Tech Giants Unite to Get Funding for Increased Chip Production

Peter_Brosdahl

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As many know, there is an extreme global chip shortage affecting nearly every sector. From unprecedented demand to climate issues, supply chains have been unable to keep up. As a result, many tech companies have formed the Semiconductors in America Coalition to aid in the ongoing situation. SIAC is hoping to influence the U.S. to help fund the building of new manufacturing facilities with the new CHIPS of America Act. It remains to be seen if it will get the requested funding, but the alliance is a sign of dire needs...
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That is kinda interesting and I'm ok with it if we can as a government enter the market to bolster supply and profit from it.
 
Its not like they don't have billions to fund that themselves, why do they need the people's money?
 
Grimlakin said:
Most likely because the raw materials and rights to mine them are easier for a government entity.
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Certainly. Particularly the regulations around rare earth element mining. Our only significant deposits are in California, Nebraska, Texas, and Wyoming. The only large working mine in the US was Mountain Pass which was shuttered for years because of low prices and government interference. The government can solve one half of those problems that private industry can not.
 
Grimlakin said:
Most likely because the raw materials and rights to mine them are easier for a government entity.
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Its not like they couldn't get those either. And apparently they are seeking funding, not materials. I mean, right there are the 5 top companies in the world, they make more money than most countries and they want money?
 
Stoly said:
Its not like they couldn't get those either. And apparently they are seeking funding, not materials. I mean, right there are the 5 top companies in the world, they make more money than most countries and they want money?
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Why shell out the money and take a hit to the balance sheet when you can get a handout from the people? After all, aren’t people bitching right now about the rising costs of goods due to supply shortages? The little guy will always to be the one to get screwed when economies are in turmoil.
 
No tears here, they can invest their money.
Why even have it then?
Sure, lets do government, plus lets let do 90% balance sheet capture out of them jokers there.
They just don't want to get involved in a lower profit margin sector, that is all.
 
Grimlakin said:
So is shelling out 10k pocket change to someone that makes a hundred k a year? I don't think Apple makes 1 trillion a year... even then more than 10% is a big chunk of change.
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They make about $250B/yr. They do have around $200B in cash sitting off shore though.

Yeah, it would sting, even for Apple. Which is probably why they just bribe TSMC into giving them preferred access to new nodes.
 
I don't think the issue today is that companies are afraid of investing the money. if there is a return to be had, the money will get invested.

I think there are four big issues that are preventing more investment in fabs

The first is that it's hard to get started. You need a lot of experienced engineers, and you need access to IP, or a really patient and long-term thinking set of investors that are willing to R&D for no return for a long long time. Those two factors are going to keep new players out of the Fab business - you can't just form a startup and jump right in and be competitive, unless you have some groundbreaking new tech under your belt (which, I won't discount could happen, but it's a lightning strike and extraordinarily rare)

The second is that it's risky, so investors don't like to put money into it. You see big, established players that had been world leaders get humbled in just a matter of a few years (Intel) when they hit engineering challenges. That can set them back for years/decades, assuming they get over the challenges and get back to parity. You see some companies just throw in the towel and not even attempt to compete at the cutting edge (GloFo, TI), and a lot of companies just get out of it entirely because the returns are really hard to justify for the risk (IBM, AMD, etc)

The third is that it takes a long time to get a fab up and running. This is why current players aren't out there racing to build new ones: by the time they get online, the demand for the products they would serve will be mostly gone, and it will be all shifted to next generation. Those next generation facilities are already in progress. No one wants to chase a short term bubble and get stuck with a lot of very expensive manufacturing capacity that they can't fully utilize. The manufacturers would ~much~ rather underserve, and have the price drift up to meet demand, than oversaturate, and watch the prices tank and destroy their ROI.

A fourth would be geopolitical - you won't see much investment in the US without some incentives. You won't see much investment in China without political involvement. You won't see investment in typical low-labor areas because of lack of skilled work force. There are few geographical areas that have the right mix of political climate, geographical requirements, economic conditions, and workforce
 
Actually I think if someone took the initiative to stand up a fab to make current gen hardware they would win.
 
Grimlakin said:
Actually I think if someone took the initiative to stand up a fab to make current gen hardware they would win.
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By the time it is ready for production wafers we will be two or three gens ahead of current.
 
Actually I think if someone took the initiative to stand up a fab to make current gen hardware they would win on profit for a while. Head units and such don't need tiny cpus and don't need extreme efficiency.
 
Brian_B said:
I don't think the issue today is that companies are afraid of investing the money. if there is a return to be had, the money will get invested.

I think there are four big issues that are preventing more investment in fabs

The first is that it's hard to get started. You need a lot of experienced engineers, and you need access to IP, or a really patient and long-term thinking set of investors that are willing to R&D for no return for a long long time. Those two factors are going to keep new players out of the Fab business - you can't just form a startup and jump right in and be competitive, unless you have some groundbreaking new tech under your belt (which, I won't discount could happen, but it's a lightning strike and extraordinarily rare)

The second is that it's risky, so investors don't like to put money into it. You see big, established players that had been world leaders get humbled in just a matter of a few years (Intel) when they hit engineering challenges. That can set them back for years/decades, assuming they get over the challenges and get back to parity. You see some companies just throw in the towel and not even attempt to compete at the cutting edge (GloFo, TI), and a lot of companies just get out of it entirely because the returns are really hard to justify for the risk (IBM, AMD, etc)

The third is that it takes a long time to get a fab up and running. This is why current players aren't out there racing to build new ones: by the time they get online, the demand for the products they would serve will be mostly gone, and it will be all shifted to next generation. Those next generation facilities are already in progress. No one wants to chase a short term bubble and get stuck with a lot of very expensive manufacturing capacity that they can't fully utilize. The manufacturers would ~much~ rather underserve, and have the price drift up to meet demand, than oversaturate, and watch the prices tank and destroy their ROI.

A fourth would be geopolitical - you won't see much investment in the US without some incentives. You won't see much investment in China without political involvement. You won't see investment in typical low-labor areas because of lack of skilled work force. There are few geographical areas that have the right mix of political climate, geographical requirements, economic conditions, and workforce
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A quick look shows Intel, IBM, Texas Instruments, Micron and even TSMC. So there you have the engeneering, IP and even infrastructure, So all those arguments you said, kind of sound like mumbo jumbo.

What if instead of get united to get funding, they would unite to invest to create/expand infraestructure. It doesn't even have to be in the US, there's also Mexico and Canada where they may get more incentives, since they are in the NAFTA (what's it calld now?) region.
 
Grimlakin said:
Actually I think if someone took the initiative to stand up a fab to make current gen hardware they would win on profit for a while. Head units and such don't need tiny cpus and don't need extreme efficiency.
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It takes years from ground breaking to wafer production. The lead time on the lithography equipment itself is more than a year.
 
I think the bottom line is we do need more. Geography can certainly play factors as does political factors but the obvious takeaway is that the current system cannot suffice. The funding they are asking for is a pittance compared to what it takes to build even one fab. The new act is supposed to get around $50B. It takes around $20B-50B for one facility. I'd say it's more of getting a foot in the door for possibly a new way of doing things down the road. It also doesn't help that each fab can usually only produce one or two types of wafers for its lifetime. The extremes of lithography seem to be getting larger now as 2nm is around the corner meanwhile we see Intel and other companies refocusing on 12nm or larger dies during all this in order to meet demands with what they do have on hand.

Stoly said:
What if instead of get united to get funding, they would unite to invest to create/expand infraestructure.
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I do agree that from infrastructure to funding the industry should be doing what it can but that cannot really be done without some engagement from the government. Even if they could it's all but guaranteed that should they succeed someone on a political level would then feel the need for greater involvement for a slice of the pie so why not have everyone at the table in the first place?
 
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