By on May 26, 2021

Now that it’s effectively too late to avoid a crisis, the United States has begun asking itself whether or not now is the time to put into motion a plan that will eventually lead to the nation manufacturing its own semiconductor chips. As you’re undoubtedly aware, the automotive sector has taken a beating as Asian-based supply chains are experiencing what can only be described as unprecedented demand. But they aren’t building enough to satisfy everyone and the local markets are taking precedent.

U.S. Commerce Secretary Gina Raimondo proposed a $52-billion solution on Monday that would cram fresh government funds into production and research that could result in seven to 10 new U.S. factories. But that’s just to get the ball rolling on an industry that will take several years to mature, leaving some to wonder whether the country should even bother. 

According to Reuters, Raimondo suggested at an event outside a Micron Technology Inc chip factory that the government funding would generate over $150 billion worth of investments in chip production and research. Though only a portion would be contributions from state and federal governments, with the rest coming from the private sector.

“We just need the federal money … to unlock private capital,” she said, noting that “it could be seven, could be eight, could be nine, could be 10 new factories in America by the time we’re done.”

Unfortunately, the timeline on those facilities becoming active is a few years, with the government funding being spread out over five. Senate Democratic Leader Chuck Schumer revealed the plan last week.

From Reuters:

Supporters of funding note the United States had a 37 [percent] share of semiconductors and microelectronics production in 1990; today just 12 [percent] of semiconductors are manufactured in the United States.

As first reported by Reuters, the bill includes $39 billion in production and R&D incentives and $10.5 billion to implement programs including the National Semiconductor Technology Center, National Advanced Packaging Manufacturing Program and other R&D programs.

Senator John Cornyn, a Texas Republican who also took part in the joint event, has filed an amendment to remove prevailing wage provisions from the bill and said he wanted a vote on his amendment, saying the wage issue was jeopardizing Republican support.

The wage issue is a tricky one because one side of the aisle wants to ensure good-paying jobs while the other is fearful that it will make the endeavor too costly and ultimately non-competitive against Asian suppliers that historically pay workers far less. While few are saying so, most of this pertains directly to China — which has been a highly appetizing locale for manufacturers since it pays workers a fraction of what would be considered reasonable here. While much of that is the result of U.S. regulations and worker protections driving up the prices here, China has been criticized for utilizing slave labor. The issue is apparently bad enough to have already roped in several global automakers and textile companies, earning them plenty of criticism.

Meanwhile, the Chinese Communist Party has repeatedly signaled that it wants to invade Taiwan. Besides the untold geopolitical strife that would bring, the island nation is responsible for a large portion of the semiconductor chips imported by the United States. The chip shortage is swiftly becoming a national security issue and America has been caught with its pants around its ankles.

The bill has bipartisan support but some are annoyed with the amount of federal spending that has already taken place. In service of adding perspective, the United States has spent trillions over the last twelve months on things like COVID relief and ultimately ended up with a crippled economy, increased joblessness, and shifted more wealth to society’s top earners. Considering the entire cost of World War 2 was about $4 trillion (adjusted for inflation) it’s difficult to understate the size of financial commitments the U.S. has been making of late.

Critics have suggested that the government has shown itself as poorly suited to spur industry in a responsible way and claim it would be better to just deregulate in the hopes of appetizing the private sector to do its own thing. But we sure could use those chips right about now and there are de-contented or partially built vehicles sitting around on factory lots as proof. Globally, the tally of impacted vehicles could be as high as 4 million units by year’s end.

What say you? Should the government get the lead out and try to jumpstart a localized semiconductor industry or have we already blown this one?

[Image: Gorodenkoff/Shutterstock]

Get the latest TTAC e-Newsletter!

96 Comments on “QOTD: Should the U.S. Produce Its Own Semiconductor Chips?...”


  • avatar
    theflyersfan

    Well, we can’t have an economy based on us warehousing and delivering goods made in other countries, can we? It seems like the only things being built (besides more cookie-cutter housing developments) just beyond the beltways of cities are massive warehouses meant to ship Asian-built goods to online shopping Americans.

    I refuse to jump into a Red vs. Blue argument here, which this is 100% bound to turn into, because both parties are guilty as sin for promoting policies and allowing entire industries that were so powerful here to go running overseas and take good paying jobs with them. But I’m for whatever and whomever it takes to bring electronics jobs back to the USA. And for the love of God, don’t wait for federal funds to be freed up to take the first step. I’m not part of the cult of Elon, but that took some brass ones to sink what he’s sunk into what he has accomplished.

    In a nutshell, with more people buying more electronics, more cars, more of everything needing chips, and there being a finite supply, the simple answer is YES: we need to produce our own and let the rest of the world fight for the rest.

    • 0 avatar
      Pig_Iron

      Let me do it for you. The uniparty of the establishment elites who controlled both parties, have been actively participating in the managed decline of America and the West in general. They are busy waging war on the America-First wing of the the Repubs, and are losing to the growing fasco-communist faction of the Demos.

      “A nation which can not make its own plows and swords is soon hungry and defeated.” – Pig_Iron

      Oh, and, Fair Trade NOT Free Trade

      • 0 avatar
        redapple

        In the last 20 years, in the USA.

