Chip makers are threatening to scrap future US factories without generous tax breaks

[In It to Win It]

Quartz

The world’s largest semiconductor manufacturers—Intel, Samsung, and the Taiwan Semiconductor Manufacturing Company (TSMC)—have all announced plans to build new chip factories in the US. Everyone is bragging about those plans: American lawmakers say bringing chip manufacturing back onto US soil will strengthen national security, while the chip makers, chastened by this year’s disastrous semiconductor shortage, are diversifying their supply chains to avoid future crises.

But there’s one problem: Who will pay?

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To ratchet up the pressure on US lawmakers, Intel has threatened to scrap plans to build two Arizona chip plants unless Congress passes the CHIPS Act promising $52 billion in subsidies for domestic semiconductor manufacturing. The bill is currently stalled in the House. “We aren’t going to be able to do that without CHIPS funding,” Intel government relations head Al Thompson told Bloomberg.

TSMC made similar threats before breaking ground on a new $12 billion plant in Arizona, which it intends to fund, in part, with money from the CHIPS Act. “Subsidies will be a key factor in TSMC’s decision to set up a fab in the US,” TSMC chairman Mark Liu told Bloomberg in 2020. “Our request is that the state and federal governments together make up for the cost gap between the US and Taiwan.”

Samsung has made its own plans for a new cutting-edge $17 billion factory in the US contingent on subsidies. The company tentatively named Arizona, New York, and Texas as potential sites for the new factory. But in a June regulatory filing with the Texas comptroller’s office, Samsung made clear that tax breaks are “a determining factor” in its location decision. If Texas doesn’t cough up satisfactory tax breaks, Samsung wrote, “the company would likely locate the project in Arizona, New York, or [South] Korea.”

[AllaN01Bear]

1. and yet we cant afford free 2 year community college . we cant afford updated and repaired infastruc

ure. free universal health care. sounds like blackamail to me . call it what it is.and the rs keep complaining were broke ?

[hunter]

2. So it seems we've lost our ability to make these chips ourselves...

... except for the expensive hardened military sort.

[Calculating]

3. I'd even support redirecting some of our defense budget to these companies

Being able to manufacture chips here in the USA is a national security issue. The reason why Taiwan matters so much that we might get in a war over it is THE CHIPS.

[zonemaster]

7. This.

Those companies aren't dumb. They know the exposure that the US has economically, and they're going to leverage that. One of the reasons a lot of the advanced chip manufacturing is overseas is because it's cheaper to manufacture over there. Putting new, ultra-capital-intensive plants over here is not likely to end up with manufacturing that's cheaper in the US than it would be overseas - probably ever. Just like we subsidize other industries that are part of our core national interests and security, this will be another one.

[tirebiter]

4. It's not that unreasonable for the first generation.

Last edited Sat Oct 30, 2021, 01:54 PM - Edit history (1)

Labor needs to be paid well is the real issue, IMO. That and ecological issues can’t be swept aside.

[dalton99a]

5. Latest figures (2019):

[Tetrachloride]

6. Competitive bidding. Bonded contracts.

[msongs]

8. tax intel n samsung imported chips. nt

[ShazamIam]

9. They don't want to pay taxes for off-shore profits and operations so why should they have the

the protection from the U.S. Military and State Department for their off-shore operations. Perhaps our tax dodging corporations need to pay for private military protection and stop using the U.S. taxpayers to protect their profits.

U.S. Capitalism, our largest and most greedy welfare class.