Germany paying $5.5B for Intel fab | Hacker News Reader

Germany paying $5.5B for Intel fab

electronicsweekly.com

453 pointsthrowaway4good547 comments

Investing in local chip fabs is long overdue. These are incredibly important for geopolitical stability and should be distributed world-wide. We've centralized too many fabs in too few places in the search for low cost.

It is very important for national stability. A highly-interconnected global economy is arguably better at securing international stability.

That was the main argument for global trade already in 1914. France was Germany's most important commercial partner, and vice-versa. All German rifles had stocks made from French walnut wood! All French locomotives had German-made tubing! This stupid mantra was repeated ad nauseam after 1991, too, with silly op-eds from Friedman and friends about how two countries with McDonald joints in both can't be at war and similar inanities. Surprise surprise, such wars happened many times since then (the latest being, of course, Russia vs Ukraine).

A connected world is not a guaranteed sufficient condition for peace. But that does not mean it's not a necessary condition for peace. One could argue that without economic interconnectivity, Europe could have fought WW1 much earlier, or would have had wars much more often.

You can and should have both. It's a form of defense at depth.

The theory of comparative advantage (David Ricardo) means it's worth specializing. But the counter argument (local resiliency) is also important -- but it may mean less efficiency in the short run, as a kind of investment against risk.

All that is fine, but it opens up the opportunity for short-sighted decisions (basically a mercantilist view that exports = good and imports = bad) like tariffs to protect local mfrs (which removes incentives for them to be efficient).

In short, like everything in life, there's not a sharp decision.

Entering war in 1914, one of the French traditional soldier costume included bright red pants (that made them easy to spot and shoot into on the field). The dye came from Germany. And it was very cheap!

And in 1812 the UK was the US's biggest trading partner. And that created major tensions in the US, with New England almost threatening secession over it. But the war still happened.

Friedman launched what I call Friedmanism: The belief that vapid and banal observations are the best way to understand the world. His McDonald's observation launched a thousand opinion writers to imitate him

The economic sanctions against Russia really do seem to be creating quite a lot of internal pressure to stop the war in Ukraine which is not going so well.

Without those sanctions, it is quite conceivable that a troubled war effort would not be nearly so much of a problem, but because of the trade dependency Russia feels quite threatened by the consequences of war. Not enough to have prevented it in the first place, but they overreaced.

McDonald's is now leaving Russia. A local company is taking over operations there and will operate under a different brand name.

https://www.npr.org/2022/05/16/1099079032/mcdonalds-leaving-...

Your analysis is incomplete at this point. We do not know what will be the outcome of war. How long will sanctions and general isolation of Russia hold and what that might result in.

Perhaps it will(as it seems now, also) be seen as catastrophic mistake. Like Russia selling Alaska to US. My point is, it is way to early to tell and even if we knew the outcome: we have to have few events/outcomes like that for them to become an example of mistake to not make.

Generally countries can do whatever, despite all. It is more important we deter them and have tools to do that as broader "world" community. Otherwise we would have to forcefully own "other" countries to secure such peace.

I'd like to think, though, that today's economic connections are less replaceable than wooden stocks or steel tubes. Try replacing modern electronics with local resources when you're Russia, for example.

more interconnectedness = less % chance of war

not absolute 0 % chance of war

How many more wars would there have been without this interconnectedness?

This is the same logic that because some vaccinated people get Covid, vaccines are stupid and don't work.

See, that's the problem with franchises. If every McDonald's was run directly by McDonald's HQ, then surely McDonald's would have pressured Putin not to attack Ukrainian cities with McDonald's restaurants in them.

If Taiwan didn't have the world's most advanced semiconducter industry, which China (and all other nations) rely on, China would have long ago attacked it.

So that's an easy example of how trade helps keeps peace.

> highly-interconnected

I think the problem is, decision makers need to understand what interconnectedness means, and not just on an abstract level. If you make things, you're intimately familiar with just how many components come from China. You're deeply aware of the fact the machines you use are made in basically every country in the globe. That the materials you consume come from literally every corner of the planet.

People tend to think about globalization as a matter of buying discrete commodities from different places: bananas from panama. They don't understand that essentially all products today are amalgams from different factories scattered across the globe. That leads to crazy weird decisions like Brexit, silly trade wars, etc. People don't realize that cutting a country out of the system is less like not talking to somebody, and more like cutting out a big chunk of one of your organs.

This is also the problem with something like the Buy American Act. I recently heard about a case where pipes(?) had to be pulled back out of the ground because it was discovered that the steel for the bolts had come from China. All this creates enormous overhead and worsens inflation, not make it better.

I used to believe that but have started to serious doubt it. Some counter-arguments:

1. It's reasoning a'la "It's economically inefficient therefore it's less likely to happen". In my opinions, governments are absolute experts in implementing economically nonsensical policies, international conflicts included.

2. Any link between nations can be weaponized, i.e. imposing tariffs, banning imports/exports, and so on. The greater your dependency on me the more ways I have to harm you.

3. Such weaponization will naturally harm your own citizens but you, as a decision maker, will bear very little cost.

4. The easier it is for me to replace you with an alternative the more likely I am to use that against you -- this is classic BATNA. You don't like my export quota? So what, I've got more interest than I can handle and you can build your batteries without lithium if you don't like that.

This argument has been made before. https://en.wikipedia.org/wiki/The_Great_Illusion

Unfortunately, it didn't work out. https://en.wikipedia.org/wiki/World_War_I

Economics is relative. If you go to war and win, you are wealthier than the enemy who lost. If you are confident of victory, the "cost of war" thus matters less, because you get on top anyway.

Of course this only applies in a vaccuum. If there are any nations you don't attack and win, they can just build up their economy while you tank yours fighting and then swoop in to defeat you on the cusp of your victory.

Basic strategy in the game of Civilization. The rest of the world gangs up against a warmonger and unless they can promptly achieve world domination, ultimately self-destruct.

Interconnected yes, centralized somewhere out of your control? preferably no.