        73,000 manufacturing plants have closed.
        10 million good paying jobs lost.

        Let that sink in.

        • 0 avatar
          Lou_BC

          Lost jobs have occurred mostly due to automation.

          There was a great article in Automotive News about the chip shortage.

          A lot of it was caused by a shift if spending to electronic devices, increased spending on tools that use chips, and car companies scaling back production and then not having chip contracts sufficient in depth to cover their demand. The “chip” industry was caught flat footed. They expected this sort of demand to ramp up over a few years not 6 months.

          And yes, both political parties are to blame for letting themselves become dependent upon critical products made elsewhere.

          htt ps://ww w.auton ews. com/suppliers/chipmaker-speaks-how-it-looks-his-side

          The good thing about COVID-19 is that it has shown countries where their weakness are and hopefully they ‘ll work on fixing them.

          • 0 avatar
            28-Cars-Later

            Good point Lou, thanks for the link.

            So we’re nearly six months into 2021 and obviously chip orders and demand have been skyrocketing. The mfgs were aware of this earlier in the year so they should have begun to switch and/or expand capacity a few months ago. So really there should be relief starting in Q3… we shall see.

          • 0 avatar
            jeffmete

            Lost Due to automation? That is so obviously wrong it’s scary you believe it. I’ve spent a career in heavy industry shutting down manufacturing plants and moving them to Mexico, China and India. All chasing cheaper labor. Automation had nothing to do with it.

          • 0 avatar
            Lou_BC

            @jeffmete – statistically it is rather easy to verify. I’ve seen it with my own eyes in the lumber industry. New and faster machines replace men.

          • 0 avatar
            jeffmete

            I’m talking manufacturing jobs. Drive through Saginaw, flint or Detroit all the those jobs were lost overseas. Most of the Midwest was decimated by those job losses,

          • 0 avatar
            Lou_BC

            @jeffmete – Yes, jobs have been lost to offshoring but various sources put it at around 15% as opposed to 85% lost due to automation. It applies to every industry. Unskilled repetitive labour is easy to replace by machines.

            The coming boom in AI and associated wave of smart machines can potentially reduce the workforce by 50% in the next 20 years.

          • 0 avatar
            jeffmete

            They must have done the study after we lost all the mfg jobs overseas. Ive spent 40 years in heavy industry and that’s all we’ve done, with first the southern strategy, then to Mexico, then China, India and Brazil, now looking at places like Africa. Every move chasing labor costs. I’ve had to train Mexicans on how to run the equipment we moved out of our US plant (south bend, IN) to Mexico. Our Chinese plant used almost 8 times as many people as our US plant to make the same number of engines. There’s a reason you can’t buy an American made TV and it’s not because of automation.

          • 0 avatar
            jeffmete

            They must have done the study after we lost all the mfg jobs overseas. Ive spent 40 years in heavy industry and that’s all we’ve done, with first the southern strategy, then to Mexico, then China, India and Brazil, now looking at places like Africa. Every move chasing labor costs. I’ve had to train Mexicans on how to run the equipment we moved out of our US plant (south bend, IN) to Mexico. Our Chinese plant used almost 8 times as many people as our US plant to make the same number of engines. There’s a reason you can’t buy an American made TV and it’s not because of automation.

          • 0 avatar
            Lou_BC

            @jeffmete – lots of people lost jobs due to offshoring but more did due to automation. That’s my point. I’m not entirely in disagreement with you. It’s just easier to blame the Chinese, or Mexicans than it is to blame robots and computers.

        • 0 avatar
          tomLU86

          There’s a lot to unpack here.

          @Pig_Iron is essentially correct.

          John Adams (2nd Pres) stated that the US system worked only with a “moral people” (paraphrasing). Well, I don’t think the “me generation” or “greed is good” mindset is what Mr. Adams had in mind

          America’s rapid rise to excellence (relative to other nations) made the USA in general, and middle America in particular complacent.

          From excellence, we have become a society that buys into the “something for nothing” mentality.

          Technology and…China carried us for a few decades.

          If chips were profitable in the USA, some one would make them here. Either they are not, or they are more profitable overseas.

          If America was more self-sufficient, many American’s would have a lower standard of living, because many goods would cost more. At the same time, a self-sufficient America, with decent wages (I’m generally conservative, but to the dismay of my pals, I support minimum wage of $12 to $15–that’s the equivlent of $3 in 1979), we would have fewer poor Americans, and we would have a more solid and honest economic foundation. To me, we seem overextended in every area–and that contributes to the angst and increased partisanship, as people are nervous about holding on…

          People like Ross Perot and Pat Buchanan warned the public about excessive debt, unfair trade, a bloated and expensive defense establishment. Their message didn’t get enough votes. On NAFTA, everything Perot, mocked as Mr. Big Ears, predicted, has come to pass.

          Donald Trump agreed with quite a bit of what these folks said, and packaged some of it in his campaign.

          Well now, China ain’t so cheap. Neither is Taiwan. But they make the stuff we need.

          It can’t be conjured up. It needs investment and capital.

          But wait..we don’t have capital–as in money. In general, we are drowning in debt. Conjuring it is not the same as hard-earned cash. If we are lucky, we will go back to 1979-80 inflation.

