Judging by all the construction I see at the fabs around me, the people I see moving in to get the new jobs working at the fabs or related businesses, I'd say its pretty real to me and those around me.
I've been thinking about moving out to that area. Building these fabs will do amazing things for the local community & economy. It is also likely the most resilient part of the TX power grid...
One of the interesting lessons of the past few years is that supply chain lead times are a thing and policy doesn't just happen because central planning says it should.
So, if there is a bubble in the chip supply pipeline, auto manufacture doesn't happen. If there is undersupply of precursor chemicals it takes a while to make vaccines at scale...
What you are talking about makes me think of the very long lead product that is skilled people. A significant proportion of fab employees are genuinely highly skilled workers who need a specialised physics degree and then additional training in order to optimize yields and things like that.
I think they can build the buildings and buy the machines but unless a lot of Taiwanese are willing to get on a plane and move to the US, it is going to take a long time to be able to replace their labour at the required scale.
The political valence of this could be significant next year. This is a lot of high paying, high-demand jobs in multiple sectors of the economy from just one of 3 major pillars of the administration's agenda.
- treating anyone who isn't "white enough" with dignity and without extreme suspicion of being in the country illegally. Driving in texas and not white enough? You might end up in jail if you don't have sufficient proof on you that you're not "an illegal"
- a reliable power grid, because they petulantly do not want to have to follow federal regulations in how they run said grid (also, electrical pricing that doesn't swing by 4 orders of magnitude or more)
- a well-funded public school system with science-based curriculum to develop their children into a skilled workforce capable of critical thinking, being retrained, etc.
- human rights, healthcare, mental health services, etc which highly skilled technical workers tend to strongly prefer/value (and in case nobody told Texas: there is a long, long history of highly skilled electronics engineers, programmers, etc being LGBTQ, autistic, having mental health needs, etc.)
Anyone who is highly skilled in semiconductors could write their own ticket. Why would they go to Texas?
Surprisingly few people engage with the main points of the article. It is pointed out how much money are spent, but the article is about how profitable those fabs will be. The author is conservative in judgments, but they ask a few questions worth considering, mainly: are the fabs big and efficient enough to offset the slower build, which is also more expensive, for lower volumes of production.
Profitability on the fab level is the wrong metric. Producing semiconductors, like producing vaccines, has large positive externalities. It enables basically the entire rest of the economy to function. These fabs could lose billions, kept alive by government subsidies, and still be a great deal for the country as a whole.
The real question is how unprofitable will it be to remain dependent on Taiwan in the face of the inevitable conflict coming with China. US and Europe based fabs could literally lose money and require subsidies and still net out as less expensive.
I think most of us only can reply to the first paragraph or so, and the first plot, because of the paywall. So most of the conversation is about the headline.
While not specific to chipmaking, Lyn Alden's latest public newsletter on reshoring is, as always, excellent: https://www.lynalden.com/reshoring/
The relevant point is that while the manufacturing portion is real, successful reshoring also requires skilled labor. Skilled labor for fab production is not something US has now and it takes many years to grow; and it is not clear if the US has the desire and the will to foster this growth.
Those are good points, and there's one more. If we want supply chain security, we need to scale up the rest of the ecosystem to go from chips to a packaged products on a shelf. That goes back to your point about fostering the growth... we need to foster the rest of the vertical too.
An easy solution to that is open up skilled worker programs. Importing talent is something the US is generally excellent at, offering a much more dynamic culture, better quality of life, better compensation than most manufacturing hubs and having a sizable ethnic community for most cultures wherever skilled labor is needed. While not universally true by any measure enough people want permanent residency in the US that you could staff almost any nascent industry. Further funding to public universities could establish programs and import professors. Once you’ve seeded the industry mentorship, education, and opportunity fosters a domestic talent pool. Sadly these days nativism is the popular politic.
My question: As an American, why should I work in IC fabrication? I'm competing with low-cost Asians who set a cap on my salary. Work conditions, income, and everything else is worse than SWE.
I switched away from electronics early in my career, and it seems like a strict win.
As much as I believe in on-shoring, I'm not sure those issues can, will, or should be fixed.
For the "can" part, looking at the numbers, it looks possible.
If I take TSMC, they have:
* $73b revenue
* $32b income
* 73000 employees
(2022 numbers from wikipedia)
That's a really high margin, and a really high revenue per employee. This means there is probably room to accommodate for higher wages.
The concern I have revolves more around the US work culture. Employees tend to switch company frequently. Given how critical institutional knowledge is for running these fabs, this is a handicap.
