I just don't get it - the country has over $34 Trillion in debt already and we are handing out money to mega-rich corporations who don't need the money (among other things we waste money on).
This is not going to end well - our kids and grand kids will be paying for it.
They would be paying far more if chips suddenly stopped coming out of Taiwan in the future and the U.S. had no onshore capacity to make their own.
It’s more of an insurance policy than a subsidy. Intel needs a reason to build in the U.S., and grants tip the ROI scale on their side to make it happen.
IMO this is a big enough national security threat that what intel is doing is similar to if Lockheed said “we’re going to start selling to Russia instead of the US unless the US gives us nice grants”.
It shouldn’t even be an option for Intel to continue manufacturing in other countries. It should be “move manufacturing back to the US or the Fed will take ownership of the whole company and do it for you.”
(And maybe it’s sort of an unspoken assumption that if they don’t take this carrot, then the US really would use the stick to force their manufacturing back into the US).
An expropriation of this kind and magnitude by the US government would be historic. Has it happened before? I'm curious.
I know there's talk about TikTok either selling to a USA owner or leaving, which seems pretty monumental too. Not quite an expropriation since the state wouldn't be taking control of it, but somewhat similar.
I mean, if Intel is only motivated to build in the USA when it gets a fat check rather than out of conviction, I think that's a problem too, no? Does this mean that whenever maximizing (short-term) shareholder value is at odds with national sovereignty the USA will have to hand them out a check?
I don't know that this is what's going on here, perhaps Intel really is committed to the USA beyond the individual gain of its executives and shareholders. It's worth noting though, there's some prominent examples in US history where this hasn't been the case. Banks for example got really rich at the USA's expense in the years leading to 2008.
and yet INTC has been in business for decades, profitable the whole time, producing chips without this grotesque handout of taxpayer monies.
They have already used their excess profits - many $10's of billions of dollars in recent years, for stock buybacks, but apparently they really, really need this money from taxpayers to stay a going concern.
This is a thing intel didn’t care about doing. The government wants the fab strategically so is incentivizing them to do it. It has nothing to do with intel’s profitability otherwise.
It’s no different from grants to build renewables, farms, housing, munitions, whatever the government wants done in the country.
However, it is a very indirect way of getting what the government wants, prone to manipulation.
The more direct option is to contract and purchase the finished product.
The general problem is twofold. First, it can be more financially efficient to spend on incentives then finish product. Second, much of the public do not trust their representatives to perform this analysis and negotiate in good faith.
Is a 25 billion Upstream incentive cheap compared to the Chip Price premium the government would have to pay to have the same incentive?
The other question is who benefits from domestic chips and if the government is the right person to pay.
I guess in your mind it is not possible for both things to be bad? As long as we have the bogeyman of the DOD budget, any money spent that is even a penny less than the DOD budget is OK, is that how you see things?
People have been repeating this tired trope for decades and yet we persist. The US doesn't even have the worst debt load of developed countries and ones that are significantly worse are still operating fine!
This is not going to end well - our kids and grand kids will be paying for it.