          And human capital…our kids have been dumbed down for decades. In “Bowling Alone” by Robert Putnam, he noted studies showed that an HS grad in 1948 was better educated in terms of math and english and history and science most college grads 50 years later.

          Ain’t no such thing as a free lunch. We reap what we sowed. And given our relatively sophisticated lifestyle is also quite fragile to pandemics, energy shortages, lack of order….

          • 0 avatar
            slavuta

            Wait, we just spent hundred of millions $$$ on NPR, some worthless museums; billions bailed out failed blue states…

            Would you think that making these manufacturers non-profit would help? Get good managers, with good salaries, give good salaries to workers but make it non-profit.

            Pakistani gender research $$ could buy a land mass for such factory

          • 0 avatar
            Lou_BC

            @tomLU86 – your post is the sort of well thought out political commentary that we so desperately need in society.

            North America post WW2 had a huge advantage in not being ravaged by war and a massive industry already geared to production. That gave the middle class a good lifestyle. We’ve grown complacent or lazy depending on your point of view. Education is inadequate and we expect a lavish lifestyle with minimal effort. Cheap financing has fueled that “money for nothing” expectation. Eventually someone’s going to have to shoulder the burden of that debt.

          • 0 avatar
            Art Vandelay

            Thanks Slavuta. I for one always appreciate knowing the official party line iof a dying petro-state with respect to US policy.

          • 0 avatar
            NigelShiftright

            “Ross Perot…..Pat Buchanan…..Donald Trump”

            When “reputable” political candidates agree that some issues are not to be brought up for discussion, don’t be surprised if the disreputable candidates who grab those issues get a whole heck of a lot of votes.

          • 0 avatar
            28-Cars-Later

            I’ll add James Goldsmith to that list.

            https://www.youtube.com/watch?v=wwmOkaKh3-s&t=1232s

            Ross Perot was and is a more reputable candidate than pretty much all of the serious presidential candidates of the past thirty years. Aside from being a third party candidate, the general public at the time was not aware Bill Clinton is a cokehead, drug trafficker, rapist and murderer or H.W. Bush a spy, murderer and Dog knows what else. Even the fogies of the time given this knowledge would have thrown votes at Perot.

        • 0 avatar
          Ol Shel

          Thank you, Job Creators.

        • 0 avatar
          ect

          redapple, here’s what has actually happened to US manufacturing since NAFTA was signed in 1992:
          1. US manufacturing output (in constant dollars) has doubled (Bureau of Economic Analysis)
          2. Direct manufacturing employment has fallen by 1/3 (Bureau of Labor Statistics)

          As Lou_BC has noted, job losses in manufacturing have resulted almost entirely from automation, not offshoring.

          US manufacturing has continued to grow by moving upmarket, even while lower-value production has moved elsewhere. That’s good for the US, not bad.

    • 0 avatar

      America still produces aircraft and rockets. SpaceX and Boeing are world leaders. Still, the US is in decline in most areas.

  • avatar
    Pig_Iron

    Three guesses – first two don’t count.
    :-/

  • avatar
    JMII

    The race to the bottom has created this. Everyone wants things cheaper thus consolidation and economies of scale became the winning strategy to lower prices. On the business side higher profits make shareholders happy so the practice of squeezing margins is encouraged. The downside is having all your eggs are in one basket… and we all know what that means.

    More things needs to be produced in the US no doubt – but nobody wants these unskilled labor jobs and the profit margin isn’t high enough to justify the investment in the factories. What can be done to fix this? I have no idea.

    • 0 avatar
      mcs

      “the profit margin isn’t high enough to justify the investment in the factories”

      In the high-performance computing world, it costs me $12k for an accelerator card. For sure they could make a profit on that. There is a lot of room for profit in the HPC world. Much of it is defense-related, so an even bigger reason to move it to North America.

      • 0 avatar
        Art Vandelay

        “In the high-performance computing world, it costs me $12k for an accelerator card…”

        So you are buying 980ti’s on eBay I see.

        Kidding but yes, it is stupid out there with respect to that stuff right now.

        • 0 avatar
          mcs

          @Art: I know, GPU prices are probably around that on ebay for sure. I’m buying Xilinx Alveo cards and other similar parts. I buy directly from Xilinx. On some stuff they give me a discount. Some of what I buy are DOC classified 5A002 controlled parts and even though they are restricted, there still seems to be a shortage.

      • 0 avatar
        JMII

        “For sure they could make a profit on that.”

        If there was money to be made in the US making these chips someone would have jumped all over it. The margin or volume must not be there. More likely the current overseas factories were already filling the need just fine. Until this happen. Most businesses are not setup for “rainy days”, its all about the here and now.

        • 0 avatar

          Their worried the shortage is short lived. They think if they invest foreign firms will freak out and flood the market and make it unprofitable again. The lumber markets are showing this now. A friend of mine delivers logs to mills for lumber. He said they are running at capacity and paying overtime. but knot investing capital in physical expansion as their worried the market will over correct and they will be stuck with debt from expansion. Plus they are making a lot of money at the moment due to the higher cost so little incentive in the risk. It will take outsider s coming in to change that.