In this case, you don't want to be dependent on one geopolitically unstable island. If there is a war, it won't be the EU's decision to start/stop it. You'd want China to be dependent on EU and vice versa, to make it costly to start a war. But if China has nothing to loose by attacking Taiwan and the West would loose all advanced electronics... This is not going to bring any kind of stability. You might only be forced to buy those chips from China, giving the potential aggressor even more leverage (and money)

Given the recent news I think that there is no correlation. Russia and the EU are giving each other the finger and no amount of mutual trade changed Russia's long standing attitude of taking all they can get (of course all global powers do that.) Actually, no trade at all between Russia and the EU would have made that area of the world more stable: the EU won't have to scramble to replace energy providers and no sanction could harm Russia. There would still be a war but nothing else.

For generic trade, yes. But 2020-2022 taught us about what happens to supply chains in emergencies.

In March 2020, I made the following predictions:

1) National governments will do what it takes short to provide for their citizens, even if they have to print money to do so, and risk inflation. Check.

2) Supply chains will be shaken up, costs for most goods will go up. Check

3) National governments in Western countries will seek to have strategic industries moved back to domestic or friendly territories. Check.

4) International trust will detoriate, and international conflict will become more likely. Check.

5) As inflation goes up, central banks will try to raise interest rates, but too slowly and too little. Check.

6) At some point, interest rates will rise to a level that causes a severe recession, with rising unemployment, even though inflation still remains higher than the interest rate. As people take to the street, central banks are forced to lower the interest rate, and possibly resume QE. Still open.

7. As interest rates go down, inflation goes even higher than before step 5. It will remain like this for the best part of 10 years (with high volatility), before some countries are willing to take the Volcker medicine for real.

8. As the economic forest fire ends, debts are erased, retirees have lost their savings and the next super-cycle begins.

It’s also very good at securing international ossification, creating a stultifying society of sameness, with the same few billionaires, multinationals, and technocrats running the show, pushing societal and international stability in service of profits.

I don’t think the result is a net positive. It looks more like keeping a lid on justified dissatisfaction while preventing any upset of the status quo.

You have a little feedback loop here because if you optimize only at a global scale and ignore local scale, you could create unstable local scale systems which destablize the global system as well. Hence the many current failures of neoliberalism.

And of course, as you point out, if you only optimize on the local scale and ignore the global scale, you'll also create an unstable system. Hence the failures of extreme nationalism we've seen historically.

Both cases can lead to instability because of their relationship to one another (the global system is composed of localized systems). You need to look at balance across the entire picture, which means you can't just ignore your own country and its people but you also can't ignore the rest of the world, either. It's tough trying to create a good stable global system that isn't disenfranchizing some large segment of the population.

Up to a point. Like anything, there’s trade-offs that have to be considered. Globalization, at its maximum, would centralize the production of resources to places that are most efficient. As we’ve seen, this causes huge problems when the production and/or distribution systems go down. We finally got a taste of that and are paying the price for it. Some level of decentralization will be good, but hopefully we don’t overdo it and end up too far in the other direction.

I think the parent makes a better point in concrete terms. Geopolitically interconnected trade is all well and good in theory, but putting two superpowers at odds over the consolidation of oxygen right off the coast of one of them, with a long-standing grudge between them into the bargain has obvious implications for stability.

All of economics looks great on paper until basically any little happenstance quirk utterly breaks the whole thing.

  > Geopolitically interconnected trade is all well and good in theory, but putting two superpowers at odds

one impression i get is that perhaps economists and leaders thought they could just leave everything to the market - interconnectedness economically through world-wide ("free" market) capitalism - and then they could politically hang up their hats so-to-speak (everything would take care of itself) because everyone would reach great prosperity

obviously, as we have seen in the past 40 years, both within and without there has been alot of economic turmoil (economic crisis) instead of pure prosperity and it turns out politicians couldn't outsource their jobs to the market

countries and regions need to politically strive for peace, cooperation and friendship, the market and trade isn't enough imo

A system that doesn't rely on perpetual tension in the search for ever expanding profit would be far better for stability. It's typically been the case that the ones who have the most influence in government know how to make huge profits from instability and conflict. Take a look at the companies making huge profits from the current instability.

And, in particular, the monopoly Taiwan has over precision chip making is deeply important to their national stability.

The more interconnected the global economy is, the more single points of failure there are. No thanks, I'd rather society be more resilient.

> more single points of failure

Multiple single points of failure is an oxymoron. Either there is one point of failure and it's "single", or there are multiple and by definition no longer "single".

>> Investing in local chip fabs is long overdue.

Nah, this is a bargain. Rather than chasing the technology for 50 years, they just waited until it's already mature (2nm may be the end of the road?) and spend a few billion after all the development has happened elsewhere. BTW Germany is already home to some fairly advanced non-EUV fabs with Global Foundries.

> (2nm may be the end of the road?)

from https://en.wikipedia.org/wiki/Bremermann%27s_limit :

>However, it has been shown that access to quantum memory in principle allows computational algorithms that require arbitrarily small amount of energy/time per one elementary computation step.[6][7]

Not the end of the road.

I don't think this is why fabs were centralized. I think this is because when you start to decrease node size, the fab costs go up astronomically so to keep the cost in check you need economies of scale and with the current manufacturing techniques you can achieve this by centralizing manufacturing.

Seems to me that most software is horribly inefficient anyway. If push came to shove we might just consider making better software?

The cutting edge of software that mostly uses these advanced process node sizes is not horribly inefficient. The new applications enabled by, for example, GPU-accelerated ML are not the same as running 400 chrome tabs on an M1.

The hot paths in most important high-end computing are mostly quite efficient.

> The hot paths in most important high-end computing are mostly quite efficient.

it’s hard to determine the lower bound on a lot of these things. in scientific computing (e.g. physics sims) i still run across a lot of runtime branching that could easily be compiled out if we were using languages that had stronger type systems/templates. we use linear approximations for a lot of things, but it’s been shown that smarter interpolation can let you decrease your resolution without losing accuracy/stability. there’s an easy 2x or more perf gain every time you do that successfully. there’s also the boundary conditions: we always simulate more volume of space than we’re actually interested in so as to avoid certain types of distortion (reflections from the boundary of the simulation). over time we’ve learned tricks for reducing those reflections: we’ve applied a lot of general-purpose optimizations, but there’s evidence that we can go further if we encode more simulation-specific information at these boundaries. this whole area has just been slow, steady, compounded optimizations.

i don’t work in ML, but i find it very unlikely that (a) optimizing neural networks is a completely solved problem or (b) that you all know how to train them using the fewest iterations.

you make sweeping statements that just aren't obvious to me.