I also cannot shake the feeling that the lack of regulations regarding working conditions might also be detrimental. Better regulations and compensation rules regarding night shifts or on-call for example could improve things greatly and attract far more workers in this field.
They may be forced upon us, regardless of the negatives you highlight, if globalization and free-trade brakes down and/or the international trade-value of the $ goes down making the cost-benefit for domestic sourcing more favorable.
You're right. Why should any American ever work in any job that doesn't favorably compare to SWE salary and working conditions? Everyone should quit their jobs and become a SWE. It's just that simple, right?
When these types of things are funded one always gets the sinking feeling that the money is just getting stolen and/or wasted by savvy insiders who know how to write grants or who know the right people. In fact, I think that's a reasonable assumption and some proof is required to show that it is not the case.
> When these types of things are funded one always gets the sinking feeling that the money is just getting stolen and/or wasted by savvy insiders who know how to write grants or who know the right people.
That's definitely the feeling I get when I see the grants that get given out for Broadband to underserved areas. So much money gets spent on infrastructure for not much actual benefit.
Hopefully these fabs don't follow down that road. If nothing else, it'll be a lot easier to check and see if the objective were achieved, compared to broadband which is inherently much more decentralized.
This is exactly how I feel which is conflicting because my company gains from such funds. My multinational employer, based outside of the US, has been expanding into the US for years due to shrinking growth opportunity in Asia and Europe. In recent All Hands, the NA head has mentioned we’re applying for millions in grants through the IRA which is essentially subsidizing what we were planning to do all along.
I hope this at least means there’s no excuse to cut bonuses in upcoming years though.
Good thing there are $200B worth of proof already. At what point would you be satisfied, if 100% of semi manufacturing took place in the US and 0 chips were manufactured elsewhere the instant the grants were handed out?
They profited offshoring now they will charge you to bring it back so they can profit some more. The wheel will continue to spin and nothing will come from it. Just enjoy the ride.
CNBC's take on the matter [How Texas Became The American Chipmaking Hub](https://www.youtube.com/watch?v=mDamhO7my9A). Although the 17 minute clip is Texas-centric, it still talks about other states.
Yep, near Spruce Pine, NC. My Grandad lived his whole life in that area and would tell stories about mining mica and riding the trains they used to transport it. There's still a bit of the train system left, at a local amusement park, Tweetsie Railroad.
America's basic socioeconomic structual model is highly flawed and any company wanting to do manufacturing here will see obvious disadvantages compared to Europe or Asia.
1) Employers are responsible for employee health coverage, inflating employee costs by a significant degree. The rationale for this model among the investor class is that it makes employees dependent on their employer and limits the power of unions, but for example in Germany, there's free state-supplied health care (paid for by higher taxes on individual and corporate profits).
2) Four decades of neoliberal trade policy and corporate profit maximization have created a situation of fragile global supply chain dependence and a lack of skilled experienced labor in many manufacturing sectors. High-skill manufacturing jobs have been replaced with low-skill service jobs and the brain drain into the financial sector has left the industrial sector in second place.
3) Construction and operation of new manufacturing facilities relies on a robust domestic infrastructure system, but American infrastructure (railroads, electricity grids, ports, etc.) is woefully decrepit in many areas and lags behind China and Europe. Again the reason is nobody wants to pay for it, and the issue is not 'overregulation' it's that it would require higher taxes and corrupt government contractors divert government funds into their own pockets instead of into the projects, resulting in constant cost overruns and low-quality outputs (reminscent with what went on with Iraq and Afghanistan reconstruction contracts).
It turns out worshipping at the feet of Milton Friedman & Co. wasn't such a good idea after all.
There’s a lot of discussion on this thread about how US workers (even outside extreme CoL hubs) are just too expensive to do cutting-edge semiconductor fabrication.
Why? Ease up a bit on immigration for skilled workers, subsidize however many CHIPs Acts it takes to get the motor running, export a higher standard of living for skilled workers thereby, and margins on the most elite manufacturing sector on earth stay…really friggin high?
How productive does the global economy have to get before paying people well stops being a non-starter?
We didn’t used to fuck around on this: Bell Labs, Western, DARPA, the Apollo Program. Shareholders got a solid, low-beta return, workers got benefits and an education for their kids, and technology improved at an explosive rate.
My take is it not the skill or even the cost of labor. The biggest issues is it is easier to find skilled people in Asia willing to work late and long hours to keep the machines running 24/7. The only way to make money is to keep these machines running as close to 100% efficiency 24/7. It isn't just one company, it is the whole chain of suppliers/manufactures with fast turn around time that gives Asia a upper hand.