          • 0 avatar
            28-Cars-Later

            I’d say at least through Nov 2022 and longer depending on how the “elections” go.

  • avatar
    redapple

    28
    AND
    LOU

    Previous 3 presidential elections, mail in ballots were tossed out at a 4.0 % rate. iMPROPERLY FILLED SIGNED, MISSING SIGNATURES, MULTIPLE CANDIDATES SELECTED IN SAME RACE AND SO FORTH. Bidet won in an electiOn where 0.4% were thrown out.

    At the same time mail ballots went from 10,000,000 in 2016 and before to 60,000,000 in 2020

    In an election where 50,000,000 PEOPLE ARE are voting by mail for the first time, you would think that the not completed correctly rate would GO UP – NOT DOWN.

    Uuuuh. THAT IS WHAT HAPPENED AND HOW THEY DID IT.

    • 0 avatar
      ahintofpepperjack

      This is completely false and continuing to spread this misinformation is extremely dangerous. The 4.0% lie originated on social media and spread rapidly with no actual sources.

      An actual researched article with sources proving this is false below.

      https://www.reuters.com/article/uk-factcheck-georgia-rejected-ballots-fo/fact-check-georgia-rejected-ballots-did-not-go-from-4-to-almost-zero-in-2020-idUSKBN2832CM

      • 0 avatar
        Lou_BC

        Yup. Redapple trolling for political hit points.

        And even if it were correct, “iMPROPERLY FILLED SIGNED, MISSING SIGNATURES, MULTIPLE CANDIDATES SELECTED IN SAME RACE” isn’t by definition fraud.
        They are “spoiled” ballots.

        • 0 avatar
          redapple

          MY POINT IS STILL VALID

          https://ballotpedia.org/Election_results,_2020:_Analysis_of_rejected_ballots

          States that have 2020 data, report a lower or much lower throw out rate in 2020 than in 2018 and 2016.

          This happening while 2-3 times more people are voting by mail and for the first TIME.
          FIRST TIME IS IMPORTAnt because one would expect the throw rate to BE HIGHER IF YOU ARE DOING IT FOR THE FIRST TIME.

      • 0 avatar
        NigelShiftright

        Lots of false info on the nuts and bolts of the election, so I’ll set that aside.

        “continuing to spread this misinformation is extremely dangerous” Hyperbole alert. Everyone has made up his mind on this one way or the other by now.

        But incontestably true was the 24-7 tongue bath given to Biden by the MSM for the several weeks running up to the election. (and thereafter)

    • 0 avatar
      kjhkjlhkjhkljh kljhjkhjklhkjh

      LOL…. /faceplam/ this is a deep red plot to subvert icecream … that a terrible thing at it’s core for sales for shrimp and coffee … id pay attention to the left right up down mail in cabbage polls to be sure trump elected himself head dildo. but we have to consider the lack of mushrooms as well since your post lacks links to the ford lightning or the chevy camaro conspiracy where only big block v8s voted correctly ..

    • 0 avatar
      ect

      redapple, for your fantasy to be true, Republican officials in Arizona and Georgia, all of whom campaigned for Trump, would have had to be part of the conspiracy to deny him the election. Which is preposterous.

      The election was free and fair. Biden won, Trump lost.

  • avatar
    Matt Foley

    Hell yes, we should jumpstart a localized semiconductor industry, for all the same reasons JFK said we should go to the moon, and that worked out well:

    https://er.jsc.nasa.gov/seh/ricetalk.htm

    “To be sure, we are behind, and we will be behind for some time…but we do not intend to stay behind, and in this decade, we shall make up and move ahead.”

    • 0 avatar
      28-Cars-Later

      Imagine for a moment if a great president like JFK was fought tooth and nail by State Media over his moon aspirations? Would “For All Mankind” be our reality?

      https://www.popularmechanics.com/culture/tv/a27703218/for-all-mankind-trailer-apple-tv/

  • avatar
    Urlik

    Nice handout for the companies that are already building additional fab plants in the US. Yes, additional. Not all chips are made outside the US but the smallest die plants tend to be outside the US right now.

  • avatar
    SCE to AUX

    “We just need the federal money … to unlock private capital”

    That’s false. Private capital will unlock if the operation shows promise of being profitable.

    Q: Should the US produce its own semiconductor chips?
    A1: Sure, if you’re willing to pay more for them.
    A2: Definitely, because it’s become clear that business sourcing is a matter of national (economic) security.

    • 0 avatar
      28-Cars-Later

      ““We just need the federal money … to unlock private capital””

      Analogous to “We have to pass the bill, so that you can find out what is in it”.

    • 0 avatar
      Snooder

      The entire point is that is NOT profitable, but is still necessary.

      It’s the same reason why we pay farmers not to grow corn. Because making sure we have excess agricultural capacity is useful and necessary to prevent famine.

      • 0 avatar
        28-Cars-Later

        Uh other than your typical special interest lobbying farmers are paid corporate welfare in order to 1. control supply and 2. prevent them from going bust when sh!t happens.