It's depressing how bloated and slow some software is despite running on way faster machines. The software engineering accomplished in the 90's was nothing short of astonishing.

Software engineers are expensive too.

Software is bloated and slow to make it faster to develop mostly.

Look at your average website with 85 megabytes of JavaScript and Bootstrap for the UI.

TreeShaking in theory can get rid of all that unneeded JS - and there should be something that can do it for CSS, too.

But most people aren't using it. And even if they did, there would still be a lot of bloat left over from using the libraries to make life a little bit easier.

Go to average midsize startup and the amount of this going on is multiplied exponentially by the number of developers.

There's not really a cure here.

There's not enough engineers that know how to do things absent these frameworks - that even if you do know - it's still not worth it because the people you'll be working with probably don't.

Didn't you and parent both say "to keep costs low"?

Will it make much of a difference, though?

Sure they can fabricate the chips, but a lot of the raw material needed will come from places like China.

Right now, the raw material will come from China because that's where the resources are developed. But once a fab is in place, it makes sense to push more to develop local resources, or at least among more diverse allies.

It doesn't make sense to do that now, because you'd just be shipping local resources to a foreign fab, so that's still a bottleneck. But I think having a local fab is the tipping-point.

Which raw material specifically?

Norway is the fifth largest exporter of Quartz. Turkey is third. I think there's enough Quartz in Europe for silicon.

For silicon wafer manufacturing there's Okmetic Oy in Finland and Siltronic AG in Germany.

It's a move back down the supply chain. Fine, they haven't completely verticalized the entire supply chain. It's still a strategic move.

China is getting a fair bit of the precursors from Africa. European countries are in a fairly good position to do business with African countries.

In the very least I think it's easier to stockpile resources than chips.

copper, silicon, gold, aluminum are sourced from many countries so they wouldn't need any raw materials from any particular country. Also the machines used to make the Fabs are sourced right next door in the Netherlands

ASML is in the Netherlands though.

Edit: Yes ASML is obviously not a chip fab but they supply the machines that actually fabricate the chips.

Manufacturing anything large is an international affair these days.

https://www.asml.com/en/news/stories/2020/inside-high-tech-m...

"ASML has five manufacturing locations worldwide. Our lithography systems are assembled in cleanrooms in Veldhoven, the Netherlands, while some critical subsystems are made in different factories in San Diego, California, and Wilton, Connecticut, as well as other modules and systems in Linkou and Tainan, Taiwan."

And you can assume those factories depend on sub-assemblies from lower tier factories which are made in even more places.

>Manufacturing anything large is an international affair these days.

...or even the humble pencil:

https://genius.com/Leonard-e-read-i-pencil-annotated

ASML's core IP was developed and is owned by the US government, that's why they can't ship anything to China without the US's permission. ASML has some fancy stuff but is entirely dependent on the US at the end of the day

from all the way back in 1999 - https://www.eetimes.com/u-s-gives-ok-to-asml-on-euv-effort/

Correct, but ASML is not a chip fab

No but it is the monopoly supplier of the single most important device for fabs.

If ASML (and all their knowledge) disappeared off the face of the earth today progress in semiconductors would probably be set back a decade or two.

The fact they are a single company in one country that the global industry depends on for progress in semis should be of concern.

I think the point was that high-tech shouldn't be concentrated in one location. What if ASML was in China?

ASML also makes their high end lithography machines (the ones that cost $100M+ a pop) in Connecticut, USA: https://www.asml.com/en/company/about-asml/locations/wilton-...

Yup

May have had something to do with these tweets [1] from Emily Haber @GermanAmbUSA German Ambassador to USA:

>> "The current geopolitical situation and its impact on supply chains has triggered a discussion about “technological sovereignty” in the US and Europe. For us, it means being able to help shape future technologies in line with our values. We see the USA as natural partners in this."

>> "It's one reason our Minister for Education and Research is visiting Washington. Welcome, Minister @starkwatzinger . Your visit will deepen our cooperation as we face intense global challenges! 2/2"

https://twitter.com/GermanAmbUSA/status/1534236635562491905

Why is the local fab specifically important? They're still going to fly the wafers to Malaysia or wherever for packaging, right? And the tools and chemicals will all be made elsewhere, won't they? It's not as simple as having a steady supply of apples from your local orchard.

I'd imagine it won't replace the entire supply chain in one go (although I think quite a bit of semiconductor tooling is already manufactured in the EU), but I think it's a step on the path towards that. Which is probably a good thing considering how fragile it appears some of our hyper-efficient globalised supply chains can be

That part is solved:

(1) German BASF is one of the manufactures for "semiconductor chemicals".

(2) More important: Getting parts from Malaysia (etc) is no issue as I don't think they plan to attack any neighboring countries in the next decade. Also, they did not start a trade boycott against Lithuania just over the name of an trade office.

If there is a conflict with China, maritime routes will become much less reliable than they are now, after 75+ years of peace and 30+ years of a unipolar international system.

Exactly.

Malaysia can still be a partner, however this is a big step that opens the door for replacing labor in distant countries with another EU neighbour. This is good for the entire EU.

Self sufficiency for products that are the lifeblood of your economy is attractive to governments.

Any of the things you describe can easily be replicated locally, fabs much less so.

Even more to the point is that it gives countries the chance to develop a high value competitive advantage that others cannot replicate.

Places like the EU would argue that they have the human capital to compete globally but they don't have the industry because of historical factors.

They're also creating a packaging center in Italy

https://gamingnews.cyou/here-is-intels-plan-for-europe-a-pac...

And an R&D center in France

https://www.intel.com/content/www/us/en/newsroom/news/eu-new...