I live in a relatively small city that has a 30B phased wafer fab project under way, and an another separate 5B wafer fab project underway, and plans for at least one more in the next couple years.
Anecdotal, of course, but there's some real things being built for sure.
I don't think any of this onshoring, if it ever actually happens, is going to be a net positive for the areas that host the fabs. TSMC is already sending hundreds of their own workers over to America to work on stuff because they aren't happy with the local workforce, I don't see any reason why this will change any time soon. The US is just going to be a place they send their workers to fab chips in plants that got sweet cost/tax breaks, and that they don't care at all about polluting the local environment.
What's the end goal here? To onshore only chip production to the US? Or are we talking about onshoring entire electronics supply chains?
How about all the other stuff that's required besides the dies themselves... chip substrates? packaging? Passive components? Onshore PCB manufacturers (that are actually affordable)?
We build 10 to 12 layer boards with BGA x86 CPUs. There's a MASSIVE premium on trying to have complex PCBs made in the US. The last time I looked I found a lot of PCB mfgs in Mexico, but they're seemingly owned by the Chinese.
How much of this chipmaking renaissance can be compared to the American Factory Netflix documentary having some of the same challenges? I understand that shows the difference in culture more than anything but underneath it also speaks of efficiency which is of high importance.
We've got another $50 billion. And another after that. And another after that. As necessary.
See: Ukraine v Russia.
$50 billion ain't what it used to be (and Russia is an economic joke in scale compared to the US, we can shovel billions of dollars into that war endlessly). Its just that the US and China have gotten so massive compared to their former peers, that we can fund at a relative gigantic level quite easily. The US economy is now 50% larger than the EU economy, and six times larger than Japan. US GDP per capita is a shocking $80,000 - well over double that of both the EU and Japan (soon to be double that of France and Britain; or closing in on France and Britain combined to put it another way). $80,000 is equal to the combined GDP per capita of France + Japan.
Things that are difficult for the EU to fund, like $50 billion for chips, are now comparatively easy for the US (or China) to fund. We're only funding the CHIPS Act because that sum is no longer a huge deal to the US. That's a little toy program that Biden was allowed to play with precisely because it's not that big of a deal financially. A medium deal would be $200-$300 billion (eg helping Ukraine defeat Russia across several years); a big deal is $500b-$1 trillion (infrastructure level).
Germany's economy hasn't grown on an inflation adjusted basis in decades. The same is largely true of all of Europe's biggest economies.
US GDP in 2008: $14.7 trillion. Now: $26.8 trillion.
Germany GDP in 2008: $3.7 trillion. Now: $4.3 trillion. And that is a mirror of what has been going on in Europe broadly (with a few exceptions eg the Baltics and Ireland). Since 2008 the US has added economy equal to Germany + France + Britain + Italy.
$50 billion would have been a big deal for the US, two decades ago.
I'm excited to see what happens with Micron in Clay and seeing how far they're committing (and putting their money where their mouth is already) gives me a lot of hope to see it through.
It's interesting to see that, in the end, the domestic manufacturing guys were right but in a different way. The biggest blockers to America presently are ossified construction and manufacturing. Chip fabs delayed due to local red tape. Ammo factories cannot expand manufacturing because they are now historic buildings. Fascinating.
[+] [-] vel0city|2 years ago|reply
https://www.ti.com/about-ti/company/ti-at-a-glance/manufactu...
https://news.ti.com/blog/2022/09/29/tis-new-300-millimeter-w...
https://dallasinnovates.com/finisar-considers-3-billion-semi...
https://www.dallasnews.com/business/jobs/2022/12/07/sherman-...
https://www.samsung.com/us/sas/Taylor
> Texas has led the country in semiconductor exports for 11 straight years, and has shown a commitment to expanding the industry.
https://www.texastribune.org/2022/07/26/texas-chips-act-semi...
[+] [-] tylerfontaine|2 years ago|reply
Definitely a lot of heavy construction.
[+] [-] bob1029|2 years ago|reply
[+] [-] api|2 years ago|reply
[+] [-] shubb|2 years ago|reply
So, if there is a bubble in the chip supply pipeline, auto manufacture doesn't happen. If there is undersupply of precursor chemicals it takes a while to make vaccines at scale...
What you are talking about makes me think of the very long lead product that is skilled people. A significant proportion of fab employees are genuinely highly skilled workers who need a specialised physics degree and then additional training in order to optimize yields and things like that.