        What’s more concerning is how salable food that is unsold is discarded:

        https://thegrocerystoreguy.com/what-happens-to-unsold-food-in-supermarkets/

        I read a post once where when asked why they refused to donate near spoiled food a grocery store manger said something to the effect of: “because they don’t have the money to buy it”. Drive near the rear of a grocery store and ask yourself why is there a lid on the dumpster.

        • 0 avatar
          Snooder

          Yeah, controlling the supply (of chips) and preventing domestic manufacturers of chips from going out of business is kinda the point here as well.

  • avatar
    watersketch

    What’s that sign on every assistant’s desk – When did your failure to plan become my emergency?

    If the car companies need more chip plants let them subsidize them. I suspect that they would rather close assembly lines than pay extra for parts.

  • avatar
    Snooder

    This will be an interesting and complicated balance to make.

    First, just so that everyone is clear, there are already plenty of chip fabrication plants in the US. However, they mostly tend to be more expensive and higher margin chips.

    Second, chip manufacture isn’t a low skill job. It’s not like t-shirts or something where you can pay sweatshop wages.

    That said, in order to generate more chip production within the US, we would need to implement some sort of protectionist policies. Either by preventing import of outside goods, or by subsidizing local production. Or both. However, protectionism runs the risk of not only alienating foreign trading partners, but also, much worse, of ruining the domestic economy by allowing domestic manufacturers to get complacent and stagnate. Which means that eventually people will just pay the premium for imported goods or resort to smuggling. This is the lesson that Brazil learned in the 90s and 2000s as their protectionist approach resulted in a reduced domestic economy.

    The other question is whether businesses will actually utilize the subsidy for the intended purpose. The recent debacle with the Foxconn plant in Wisconsin should be a fresh reminder of the pitfalls here. They took the tax breaks and then realized that it still didn’t make enough money to be worth it. So you end up with no plant and ALSO wasted money.

    • 0 avatar
      watersketch

      Foxconn in Wisconsin is a great example of the market moving past the original plan. While it might have made sense the day it was signed, a few years later after the land was acquired, zoned, highway exits built, and construction began, it was no longer economically viable.

      • 0 avatar
        Snooder

        Well yeah.

        That’s the point. What the market says is the most efficient, and what we need long-term are not always the same.

        Businesses try to follow the market. Which is great. But government is supposed to take a longer view with different priorities. That maybe focuses less on efficiency and profit and more on things like robust disaster planning.

        A business can just plan on riding out a few quarters of low yields, firing a bunch of people and then hiring them back later. A government needs to recognize the harm that does. First to the employees who are fired, and then as knock-on effects to the entire economy. And the government needs to plan for ways to counteract that, even if that means doing things that are explicitly economically inefficient.

        A good example here is planning for famine. A smart farmer will sell all his crops every year. Leaving crops unsold is just lost profit. A smart government will stockpile grain for a bad year that comes once a generation. Which means losing money and wasting grain 19 years of out 20 just to make sure that we have enough to go around on that 20th year.

  • avatar
    Luke42

    There’s a lot more to Chinese/Taiwanese electronics-manufacturing dominance than just lower-than-the-US wages.

    They have the whole supply chain and business ecosystem there.

    We could do the same in the US, but we have not. It would take a decade of sustained government investment to build the business ecosystem here. (If it were profitable to build this industry piecewise, private industry would have financed those pieces already).

    Also, building a factory is capital-intensive, low-margin, and high-risk. Nobody’s going to lend me a million dollars to build and run a factory, only to get a $1.05 million back in 3 years. You can do much better by buying index funds. That’s yet another reason why private investment has not solved this problem. Government investment is the alternative, but American politics won’t allow it.

    As you can see, the same people who are complaining about the lack of American manufacturing are the same people who are standing in the way of the enormous government investment (sustained over a decade or more) required to fix the problem.

    As a result, the whining about American manufacturing will continue — while companies on both sides of the Pacific will continue to make money by engaging in mutually-beneficial-to-them global commerce.

    I’m willing and able to build an electronics manufacturing company here in the US. I just need a customer who’s willing to pay a premium, and an investor who’s willing to take a (potential) loss.

    Nothing will change, and the whining will continue. [shrug]

    • 0 avatar
      Lou_BC

      @Luke42 – You hit upon a critical piece of the puzzle. Billionaire types no longer put their money into manufacturing. It’s high risk and low returns. They’d rather purchase existing factories that are profitable or play the stock market.

      I have to add that the “the same people who are complaining about the lack of American manufacturing” also complain about the cost of products. They bitch about a lack of American manufacturing or lost jobs on their way to Wal-Mart to buy cheap chineseum.

  • avatar
    Dartdude

    America needs to get government out of businesses. Let the auto manufactures use their capitol. Nothing is ever free from the government there always strings attached. Mainly chip manufactures only hire people of color or transexuals who knows. Look at what the government has already screwed up Education, Healthcare and farming as examples.

    • 0 avatar

      The issue is more that’s not what other countries do now. China has kind of figured out how to make massive government subsidies actually work for it’s economy. There is a balance there but I think some government intervention is warranted. China makes mistakes with this too, but over the past 40 years they seem to have done more good than harm to their own economy.