There's a lot of assumptions there. Why don't you assume that it's about having as much of the supply chain locally?

Assembly services are all over the place. Here's a large one in Escondido, CA which is commonly used. https://www.qptechnologies.com/about-us/company-info-bios/

I think sourcing those things would be a lot easier than building a fab, on a time scale.

Most of Intel's fabs are in the US.

Yep. Accelerate the global warming for inefficient waste on local fab and pollute the environment globally. For the national security, we could sacrifice all countries including ourself. Hillarius.

Is the increase in cost known or predictable in decentralizing fabs? The argument for geopolitical stability is strong but at what cost?

Not just fabs, but other staples like baby formula.

Doesn't feel to me like microchips are in such short supply that any more would significantly contribute to the economy. Am I just unaware of the crisis going on all around me?

That wasn't the parent's argument. But, incredibly enough, there really is a shortage in microchips that has lead, among other problems, to shutdown of whole production lines for cars.

It doesn't necessarily matter to have local fabs: at least in the current situation, the worldwide chip production is still a mostly free market with products being sold to the highest bidder independent of location (as long as it's not Russia). But the confidence of this state continuing is certainly lower than it was a few years ago.

This will not do much with Taiwan being a single source for semiconductor manufacturing supplies.

Much of critical blockers for chemicals, consumables, materials will still be in Taiwan just because the semi industry is that huge there.

All 300mm fabs working outside of Taiwan are just few shipments of consumables away from stalling all the time.

When Russia attacks Ukraine, the 3rd world is fucked.

When China attacks Taiwan, the 1st world is fucked.

> When China attacks Taiwan, the 1st world is fucked.

China would be shooting themselves in the foot by invading, because it would equally fuck them. I've read in may places that as soon as China invades, Taiwan will blow up all the fabs and supporting supply lines. So even if China takes control of Taiwan, the semiconductor industry will be a smoldering pile of nothingness.

This article[1] does a great job in describing why this would be the case. Even if China prevents the destruction of those fabs and factories, there would still be tons of obstacles.

[1]: https://doxa.substack.com/p/why-a-chinese-invasion-of-taiwan

What makes Taiwan inherently better than somewhere else ? If it's just for historical and/or economical reason I don't see why Europe or the US couldn't build their own chemical plants.

You have to start somewhere, it took us decades to delocalise everything to Asia, it'll take decades to build these industries locally.

Your argument sounds like one for local investment in fabs. The point is that you develop industry (with subsidies) and the ancillary industries follow and then you (and the rest of the world) are not dependent on a single source.

Of course it's not enough to just pay Intel to open a fab you have to compete successfully with places like Taiwan and have a growing industry, otherwise that won't happen. That's the main risk here.

So Europe needs to start making supply factories, too.

With a fab, that's still difficult, but necessary.

Without a fab, however, that would have been deemed impossible and unrealistic.

Resource extraction and refinement are much lower capital-cost infrastructure than a chip fab. If, God forbid, all the eggs in that one basket get smashed, it's far more feasible for that infrastructure to be developed elsewhere.

It would still suck in the interrim, of course.

>Much of critical blockers for chemicals, consumables, materials will still be in Taiwan just because the semi industry is that huge there.

You mean like Linde, Air Liquide, Dow, Merck, BASF, Entegris, Shiply, Fujifilm, Wacker and so on?

Those are not Taiwanese.

> semiconductor manufacturing supplies

Which supplies specifically? Aren’t the big ones just silicon and solvents?

Just wait 10 years until we get rid of it again like we did with AMD and Infineon.

This is spot on and I feel a lot of the comments here miss this context. Germany has tried this before and it was a gigantic waste - they build a fab somewhere at massive cost, claim it as victory because it's "invested locally", zero ecosystem materializes around it, and ten years later the fab is obsolete and shuts down. It helps nobody except the chip company.

Erm, maybe I'm out of the loop, but hasn't Dresden developed into a fairly healthy technology "hotspot" (at least for "German standards")?

(e.g. AFAIK the former AMD fab is now GlobalFoundries: https://www.silicon-saxony.de/nc/mitglieder/mitglieder-foerd...)

GloFo is still producing at maximum capacity (of course, like ~every fab right now), a small ecosystem has developed, and Intel is... oops, not quite moving to the same area - 230 km away is not commuting distance.

That's what I've always heard and searches seem to confirm [1]

1. https://www.seedtable.com/cities/dresden

Fab operators are hedging against future geopolitical conflict with China and how that will impact Taiwan. Many will scoff at this, but Intel, Samsung and others are putting serious money on it. The people that can still make devices when Taiwan is blockaded by Chinese battle fleets will make bank.

It's unfortunate that there will be an economic incentive for that to occur.

If they're willing to build a lot of processors rather than add dangerous features to use one chip or core or whatever maybe they can make it multiples of ten years this time ;-)

Wenn sie bereit sind, viele Prozessoren zu bauen, anstatt gefährliche Funktionen hinzuzufügen, um einen Chip oder Kern oder was auch immer zu verwenden, können sie dieses Mal vielleicht ein Vielfaches von zehn Jahren schaffen ;-)

Yes, Bosch just built a huge factory in Saxony

I hope they treat the workers well.

Maybe their chips will end up in my next laptop.

(I think I can keep repairing this one for a while, sorry I'm a bad capitalist or whatever.)

> Maybe their chips will end up in my next laptop.

Unless your laptop is also a car that's probably unlikely ;)

(AFAIK the new Bosch fab will mainly produce chips for the car industry)

No comment on the actual content, but I love how the German version is almost 30% longer ;-)

Intel spent tens of billions on stock buybacks and now they're getting subsidies to build fabs.

Why does the middle class taxpayer have to bail everyone out, with lower living standards due to taxation and inflation.

It's about national security. A fab is necessary for national security

Subsidizing an American company is not necessary for Germany's security. In fact, it undermines it.

That's a silly and naive take. This investment will tremendously boost the semiconductor ecosystem in Germany. In the long run, this will do wonders when German companies want to or have to expand their capabilities, find more employees, design, package or assemble chips, buy wafers, equipment, supply chain, you name it.

