News US introduces act to add tax credits for chip designers, extends credits for chip production, too

[Admin]

The STAR Act extends the semiconductor manufacturing tax credit beyond 2026 and expands it to include research and development.

US introduces act to add tax credits for chip designers, extends credits for chip production, too : Read more

 

[bit_user]

It's all well and good to have chip design subsidies, but there is no scarcity either of chip designers or design centers, in the US. Where we have a critical shortage is in fab capacity and upstream supply chain. So, if you've only got a limited amount to spend on it, focusing that spending on the critical shortage is the smarter thing to do.

BTW, tax breaks are government spending by a different name. Anything which contributes to the budget deficit is effectively government spending.

 

[why_wolf]

Chip design is something the US already completely dominates. Total cash handout.

 

[DS426]

...

BTW, tax breaks are government spending by a different name. Anything which contributes to the budget deficit is effectively government spending.

Absolutely, and the federal government have used tax breaks for decades to mold and shape things in the direction they want things to go. EV tax credits are another great example. It's just a funny approach as -- just as you said -- it's less revenue later in favor of not paying upfront (although the CHIPS Act does include direct payments and government loans as well); a calculated interest savings on federal debt?

As for the CHIPS Act and President Trump, IMO, he favors American manufacturing strongly enough that he wouldn't try to make any major changes to it, and if anything, would extend it similar to this STAR Act.

 

[ezst036]

Another wonderful day for the lobbyists!

 

[OldAnalogWorld]

Unfortunately, the right policy will not lead to a rapid reduction in prices, which will inevitably rise due to new customs duties for China and other countries.

Customs duties should encourage the purchase of goods from local producers, equalizing the prices of their goods and foreign ones by subsidizing end consumers, not companies - only buyers have the right to decide which goods are really of the highest quality and which are not, which best meet their needs, and not Uncle Sam and the pseudo-capitalists sponsored by them, receiving non-market subsidies, they are a road to nowhere. Subsidies encourage corruption and a decline in the productivity of management and personnel and reduce competition in the market in reality.

Companies should work in market conditions within the country, as a minimum, since globally this becomes impossible due to massive subsidies everywhere.

I read that the Chinese authorities have started subsidizing mass demand. This is the right decision, but not by printing money, but by collecting customs duties from foreign producers. And the US and Europe should do the same. And then subsidies to local producers focused on exports to high-margin countries will lose their meaning - duties will eat up all the increased margin on high-paying clients in developed countries. And China will lose, because its society is less solvent for obvious reasons.
15-20 years and it will all be over for China. The rebuilt US, together with its key allies, just needs to stoically survive this period of deteriorating living standards for ordinary people, which needs to be explained to them as thoroughly as possible in advance, which none of the populists want to do now, and this leads to sad consequences...

 

[mikerahl]

It will be important for countries such as Canada (currently being attacked and having been attacked repeatedly by the US) to lock the US out of our raw materials that might be used for such manufacturing in the US since it won't benefit Canada in any way shape or form to be a supplier of those raw inputs. Instead, Canada should nationalize US corporate held tech patents and use them to build our own chip industry. The US is attacking Canada left and right of late, as well as constantly threatening to annex the country. Time to respond by locking the US out of all our raw minerals. Should put a damper in Trump's plans to harm everyone outside the US

 

[OldAnalogWorld]

I don't know about Mexico, it's a much less developed society with a different mentality than the US-Canada, but it's definitely more profitable for Canada to become a US state than to try to argue with them. You don't have a chance, you're too small in population (and consumers), you won't survive in the new dark world order.
I previously advocated that rather than feud with China over Taiwan, it would be easier to move all 5-7 million of the most developed population of the island to the US/Canada along with their families (this is several times less than all the illegal immigration to the US/Сanada over the past 10 years - only in this case, people with lower intellectual development most often end up in the US), which would only greatly increase the potential of North America. And leave Taiwan empty to China - let it do what it wants with its destroyed industry and without its human capital. In the end, people are more valuable than territory, especially developed people, and they should be lured to the country first and foremost. This is what the US has risen on for 250 years - the arrival of the most passionate layers and many scientists/engineers from all countries where they were not valued and there were less free societies.

 

[mikerahl]

I don't know about Mexico, it's a much less developed society with a different mentality than the US-Canada, but it's definitely more profitable for Canada to become a US state than to try to argue with them. You don't have a chance, you're too small in population (and consumers), you won't survive in the new dark world order.
I previously advocated that rather than feud with China over Taiwan, it would be easier to move all 5-7 million of the most developed population of the island to the US/Canada along with their families (this is several times less than all the illegal immigration to the US/Сanada over the past 10 years - only in this case, people with lower intellectual development most often end up in the US), which would only greatly increase the potential of North America. And leave Taiwan empty to China - let it do what it wants with its destroyed industry and without its human capital. In the end, people are more valuable than territory, especially developed people, and they should be lured to the country first and foremost. This is what the US has risen on for 250 years - the arrival of the most passionate layers and many scientists/engineers from all countries where they were not valued and there were less free societies.

Canada would never be admitted as a state, it would become a territory to abuse,, just like Puerto Rico. To ensure this does not happen, Canada needs to pull out of alliances with the US (not difficult, the US is doing it for us), withdraw support for the US dollar, and move to a neutral posture, being equally supportive of the BRICS block as we are of the US.

 

[bit_user]

As for the CHIPS Act and President Trump, IMO, he favors American manufacturing strongly enough that he wouldn't try to make any major changes to it,

That's not what he said.

"He also argued that government grants like the CHIPS Act are unnecessary and counterproductive and that companies should use their own resources to build fabs rather than rely on public funding."

Source: https://www.tomshardware.com/tech-i...t-tariffs-on-taiwan-made-chips-impacting-tsmc
​

He does like tax cuts, though. Maybe STAR is an attempt to get something through to slightly blunt the impact of CHIPS getting repealed.

 

[bit_user]

Canada would never be admitted as a state, it would become a territory to abuse,, just like Puerto Rico.

Stop worrying about that. It's not a serious threat. It's just meant to intimidate Canada, ahead of trade talks. Also, these over-the-top statements serve a role in distracting public attention from other things that are actually happening.

P.S. I like Canada. Whatever happens, I wish the best for you guys.

 

[why_wolf]

Canada would never be admitted as a state, it would become a territory to abuse,, just like Puerto Rico. To ensure this does not happen, Canada needs to pull out of alliances with the US (not difficult, the US is doing it for us), withdraw support for the US dollar, and move to a neutral posture, being equally supportive of the BRICS block as we are of the US.

Being friends with BRICS would be viewed as antagonistic ( B. Russia I. CHINA S.) Also would not be helpful as all those countries are raw resources countries, ie Canada's competition.

They'd be much better off, and have an easier time, cozying up to the EU. The EU is in serious need of raw materials that are from somewhere other than an actively invading nation (russia) or constantly on the verge of civil war (congo)

 

[OldAnalogWorld]

The EU is in serious need of raw materials that are from somewhere other than an actively invading nation (russia) or constantly on the verge of civil war (congo)

This is a deliberately false premise - Germany and the EU countries have quietly increased LNG supplies from Russia several times as soon as the pipelines were blown up and Ukraine stopped pumping on January 1. The EU talks a lot, but in reality it does little, pursuing an openly two-faced policy, just like the US in terms of buying Russian resources. If they really wanted to squeeze them, everything would have been done back in 2022. But it is one thing to lie to the public and another thing - real needs that must be met at a minimum price, since the EU is mired in debt, just like the US. What makes me laugh the most is the hypocrisy of German industrialists howling about expensive energy resources - the cost of 1 kWh for individuals in Germany is over 50 euro cents. And the wholesale price is only 4-5 euro cents for industry. And they allegedly are not happy with this!

Now that the duties have been introduced by Trump, it is obvious that he did not intend to return the money received from these duties to US residents, to equalize competition, as I described above, the correct path. Therefore, these duties will lead to a drop in the standard of living, especially for the least well-off strata of the population of the US, Mexico and Canada. The funniest thing is that they "punished" China the least of all - only 10%, while their neighbors were immediately punished by 25%... And all because the key production is still in China, and not in Mexico and in the raw materials appendage - Canada (like Norway) and the US authorities do not want to quarrel with China. It is one thing to shout about 50% tariffs, and another is the reality, where the US is closely tied to China in many key positions. It will be very difficult to untie it and will take a lot of time...