  • avatar
    namesakeone

    I hate to ask this–to add a further layer to this problem–but how much of our national debt is to China? And how much would they object to our industry taking away their business? If China calls in our debt and America is unable to repay it, we could be in real trouble.

  • avatar
    28-Cars-Later

    Secy Raimondo’s proposal may or may not be the best, but it is certainly well founded. My view is simple, since the nation spends tens of billions on nothing that benefits Americans (Pakistani gender programs for example), why not X billion toward an industrial and national security issue?

    https://www.business-standard.com/article/international/us-congress-clears-25-million-for-democracy-gender-programmes-in-pakistan-120122201575_1.html

    Btw CONgress literally rewarded a nation which refused to cooperate against terrorism.

    “The USD 25 million provision, reflecting revival of civilian aid package to Pakistan that was stopped by US President Donald Trump in January 2018 along with all security assistance, because of its non-cooperation in fight against terrorism, is part of the massive USD 2.3 trillion bill, that includes long-delayed coronavirus relief (USD 900 billion) and fund the government USD 1.4 trillion, passed by the Congress on Tuesday.”

    “‘America’s struggling workers should be prioritized over gender-specific programs in Pakistan or anti-narcotics programs in Bruma [sic], or money for Ukraine (all of which are funded in this bill),” he said.”

    Hmmm I’ll take “black bag ops” for $200, Alex (RIP).

    • 0 avatar
      28-Cars-Later

      Additional: I think we need to prepare for the very real possibility of military conflict over Taiwan. Notably on the subject Senator Biden gave these comments:

      “Democratic nominee Joe Biden has previously said Congress should decide whether the U.S. should defend Taiwan in any attack.”

      https://www.bloomberg.com/news/features/2020-10-07/here-s-what-could-happen-if-china-invaded-taiwan

      Right Joe, the same Congress who has not had a thing to say about military conflict since the National Security Act of 1947/War Powers Act of 1941/2 or declared war since December 8, 1941. Translation: I will not intervene in a Taiwanese invasion. I suspect Beijing will attempt a political unification effort first so that should give us some time to prepare, but if Xi is serious the time to move on it would be while the US is not in a state of unity with a weak leader.

      Even if the US were in a state of unity I doubt much the citizens would want to fight a new Pacific War with a nuclear power, nor the Joint Chiefs risk a nuclear conflict despite the strategic importance of the island. When/if a military conflict occurs and the US effectively declares neutrality, it will be the death blow for our nation on the international stage and the end of Pax Americana. If this can be sold as voluntary unification – which is what is best for all parties save Taipei – than the negative impact on the US will be far more gradual. Perhaps Premier Xi can convince Taiwanese president Tsai Ing-wen to hold a referendum and use mail-in ballots?

      “Failing to intervene could hurt U.S. prestige on scale similar to the U.K.’s failed bid to regain control of the Suez Canal in 1956, Ray Dalio, the billionaire founder of Bridgewater Associates, wrote on Sept. 25. That crisis accelerated the disintegration of the British Empire and signaled the pound’s decline as a reserve currency in favor of the dollar, Dalio said.”

      • 0 avatar

        Prepare or not America has already lost the war. American military is in war with itself over Trump, gender identity and sex change.

      • 0 avatar

        I would say the US pretty much has to defend Taiwan. Japan and South Korea would be none to happy to see China expand. While most people would say logically it’s not our fight the implications of not doing something are a bit to big and would severely hobble the US position in the world pecking order. I know people think so what, but the reality is our position is what keeps our economy alive. If we became just another country all our debt might actually become an issue for example.

  • avatar
    kjhkjlhkjhkljh kljhjkhjklhkjh

    No we should not. It will take trillions and years of hopes and dreams. And by the time they are ”online” and ”production ready” in 3-4 YEARS this snafu will be over and TSMC/Samsung will have ALSO expanded capacity and essentially the US factories will close down because we cannot compete on a level playing field in the semiconductor industry and all that time money and jobs will get tossed into the meat grinder ..

    Unless you BAN silicon imports or tax them even higher than now (ruining trade agreements and affecting other tertiary industries) you can not stop Asia from out producing the US, outpricing the US, and employing cheaper labor than the US.

  • avatar
    NigelShiftright

    Cheaper, faster solution:

    Make Taiwan the 51st state.

    • 0 avatar
      slavuta

      Xi is starting to sweat.

      this has few interesting points
      1. Taiwan is a disputed territory and does not have full UN recognition. This can help US to make it a state
      2. China Considered Taiwan their territory. This can make it dangerous mostly for Taiwan if US considers to make it a state
      3. You are going to bring 25M Chinese into US, 35-40% of whom want eventual reunification with China. That is going to fly well.

      I know, you’re just kidding.

    • 0 avatar
      SaulTigh

      Taiwan has 23 million people in an area a little larger than Maryland. We’ve got plenty of land here. Why not essentially import Taiwan and all their factories and employees, then let China have the island if they want it so badly. This would be much better than allowing uneducated peasants to flood across our southern border.

      Moving entire factories has been done before.

      • 0 avatar
        ajla

        “Why not essentially import Taiwan and all their factories and employees, then let China have the island if they want it so badly. ”

        I assume the people of Taiwan aren’t keen on abandoning their nation.