It's about building an ecosystem, much like SV. People on HN of all places should know this.

There will be a huge knowledge transfer into Germany during this process. Fab's are fabulously intricate and difficult to run. $5.5 billion to teach your populace how to make chips? Worth it.

Ideally, the EU would be trying to build its own semiconductor industry. I don't see that kind of foresight in any of our political leaders, much less mine in Germany. So the next best thing is to ensure that the current company we're reliant on builds local production.

I mean, the fab is physically in Germany. That's what matters for national security.

As an American, would I (hypothetically) rather have a Germany company building F-35s in the US than an American defense contractor building F-35s in Indonesia? I think the answer is obviously "yes".

The fab is in Germany. In a scenario where the US and Germany are at odds Germany is the one with a fab. I doubt it weakens Germany's position unless they sacrificed funding some German chip maker, but I don't think they have anything near as huge as Intel.

I mean in theory but not in practice

The factory is located on german soil, so if push comes to shove it is a german factory.

Would you mind explaining why you think this is the case?

The fab is still here. Ownership can change in the worst case. It would be nice to have a leading EU-owned chip maker, but we just don't have that yet. For the short term and the worst of cases, just having the thing matters a lot more than the profits staying here.

Keeping their nuclear plants running is also necessary for national security and yet look where we are.

A decade of basically zero interest rates. Can't they borrow the money?

> It's about national security. A fab is necessary for national security

How does germany funding a foreign/non-german company's fab part of national security? What about expelling a foreign occupying force? If the germans cared about national security, shouldn't they be looking in that first?

If germany was funding a german company's fab, it would be national security. What germany is doing is paying tribute to a dominating foreign empire. No different than india sending their goods to britain during the colonial period.

> What about expelling a foreign occupying force? If the germans cared about national security, shouldn't they be looking in that first?

*looks over at Ukraine*

Yes, I'm sure the Germans are eager to expel American troops right now.

The US and Germany are allies. In fact, I believe “German” is the largest ancestry group in the US.

Besides which, it’s extremely common for entities to invest in mutually beneficial agreements with other entities.

They stopped doing that in Q1 of 2021 for obvious reasons.

Notice all the zeroes https://www.intc.com/stock-info/dividends-and-buybacks

Also, "Upcoming Dividends: There are no future dividends presently declared for INTC as of Jun 7th, 2022. The declaration and payment of dividends are at the discretion of the Company."

I suppose one could argue that they shouldn't have done that in the quarters before now but they are where they are.

I think, declaring dividend is linked to their earnings report. For ex. last ER was on 4/28 and few days before that, they declared their dividend. So, its not given that there won't be any dividend in 2022 or so. Next earnings is in Jul, so we would get to know that sooner. As a side note, if any company declares dividend reduction or stops them altogether, I would expect the stock to drop like a rock. see AT&T in last year.

https://seekingalpha.com/symbol/INTC/dividends/history edit: added history

Stock buybacks are not "spending" and don't cause Intel to lose money.

Germany's negative interest rates indicate they haven't been spending nearly enough, though.

This sounds almost like a parody of an uninformed rant against capitalism.

Stock buybacks are a simple standard way to distribute company profit to it's owners (alternative options are dividends, retaining the profits in the balance sheet, or reinvesting them). This is decided by Intel's management and overseen by the board who represent the interest of the stock owners (who are widely dispersed and include lots of pension funds of commoners, not just billionaire fatcats).

The EU by way of the European Commission appears to have decided that it's of strategic interest to subsidize Intel fabs as a way to induce them to build in Europe, as opposed to Asia (which according to Intel is 30%-40% cheaper). The European middle class is not "bailing out" anyone here.

If you want to rant, a better starting point IMO is to 1) contemplate whether the European Commission is acting in the interest of the German/European citizen (and if not, how to fix this democratic deficit) 2) check if Intel's claims are truthful, and if so, why Asia is so much cheaper and whether that is worth doing something about that

In any case, I don't see what Intel's stock buybacks has to do with European taxation and inflation in this case.

Subsidies are always bad for the common citizen so no, it is not acting in the interest of German/European citizen. Subsidies are the product of flawed economical thinking even when "national interest" is used as a BS justification.

The "never spend on anything or get into debt" mindset is common, but it's odd to find it on the forum of a VC firm. Just because something is called "subsidies" doesn't mean you don't get things back in return.

Subsidies such as this are a net-loss for the average citizen of Germany and whatever country would have otherwise been host to this factory. It may well be in the interest of the German citizen, and it happening means that this is indeed the believed by people who studied the specifics.

A better example for wasteful subsidies may be the competition for their new HQ Amazon ran between US cities, only to place it where they wanted to go in the first place. There, as well as in the Intel case, a deal prohibiting competition by subsidy would be in everyone's interest.

A one time subsidy that likely pays out more over time than it cost is always a net negative? While obviously there are bad subsidies, I find it hard to believe that it is always the case.

Is it really necessary to establish the necessity of strategic domestic manufacturing capabilities in a post COVID world? We saw what happened when there was enormous need for masks, then later vaccines. The fact is that Germany as a nation that has so much of its economy linked to high tech manufacturing uniquely would benefit from securing a most domestic chip supply. The evidence for why it is necessary has already been laid bare in the past few years. The Chinese are already massively subsidizing their fabs. So is South Korea, Taiwan, and all the other major players. If you want fabs you must subsidize or die.

It's going to be a while before we are not depending on China. If you look at this 2020 Apple List of Suppliers: https://www.apple.com/supplier-responsibility/pdf/Apple-Supp... you can see the large variety of companies they they rely on for manufacturing.

Plugging this into Excel, you get the following distribution:

Country Count:

China 156 Japan 40 US 30 Taiwan 26 South Korea 23 Vietnam 21 Malaysia 15 Philippines 15 Thailand 15 Singapore 14 India 9 Germany 8 United Kingdom 4 Austria 3 Mexico 3 Belgium 2 Brazil 2 Czech Republic 2 France 2 Indonesia 2 Australia 1 Cambodia 1 Costa Rica 1 Finland 1 Ireland 1 Israel 1 Italy 1 Malta 1 Netherlands 1 Norway 1

apologies for the formatting.

