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[...] President Joe Biden signed the CHIPS Act into law in early August to help boost the US chip manufacturing industry amid a global microchip shortage.
As part of a plan to restore the US semiconductor industry and protect national security interests, the CHIPS Act prohibits US tech companies that receive federal funding from building new, advanced factories in China for at least 10 years.
"Companies who receive CHIP funds can't build leading-edge or advanced technology facilities in China for a period of 10 years," Secretary of Commerce Gina Raimondo said in a press briefing Tuesday. "Companies who receive the money can only expand their mature node factories in China to serve the Chinese market."
One of the main objectives of the CHIPS Act is to "establish and expand domestic production of leading-edge semiconductors in the United States" to help reduce reliance on foreign producers like China, Raimondo said. "The United States consumes more than 25% of the world's leading-edge chips and produces zero of those chips."
(Score: 2) by Username on Friday September 09 2022, @10:04AM
I bet they'll all move to Hong-Kang, Shang-Hei or Tai-Whan.
(Score: 2) by Opportunist on Friday September 09 2022, @10:46AM
We won't build anything in China.
But look how many new companies got founded in the meantime that do!
(Score: 2) by looorg on Friday September 09 2022, @02:06PM (14 children)
I wonder which will be the new/next China? If China now is problematic for political reasons, also they are starting to become more expensive. The production circus have to move away to the next cheap land. India isn't cheap anymore. So which place in Africa, probably, is going to be the lucky winner for the next decade of cheap production and manufacturing? After that they better hope that it's all robot production cause there won't be any cheap places left to produce in with people doing to the work.
Are we going to see a wave of things moving "home" again to America and Europe in-between? COVID showed that the JIT production, logistics and manufacturing is a nightmare and source of epic failure.
(Score: 3, Interesting) by RedGreen on Friday September 09 2022, @02:38PM (1 child)
"Are we going to see a wave of things moving "home" again to America and Europe in-between?"
I would think Central and South America for US companies and Africa for European companies would be ideal places. Plenty of cheap labour and
people to exploit. Plus it solves the problem of migrants flocking to both places to get a better life as you put the jobs between them and the place they try to get to. No excuses left for those government in place to be pushing their problems onto the more advanced economies and zero excuse left for the allowing of it to happen by the parasite corporations in those countries seeking the slave labour in their own countries anymore. Fuck the corporations if they do not like it, it is well past the time for a corporate death penalty to start being imposed on both them and the people running them. Your business benefits the society it is in or see you later should be the new way of doing it or my previous point is imposed on both.
"COVID showed that the JIT production, logistics and manufacturing is a nightmare and source of epic failure."
Only when you have an extraordinary event like a world wide shutdown, it works perfectly fine when the system works as intended. Though the allowing of the transit of all them goods from far away places wastes a huge amount of resources that sourced closer to home items do not.
"I modded down, down, down, and the flames went higher." -- Sven Olsen
(Score: 1) by khallow on Saturday September 10 2022, @01:12AM
How about we just not do that? You don't have to justify your existence by how much benefit to society you generate. I think it's only fair we extend that same courtesy to corporations and other businesses.
This is especially pointless because you neither have a clue what is beneficial to society nor any understanding of how such things go very wrong with the worst of society taking control of the decision process. It's just a glaring display of ignorance.
(Score: 1, Interesting) by Anonymous Coward on Friday September 09 2022, @03:28PM
Singapore, Malaysia and Indonesia?
The problem is that China's manufacturing advantage is not just about labor anymore. It's now experience and having so much of the supply chain.
(Score: 0) by Anonymous Coward on Friday September 09 2022, @04:18PM
Nigeria?
(Score: 2) by RamiK on Friday September 09 2022, @06:08PM (9 children)
Do note the Japanese were out-producing the US in semiconductors as early as the 60s and by the 70s had a lead on memory and even integrated chip manufacturing and design technologies. In fact, the only reason the west regained the R&D lead in the late 80s was because Japan was pressured to sign the US-Japanese Semiconductor Agreement in 1986 which of course opened the door way for China to enter the markets...
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(Score: 2, Informative) by khallow on Saturday September 10 2022, @05:30PM (8 children)
In Japan, they call that treaty the lost decade [wikipedia.org].