    • 0 avatar

      “Make Taiwan the 51st state.”

      Then making chips in Taiwan will become unprofitable. Taiwan will be a Democratic state so Republicans will never agree to that.

    • 0 avatar
      28-Cars-Later

      Do you feel like having a repeat of the Berlin Airlift after statehood is confirmed?

  • avatar
    jkross22

    Borrowing money to pay for something that might pay off in 10-15 years. Sounds like the deal that Foxconn got in Wisconsin. Are we this stupid? Yes, yes we are.

    How about this – pass right to repair legislation, making it illegal for manufacturers to block suppliers from selling parts to repair their stuff. This will reduce the demand for new products, which will tap the brakes on demand for new products with semiconductors in them.

    It’s also more environmentally friendly, so I’m sure big tech will be on board. After all, they’re all in on going green, right?

  • avatar
    28-Cars-Later

    This is correct, however I think its a bit like “if you build it they will come”. Through automation and on continent production in Mexico, the automakers over time can realize cost savings to outweigh additional chip costs per unit by sourcing them from a US firm. If you asked the CEOs right now, you could have all the chips you want just at an elevated cost, how many will scoff at it?

  • avatar
    stuki

    If it was still possible to produce something as complex and price sensitive as fundamental semiconductors in the US, it would be done.

    You simply can not simultaneously provide rank idiots the illusion that they “make money” from decaying “homes” and “assets” they have no particular clue about what even is, while still leaving enough real resources to productive people to produce anything all that valuable at competitive prices.

    Every penny handed to illiterates on “Wall Street”, ambulance chasers, patent trolls and armies of dimbulbs so dense they believe the fungus in their walls somehow create some sort of value while they themselves sit there on their couch, is a penny not available for productive people’s use. That’s just basic arithmetic. Not that any of the above would understand, of course…

    The cost of keeping the above, and other, armies of utterly incompetent, hence utterly unproductive, rank morons living in unearned splendor, is ultimately borne by anyone still hopelessly romantic enough to even bother attempting to do something productive in our free-falling little kleptocracy. Rendering the competitive production of anything, an occurrence about as common as a broken clock being right.

  • avatar
    AnalogXer

    Tax payer bailouts discourage innovation. Any industry that got itself into this JIT mess, needs to find their own way out.
    For the auto industry, its not the chip shortage, its the shortage of automotive specific chipsets used to make PCM, TCM, BCM, and ECM. Now would be a great time to virtualize all the ancillary modules and let a more open architecture ECM do the work with software. Automotive electronics need to be standardized across all models for a given manufacturer. Sensors and software should be the only difference between makes and models.

    • 0 avatar
      Scoutdude

      There all ready is at least some standardization across models from a specific manufacturer. Ford is big on that with all the programming baked in for the different applications and just a few lines of code that tell the module what program to run, what options to enable ect.

      That is why so many modules require programming before/upon installation for them to work.

    • 0 avatar

      Ive said it before and Ive said again software is not always the f*%#ing answer.

  • avatar
    Jeff S

    “How about this – pass right to repair legislation, making it illegal for manufacturers to block suppliers from selling parts to repair their stuff. This will reduce the demand for new products, which will tap the brakes on demand for new products with semiconductors in them.”

    Agree. That would reduce the demand for new vehicles and be a green alternative. Also reduce the number of chips used in new vehicles. The more electronics make vehicles overall less reliable–less to go wrong.

  • avatar
    conundrum

    The US is far too expensive a place to ever get back to being a place making cheap consumer items. Chips, maybe.

    The privatization of everything has gotten to the point that mere general infrastructure is owned by someone other than the people, which is government of all types. And the private owners demand a tithe for the use of “their” property. Toll roads and bridges, health care, every damn thing has a tithe built into it before anyone can contemplate building a factory to make Rubbermaid garbage cans.

    It didn’t use to be this way, and in those days pre-1980, the US out-produced the world no sweat whatsoever. Everyone used the free infrastructure that government provided from taxes. It kept costs low, made investing easy.

    Then, the big boys found ways to corrupt the system and make a healthy buck off it, gradually reducing the shared wealth of the nation and appropriating it for themselves. Sourcing product from overseas factories was just a logical extension of the robbing of the infrastructure your average Joe had contributed to for generations, plus dumping the higher labour costs of the average worker. There was no analysis of this as to how the country had worked so well and paid its citizens a decent wage. All was suborned to immediate corporate and elite profit.

    Forty years of ripping off sovereign wealth, and now we have multi-billionaires on the one hand and relative peons on the other. You don’t need socialism to return to the old days. You do need to break up the non-productive parts of the economy which mine the lower reaches, such as banking and financial schemes and company share buybacks, not a whit of it productive in the sense of raising the tide for all citizens. The fix is called progressive taxation and a lot more of it on the truly rich. Nobody, except maybe Musk and a few others, actually “works” hard on the way to becoming a billionaire. They think they do, but they don’t even work as hard as a guy holding down two poorly paid jobs to make ends meet. So excuses had to be made to explain why financial and “investment” “geniuses” were worth billions.

