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posted by janrinok on Monday July 04 2022, @10:16PM   Printer-friendly
from the somebody-wants-more-bribes dept.

U.S. May Lose Silicon Wafer Factory If Congress Can't Fund CHIPS Act, Commerce Secretary Says

U.S. may lose silicon wafer factory if Congress can't fund CHIPS Act, commerce secretary says:

U.S. Commerce Secretary Gina Raimondo told CNBC's Jim Cramer on Monday that she believes GlobalWafers will follow through on its plan to build a silicon wafer factory in Texas — but only if Congress passes funding for the CHIPS for America Act by the time the August recess begins.

"This investment that they're making is contingent upon Congress passing the CHIPS Act [funding]. The CEO told me that herself, and they reiterated that today," Raimondo said in an interview on "Mad Money."

"It has to be done before they go to August recess. I don't know how to say it any more plainly. This deal ... will go away, I think, if Congress doesn't act," she added.

GlobalWafers, a Taiwan-based semiconductor silicon wafer firm, said Monday that it plans to build a facility to produce the component in Sherman, Texas. The facility could create up to 1,500 jobs and produce 1.2 million wafers a month, according to the U.S. Commerce Department.

The CHIPS (Creating Helpful Incentives to Produce Semiconductors) for America Act incentivizes investment in the U.S. semiconductor industry. While it was passed in January 2021, a funding package has not been approved by Congress.

McConnell Warns Dems of Fallout for Reviving Biden Bill

McConnell warns Dems of fallout for reviving Biden bill:

Senate Republican leader Mitch McConnell threatened Thursday to derail a bill designed to boost semiconductor manufacturing in the United States if Democrats revive their stalled climate and social policy package.

The rejuvenation of the Democratic reconciliation package, central to President Joe Biden's agenda, remains a work in progress and is far from certain. But with some signs of progress in the negotiations, McConnell is moving to complicate Democratic plans by warning that Republicans would react by stopping separate semiconductor legislation from moving over the finish line in the coming weeks, despite its bipartisan support.

"Let me be perfectly clear: there will be no bipartisan USICA as long as Democrats are pursuing a partisan reconciliation bill," McConnell tweeted, referring to the shorthand name for the computer chips bill that passed the Senate last year.

Both chambers of Congress have passed their versions of the legislation, which would include $52 billion in incentives for companies to locate chip manufacturing plants in the U.S. Lawmakers are now trying to reconcile the considerable differences between the two bills, but at a pace that has many supporters worried the job won't get done before lawmakers break for their August recess.

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  • (Score: 2, Interesting) by Anonymous Coward on Tuesday July 05 2022, @05:03AM (2 children)

    by Anonymous Coward on Tuesday July 05 2022, @05:03AM (#1258163)

    Two major factors: Cost of labour, and exchange rate.

    Exchange rate first, because that's easier and simpler to explain. The dollar is an expensive currency, so any exports from the USA immediately have a relative purchasing power handicap compared to exports from most of the rest of the world. If the dollar were to tank against most other currencies, US exports would take off like a rocket because suddenly it would be that much easier for everyone else to pay the cost in dollars. This is one of the major downsides to the dollar being a world reserve currency - it's overvalued which increases domestic standard of living, but reduces export competitiveness.

    Cost of labour is the tougher one. Yes, US workers get paid well, and they are paid in dollars. This much is obvious. What then usually comes up is that someone starts hyperventilating about the relative efficiency and productivity of US workers - which is very misleading because while on paper it's true, it's largely true because US employers have been driven by decades of competitive problems to get more from their workers by aggressive investments in assistive technology and automation. If you just look at the output and US worker pay rates, the productivity is indeed very good, but when you look at sunk capital and tooling, the picture darkens which is one reason for the return on investment on foreign investments to be much higher than circumstances would otherwise suggest.

    If the folks in congress were really devoted to making the US competitive, they'd ditch the policy of making the dollar a reserve currency. It's unwinding anyway. Just let it die a natural death, and let the dollar devalue. People would moan and groan about chinese imports costing more, and there would be great instability in China as they scrambled to find other markets (or as they desperately wound the RMB's crank to try to keep it stable compared to the dollar) but american industry would be boosted.

    There are geopolitical arguments on both sides.

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  • (Score: 1) by khallow on Tuesday July 05 2022, @01:17PM (1 child)

    by khallow (3766) Subscriber Badge on Tuesday July 05 2022, @01:17PM (#1258247) Journal

    Two major factors: Cost of labour, and exchange rate.

    There's also factor three - that regulatory burden that Reziac mentioned.

    Cost of labour is the tougher one. [...] If you just look at the output and US worker pay rates, the productivity is indeed very good, but when you look at sunk capital and tooling, the picture darkens which is one reason for the return on investment on foreign investments to be much higher than circumstances would otherwise suggest.

    In other words, your cost of labor factor is actually a cost of capital factor. I assure you that sunk capital and tooling is not labor. And regulatory burden is a big part of the reason that is so expensive (for example, policies that drive up the cost of real estate).

    • (Score: 0) by Anonymous Coward on Tuesday July 05 2022, @02:02PM

      by Anonymous Coward on Tuesday July 05 2022, @02:02PM (#1258254)

      It's both.

      To put it another way: you can get high returns from american labour if you offset the labour cost by reducing the need for it with heavy capital investment, which works well in the USA because of decades of experience doing exactly that. Or, you can avoid the capital investment and deal with the high cost of american labour unameliorated by automation.

      The central point is that the generally paraded idea that american labour is particularly valuable as if somehow the USA were made up of magic productivity dirt is a lie, based on ignoring how the productivity numbers are calculated. Either way a prospective factory gets to decide between a huge money dump today, or a heavy money bleed.

      The other aspect that affects this particular industry is that it is so heavily automated anyway that the trade-off doesn't really exist as a point of comparison with other countries. You can't trade clean rooms and high precision machinery for ten thousand ugandan labourers sweating away for pennies a day. This means that wherever you put it, you're dumping a hell of a lot of money into construction and equipment no matter what you do, and any tinkering you do to the capital investment mix is relatively marginal. The few people (comparatively speaking) that you do need for the job are not easy to find nor replace (and I've known a few - these are very highly trained, skilled people with additional on-the-job training provided).

      You're quite right about the regulatory burden, but of course that is inclined to be lighter in Texas than, say, California.