Yeah, but people could work at Intel in Ireland for a long time, ditto for Google in Ireland/Switzerland etc. Knowledge transfer happens but the people it goes to stay with the US firms. Or they leave but aren't interested in competing with their old haunts and go to do something else.
It could depend on you time line. If you're thinking 20 - 30 years, then it may not be a bad idea. Get some US company to build a plant and run a plant, then hope that at some point some of the employees will want to start their own companies, using the knowledge they've gained working at Intel.
EU can ban trade on semiconductors and stop it from exporting at any point, effectively avoiding shortages in case of wars pandemics etc much like the US and later EU did for vaccines.
Even though US doesnt export vaccines due to a ban, Pfizer has a plant in the EU making and selling the vaccine in the EU.
Yes, if you are ready to invest like 10-20 bln, I'm sure they'll offer you subsidies. Subsidies are not upfront payments from the govt. They are usually reduced taxes, etc. So if you are going to invest and do something that will raise a 10 bln tax bill, maybe they'll consider your offer as well.
Everybody is currently throwing money at chip makers as the world finally realizes how dependent it became on chip production in Asia. Intel is just smart and wants to get subsidies in the US and in the EU.
There already are several chip making fabs in the EU, btw.
With that money we could just build our own fab, we don't need intel for that. Are the european citizens supposed to pay for intel's fab? Do we get the chips for free then?
What the heck is up with these companies? Capitalism means they have to spend their own capital, not the publics.
Not that I support government subsidies but $10 billion would not build you a 5nm fab. Heck, it wouldn't even get you a 14nm, with the rate the Chinese are sucking up all the used fab equipment.
Secondly, TSMC and Samsung use EUV for only a few chip layers, and use DUV immersion for the rest, so both types of systems are needed at and below 7nm. The number of mask layers increases as nodes decrease.
A 28nm IC has up to 50 layers, a 14nm/10nm has 60 layers,
A 7nm IC has 80 layers, and
A 5nm IC has 100, depending on manufacturer.
TSMC uses EUV for just 12 layers at 7nm vs. 68 DUV layers. TSMC uses EUV for 22 layers at 5nm vs 78 DUV layers. Immersion DUV is critical to make these chips, and ASML is losing share to Nikon.
That would be nice. It would be true if governments reacted to the loss of 10 bn in taxes by reducing spending in other areas to compensate. In reality what they will do is raise taxes on people to compensate OR print money/borrow, which is a direct equivalent.
If the EU was phrasing it as "we'll give Intel 10bn in subsidies and eliminate departments and programmes X/Y/Z to pay for it" then appetite for this sort of thing would rapidly evaporate, but of course, they won't do so.
Nothing wrong with printing more money, how else would they keep that inflation going?
Edit: not joking/sarcastic. The amount of currency in circulation needs to increase or there's no inflation. And inflation is considered necessary for people to not just sit on their treasure chests and not spend.
Paradoxically, hardware is one of the most deflationary domains (like, 50% yearly performance increase per dollar spent) , yet it's still crazy in demand.
Why would they have to raise taxes on people to compensate?
The amount of economic activity required for Intel to even generate $10bn in taxes is massive. The firms Intel employs to build the $20+bn fab would not have the same tax break, nor the employees involved in the construction. Nor the employees, suppliers, and various vendors and logistics companies that would be involved in the running of the fab once it is operational.
So in additional to the strategic political goal of having an advanced current-gen fab on European soil, you also get
– The "second party" taxation that occurs to the parties on the receiving end of the capital Intel is expending in the building and running of the fab. While this is a form of "taxes on people to compensate", it doesn't necessitate raising taxes to offset the Intel subsidy. Since the economic activity is a direct response to the capital Intel employs, even leaving taxation on these parties as-is results in incremental tax collections vs. no fab at all.
– Considering the amount of profit these fabs seem to throw off during their lifetime, and Intel's general scale globally, it stands to reason that a $10bn tax abatement won't subsidize the taxable activities of the fab indefinitely. So once that's been consumed, you're now getting the taxation resulting from the fab's activities and all that second party taxation you were getting the whole time.
So immediate cuts to government services to offset these seems a bit over the top, since a project like this does result in a net increase in taxable activity in both the short and long term, it's just less than it otherwise would be in the short term since you gave a break to the primary entity involved as an incentive to secure their participation.
That said, it only works out that way if companies uphold their side of the bargain. So instead of major spending offsets, it'd be better for governments to structure these subsidies with way more teeth than they usually do. To at the very least claw back the subsidy if warranted[1], or even better to add penalties to the terms of these things such that a company foots the bill for the time and effort and resources the government put into their end of things and the company thinks twice before entering these agreements in the first place.
