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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.
(Score: 2) by Thexalon on Tuesday July 05 2022, @11:49AM (3 children)
There's another piece of the puzzle that I think is very relevant here: Negotiation tactics.
How often does this happen:
Corporate executives: "Sure, we'd love to put / keep our corporate headquarters / factory / office in your city, but we can't afford it unless you give us a tax break, *wink wink*."
Mayor: "Oh, right. Yes, we need this tax break to bring jobs to our area, I understand. Here you go!"
Executives: "Excellent, it was nice doing business with you. We'll remember that in your re-election campaign. Oh, and here's some campaign contributions for you."
And the number of jobs is never what was promised, and the tax breaks somehow never go away, and ordinary citizen's taxes have to increase or city services have to be cut to deal with the shortfall, but it worked out for both the mayor and the executives, so who cares?
Because anything that a company might do will be more profitable if they don't have to pay taxes on it, any company with the power to do this maneuver will at least attempt it.
So when a company says that they need government incentives to do a thing they know the government would like them to do, what they're asking for is the power to set their own effective tax rates. And they're probably going to get what they want. And if you don't believe me, just look at what happened when Amazon asked governments to put in bids for their HQ2.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 0) by Anonymous Coward on Tuesday July 05 2022, @02:05PM (2 children)
The real lesson that I remember from the HQ2 saga was that NYC was all set to get some of the action, until AOC started squawking about the usual big-biz-is-the-devil stuff, and then Amazon said: "Hell no, we've seen this movie before in Seattle, we're out."
It's not all about the tax rates, it's also about the degree of naked hostility on the ground.
(Score: 0) by Anonymous Coward on Wednesday July 06 2022, @01:11PM (1 child)
No, it was about "why should Amazon get tax breaks when `Mom & Pop Coffee Shop` doesn't". Amazon promised to bring ten "gazillion jobs" into an area (that already had help-wanted signs on most retail shops) for the "low, low cost" of "I don't need to contribute to the economy where i make my money". Being a resident of the local area, I found that the talking-points in the media didn't line up with what the people in the area actually wanted - which was "ok, build your stupid headquarters, but don't increase my property taxes to pay for it". What ended up happening was a smaller-than-planned office, with no "perks" from the government, which never met their own hiring estimates (sound familiar)?
We were all very aware of the Foxconn fiasco in Wisconsin, and we'd rather not fund that kind of nonsense here
(Score: 0) by Anonymous Coward on Wednesday July 06 2022, @03:26PM
Yeah, there are the shenanigans about tax negotiation as well, and of course the logical position for a jurisdiction is: "Sorry you feel that way, you obviously wouldn't like it here and shouldn't move here."
But the financial calculation is far from the only one, which is what NYC's experience illustrated. Bear in mind that Amazon is headquartered in Seattle, and that is by no means a cheap city in which to do business. Sheer headline expense wasn't what drove Amazon to look elsewhere; it was also the sheer, naked hostility from the local government. AOC just made sure that it was crystal clear that they could expect more of the same in NYC, with the immediate result that regardless of local costs, NYC suddenly dropped off the list like rain from a gutter. Local office? Sure. HQ2? Not gonna happen.
An analogous case just came up with Newsom trying to woo californians back from Florida. The chances of people who left California because of its current situation, to go to Florida, wanting to go back is quite small. Floridian officials looked amused, not concerned.