I disagree that subsidizing R&D to a few companies is going to make us more competitive.
Look at GE or Boeing, it didn’t work out.
What works is a free market. Raise import costs on CPUs and you’ll incentivize building in the US and more companies to form. It costs $0 tax dollars and brings in revenue and high paying jobs. Similar to what we did with car manufacturing.
Tariffs on products we don't have immediate domestic manufacturing capacity for will hurt the economy in the short term, which is not a great move during a period of rising inflation. It's a tough decision though, because it does feel like the better move for the long term.
Congress offloads imposing tariffs to the executive branch, so they'd need to take it back to do that. Otherwise, it's just a countdown for the industry to donate enough to the opposing political party's PACs to get them in office and repeal the looming tariffs.
ie. the current bill only passed because both political parties are fine with giving companies government money.
Intel is still a very large player in chips and dominate in some areas. Even TI which has tons of fabs (not highest end) as well. I don’t really understand this.
TI's fabs are mainly focused on analog, so the requirements are a bit different. IIRC we have 3 130-65nm layers for digital in our mixed signal designs which is roughly on par with a the process technology Intel used in 2005.
I agree tariffs are the right long-term move. I think they just have to be implemented gradually. Just increase it by 4% per year for the next 10 years.
Consider that semiconductor fab has a very high barrier to entry in that the cost and time required to bring it online.
No company presently appears to be poised to build out significant domestic chipmaking capability as far as I know.
I believe that this is where subsidization makes sense, because if we wait for the free market to catch up to the shortfall in supply created by raising import costs, it will ultimately take longer to get the manufacturing capacity online.
Uh I mean yes Boeing is kind of a mess right now, but it's ridiculous to argue that having Boeing based in the US isn't an enormous strategic advantage.
Can you imagine a world where US airlines had to depend on either Airbus or Sukhoi planes? Do you really think that would be better?
I don’t think subsidizing them has been a success. I think tariffs and awarding contracts to the best domestic manufacturers are the way forward. That’s why SpaceX took off, they won contracts.
Boeing effectively lobbied to regulate others out of existence. Bought off who they could, then won grants and contracts because there was no one else.
Can you elaborate? How was Boeing subsidized in this instance and SpaceX not? It's my understanding that it was closer to the other way around. Both Boeing and SpaceX won commercial crew contracts, but Boeing (at the time) had a stronger track record. It was a strategic move by NASA to not put all their eggs in one basket and it worked out well by subsidizing the early dark horse (SpaceX).
Maybe a combination of the approaches. I might actually be in favor of raising import costs if there were a guarantee of some sort that the resulting funds would be applied to jumpstarting domestic chipfab capabilities, specifically to overcoming the initial capital intensive investment required to get started.
> Can you imagine a world where US airlines had to depend on either Airbus or Sukhoi planes? Do you really think that would be better?
Are we going to pretend 737MAX wasn't grounded for a year and half after 2 devastating crashes killing 346 people? I think a world without Boeing would have been clearly better?
>Are we going to pretend 737MAX wasn't grounded for a year and half after 2 devastating crashes killing 346 people? I think a world without Boeing would have been clearly better?
I seriously think you should consider reading the history of air travel, they don't say "regulations are written down in blood" for no reason. There's been many an accident due to a mechanical fault that's eventually remedied.
Its a tragedy but you seriously have to take a breath and think a little. If you want to get into a pissing contest over aircraft manufacturers, the air France 447 (airbus plane) crash was largely caused by the inputs being averaged together. On a Boeing plane, the inputs are synced (one side pushes down, the other side goes down as well). Maybe we should eliminate airbus as well.
Big difference between a mechanical fault and what appears to be regulatory capture from a monopolizing entity causing a very sketchy product to be approved in a safety critical role - which then kills a lot of people.
>Big difference between a mechanical fault and what appears to be regulatory capture
You can't call Airbus's design decision to average the inputs a "mechanical fault", somehow that got approved by regulators.
You are damning Airbus with the same attack you are aiming at Boeing.
The 737-MAX crashes are absolutely horrific and how the FAA responded was terrible. The design was shit and should have had better review, same for Airbus and what caused France 447.
Undoubtedly this is a massive gift from taxpayers to Intel. Hard to see anything good in that.
I also agree that subsidizing R&D isn't a reliable strategy to make us more competitive. Government incentivizes to find solutions works much better.