  China           156 
  Japan            40 
  US               30 
  Taiwan           26 
  South Korea      23 
  Vietnam          21 
  Malaysia         15 
  Philippines      15 
  Thailand         15 
  Singapore        14 
  India             9 
  Germany           8 
  United Kingdom    4 
  Austria           3 
  Mexico            3 
  Belgium           2 
  Brazil            2 
  Czech Republic    2 
  France            2 
  Indonesia         2 
  Australia         1 
  Cambodia          1 
  Costa Rica        1 
  Finland           1 
  Ireland           1 
  Israel            1 
  Italy             1 
  Malta             1 
  Netherlands       1 
  Norway            1

Much love! Thanks for the formatting :)

It is more complicated, all 9 companies in India are subsidiary on Chinese companies. Same is true for lot of companies in Vietnam, Malaysia. This gives diversification in case of a regional epidemic or natural disaster, but how will they behave in case of a geo-political crisis.

However the suppliers this fab with its EU-subsidies aims to outcompete are not in China but in Taiwan, the US, and South Korea.

What is even funnier is that Intel has plenty money and is profitable and dividend paying even though nearly all of Intel's fabs are in the US (and thus suffering from the high cost level compared to Asia is a part justification for these subsidies).

They lost $ 20 billion in the last year.

They made $20 billion last year.

Intel earnings per share is still positive. Do you mean they made less than before?

Everyone is paying for chip fabs. This isn't new? Especially Intel and TSMC are in a position where they can require money for a fab. Together with Infineon, NXP or ASML we could built up own production lines but these will also cost a lot of money. Because China is doing the same. Europe just missed to do the same, strategic investment into the economy. Free trade...China never believed in and we shouldn't neither.

I honestly think this is something the UK should be doing too, however with the current political environment it wouldn’t be possible.

It's really common for chip companies to shop around and start a bidding war to see where they can get the highest subsidies.

Honestly, this is good policy. We can't have our complete global supply chain held over our heads when China goes and does something crazy inevitably.

Pssst! Don't tell anyone I told you: they are already doing crazy stuff, but we shouldn't complain too loudly, or else...

There's a difference between internal and external genocide. Not morally, but realistically.

As we've seen with Iraq and many other times, trying to stop internal genocide is not really doable.

> Honestly, this is good policy. We can't have our complete global supply chain held over our heads when China goes and does something crazy inevitably.

American/Italian and agreed.

Though I worry what will happen is they just spin up plants in the various totalitarian states of SE Asia in parallel.

(Eg: Vietnam is communist, Thailand is a kingdom, on the ground they are allegedly very similar, but I haven't been to either personally.)

This is a very bad policy. We should instead invest in local companies, not a American monopoly like Intel.

> This is a very bad policy. We should instead invest in local companies, not a American monopoly like Intel.

The origin of the company is irrelevant if they respect basic norms.

How exactly is "intel" a monopoly when Advanced Micro Devices Inc. is also American?

> The origin of the company is irrelevant if they respect basic norms.

This is not correct. American govenment has a habit of using American companies to push foreign policy objectives.

That hardly matters as American and EU foreign policy are almost completely aligned.

Intel is far from a monopoly in the foundry business and is frankly, the only realistic option outside of TSMC to make this happen.

And the US does the same thing in terms of tax breaks for German automotive companies building manufacturing plants.

Which again, makes sense, because you want to make sure you have manufacturing across continents in case Russia invades Germany and blows up all of the auto plants (for example).

Russia is not going to invade Germany. Stop spreading nonsense.

You probably shouldn't be downvoted for that. Russia of the present, and for at least the next few decades, is entirely incapable of getting anywhere near staging an invasion of Germany. Russia and it's hyper incompetent military can't even make it a quarter of the way through Ukraine.

The best Russia could do is bomb Germany from a distance, which could pose a small threat to valuable infrastructure like fabs.

Frankly, with NATO around they don’t Have to invade Germany to get Germany involved in a war - if they invade any NATO member, Germany will get involved, which means Germany is a target for retributive strikes.

You are very confident of that. I wouldn't be so confident of that.

We are - indirectly. Intel uses EUV machines provided by ASML.

The ASML machines Intel uses use EUV tech wich ASML acquired through their acquisition of Cymer, California and use licensed tech from Sandia Labs, also a US lab, meaning the US has full veto rights over to whom ASML gets to sell their EUV machines (spoiler alert, not to China).

> meaning the US has full veto rights over to whom ASML gets to sell their EUV machines (spoiler alert, not to China).

That's false. For USA to be able to block exports of the technology, more than 25% (if I remember correctly) of parts has to be of US origin. When the EUV program started, the share of US technology was much higher, but as the program progressed, it was diluted.

USA could still block sale of EUV machines, by refusing export/licensing of critical components, but they'd have to change their laws first.

Fact is that ASML voluntarily chose to block exports to China. In part because they want to keep good relations with USA. It's the US that funded the EUV program in the beginning after all. But I'm sure ASML was tired of China copying their stuff too, so it probably wasn't hard to convince them.

Intel was going to buy them anyway, regardless of where the fab is built.

Why? Germany doesn’t pursue political objectivity anyway.

I don't want my tax money filling the coffers of an American monopoly.

The alternative is that they take $5.5B from France and you lose the jobs.

Strategically, you want the semi jobs to seed local expertise.

What market is Intel a monopoly in?

They don't even have all of the x86 market. https://www.extremetech.com/computing/335650-amd-achieves-al...

Understandable, but that’s why western liberal democracies have been established. G7 summits leave no room for this kind of reasoning.

Why do you care about the origin of the company?

> We should instead invest in local companies, not a American monopoly like Intel.

but they'll bring CPU/Semico talent to germany and other eu countries

then with talent you can start building your own start ups, dont ya?

Having an established player that trains and employs workers creates a pool of experienced workers in the area. Those are exactly the kinds of people to get a local competitor started.

There are lots of local semiconductor companies (Infineon, Bosch). This money would be better spent on them.