I wish governments would "collude" to ban these types of subsidies, because at the end of the day it's just basically regressive taxation: smaller businesses and startups need to pay their full, fair share of taxes, while huge successful companies pay next to nothing.
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[ 2.7 ms ] story [ 80.7 ms ] threadSeems like a long shot though
Even though US doesnt export vaccines due to a ban, Pfizer has a plant in the EU making and selling the vaccine in the EU.
https://www.theguardian.com/politics/2018/dec/30/no-deal-bre... for example (and it's got worse since)
The US probably won't give them a subsidy, but the EU really wants tech and might be willing to pay for it.
There already are several chip making fabs in the EU, btw.
https://www.wsj.com/articles/biden-urges-50-billion-to-boost...
With that money we could just build our own fab, we don't need intel for that. Are the european citizens supposed to pay for intel's fab? Do we get the chips for free then?
What the heck is up with these companies? Capitalism means they have to spend their own capital, not the publics.
Not that I support government subsidies but $10 billion would not build you a 5nm fab. Heck, it wouldn't even get you a 14nm, with the rate the Chinese are sucking up all the used fab equipment.
The highest estimate I found was 20bn.
If we are spotting intel 50% of the cost, why not go all the way and do it ourselves?
There are a lot of small european semi companies, both design and manufacturing, that we could this with instead. Why not give that money to Infineon?
Makes no sense.
We have our own semiconductor industry. Why not help them instead of intel?
Europe builds _1_ component for one fab stage (the EUV litho machines). For the other stages, there are other manufacturers in other countries.
https://archive.ph/HEI2z
Japan is still the dominate supplier of the chemicals used in silicon fabs.
The majority of the process is still DUV layers (less advance than EUV), and Japan's Nikon/Canon are the leaders in DUV.
https://seekingalpha.com/article/4412366-asml-not-dominant-w...
Yeah, read the article. ASML market share in immersion DUV dropped from 95 to 85%.
That 10bn is not lost money, assuming a fab would not have been built (which may or may not be a fair assumption) without the subsidies.
If the EU was phrasing it as "we'll give Intel 10bn in subsidies and eliminate departments and programmes X/Y/Z to pay for it" then appetite for this sort of thing would rapidly evaporate, but of course, they won't do so.
Edit: not joking/sarcastic. The amount of currency in circulation needs to increase or there's no inflation. And inflation is considered necessary for people to not just sit on their treasure chests and not spend.
The amount of economic activity required for Intel to even generate $10bn in taxes is massive. The firms Intel employs to build the $20+bn fab would not have the same tax break, nor the employees involved in the construction. Nor the employees, suppliers, and various vendors and logistics companies that would be involved in the running of the fab once it is operational.
So in additional to the strategic political goal of having an advanced current-gen fab on European soil, you also get
– The "second party" taxation that occurs to the parties on the receiving end of the capital Intel is expending in the building and running of the fab. While this is a form of "taxes on people to compensate", it doesn't necessitate raising taxes to offset the Intel subsidy. Since the economic activity is a direct response to the capital Intel employs, even leaving taxation on these parties as-is results in incremental tax collections vs. no fab at all.
– Considering the amount of profit these fabs seem to throw off during their lifetime, and Intel's general scale globally, it stands to reason that a $10bn tax abatement won't subsidize the taxable activities of the fab indefinitely. So once that's been consumed, you're now getting the taxation resulting from the fab's activities and all that second party taxation you were getting the whole time.
So immediate cuts to government services to offset these seems a bit over the top, since a project like this does result in a net increase in taxable activity in both the short and long term, it's just less than it otherwise would be in the short term since you gave a break to the primary entity involved as an incentive to secure their participation.
That said, it only works out that way if companies uphold their side of the bargain. So instead of major spending offsets, it'd be better for governments to structure these subsidies with way more teeth than they usually do. To at the very least claw back the subsidy if warranted[1], or even better to add penalties to the terms of these things such that a company foots the bill for the time and effort and resources the government put into their end of things and the company thinks twice before entering these agreements in the first place.
[1] https://www.theverge.com/2021/4/20/22393679/wisconsin-foxcon...
Competition is often the catalyst for the creation of the many innovations that society makes use of. What am I missing here..?
Note, I'm not claiming it is unfair - small and crafty companies often get benefits as well - mostly the middle size and honest ones gets shafted.