BUT building high-end fabs is SO very capital intensive, that I think this actually could work out. This might actually be a case where the skids need to be greased a bit (to the tune of billions of dollars) to get them over the hump and back in the game.
Yes it is, there’s always been taxes. Free market typically refers to regulations, free commerce (means ability to buy and sell), etc. that doesn’t mean no taxes, particularly tariffs.
The US federal government was initially only able to make revenue from tariffs. Basically you control the borders, but inside the borders there are no control (ie free market). Once you deal between nations, you cannot have a perfectly free market, else your enemies will eat you. Which imo is what happened the last 50 years.
A tariff is a regulation. Tariffs are the interstate commercial equivalent of Pigovian taxes. When the government puts its thumb on the scale of what should or shouldn't be sold with an extra cost attached, that is not a free market.
Obviously it's less free with tariffs than it would be without, but given the goals of the bill some level of interference is unavoidable. The question is whether to meet those goals with top-down central planning, or by tweaking the incentives and letting the market handle the details on its own. The latter is much more in keeping with free market principles than the former.
Could a market be free without tariffs? Does free not imply competitive?
US policy can't force South Korea or Taiwan to have a free market. No matter what we do, any domestic company has to be able to compete with Samsung and TSC. Because of that, there is no purely "free" global market.
Either you change the rules at the border (tariffs), you match your competitors' strategy (subsidize), or you lose.
No, lettergram is misusing the term 'free market'. Free marketeers don't just want less government enterprise, they also want lower tariffs and light regulation.
Unfortunately, this is true. We have to subsidize the industry because other countries are subsidizing them. We can't compete on a level playing field because there isn't one.
There is no “free market” here.. other players in this field like samsung and tsmc are neck deep in govt funding. The question is are we ok handing over the top spot for such an important technology - most likely the most important technology right now- to foreign manufacturers?
i'm with you that a tariff scheme is better than giving money to large corps, which always puts money in the pockets of the already rich rather than into creating customer surplus and driving innovation. there is a (mostly front-loaded) cost, but there is also a clear net benefit in the long run. the tariff scheme just needs to be graduated (both on and off) and based on industry milestones. if it isn't ramped down as soon as feasible, then it becomes a overly-depended-upon subsidy and a market distortion masking price signals instead.
because we know there is a large and likely growing demand for semiconductors, it's not a very risky bet for us to be subsidizing it via trade restrictions for some finite amount of time.
There is no such thing as "the free market" - it's this mythologized idea that people keep pushing, usually to damage workers so they can ship jobs offshore.
If anything, the more something resembles a "free market", the worse it is - you don't think Intel wouldn't poison the water supply if it juiced the Q4 earnings?
It's always more economical to just dump the toxic waste into the local river. If anything these subsidies even the playing field for people who don't think that's a good idea.
There are absolutely free markets, usually small, niche, some under ground. Just because you don't see it, doesn't mean it doesn't exist. The world, and its economies, are more complex then you, I or anyone on this board can comprehend
Lol the whole point of the US design was to allow the free market internally. Externally it was designed to be protectionist.
I agree “free market” today is insane. Initially the federal governments only source of revenue was tariffs, so it would protect domestic production. This makes the US independent and wealthy.
You can’t have an international “free market” system unless you don’t want to protect domestic production. Which imo is what the US did starting in the 70s until today.
"The General Market's mechanisms are always operating - even when governments like to believe they've overruled it. For guns and bombs and red tape and regulations can only obstruct a consumer's quest for what he wants; they can never destroy his insatiable desire to improve his life and enjoy greater mental well-being.
The self-interest of each human being, his continual search for whatever he wants, is a natural law. Governments can make it difficult for him, but their roadblocks only cause him to seek other avenues in order to get what he wants.
As a result, the General Market will always triumph eventually whenever there's a conflict between consumer desires and government interference. And it's vitally important to understand this. For it's the reassertion of the market's sovereignty as the ruler of the world that's causing today's economic upheavals."
This looks like an appeal to nature, concerning a form of conduct that could just as well be conditioned in individuals.
It also seems to place the government in direct opposition with the wants of consumers, without acknowledging at all the fact that markets are just as often made unfree by the actions of its private actors.
Look at GE or Boeing, it didn’t work out.
What works is a free market. Raise import costs on CPUs and you’ll incentivize building in the US and more companies to form. It costs $0 tax dollars and brings in revenue and high paying jobs. Similar to what we did with car manufacturing.