Yes, also at 18Bn it is a HUGE factory ehich will make the area more attractive for smaller players. I think and hope they know what they are doing

I have to wonder if deglobalization and expensive onshoring is as much of herd mentality as glocalization and offshoring have been. Sure, if the no college white males of the US get their demographic last hurrah and elect a populist isolationist who pulls America out of NATO, then, yeah, it's bad times for a rational set of international interdependencies.

Or, if the Taiwan and Korean foundries are the best on the planet, everyone should contribute to the international stability it takes to maintain access to those resources. Almost every part of the tech industry benefits from global low-friction trade.

Brexit regret is a solid majority opinion in the UK. The US recently lowered trade barriers to solar panels from China. Hopefully sanity prevails. While it is possible to overdo the offshoring and JIT inventories, increased trade volume makes everyone more prosperous.

39/47 regretting brexit is not a solid majority. https://www.statista.com/statistics/987347/brexit-opinion-po...

Brexit regret is always a solid majority in the minds of the diehards, who claimed the day after the 2016 referendum (seriously) that a) millions of Leave voters already regretted their votes, so b) a do-over was the only right and proper thing to do.

Regret https://www.independent.co.uk/news/uk/politics/brexit-poll-b...

How many RISC-V research centers could be created with that money?

RISC-V research center do not build 5nm chips at industrial scale. And without 5nm chips at industrial scale, RISC-V research is useless.

And build those designs where?

A lot.

Sounds like a bargain given the local skill base support and industrial autonomy.

The most economical solution is to hand virtually all industrial expertise and capacity to China, who not coincidentally massively subsidizes its industrial base. China's government puts its thumb on the scale. Not doing the same is unilateral disarmament.

It will be clear that this money was wasted within ten years.

What a government needs to do to attract real manufacturing entrepreneurs:

- pro family policies (for people)

- pro immigration (for people)

- cut environmental laws (for capex make-right)

- cut business taxes (for gm make-right)

- cut personal taxes (for people)

- fight back against china-sponsored economic maneuvering at the multilateral level (to create a competitive market)

> - cut environmental laws (for capex make-right)

I'm with you on all but this. Cleaning up the environment is a very expensive, time consuming process. There's still about 20 superfund sites in Santa Clara County due to its heyday of tech manufacturing.

Our local community has been fighting for the cleanup of a 60 year old disaster. That they agreed to clean up 20 years ago. But they've barely started.

Germany hasn't been doing any of that except immigration, and it has fared exceptionally well over the last decades. Taiwan's chip industry is the result of massive subsidies that got it started.

And watch as your fledgling local business dies due to hundreds of billions of subsidies for foreign fabs. South Korea alone is subsidizing Semiconductors with $450Bn [1]. If you want local fabs, you need to spend money. Or you get to watch your automotive assembly lines stop because of chip shortages.

[1]: https://www.bloomberg.com/news/articles/2021-05-13/korea-unv... [1 Non paywalled]: https://archive.ph/9Gs8q

Sorry, I am a bit confused about these parts - how does it help manufacturing enterprises? (I am not saying it doesn't, I just don't understand, hah.)

> pro family policies (for people); cut personal taxes (for people)

I'm not saying this won't be wasted but in also skeptical of your policy? And why do we care so much about manufacturing anyway?

Open question. Will this be enough to support an ecosystem of related companies close by?

Why Magdeburg? I have a really hard time to find an argument that puts the city in an advantageous position relative to other competitor places (like Dresden, Munich agglomeration, Rhein/Main area, Hamburg agglomeration).

Already prepared grand space for industrial use with energy, water and public transport; 100% carbon neutral wind energy and very soon also water-neutrality were a few of the reasons given.

True, space is a selling point.

Why not? Cheap, Uni Magdeburg is pretty good in STEM, water (yes that is an issue!), close enough to Berlin and Wolfsburg (Volkswagen), good transportation.

Cheap place to build, cheap place to live, cheap labour, pretty good infrastructure. All of the cities you mentioned are very expensive to built in, but also to live in.

If the government pays subsidies they will combine it with strengthening economically weaker areas. No one needs more high quality jobs in the overcrowded and overly expensive Munich area.

Wow.

For those old (or well-read enough in history) enough to have a sense of just how dominant Germany once was, world-wide, in science, technology, chemistry, optics, etc. etc....this news feels kinda like a tombstone of German identity.

Umm, the German company Zeiss is the only company in the world capable of making the mirrors for the EUV machines used in this factory.

They're still have world leaders in power semiconductors with Bosch and Infineon.

This isn't the only fab in Germany btw. Global Foundries has a fab in Dresden doing advanced low-power FDSOI ICs.

You can't expect a single country to lead a majority of technical fields forever. That's unrealistic. I'd say Germany is doing completely fine.

Lol, Germany was never anywhere close to being a leader in chip manufacturing (and why should it in a global market). Arguably, even East Germany had a better chip industry than West Germany in the 70s and 80s, but that was still 5..10 years behind the state of the art.

For those really not familiar with the history - German's global dominance ran from roughly the early 1800's to ~1930. We're talking the era of the German Customs Union - https://en.wikipedia.org/wiki/German_customs_union That Union was mostly driven by the Kingdom of Prussia - https://en.wikipedia.org/wiki/Kingdom_of_Prussia

The median age in Germany is now 46 years old, ie closer to retirement than doing anything new/risky.

Why can't everyone get a help from the German government to start a business? I want to grow cucumbers, so it would be nice for Germany to pay to help me start a cucumber growing business.

I mean germany/the EU does pay subsidies to (cucumber)-farmers [0], there is literally billions each year flowing into keeping farmers somewhat afloat.

[0]https://www.zeit.de/wirtschaft/2013-11/agrarreform-landwirts...

The trick that he's missing is that first you hire a lawyer to figure out all the subsidies you can get and then you see whether the business is viable!

Maybe I am an US citizen and I want to start a business in Germany.

Okay, in that case you are eligible for a variety of loans, up to 40% of the costs of establishing the business, granted you are willing to establish it in the more rural eastern regions [0], additionally there is a wide variety of relatively lenient credits available for founding companies [1].