(Score: 2) by RamiK on Saturday September 10 2022, @07:42PM (7 children)
To be fair, while the "we won't compete with the US" heavy silicon and automobile accelerated the decline of Japan's economy, some recession and economic problems were largely inevitable in the face of China opening up to trade and the US wanting to prevent any one country dominating any one sector (unless it's the US...).
Regardless, my point is that whether the goal is the possible [1] disrupting emerging Chinese dominance in heavy silicon, or the impossible [2] moving production to the US, the bill is too toothless to achieve either and was diluted by the lobbies to nothing but corporate welfare.
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(Score: 1) by khallow on Saturday September 10 2022, @11:08PM (6 children)
(Score: 2) by RamiK on Sunday September 11 2022, @01:32AM (5 children)
Japan still leads the GDP-to-national-debt charts but if you look at the per-country breakdown as a whole you'll find it doesn't really predict quality of life or economic status all that much: https://worldpopulationreview.com/countries/countries-by-national-debt [worldpopulationreview.com]
Japan was leading the growth figures in the OECD from the 50/60s right up until the 80/90s and was practicing Keynesian policies throughout so that ain't it.
Personally, my take is that they just didn't have enough working hands since their birth rates were too low and they got too old. Other nations, like Germany, ended up opening their borders to foreign workers to fill in the gaps. Japan bet on robotics and lost.
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(Score: 1) by khallow on Sunday September 11 2022, @04:13AM (4 children)
Ever consider that they would have lead anyway? Industrial country that was bombed to bits? It's not easy, but rebuilding that would have caused huge growth even if they weren't practicing any Keynesian policies at all. And given that they've been pursuing Keynesian policies for the past thirty years without much luck, I think we'll need to look elsewhere for their earlier tale of success.
(Score: 2) by RamiK on Sunday September 11 2022, @08:53AM (3 children)
The post war economic boom ended in '73 / '75 but Japan's growth lasted into the mid-80s / early 90s.
No they haven't. Japan public and private sectors stopped investing in growth factors in the mid-90s following the collapse of the asset price bubble:
https://en.wikipedia.org/wiki/Lost_Decades [wikipedia.org]
That said, without access to labor, investing in growth wouldn't have yielded anything so they weren't wrong per say... e.g. Taiwan currently has some 800k foreign workers and expects to bring in another 400k in the coming decade and they're still losing some orders to the Vietnamese factories while China has some 200million+ migrant workers keeping the factories running.
Anyhow, this is mostly off topic to my main points:
1. The bill doesn't secure access to labor at competitive costs to China.
2. The bill doesn't change current industry practices for China operations.
3. The bill doesn't guarantee automation solutions at competitive costs to China.
So, even if you ignore how automation will be cheaper to do in China so betting everything on it is just being silly, nothing in the bill as it stands is anything but corporate welfare regardless since it just doesn't secure anything relevant to keeping the money from leaking into China.
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(Score: 1) by khallow on Sunday September 11 2022, @01:47PM (2 children)
There's no cutoff point for that in 1975. In other words, the post war economic boom ended in the late 1980s. And my take is that Keynesian policy didn't do that either, but sensible nurturing of their business environment.
Keep in mind that Keynesian spending resulted in a huge misallocation of Japanese labor - for example, in the feebler parts of the internal economy (construction, government, and agriculture, for example). And who here is really surprised that a top-down approach to automation failed hard?
I think the bill will be an utter waste of resources and time. If your economy isn't attracting this high tech industry naturally, it's not going to attract a viable industry with regulations and public funding.
(Score: 2) by RamiK on Sunday September 11 2022, @04:16PM (1 child)
https://en.wikipedia.org/wiki/Japanese_economic_miracle#Steady_increasing_stage_(1973%E2%80%931992) [wikipedia.org]
The global context: https://en.wikipedia.org/wiki/1973%E2%80%931975_recession [wikipedia.org]
Be sure to follow up on the Plaza and Louvre Accords hyperlinks to see what I mean about Keynesian polices ending.
( https://www.grips.ac.jp/teacher/oono/hp/lecture_J/lec12.htm [grips.ac.jp] )
You just can't build a labor sector on an average wage of a car every 3 month. This is why Japan's total farmlands were consistently shrinking at a stable rate since the 50s (https://www.oecd.org/japan/42791674.pdf p.26) regardless of periods of recessions or growth.