I think they can build the buildings and buy the machines but unless a lot of Taiwanese are willing to get on a plane and move to the US, it is going to take a long time to be able to replace their labour at the required scale.
[+] [-] laidoffamazon|2 years ago|reply
[+] [-] KennyBlanken|2 years ago|reply
- treating anyone who isn't "white enough" with dignity and without extreme suspicion of being in the country illegally. Driving in texas and not white enough? You might end up in jail if you don't have sufficient proof on you that you're not "an illegal"
- a reliable power grid, because they petulantly do not want to have to follow federal regulations in how they run said grid (also, electrical pricing that doesn't swing by 4 orders of magnitude or more)
- a well-funded public school system with science-based curriculum to develop their children into a skilled workforce capable of critical thinking, being retrained, etc.
- human rights, healthcare, mental health services, etc which highly skilled technical workers tend to strongly prefer/value (and in case nobody told Texas: there is a long, long history of highly skilled electronics engineers, programmers, etc being LGBTQ, autistic, having mental health needs, etc.)
Anyone who is highly skilled in semiconductors could write their own ticket. Why would they go to Texas?
[+] [-] gostsamo|2 years ago|reply
[+] [-] ProjectArcturis|2 years ago|reply
[+] [-] User23|2 years ago|reply
[+] [-] bee_rider|2 years ago|reply
[+] [-] ptero|2 years ago|reply
The relevant point is that while the manufacturing portion is real, successful reshoring also requires skilled labor. Skilled labor for fab production is not something US has now and it takes many years to grow; and it is not clear if the US has the desire and the will to foster this growth.
[+] [-] bonestamp2|2 years ago|reply
[+] [-] fnordpiglet|2 years ago|reply
[+] [-] frognumber|2 years ago|reply
I switched away from electronics early in my career, and it seems like a strict win.
As much as I believe in on-shoring, I'm not sure those issues can, will, or should be fixed.
[+] [-] kakwa_|2 years ago|reply
If I take TSMC, they have:
* $73b revenue
* $32b income
* 73000 employees
(2022 numbers from wikipedia)
That's a really high margin, and a really high revenue per employee. This means there is probably room to accommodate for higher wages.
The concern I have revolves more around the US work culture. Employees tend to switch company frequently. Given how critical institutional knowledge is for running these fabs, this is a handicap.
I also cannot shake the feeling that the lack of regulations regarding working conditions might also be detrimental. Better regulations and compensation rules regarding night shifts or on-call for example could improve things greatly and attract far more workers in this field.
[+] [-] danpalmer|2 years ago|reply
More than Asia, but same order of magnitude, maybe even the same ballpark for some areas.
I expect most chip design will still be done in Asia and those are the high paying jobs.
[+] [-] mcntsh|2 years ago|reply
[+] [-] PKop|2 years ago|reply
[+] [-] slingnow|2 years ago|reply
/s
[+] [-] aj7|2 years ago|reply
[+] [-] javajosh|2 years ago|reply
[+] [-] nordsieck|2 years ago|reply
That's definitely the feeling I get when I see the grants that get given out for Broadband to underserved areas. So much money gets spent on infrastructure for not much actual benefit.
Hopefully these fabs don't follow down that road. If nothing else, it'll be a lot easier to check and see if the objective were achieved, compared to broadband which is inherently much more decentralized.
[+] [-] bitsage|2 years ago|reply
I hope this at least means there’s no excuse to cut bonuses in upcoming years though.
[+] [-] merman|2 years ago|reply
[+] [-] epistasis|2 years ago|reply
It's been a long time since the US did industrial policy.
[+] [-] barelyauser|2 years ago|reply
[+] [-] addfgionio|2 years ago|reply
[+] [-] foofoo4u|2 years ago|reply
[+] [-] a_wild_dandan|2 years ago|reply
[+] [-] isykt|2 years ago|reply
The renaissance is real, or is about to be.
[+] [-] CoastalCoder|2 years ago|reply
I just assumed they had processes for eliminating any and all contaminants.
[+] [-] sudosteph|2 years ago|reply
[+] [-] SoylentYellow|2 years ago|reply
[+] [-] mbfg|2 years ago|reply
[+] [-] photochemsyn|2 years ago|reply
1) Employers are responsible for employee health coverage, inflating employee costs by a significant degree. The rationale for this model among the investor class is that it makes employees dependent on their employer and limits the power of unions, but for example in Germany, there's free state-supplied health care (paid for by higher taxes on individual and corporate profits).
2) Four decades of neoliberal trade policy and corporate profit maximization have created a situation of fragile global supply chain dependence and a lack of skilled experienced labor in many manufacturing sectors. High-skill manufacturing jobs have been replaced with low-skill service jobs and the brain drain into the financial sector has left the industrial sector in second place.
3) Construction and operation of new manufacturing facilities relies on a robust domestic infrastructure system, but American infrastructure (railroads, electricity grids, ports, etc.) is woefully decrepit in many areas and lags behind China and Europe. Again the reason is nobody wants to pay for it, and the issue is not 'overregulation' it's that it would require higher taxes and corrupt government contractors divert government funds into their own pockets instead of into the projects, resulting in constant cost overruns and low-quality outputs (reminscent with what went on with Iraq and Afghanistan reconstruction contracts).
It turns out worshipping at the feet of Milton Friedman & Co. wasn't such a good idea after all.
[+] [-] adamanz|2 years ago|reply
[+] [-] badrabbit|2 years ago|reply
[+] [-] benreesman|2 years ago|reply
Why? Ease up a bit on immigration for skilled workers, subsidize however many CHIPs Acts it takes to get the motor running, export a higher standard of living for skilled workers thereby, and margins on the most elite manufacturing sector on earth stay…really friggin high?
How productive does the global economy have to get before paying people well stops being a non-starter?
We didn’t used to fuck around on this: Bell Labs, Western, DARPA, the Apollo Program. Shareholders got a solid, low-beta return, workers got benefits and an education for their kids, and technology improved at an explosive rate.
[+] [-] Dork1234|2 years ago|reply
[+] [-] tylerfontaine|2 years ago|reply
Anecdotal, of course, but there's some real things being built for sure.
[+] [-] qbasic_forever|2 years ago|reply
I don't think any of this onshoring, if it ever actually happens, is going to be a net positive for the areas that host the fabs. TSMC is already sending hundreds of their own workers over to America to work on stuff because they aren't happy with the local workforce, I don't see any reason why this will change any time soon. The US is just going to be a place they send their workers to fab chips in plants that got sweet cost/tax breaks, and that they don't care at all about polluting the local environment.
[+] [-] c_o_n_v_e_x|2 years ago|reply
How about all the other stuff that's required besides the dies themselves... chip substrates? packaging? Passive components? Onshore PCB manufacturers (that are actually affordable)?
We build 10 to 12 layer boards with BGA x86 CPUs. There's a MASSIVE premium on trying to have complex PCBs made in the US. The last time I looked I found a lot of PCB mfgs in Mexico, but they're seemingly owned by the Chinese.
[+] [-] edgyquant|2 years ago|reply
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] boringg|2 years ago|reply
[+] [-] adventured|2 years ago|reply
We've got another $50 billion. And another after that. And another after that. As necessary.
See: Ukraine v Russia.
$50 billion ain't what it used to be (and Russia is an economic joke in scale compared to the US, we can shovel billions of dollars into that war endlessly). Its just that the US and China have gotten so massive compared to their former peers, that we can fund at a relative gigantic level quite easily. The US economy is now 50% larger than the EU economy, and six times larger than Japan. US GDP per capita is a shocking $80,000 - well over double that of both the EU and Japan (soon to be double that of France and Britain; or closing in on France and Britain combined to put it another way). $80,000 is equal to the combined GDP per capita of France + Japan.
Things that are difficult for the EU to fund, like $50 billion for chips, are now comparatively easy for the US (or China) to fund. We're only funding the CHIPS Act because that sum is no longer a huge deal to the US. That's a little toy program that Biden was allowed to play with precisely because it's not that big of a deal financially. A medium deal would be $200-$300 billion (eg helping Ukraine defeat Russia across several years); a big deal is $500b-$1 trillion (infrastructure level).
Germany's economy hasn't grown on an inflation adjusted basis in decades. The same is largely true of all of Europe's biggest economies.
US GDP in 2008: $14.7 trillion. Now: $26.8 trillion.
Germany GDP in 2008: $3.7 trillion. Now: $4.3 trillion. And that is a mirror of what has been going on in Europe broadly (with a few exceptions eg the Baltics and Ireland). Since 2008 the US has added economy equal to Germany + France + Britain + Italy.
$50 billion would have been a big deal for the US, two decades ago.
[+] [-] kotaKat|2 years ago|reply
[+] [-] duxup|2 years ago|reply
[+] [-] renewiltord|2 years ago|reply