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"The iPhone maker said last month it will lose $3 billion to $4 billion in sales in the current quarter ending in June because of the chip shortage," The IPhone maker has $3 to $4 billion in incentives to fund its own factory
> But economics works on incentives. > The economics don't line up. Suppose you're Google. You know what's cheaper than investing $100m in a new chip manufacturing company? Lobbying for the government to invest $100m in the chip manufacturing company. This is why "the economics don't line up", and "the incentives don't align". No shareholder would want you to do the financially irresponsible thing of investing in a r…
What are the geopolitical consequence of a de-coupled chip supply chain? Recall TSMC is headquartered in Taiwan, which has been a point of contention in US-China relationship since the 1950s. Please discuss civilly.
IMHO a more sustainable strategy is the government taxing the environmental and human rights externalities of off-shore production.
To all those saying that those companies can afford it themselves, remember that there are reasons they don't. The economics don't add up. Companies tend to do what is in their economic interest to do. Something like this can change the economics, which could be a good thing.
>> To all those saying that those companies can afford it themselves, remember that there are reasons they don't. Automotive chips for example tend to be produced on older nodes, not fancy 14nm and below at TSMC. I'm not talking about SoC used in infotainment but all the micro controllers all over the car. There is really zero incentive for a chip maker to expand capacity of old nodes since they are obsolete in some…
On sells a variety of components -- some are completely commodity and are produced in super cheap fabs in Malaysia. Some are mid-tier and are (or were) made at fabs in Phoenix or Pocatello. And some are high-end and come out of the Gresham fabs that they bought when LSI went fabless.
There's value in producing the commodity stuff. Obviously they're not going to enter a bidding war with TSMC for cutting edge manufacturing equipment to make commodity voltage regulators. But they still invest in fab technology at the lower end.
I don't think ONN is particularly special in this space. They had plenty of competitors and they worked to distinguish themselves on cost, depth of their product catalog, and ability to execute.
Couldn't this be a positive long term benefit of Corona? A push back against globalisation and more domestic production in each region of the world.
To all those saying that those companies can afford it themselves, remember that there are reasons they don't. The economics don't add up. Companies tend to do what is in their economic interest to do. Something like this can change the economics, which could be a good thing.
Can you please elaborate? I struggle to discern the ultimate effect of private capital versus government funds in this situation. Ideally, a business’ problems are handled by itself, not via the federal government using taxpayer monies.
On the other hand, the government potentially has a lot to lose if domestic companies are completely unable to produce hardware needed for critical infrastructure. The government also benefits from these companies expanding their supply chain to include domestic production, so the companies are asking the government to provide enough capital/tax breaks to make domestic production viable, and they're trying to convince the government that this provides enough value to the USA for it to be worth it.
But this is being pushed by lobbyists paid for by giant corporations, so it's fair to be skeptical. In reality, the $50B number probably sits somewhere between "the bare minimum needed to make this viable" and "a handout pocketed by greedy corporations".
I don't want to hear it creates jobs, it generates blah blah blah, a real equity stake and possibly repayment of the capital. Creating jobs should be a happy by-product of subsidizing an industry that is probably more well capitalized than any other in existence.
According to (https://startupanz.com/5-tech-giants-hold-588b-cash-reserves...) Amazon, Apple, Google, and Microsoft had 526 billion dollars between the four of them in cash reserves. They have over half a TRILLION dollars in cash. If this were life or death, they could afford anything.
But the calculus is offload risk onto the tax payer (despite being a shareholder directly in all those companies or indirectly via mutual funds/etfs), I don't want to be left holding the bag with no upside beyond the general sentiment of 'national security was secured' while private companies reap all the benefits.
> But economics works on incentives. > The economics don't line up. Suppose you're Google. You know what's cheaper than investing $100m in a new chip manufacturing company? Lobbying for the government to invest $100m in the chip manufacturing company. This is why "the economics don't line up", and "the incentives don't align". No shareholder would want you to do the financially irresponsible thing of investing in a r…