 

[bit_user]

If they really wanted to squeeze them, everything would have been done back in 2022.

You can't replace something like energy supply overnight. The transition takes time. That's not to say they couldn't have met their needs elsewhere by now - I think they probably could've.

The funniest thing is that they "punished" China the least of all - only 10%,

The part you're missing is that those stack atop existing tariffs on Chinese imports. So, the total amount is higher than that. Still, not as high as previously threatened, but the trade deficit with China is so massive that anything higher would've been crippling to the US economy.

the US authorities do not want to quarrel with China.

It's not about not wanting to. It's about knowing the limits of where you can realistically play.

 

[OldAnalogWorld]

The transition takes time.

They do not even try to break away from Putin's Russia, if they do not reduce, but increase supplies in another form. Meanwhile, Putin's Russia receives money for the war from the EU and the US. Which speaks of the complete duplicity of all the "sanctions" (already in the form of "16 packages") and the real moral victory of Putin's Russia and China/India standing behind them. And since Russia has already effectively received 1/3 of Ukraine's territory by summer and legalized it at the international level through a "peace treaty", Trump is forcing Ukraine to do so and practically solves all the tasks set, it has in fact won a physical war against the West in 3 years, having a GDP more than 20 times smaller than the combined US + EU + Japan + Canada + South Korea + Australia. No matter what Western propaganda broadcasts in the future. And the West will eventually be forced to lift sanctions from it. This is what it means to have the largest nuclear arsenal in the world - you can dictate your will on the planet and the size of the economy does not matter - if the enemy is paralyzed by existential fear of survival.

The part you're missing is that those stack atop existing tariffs on Chinese imports. So, the total amount is higher than that. Still, not as high as previously threatened, but the trade deficit with China is so massive that anything higher would've been crippling to the US economy.

Tariffs should be returned by consumers, and by the poorest groups. This will lead to a reorientation of these consumers to American goods, not Chinese ones. On one key condition, I repeat - the quality of these goods must be obviously higher, with equal prices for American and Chinese options. After all, workers in the USA and Europe are obviously more qualified, aren't they, receiving much higher salaries? And if this is not so (there is no difference in qualifications, and therefore better quality of comparable goods), then duties are useless - as I wrote above, they will only contribute to corruption and the socialization of the US industry, which will have no incentive to become better - Uncle Sam will pay for all their failures in business at the expense of budget money, just as all the failures of the banking mafia have long been paid for by stupid money emission. So far, I do not see any hint from the US administration that they will begin to subsidize the purchase of goods by the American population at the expense of duties. And this should have been announced simultaneously with the introduction of duties. Even if the quality is the same (at the moment), and not higher, but the prices are the same (equalized), then it is logical that a US patriot will buy an American product, and not a Chinese one, right?

Let me give you a simple and understandable example: Let's say that a smartphone assembled in the US and China, identical in quality (capabilities), costs $500 and $400, respectively. Naturally, US residents will buy the one assembled in China for $400, given the same quality (and functionality). But the customs duty will raise the price of the one assembled in China to the same $500. There is no longer any point in buying a Chinese one. But the lower income groups suffer. After all, the price has increased by $100 for them anyway. This is when the subsidy for the authorities should kick in, and it should only work for such groups (the rich will get by - as Trump and officials said - let them endure the increased burden, although this directly contradicts Trump's election promises to reduce taxes for everyone, but who believes in election promises, especially in the "middle class" + - where there are mostly people with a good education?). As a result, the poor, like the rich, buy only goods assembled or made in the USA, because there is no difference in price for them, and the quality is the same. Again, if we assume that their intentions are pure and they are patriots of the USA, not China. The rich pay a conditional $500 for a smartphone, and the poor still pay $400, but ignore those assembled in China, which leaves the latter without an increased margin due to the frantic exploitation of a much cheaper labor force and various non-market mechanisms of pressure on other countries.