You're aware the subject at hand is a US bill top-down pushing toward automation, right? I mean, I don't agree on the principle since there were plenty of previous automation attempts that went on fine... But I'm not going to bother breaking this down when it serves my point.
Again, we disagree on everything except the outcome so I'm really torn about arguing against this... Still, this is fundamentally wrong. At these scales you just can't avoid intervening in the markets. Hell, calling it "intervention" is giving the impression it's the exception when, in fact, there isn't a single country on the globe that doesn't depend on a subsidized education system or migrants from countries with subsidized school systems to get its tech workers. Then you have all the infrastructure needs that go with heavy industries like silicon... Basically, even if there was some semblance of a free-market type argument to be made regarding the finance sector, once you go into actual industry, you're looking at so many infrastructure, labor and trade variable that are entirely under the government domain even in some magical free-market, infinitely expanding model-only kingdom.
Anyhow, though we disagree on the cause, we agree on the effect of the bill being a waste of time and money so I'll end it with that before the weekend is over ;)
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(Score: 1) by khallow on Monday September 12 2022, @11:18AM
I grant that the accords were part of the reshaping of the Japanese economy from export-driven focus. That could cause a recession due to changes in economic activity as the various participants adjust. But it wouldn't have caused the Lost Decades. A huge institutional redirection of the Japanese economy to unproductive uses - via Keynesian spending - could do that.
That's just a non sequitur. One doesn't build labor sectors from how easy it is to buy a car (particularly, when there was plenty of other stuff that wasn't so easy to come by like a home). Or explain shrinking farmlands via expensive labor. You're missing the entire picture. Labor sectors can build on expensive labor - Japan did it, but they screwed up after 1990.
And shrinking farmland is easy to explain. Not being very productive, it was converted into more valuable uses. Nothing to do with cost of labor or the value of what that labor could buy.
Even if what you said were true, interventions can very a lot in effectiveness. An education system has vastly more bang for its bucks. And with "migrants from countries with subsidized school systems", we're implicitly acknowledging that even that doesn't have all that much value because other countries that have healthy economies, rather than try to bribe companies to do stuff, are the ones that will attract that subsidized education.
My take is the whole exercise just doesn't work that well. We can afford to ignore the failure though because of the wealth we're generating.
You do realize that's nonsense, right? Even again, if we were to assume that magical systems had to play by your rules, just because some level of government is required, doesn't mean that your desired level of subsidization is remotely a good idea. Infrastructure, trade, labor, yada yada don't have to be under the government domain - and often fare much better when they aren't. Keynesian spending is a notorious example. My take is that the only reason real world Keynesian spending happens is because it's a great political excuse to spend public funds and enable protectionism for various industries with sufficient influence. Countries with extremely high debt to GDP ratios are exploring the limits to this particular fig leaf.
And I think it's telling that no one has actually established that Keynesian spending works. Think about that. It's a classic example of cargo cult economics: have a recession, spend like a sailor, and recover from the recession - therefore the spending must have fixed the recession. But this ignores that recessions end naturally even when we don't do anything about them! And of course, it also ignores the remarkable ineffectiveness of Keynesian spending now. For example, the "jobless" recoveries that the US has had over the past few decades. The 2008-2009 recession and subsequent huffing and puffing resulted in a jobless recovery so bad that it was worse than what was predicted if nothing had happened. The cultists, of course, blamed it on the recession, claiming the recession was worst than we knew. Sorry, it wasn't "worse than we knew" before the intervention.
Similarly, I don't think this sort of intervention works as a means to boost US industry. The business-side players will just extract the money, and then go back to what works - namely, having some relatively high value industry in the developed world, and the rest elsewhere. It'll be a ripple in the pond. The whole thing will be an expensive lesson in the limitations of Keynesian spending. Maybe we should call this Keynesian futility?
(Score: 3, Interesting) by RamiK on Friday September 09 2022, @02:07PM
No one was planning to build a 7-5nm node fab in China anyhow: https://en.wikipedia.org/wiki/Semiconductor_industry_in_China [wikipedia.org]
And now, thanks to Intel & co.'s lobbying, nothing in the signed bill prevents subsidy recipients from ordering 14nm chips from the new SMIC factories or expanding their existing 65nm MCU lines: https://www.bloomberg.com/news/articles/2022-07-18/biden-wants-chipmakers-getting-us-aid-to-curb-china-investments [bloomberg.com]
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