3 Chips made on local soil might encourage local based assembly, more jobs (rather than build chips, ship to other places, assemble, re-import though short term that is very likely)
#4 Maybe, but not likely, reduced prices

 

[bit_user]

We should be investing in lean start-ups and new technology.

Not to diminish their role, but it's not lean startups that crank out the cutting-edge wafers, nor could they ever amass the expertise, IP, and capacity in a useful time horizon.

Semiconductor fabrication is an extraordinarily capital-intensive undertaking, and it's about scale. While startups could contribute IP, techniques, and technology, they will never make up the backbone of semiconductor fabrication in the US or anywhere else.

50x $1 Billion companies have a far, far, far greater chance of pushing forward national interests

$1B is hardly enough to stand up a single wafer production line, and then where are you going to get the expertise and IP to design the process for it to run?

In the very least, Intel and TSMC need to finally be forced to prove why exactly they keep saying a single fab ~$10B should cost more than some entire industries, let alone individual companies.

It's not just them. Look at Samsung, SK Hynix, Micron, and Global Foundries. If you really cared to understand the costs involved, the information is out there.

Just for fun, here are some companies that a government could buy for $50Billion, which would provide a far better return on investment.

• All of Global Foundries ($35.11 Billion market cap)

Okay, that's great if we want to run the entire tech industry on Ryzen 2000-class CPUs, because 12nm is where Global Foundries stopped their node development.

Also, why do you want to nationalize any of these companies? Capitalism has worked well, so far, but the problem we're facing is that US-based semiconductor makers are up against state-backed competition abroad.

• STMicroelectronics ($44.3B)
• SK Hynix ($49.19 B)
• Foxconn ($46.95B)
• Baidu (49.46B)
• Panasonic ($20.5B)
• Toshiba ($13.72B)
• Honda ($43.68B)
• BAE Systems ($33.19B)
• Nintendo ($46.28B)

Good luck. These are foreign companies.

• Microchip Technologies ($44.49B)
• Controlling interest in Micron ($64.5B cap)
• Atmel ($3.45B)
• Keysight ($28.7B)
• Motorola Solutions ($44.41B)
• US Silica ($830M)
• Amphenol ($46.17B)
• Halliburton ($32.91B)

I don't see how this solves the problem. You're just throwing names around. The names you listed which even do chip production are mostly on older nodes and specialized towards mixed-signal, etc.

Realistically, there's fewer than 350 companies on earth which could not have been bought for $50 Billion.

The Congress decided to invest in securing our domestic semiconductor production capacity, and you want to spend the money on magic beans? Even if we do get a giant beanstalk out of them, that won't help us if/when TSMC goes offline.

 

[bit_user]

It shouldn't be the role of the government/taxpayer to spend an infinite amount of direct funding to sustain a failed business model on life support, forever.

It's not infinite, and governments (the US and others) support other vital industries like agriculture.

You just have to think rationally about the alternatives.

1. Spend less than 0.1% of GDP to support domestic semiconductor production.
2. Be plunged into a chip shortage that would make the last couple years look tame, by comparison.

Option #3 might be to stand up an international supply chain initiative, but that would still take financial backing and provide fewer benefits for the US economy.

It should be the role of the government to break up monopolies, protect the "little guy" from exploitation of the legal system, and foster a regulated marketplace where the the industries we need can profit and thrive on their own merits.

Yeah, but it can walk & chew gum, at the same time.

It doesn't make sense to throw money at any company/companies who have openly stated they are only interested in doing the bare minimum to milk the taxpayer for free money, instead of actually reinvesting that funding to build out a profitable domestic business, which could sustain itself.

Agreed. That's why they need to put forth credible proposals and there need to be benchmarks and milestones to continue receiving the money. The amount of money they'll get isn't enough to 100% fund the fabs we want. They'll still be picking up most of the tab.

 

[cyrusfox]

Intel and TSMC have plenty of money and bloat to build their own factories. If these companies are too shortsighted to diversify their supply chains, then we only need to enable their hubris to reach it's natural conclusion.

The issue chips act was set to resolve was an unbalanced supply chain that is viewed as a security risk. What caused the supply chain to become so unbalanced... Foreign subsidies. It wasn't long ago you could get a whole fab built on government dime in Korea or Singapore.

The CHIPS funding as well as the European chips bill is to incentivize local fabrication. Intel and others have successfully lobbied this as a national security issue. While that parts debatable, they have succeeded in the near term as TSMC comes to Arizona and Intel is building in Germany and Ohio. I expect Korea, Taiwan, and other countries will look to compete to retain fab market share and I personally expect a glut of fab capacity. How are they going to populate all this clean room space with tools and people? All this capacity coming online to softening demand is not a profitable picture, perhaps demand picks up as they come online but its going to be challenging to fully utilize all this new capacity.

 

[ezst036]

Intel, TSMC and others are sniping at each other in meetings and filings as they attempt to obtain funding from the US CHIPS and Science Act.

Tensions Mount as Major Chip Players Jockey for US Funding : Read more[

Chipmakers are out for blood, building up intensive lobbying operations......

CHIPS needs to be repealed and de-funded.

How about instead of more debt for tax payers, they fire every last one of these lobbyists. That'll help them reduce costs and make up some of the difference. Plus, while there are many current jobs being eliminated it would be good to see the lobbyists in the same position as the rest of us regular folk. Especially when they are out there cutting fabs. What's the money for then???

https://www.tomshardware.com/news/intels-hillsboro-mega-lab-falls-victim-to-budget-cuts

Seeing a bunch of billion dollar companies duke it out over money that's essentially ours while cutting the whole reason for it to exist in the first place is really sickening. 🤮

 

[cyrusfox]

CHIPS needs to be repealed and de-funded.

How about instead of more debt for tax payers, they fire every last one of these lobbyists. That'll help them reduce costs and make up some of the difference. Plus, while there are many current jobs being eliminated it would be good to see the lobbyists in the same position as the rest of us regular folk. Especially when they are out there cutting fabs. What's the money for then???

https://www.tomshardware.com/news/intels-hillsboro-mega-lab-falls-victim-to-budget-cuts

Seeing a bunch of billion dollar companies duke it out over money that's essentially ours while cutting the whole reason for it to exist in the first place is really sickening. 🤮

Every industry is taking a hit to softening demand, we had the covid cycle that sped up purchasing, now with that subsiding we have the return to reality and everyone has a glut of supply with no demand for 3-9 months.
As fabs are largely fixed cost [it cost X to run a factory whether 100% utilized or 30%] with them being under-utilized they need to figure out how to run lean as they have much less revenue coming in. Headcount is an easy lever to move unfortunately and Intel isn't the only one cutting, look at Micron.

Now why would any company fire their lobbyist, they just made them 1000x their cost thanks to the subsidies they are getting. If anything they need more to continue ensuring that gravy continues to roll in.

Once again the money from the CHIPS act is to encourage new capacity and technology being made in the US for the US CHIPS act and Europe for their respective incentive program. Its not to protect workers from this coming recession.

 

[bit_user]

CHIPS needs to be repealed and de-funded.

How about instead of more debt for tax payers, they fire every last one of these lobbyists. That'll help them reduce costs and make up some of the difference. Plus, while there are many current jobs being eliminated it would be good to see the lobbyists in the same position as the rest of us regular folk.

This is a very emotional take. Try to think rationally about the options. If you want to have a secure, domestic supply chain for cutting edge chips, it's going to take some amount of taxpayer support. We should try to keep that aspect separate from the other ills we see in corporate America and address those in another time & place. Let's not cut off our nose to spite our face.

It's not like steel, for instance, where you can just deploy tariffs. The reason being that semiconductor fabrication needs lots of up-front investment. Also, tariffs act as a regressive tax and would stifle the high-tech economy, which we don't want. In the long term, maybe modest tariffs on imported semiconductors could be used to sustain support for the domestic industry.

 

[ohio_buckeye]

I know we aren’t supposed to be political here, but I say Intel would probably be a good shot. Is their development maybe slightly behind tsmc? Sure, but they are an American based company if I’m correct. With the current situation that there is a possible war brewing in the pacific, it seems like supporting Intel or another company based in the west is the safest bet.

While I’m at it I would say buy off the best engineers possible to get them to the USA to help Intel or whenever you help, spur the development.

After ww2, many of the brightest minds came from Europe and helped the USA build much of the technology around the space race etc. Not knowing exactly what is going to happen I think I’d be doing these things and stocking up on chips I knew I’d be needing for fighting wars, infrastructure etc etc. Hopefully you wouldn’t need them. Just my 2 cents.

 

[bit_user]

While I’m at it I would say buy off the best engineers possible to get them to the USA to help Intel or whenever you help, spur the development.

I forget where I read it, but supposedly a lot of TSMC's American employees are departing their offices in Taiwan. Not sure if they relocated to other TSMC offices or if they just outright quit.

After ww2, many of the brightest minds came from Europe and helped the USA build much of the technology around the space race etc.

We do have the H1B Visa program. I think the quota isn't pre-allocated to different sectors, though.

We could also create scholarship or fellowship programs, to spur talent development amongst US-based students.

 

[ohio_buckeye]

You make good points, thinking short term I guess but anything to hedge your bets. If I were the USA I think I’d even be approaching tsmc’s top level engineers and asking what it takes to get them to the USA to try to kickstart American chip development.

As far as future development, stop a lot of Covid relief that is allowing people to stay at home to get more people into the workforce and give incentives to go into technical colleges and engineering schools.

 

[Deleted member 14196]

I don’t think there’s any more Covid relief going on

 

[ohio_buckeye]

I know people are going to say no politics but from a practical standpoint and from an American viewpoint, if you feel that at some point there will be a conflict over Taiwan then the USA is the biggest dog in the fight on the opposing side, so I definitely feel as though the USA should be doing whatever they can to lead in chips and semiconductors, then pass tech onto their allies as needed.

Theodore Roosevelt said it well. Speak softly and carry a big stick. In other words don’t be out to threaten others but have the power and the will to take care of situations.