Or, chips just become 20% more expensive in the US and the consumer loses... and the US still doesn't gain supply chain security.
I don't think tariffs will work when the alternative requires massive outlay of capital and decades to recoup.
Not to mention, there is no reality where manufacturing these chips in the US costs less than Taiwan, for example. There is no reason to build a fab in the US with the current economic and regulatory climate. So... we have to force it to happen... which is what this bill does.
Intel had profits of $20B last year. They could easily build a new modern fab every year if they wanted to. But it makes more sense for them to spend tax payers money instead.
Amazon went years basically making no money because they were reinvesting and in a growth stage. Intel could do the same. They just need to convince investors of the new narrative. Wall Street doesn't demand profits if you deliver promises.
Without getting political - does it even matter anymore? Trillions of dollars were just thrown out the window to whoever could catch some... and few if anyone has any idea where most of it actually went.
At least this money will have a tangible, appreciable outcome. Supply chain security for such critical things such as chips is really hard to overstate the importance of for the US.
I think in this case the US is different than say Chile because its such a large market. AKA its large enough to support home grown manufacturing if the incentives aren't out of wack.
The chicken tax, as been an incredibly efficient way to assure that car's are manufactured in the USA, so much so that the cost difference between a Ford manufactured in Mexico and a Toyota manufactured in TX is basically 0.
How is this not the consumer still losing, though?
There is no reality where manufacturing a car in Mexico costs the same as in Michigan. We've artificially increased the cost of the Mexico product... that is what will happen if you try that approach with chips - they will be more expensive for no real good reason.
It also appears to cost many multiples more capital to build a chip fab than a car plant according to these sources[1][2].
Well its MX, vs TX, so maybe that is part of it, but I suspect there are other more significant differences, like for example ford sells ~7x the number of F-150's as Toyota sells Tundra's and that is only reflected in a ~3K difference in base price.
Its hard to have an exact 1:1 comparison, but I think most people would agree they are roughly the same price for roughly the same product. And yet one is largely designed and manufactured in the USA (the Toyota).
So, maybe they it costs more to employ someone in San Antonio, but maybe that doesn't really matter in the grand scheme of things vs flying engineers to MX to work out kinks in the assembly line.
And its probably the same with semiconductor manufacturing. Intel isn't behind because it costs more to manufacture things in the US, they are behind because they didn't invest in EUV, and made some technical mistakes, as well as business mistakes around contract manufacturing and refusing low margin deals.
I think if you look at the results of the IBM/Lenovo deals its abundantly clear that where the manufacturing was located had nothing to do with the success of the products (It was outsourced to Lenovo long before it became their business). The American management was the problem, and kicking it to the curb allowed them to grow the business 10X+.
And lets not ignore Samsung which has a large fab just down the road from me. So it can't be a terrible environment for USA based semiconductors if a Korean company is willing to fab things here.