    Of course, beyond lobbyists at government level promising the world to the $200K a year elected, the truly rich have sponsored a gazillion institutes and university research to produce papers and talking heads to “show” that anyone who comes for their loot are socialist commies and un-American. Your average dope has bought into this line of “reasoning” by constant repetition, such as “the free market solves everything”, and so the country as it stands is no longer a viable proposition for the majority.

    Too bad. It could have been really great, but for rampant greed at the banker and billionaire level, and no government oversight to keep what was shared resources as its, the general taxpayer’s, own. Snookered by the glib and greedy employing a host of paid help to advance only one point-of-view: Government baaaad, we just effing great! And it worked!

    For them. Now in a show of real socialism, the government is going to set up chip factories for the rich for free, and decline owning any of it. Once again, someone will make unearned money and it won’t be the average citizen — they just get to pay to make the well-off even more well-off. It’s a great scam, especially if you persuade the average taxpayer it’s in their best interest, when it is patently not. The elected are too easily corrupted with filthy lucre, disguised in ways that seem above board, so the whole system is screwed.

    Again I say, too bad it went this way.

    • 0 avatar
      Lou_BC

      Well said.

    • 0 avatar
      stuki

      +1

      Also note that the main wealth transfer mechanism, hasn’t been formal “taxes” for decades now. But rather debasement. That’s what Nixon fully completing the central bank fraud, by severing the last link to Gold in 1971, accomplished.

      Remember: Simply printing Washington’s head on paper pieces don’t create any actual wealth. Hence, every penny some “owner”, “creditor”, “fund”, “pensioner”, “home owner”, “municipality” etc., is made richer than he/it would otherwise be, by some component of “the financial system” being prevented from going bankrupt by “easing,” has to be taken from someone else. That is no more than simple arithmetic, since there is no added total wealth created by merely printing stuff on paper. Instead, it’s just more of the same, trite, taking from the productive, in order to hand to the connected.

      Those someone else’s, will always be those who are: 1) Ones who derive the smallest share of income and wealth from idly “owning” whatever “asset” is artificially levitated by the debasement rackets, and who hence instead have to do productive work for a living. And who are 2) Productive, since only productive people ultimately create any wealth for the debasers to redistribute to their idle (or makeworking, makes no difference…) clientele of nonproductives.

      End result which cannot help but imposing an ever increasing cost on productive people, since they have to support not only themselves and their productive capital, but also an army of demand-more-more-more deadweights, who do nothing whatsoever useful, but who are still kept in unearned splendor, by what is nothing more than crass, debasement driven, theft.

      And that cost has, and is increasingly, rendered costs of producing anything in America (and the wider West), too high to ever be competitive with less fundamentally kleptocratic societies.

      As you say, it didn’t use to be this way. But since 1971, it increasingly has been. And as Keynes pointed out, back when he was still practicing economics and not partisan politics; debasement is a form of theft which few seem well suited to detect. Hence, why it has been allowed to go on for so long, and at an accelerated pace at that.

  • avatar
    Jeff S

    My fear is that we as a country have reached the point of no return. We have pursued the policy of outsourcing everything in the name of globalization which is basically making things as cheaply as we can and this has led to a race to the bottom. Good comments from tomLU86, stuki, Lou_BC, conundrum, AnalogXer, jkross22, Luke42, tomLU86, and theflyersfan. Our elected officials are too busy fighting among themselves and those with the real power want to divide us all–divide and conquer. Many of the opinions you have expressed are what I have believed for years. The one thing I do believe is that we need to get the money and the lobbyists out of government and that we should have term limits. The original intent of our forefathers is that serving in public office should be a duty serving a limited amount of time and not a career. I do believe that we should not make everything but we are becoming a country that is producing less and becoming too dependent on other countries like China.

  • avatar

    As someone who has had to help source things overseas and also works for at company that builds things for defense. We really do need more plants in the US that can make things like this. One reason is defense waiting for parts from another country (one that your not always on the best terms with) isn’t a great idea.
    The other is supply chains can be disrupted a bit too easily with Just in time delivery. You either need to create bigger stockpiles of parts or have capacity to do it your self to keep the economy functioning. That doesn’t mean make everything your self, but being able to ramp up to some percentage of requirements in a short period is a good idea.

  • avatar
    Jeff S

    We do need more plants in the US or at the very least Canada and Mexico that can make things like chips. This is one of the major drawbacks of “Just in time”.

  • avatar
    crispin001

    I’m old enough to remember the Ford Microelectronics plant in my hometown…..too bad everything comes from overseas now. Unfortunately, As soon as this latest supply disruption eases in 3-4Q ‘21, it will be forgotten….and the US share of production will continue approaching zero….

Read all comments

Recent Comments

  • probert: “reeducation”? What is your problem? This stuff is happening why not drop the constant attitude...
  • 28-Cars-Later: I don’t know much those programs but I know that product is far more niche than a family of...
  • mcs: Fedex is buying 20 Semis and UPS has ordered 125. Yeah, they need a van, but too much on their plate already.
  • 28-Cars-Later: Oh but they made it so easy now, you can just mail it in. Vote early and vote often!
  • mcs: “I take the Tesla on a long drive…I run out of battery. What result ? Do they send a truck ? Am I charged...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber