I do believe that the Chip subsidy to Intel benefits Intel, the United States, and the free world. I say this based on long experience as a long time U.S. trade negotiator, student of Asian industrial policies for semiconductors, and author of several books on the semiconductor industry and the industrial policies of Japan, South Korea, Taiwan, and Singapore.
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Subject: [Salon] Trump and Chip Makers Including Intel Seek Semiconductor Self-Sufficiency - WSJ
Warren shared this today while I was preparing the email below:
Money Quote: "Any buyer of TikTok will presumably have to be acceptable to a future Trump administration. So it isn’t surprising that Trump’s former Treasury secretary, Steven Mnuchin, said last week that he was organizing a bid.
"As Bill Bishop, who writes a newsletter about China, wrote, “You could not write a better storyline for the Ministry of Propaganda if you tried.”
Yesterday it was reasonably asked here, by Warren, in response to this article: https://asia.nikkei.com/Business/Technology/TSMC-Intel-suppliers-delay-U.S.-plants-on-surging-costs-labor-crunch?del_type=1&pub_date=20240319120000&seq_num=3&si=22ea83e4-6174-491c-acec-f884e8773a23:
"What are we giving up to bribe intel to produce in US? Does anyone really believe that this subsidy and related technical repression benefits the US or the world?
"The U.S. awarded nearly $20 billion in incentives to the chip giant Intel to manufacture cutting-edge semiconductors in the country. The announcement, which is likely to be the largest amount given to a single company as part of the U.S.’ CHIPS and Science Act, is part of a broad-ranging Biden administration push to secure domestic chipmaking capabilities while restricting China’s access to advanced semiconductor technology. U.S. officials are separately also considering blacklisting Chinese chip firms tied to tech giant Huawei’s efforts to develop its own semiconductors, Bloomberg reported, and are pressing allies to tighten their own restrictions on dealing with Beijing. “Failure is not an option,” U.S. Commerce Secretary Gina Raimondo told reporters.”
With an added remark by Chas: "Meanwhile TSMC's project in Arizona seems to be foundering. The case for it was always political rather than economic. It may be nonviable.”
This from my observations as a temporary (winter) resident of what is more and more a “Restricted Military Area” of data storage centers and chip “foundries,” in addition to its vast “War Preparation Zones” going back to WW II, which the “Traditional Conservative” USAF MG Goldwater presided over in turning into a vast “military camp”; Arizona.
What follows is a brief "genealogy” of the “Military Industry” origins of this program, originating under the exalted "Teflon Don,” Trump, and the hysteria generated by his "China Hawk New Right Realist and Restrainer” allies. Instead of an “econoministic” analysis and criticism of these developments as “national industrial policy” and bad economics, which I generally agree with as well, however, though recognizing it was such extreme “global free market” thinking, principally to begin with by “free trade” Republicans which drove so much export of US business overseas in pursuit of lower labor costs to begin with, my criticism is of the ever-increasing militarization of the US. Economically, culturally, and in foreign relations. Which the Heritage Foundation says, in effect, echoing Universal Fascist Michael Ledeen: “Faster, please!"
Having necessarily adopted Arizona as a place to escape MN winters, as I have close family members here, notwithstanding my qualms about the water shortage issues in the Southwest, and its “Conservative” political atmosphere, to include its hawkish Democrats, I’ve paid some attention to these plants. And the massive data storage facilities here, and the “infrastructure” being built here to house the additional workers, and the influx as well from California, etc., not to mention the massive sports facilities here, all draining what available water there is on a massive scale. I don’t doubt there’s a water shortage here as it is visible in the water levels of Lake Mead which provides much of the water to the Southwest, and Mexico, we’re told.
But that hasn’t held up the USG doing all it can to build these plants here in the SW, with the latest example Biden’s announcement in nearby Chandler, AZ yesterday of an additional $8.5 billion in grants to Intel to expand:https://www.nytimes.com/2024/03/20/us/politics/chips-act-grant-intel.html
With this a link in the above article: https://www.nytimes.com/2023/02/28/business/economy/chips-act-childcare.html
BLUF: "Gina Raimondo, the secretary of commerce, describes the program as foremost a national security initiative."
So a Minnesota friend also down here, a peace activist, and avid hiker as a leftover pastime from his mountain climbing days when he was younger whom I’ve hiked with, suggested we go over to the Intel “foundry” here yesterday to see what we might of Biden’s visit. His objection to Biden’s visit included to its secrecy, and to his exclusive Intel audience with his announcement, instead of a more public audience. So we knew it was unlikely we might be allowed to hear the announcement in person but it was an opportunity to at least see the plant. Which we did, and which is massive! Of course. And obvious to anyone who “thinks more thickly,” and not just “thinly,” did not just begin such massive expansion under Biden. As neither current wars, like in Ukraine and Gaza/West Bank, nor massive chip plants as Intel’s is, and TSMC is intended as, are precipitated to where each is now, in a span of time only beginning with Biden taking office.
The SW is even more now something like a “Restricted Military Area,” with its massive data storage and related digital military purposes, added to its immense military “Special Use Airspace” areas. Which not only are “controlled airspace areas,” but also “War Fighting Preparation Zones,” beyond anything any other country has today, or at least until recently, as other countries become aware that we’re serious about U.S. global military control. As repeatedly expressed in our “National Security Strategy” documents. Especially Trump’s, which took a leap forward in articulating U.S. military aggression as a “national interest,” justifying U.S. aggression. But here’s just a snippet of the immense territory held under military jurisdiction by the US military and therefore, its intell agencies:
So much of what Trump began, was "credited” to (blamed on) Biden. Such as the mRNA vaccine Trump initiated development of, Covid shutdowns, and US war provocations, leading directly to Feb 24, 2022, and October 7, 2023. And now “Semiconductor Self-Sufficiency" as a national (security) industrial policy:
BLUF from article below:
"In parallel with efforts to speed up the U.S.’s chip industry, the Trump administration is also aiming to slow China’s down. China hawks have made headway in recent weeks in advancing more restrictions, including removing an exemption that had allowed U.S. companies to ship microchips and other advanced products to Chinese customers without seeking an export license from the Commerce Department, provided they weren’t destined for military use."
Updated May 11, 2020 at 11:19 am ET
Trump and Chip Makers Including Intel Seek Semiconductor Self-Sufficiency
Pentagon says coronavirus pandemic underscores vulnerability from reliance on Asian factories
A new crop of cutting-edge chip factories in the U.S. would reshape the industry and mark a U-turn after decades of expansion into Asia by many American companies eager to reap investment incentives and take part in a robust regional supply chain.
The coronavirus pandemic has underscored longstanding concern by U.S. officials and executives about protecting global supply chains from disruption. Administration officials say they are particularly concerned about reliance on Taiwan, the self-governing island China claims as its own, and the home of
the world’s largest contract chip manufacturer and one of only three companies capable of making the fastest, most-cutting-edge chips.
Trump administration officials are in talks with the largest American chip maker, and with TSMC, to build factories in the U.S., according to correspondence viewed by The Wall Street Journal and people familiar with the discussions.
“We’re very serious about this,” said Greg Slater, Intel’s vice president of policy and technical affairs. Mr. Slater said Intel’s plan would be to operate a plant that could provide advanced chips securely for both the government and other customers.
“We think it’s a good opportunity,” Mr. Slater said. “The timing is better and the demand for this is greater than it has been in the past, even from the commercial side.”
TSMC has been talking to officials at the Commerce and Defense departments as well as to
Inc., one of its largest customers, about building a chip factory in the U.S., said people familiar with the conversations.
In a statement, TSMC said it is open to building an overseas plant. “We are actively evaluating all the suitable locations, including in the U.S., but there is no concrete plan yet,” the company said.
Some U.S. officials are also interested in trying to help South Korea’s
Co., which already operates a chip factory in Austin, Texas, to expand its contract-manufacturing operations in the U.S. to produce more advanced chips, according to a person familiar with the matter.
“The administration is committed to ensuring continued U.S. technological leadership,” a senior official said in a statement. “The U.S. government continues to coordinate with state, local and private-sector partners as well as our allies and partners abroad, to collaborate on research and development, manufacturing, supply-chain management, and workforce development opportunities.”
Bob Swan, Intel’s chief executive, sent a letter on April 28 to Defense Department officials expressing his company’s readiness to build a commercial foundry—an industry term typically referring to a chip factory that can make products on contract for other companies—in partnership with the Pentagon.
Strengthening U.S. domestic production and ensuring technological leadership is “more important than ever, given the uncertainty created by the current geopolitical environment,” Mr. Swan wrote in the letter, viewed by the Journal.
“We currently think it is in the best interest of the United States and of Intel to explore how Intel could operate a commercial U.S. foundry to supply a broad range of microelectronics,” the letter said.
A Defense Department official sent Intel’s letter to Senate Armed Services Committee staffers the next day, according to an email viewed by the Journal, calling the proposal an “interesting and intriguing option” for a U.S. company to lead an “on-shore, commercial, state of the art” chip foundry.
Talks over chip-factory development plans have been under way for some time but have gained momentum recently as concern mounted about the fragility of the Asian supply chain and the defense industry’s access to domestically sourced advanced chips.
Taiwan, China and South Korea “represent a triad of dependency for the entire U.S. digital economy,” said an influential 2019 Pentagon report on national-security considerations regarding the supply chain for microelectronics.
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“Taiwan, in particular, represents a single point-of-failure for most of the United States’ largest, most important technology companies,” said the report, written by Rick Switzer, who served as a senior foreign-policy adviser to an Air Force unit. He concluded that the U.S. needs to strengthen its industrial policies to address the situation.
Chip makers also sense an opportunity to bring in funding for an industry increasingly seen as a national-security priority in the midst of stimulus efforts tied to the coronavirus pandemic, according to people familiar with their strategy.
While U.S. government leaders and technology executives broadly agree the U.S. needs to improve its capability to make chips domestically, the current landscape is complex and decision makers don’t share a unified view of how precisely to move forward.
The U.S. already has dozens of semiconductor factories, but only Intel’s are capable of making the fastest and most-power-efficient chips, those branded as having transistors 10 nanometers or smaller. Intel, however, mostly makes silicon for its own products.
Among foundries that make chips on contract for other companies, only TSMC in Taiwan and Samsung in South Korea make chips at 10 nanometers or lower.
Many U.S. chip companies, including
Inc.,
Corp.,
Inc., Xilinx Inc. and
Inc., rely on TSMC to manufacture many of their most advanced products. Intel also makes chips with TSMC, according to TSMC’s 2019 annual report.
Intel’s competitors in the chip business could be wary of contracting business to Intel unless the company proved its capabilities in the business and found a way to ensure the protection of its rivals’ technology in the process.
There are also divisions at the Pentagon, where some officials are more focused on solving the department’s own needs, while others are looking at the issue as a broader supply-chain problem, according to people involved in the discussions.
“The Department closely tracks domestic manufacturing and production of all defense sectors critical to our supply chains, and microchips is certainly one that will continue to play a key role in most, if not all, major defense programs,” said Lt. Col. Mike Andrews, a Pentagon spokesman.
The Semiconductor Industry Association, a trade group, is conducting its own study on domestic chip production that is expected to recommend the U.S. government spend tens of billions of dollars on a new fund to propel domestic chip investment, according to a person familiar with the matter.
“Semiconductors are fundamental to America’s economic resilience and national security, so it’s a no-brainer for the U.S. to invest more in our domestic chip sector,” said John Neuffer, SIA’s president and chief executive. “China and others are investing heavily, and the U.S. needs to do more to rise to the challenge to play to win.”
Another proposal that is supported by SEMI, an industry group representing semiconductor manufacturing equipment makers, involves giving tax credits to chip makers when they purchase and install equipment at factories in the U.S.
Other studies addressing support for more domestic chip-making are under way at the Pentagon, and the State and Commerce departments have also been looking at the issue, according to people familiar with the matter.
“There’s a lot of discussion going on about what the government needs to do to have a secure supply of microelectronics, and is it a public-private partnership thing, is it a tax credit, is it straight cash or is it a combination of those things?” said another person familiar with the discussions under way.
U.S. chip makers have backed off on building cutting-edge chip factories domestically in recent years largely because of their cost, which can surpass $10 billion, and a rapid development cycle that means the benefits of being ahead don’t last long.
Meanwhile, other governments, including China, Taiwan, Singapore and Israel, have poured generous financial support into developing their own domestic manufacturing, paying for factory buildings and subsidizing expensive equipment.
China’s heavy investment in its semiconductor industry has been a particular concern to both U.S. manufacturers and the Pentagon, since advanced chips are needed for modern military systems. Among its splashiest outlays, China last October set up a $29 billion fund to propel the industry.
In parallel with efforts to speed up the U.S.’s chip industry, the Trump administration is also aiming to slow China’s down. China hawks have made headway in recent weeks in advancing more restrictions, including removing an exemption that had allowed U.S. companies to ship microchips and other advanced products to Chinese customers without seeking an export license from the Commerce Department, provided they weren’t destined for military use.
The Commerce Department is also considering a rule aimed at cutting off Chinese telecom giant Huawei Technologies Co.’s ability to manufacture chips at TSMC, which would potentially be a crushing blow. President Trump has approved the move, but Commerce Department officials are still working through preliminary drafts, according to people familiar with the matter.
China is responding to the pressure by warning American companies they will face consequences in China if U.S. restrictions hamper the country’s key economic drivers. Chinese officials emphasized that message in meetings last month with large American technology companies, after delivering similar warnings last June, according to people familiar with the matter.
Write to Asa Fitch at asa.fitch@wsj.com, Kate O’Keeffe at kathryn.okeeffe@wsj.com and Bob Davis at bob.davis@wsj.com
