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Cost to rebuild US semiconductor manufacturing will keep growing:
As Washington debates spending $52 billion to start regaining America's former role as a leading semiconductor manufacturer, experts say the public and private cost over the next two decades may exceed 10 times that much—and some worry such spending may still not achieve the goal.
On Friday, the House passed the measure to appropriate the $52 billion in subsidies over five years, largely for grants to catalyze private companies' construction on U.S. soil of semiconductor fabrication factories, which are known as fabs. The Senate passed a similar bill last year. With President Joe Biden supporting the measure, some version of it may soon become law.
Some conservatives take issue with elements of the bill's semiconductor section and with other parts of the nearly 3,000-page House version. And others reject the very notion of such massive aid to private industry. But most members of Congress believe the spending is needed to ensure that the United States is not overly reliant on vulnerable overseas supplies of components that are nearly as critical as energy to both the global economy and U.S. national security.
The debate occurs amid a semiconductor shortage that is driving up inflation. It also comes as worries grow that Taiwan, where 92 percent of the world's high-end chips are made, could be invaded by China or that even a lesser crisis in that region could hamstring supplies that everyone from the Pentagon to General Motors relies upon.
But the long-term financial commitment that experts say would need to follow the $52 billion appropriation is rarely discussed.
Over the next two decades, the spending required from the public and private sectors to build and operate enough fabs to give America a reliable supply for most of its needs will probably exceed $500 billion, including the initial $52 billion, semiconductor policy experts at the Potomac Institute for Policy Studies told CQ Roll Call this week. Other experts said that estimate is reasonable.
Still, many analysts emphasize that the government money must help companies defray not just the cost of building new fabs—which is the current focus—but also the more challenging part: the cost of operating them. Otherwise, they say, the scores of billions of dollars may be misspent.
"In many cases, the government throws money at something, and then it doesn't solve the problem, because the money was not allocated to the places it needed to be," said Bryan Clark, a Hudson Institute senior fellow who performs studies on microelectronics for the secretary of Defense. "This is just going to be another example of that."
It's a somewhat long, but well-written article.
(Score: 5, Insightful) by Runaway1956 on Friday February 11 2022, @03:21AM (18 children)
It took a government bureau to figure out that the longer our manufacturing sector is neglected, the more it will cost to rebuild? That isn't unique to semiconductors, it's true of our entire manufacturing base.
It's time we figured out the true cost of exporting our technology to China. We sold the next generation's heritage for a few baubles.
Abortion is the number one killed of children in the United States.
(Score: 0) by Anonymous Coward on Friday February 11 2022, @03:31AM (7 children)
The fascist wants big government to pick and choose winners, because he is anti-conservative and anti-capitalist (viz. anti-liberal).
But yet he is also anti-socialist.
(Score: 1, Insightful) by Anonymous Coward on Friday February 11 2022, @03:42AM (1 child)
Perhaps you should look for the definitions of the words you blithely toss around. Your talking points don't hang together.
(Score: 2) by DeathMonkey on Friday February 11 2022, @05:46PM
Pretty sure that was the point!
(Score: 4, Interesting) by Phoenix666 on Friday February 11 2022, @07:07AM (4 children)
Government has undermined American manufacturing for 4 decades now. Tax policy, making it easier for companies to offshore. Currency policy, making it easier for other countries to export to the US. Trade policy, by playing with definitions of "Made in America" and such. All of those involved kickbacks that were enormous for the politicians who voted for them, but which were minor relative to what they cost the country and the regular people who live here.
All of that has been documented by the most phlegmatic sources. It used to be something that the progressive left talked about on a daily basis. They don't talk about it anymore since Bernie Sanders was sidelined in his bid for the Democratic nomination.
Washington DC delenda est.
(Score: 2) by Runaway1956 on Friday February 11 2022, @12:16PM (3 children)
I'm not sure that is quite accurate. Change that "4 decades" to "more than two decades", and I'm onboard with you. Let's remember that the first industry to start the move was the steel industry. The steel went to Europe, South America, and India. I don't think government was very much involved in that, they were passive onlookers for the most part. From my perspective, government didn't take an active part in pushing industry to China until the mid-90's, on into the mid-10s.
It sucks being a 'most favored trading partner', like the Chinese were forced to be in the 1800s.
Abortion is the number one killed of children in the United States.
(Score: 3, Informative) by Phoenix666 on Friday February 11 2022, @01:08PM (2 children)
In the late 70's people groused about "Made in Taiwan" or "Made in Japan" stamps on a few consumer products. By the early 90's there was very little that still had the "Made in the USA" stamp on it. By then nearly everything had "Made in China" on it. That was 30 years ago.
The last 20 years have only been icing on the cake.
I know. It doesn't feel that long ago that American manufacturing was a thing, but it really was 40 years ago now.
Washington DC delenda est.
(Score: 2) by crafoo on Friday February 11 2022, @04:44PM (1 child)
The average standard of living for everyone, at every economic level is higher now than it was 40 years ago.
Average house sizes are waaaay up. Spending on entertainment. # of cars a family has.
Why? The prices of manufactured goods is lower. This made everyone richer as the same amount of money bought better goods and/or more goods. If we forced manufacturing to remain in the USA we would all be poorer.
Robots are going to take over manufacturing completely, anyway. Officiating winners and losers from the top-down now is a waste of time and money.
(Score: 0) by Anonymous Coward on Friday February 11 2022, @08:23PM
Aren't some of those gains, house size, number of cars, due to the increase in average household debt?
(Score: 5, Insightful) by Anonymous Coward on Friday February 11 2022, @03:49AM (4 children)
I can't remember how I phrased it, but I got in to this whole discussion way way back in the Perot days. I was an undergrad in engineering, and one of my house-mates was (perhaps a grad student) in the School of Commerce. This was at UVa. I said something like "we don't need them" in reference to China. He said "they don't need us". I was like, "that's loser talk", and some talk ensued about how I was ignorant and didn't understand the benefit of free trade and comparative advantage. As the years went by, I had similar discussions with people how possessed economics degrees. The schools of commerce and economics all over the country indoctrinated people in to this philosophy. It was cult-like. I could never square the concept of comparative advantage with what the history of commerce taught us about monopolies. It seemed plain to me that free trade would result in concentration of industry in one place or another, leading to monopoly and all the attendant shortcomings.
That Trump was pushing back on all that was one of the few positive aspects of his administration; but not enough for me to vote for him as he was obviously flawed in so many ways. He couldn't elucidate a contrary position to the prevailing policy dogma, and it's unlikely that anybody with respectable bone fides will; because expressions of such contrariness are suppressed in academia.
Future economists may finally come around, and find a way to analyze trade liberalization in such terms--a model that accounts for the effective "sale" of a nation's industry in exchange for cheap imported goods, and they may finally realize that it isn't necessarily a bargain, that tariffs and barriers are taxes that provide the benefit of ensuring there will be multiple competitors at the global scale. They'll probably give this person a Nobel Prize, but not in our lifetime.
(Score: 3, Interesting) by Phoenix666 on Friday February 11 2022, @07:29AM
Interesting post. I'd say, first off, that China has very much needed us, meaning, the West. Where else could they steal the expertise and capital to advance their own industry? Technically they could have gotten it from the Japanese or Koreans, but history and inborn prejudices bar that. Here we are now, decades later, and the Chinese figure they've very nearly cracked it. They've stolen most of what isn't nailed down. They've co-opted the power elites across the West. They've placed their spies in everything, everywhere. But they still haven't stolen the secret sauce, nor can they.
Freedom is the secret sauce. Even if China became a democracy, a real democracy tomorrow, they still wouldn't acquire the secret sauce. They would have to be a real democracy for about a thousand years to unlearn the lickspittle-ism that defines their ethos.
As far as economists go, they artificially constrain the inputs in their models in order to sift out trends that they can write papers about and remain employed as academics or quasi-academics. Their ability to predict economic trends remains poor. Their ability to constrain economic activity with their meticulously expounded models is risible. Further, the currently predominant philosophy of Keynesianism requires the central role of government as a rational actor, which is completely preposterous.
I would go even further and say that a key disconnect, a central failing, of current economic thought is that it completely glosses over other exigent factors of global economic activity. They root for global flows of capital, while global flows of labor remain regionally bound. They talk about currency zones while actual humans are still limited by, and imagine themselves within, national and ethnic identities. It leads to situations where the bank might not care that most chips are manufactured in China, but the countries that China means to invade certainly do care.
I assert here that those disconnects will cause all the global trade agreements and the globalist system to delaminate. The bedrock human experience of language, culture, and ethos are where humans live. It defines who we are. If push comes to shove between elites who want to pit economic systems against those bedrock realities, it is the economic systems and the elites who will go.
Washington DC delenda est.
(Score: 2) by ChrisMaple on Friday February 11 2022, @08:56AM
Alas, economics does not consider certain important factors, or perhaps does not consider a long enough time frame. A China (or other totalitarian government) which chooses to route the profits of pseudo-capitalism into military development and H-bombs might be able to kill everyone in North America, Europe, and Australia. At that point the cheap goods we've received are no compensation for the end of freedom on Earth.
(Score: 1) by khallow on Friday February 11 2022, @02:35PM
Another demonstration that protectionism isn't the answer is in industry that can't be exported (well in addition to the above MIC) like power plants). Not many refineries or nuclear plants have been built in the past few decades.
What kind of future is the US going to have when it's entire economy is just a fragile, uncompetitive complex? My take is cure the disease, don't lop off limbs at random, just to cure a flu.
I think the real cult here is the cargo cult. One wants X and decides that magic ritual Y will do that. Economics is called the "dismal science" in large part because it's about the unintended consequences and other obstacles that prevent cargo cults from attaining their dreams.
(Score: 0) by Anonymous Coward on Friday February 11 2022, @11:36PM
Because there is no true free trade when all the players don't play with the same rules. If you want to make business in China you have to partner up with a Chinese company and there are many restrictions. What they are doing with Arm in China is plain robbery. And there are cases where the same factory that makes a product for a western company also makes the copy using the tools that the western company paid for.
I agree with you in some way. The biggest problem with the economists is that they are usually blind to anything that isn't the "important economic numbers".
(Score: -1, Flamebait) by Anonymous Coward on Friday February 11 2022, @04:17AM
Shut the fuck up, Rumaway! Stay out of topics of which you know nothing! Your contribution is only driving people away from SoylentNews! Just. Fucking. Stop.
(Score: 0) by Anonymous Coward on Friday February 11 2022, @04:58AM (3 children)
At least we kept the manufacture of leaf-blowers in Arkansas! Gawd, I hate those? Two guys that do leaf-blowing for the richies in the Gated Community, of their driveway, seem to have their blowers tuned to just the right dissonance to drive you mad, even from a block away. Gawd, I hate those guys, and Runaway for making their noise-makers! I hate you, Runaway!!
When does Runaway's approval rate go below positive?
(Score: -1, Flamebait) by Anonymous Coward on Friday February 11 2022, @05:44AM
Maybe in another 1900 years, give or take a little, when his senility matches that of an old moldering Greek?
(Score: 2) by Phoenix666 on Friday February 11 2022, @07:30AM (1 child)
Electric leaf blowers are quiet and effective. Let's manufacture those.
Washington DC delenda est.
(Score: 2) by lentilla on Friday February 11 2022, @08:07PM
Yes they are wonderfully helpful tools!
Sadly, no they are not.
My neighbour; aged in his indeterminate 80s; hobbles out each morning and blows the leaves off his SUV. He then removes the windshield cover and blows the leaves off the car again. Then he blows the leaves off his drive. His wife appears and they drive off.
An hour later he is back. He parks the car nearby on the drive and blows off the area, then the car. Then the car gets backed into position and the windshield cover replaced and lovingly tied down. Then the area where the car was parked gets blown off and the rest of the drive for good measure.
This sequence repeats itself several times each day, never less than thrice each day. Every time visitors or tradespeople visit, the area gets an additional once-over. Rain doesn't stop him. Windy conditions that blow the leaves around won't stop him. Late at night is no impediment.
I hate it. I hate the noise - if it was a simple one-two-three-done it wouldn't be so bad, but the start/stop whine of the electric blower is incessant. He's old; the routine takes about three-quarters of a hour; and having a clean car and a clear drive is obviously important to him (and/or this is a manifestation of cognitive decline).
As long as we put in my number one desired feature for electric blowers... a two position switch that controls the blower speed and a timer on the trigger that; once triggered; remains on for ten seconds. That would force the user to fully commit to the blowing action and get rid of that seemingly unending, undulating racket encouraged by the infinitely adjustable trigger on modern battery-powered electric blowers.
Neighbours. I bet I do something equally annoying. He's probably having a cup of tea with his wife right now plotting his next blowing adventure just to get back at me for whatever I do that annoys him!
(Score: 4, Insightful) by MIRV888 on Friday February 11 2022, @07:27AM
Free money to corporations,
so we can rebuild what we gave away.
Privatize the profits.
Socialize the losses.
(Score: 0) by Anonymous Coward on Friday February 11 2022, @01:01PM (1 child)
AKA the Military-Industrial Complex. Old Dwight Eisenhower knew who the real enemy was.
(Score: 1) by Acabatag on Friday February 11 2022, @09:57PM
In the same speech Ike warned against the rise of a Scientific-Intellectual Complex. Which many seem to ignore.