[0] https://www.iamexpat.de/career/entrepreneur-germany/start-up...

[1]

Joke is on you. Germany kinda does that for the unemployed https://www.arbeitsagentur.de/arbeitslosengeld/existenzgruen...

And in case you want to do something larger there is https://en.wikipedia.org/wiki/KfW which at least gives you loans.

Ensuring a strategic supply against encroaching French cornichons?

This could be a good chance for some universities with Chip Lab/Fab facilities across the world to start manufacturing even at small scale is important for every country self-sufficiency.

I was under the impression that this would count as direct government investment in a private company and would breach EU competition rules?

Can't they just give them a subsidy to invest in a friendly country instead? This factory will die the moment the subsidies stop

Wow. These deals amaze me.

Imagine you got given subsidies to live somewhere. I'm not talking about your wages - I'm talking about something extra. Well that is a direct equivalent here.

How any governance structure can think this is ok boggles the mind.

Is it not clear how we already live in a fascist state - where government + corporations are working together at the people's expense?

$5.5 billion.

So what's your plan when China makes good on their promise of trying to take Taiwan and either seize or inadvertently destroy TSMC's 54% share of global chip market[1]? German automotive industry would grind to a halt as they run out of chips. Better yet, if America comes to the aid of Taiwan, China would likely strike US bases in Japan and Korea, threatening even more of the global chip supply.

[1]:https://www.techspot.com/news/94856-economist-china-must-sei...

You're right! Give Intel and Tesla much more!! lol

Instead of laughing, answer me this: what is your alternative? Do you just let your economy falter as supply chains unravel?

Serious question - How do you propose governments encourage companies to do what they want? Yes it’s a subsidy but it also seems like the government in this case is essentially buying a service. I guess Germany would hire people to build this factory directly rather than paying a foreign company to do it? Which I imagine would be more expensive if it’s even possible to do.

Do you think there are better ways to do this within capitalism or are you proposing we dismantle capitalism?

Do you think governments are trying to encourage companies to do what they want?

Or are companies telling companies what they want?

Why do we have a situation where companies have so much and are given so much, and the people have so little. But pay for government largesse.

If you ask me, Intel and all those companies should never have grown so large. But, if you have to spend that money, why not use it to create a genuine home grown solution? Where is the German Intel? Wouldn't a German Intel provide the resilience you really want?

I think Germany is using the $5 billion dollars to encourage intel to build there plant in Germany rather than somewhere else, but I think your ideas sound great too. can Germany grow an intel for $5 billion? It seems to me it’s like hiring a contractor. I could learn plumbing but it would be a lot more expensive than hiring someone.

I don’t disagree with you that companies are given so much and have so much. I just wonder if it’s idealistic to think it’s easy to just “create your own intel”. Maybe not it’s not like Intel is without competitors. But just like the Plumber example, even if it’s not about the money, do they want to spend the time on developing a skill that may not be one of their core competencies? It’s not that I don’t get where you’re coming from ideologically, I’m just not sure where you’re coming from practically. But I’m no expert, maybe they should try!

>Serious question - How do you propose governments encourage companies

In some countries capitalism simply works the opposite way.

Companies pay governments to do business there? I mean this sounds great, I would love my grocery store to pay me to shop there. How do we make this happen? It seems to me sometimes like waiting for these kind of things to happen is cutting off your nose to spite your face.

Nice, I hope I'll be able to get job there

What kind of skillset is needed there?

I think one of the lessons the EU has learnt from the last 10 years is you cannot rely on international trade. Trump and now Putin mean the EU needs domestic weapons, chips, energy and a few other things...

EU is funding american companies now... what a joke this is

Couldn't Volkswagen build their own foundation for a sovereign and independent ecosystem?

Germany always enforce EU rules on all other members, but when it comes to them, they couldn't give two f ...

good luck to Russia to make its own chip fab now that no one will buy its gas

Does fab mean factory here?

Yes: https://en.wikipedia.org/wiki/Semiconductor_fabrication_plan...

> Whether or not additional funds are available from the EU is not known.

Fine it out of Google, give it to Intel.

Elon Musk would be way cooler if he built 10 chip fabs instead of buying twitter

SpaceX is really cool work for national security. Starlink helps communication, Falcon helps trip to ISS without Russian ship.

doesn't one state of art fab cost more than that?

Ah, some estimates put it as high as $20B, some as low as $3B.

Still, two nice fabs would be cooler than twitter.

Once again EU taxpayer money bankrolling US tech dominance. When will we ever learn to build up our domestic tech industry?

And before the chip hipsters crawl all over my back to prove we ackshually have a powerful domestic semi industry, please name me another EU company, other than ASML (a company 90% of people here never heard of before the chip shortage), that has the same margins, dominance and ability to shape the market, as much as the US based Intel, Quallcomm, AMD, Nvidia, Apple. I'll wait.

The thing is, other than ASML, most of our domestic semi companies (NXP, ST, Ericsson, Nordic, Infineon, Bosch, AMS, etc.) are only competing for relatively low margin chips with high competition, therefore bring home relatively little money, compared to their US counterparts which have monopolized high margin sectors (general compute, AI, graphics, etc) and rake in the big bucks.

Don't get me wrong, it's great we have our own semi industry, and we make great chips to boot, but I wish we could do more high margin products, as Chinese companies are hot on our heels with massive support from their government.

Remember the failed attempt from the merger of ST-Ericsson to take on QUALCOMM's ARM Snapdragon SoCs and modems in the mobile space 10 years ago? I was talking to a former Dutch manager who had a stint there and his reply dropped my jaw: "Yeah, that merger was never meant to ship any chips that can beat Quallcomm, it was just a vehicle designed to suck up as money as possible and funnel it into the right pockets, while some managers pad their resumes so they can move up at other companies later."

Source: Former EU semi engineer.

Does it really matter which country is the headquarters for the corporate owner? It's still a German plant hiring Germans and subject to German laws. The rule of law exists in both Germany and the US. German citizens can invest in Intel.

And, in the event of a US/German war, that plant is and will remain German, not American.

I think there's an excellent case for distinguishing that from companies from China, where non-Chinese citizens have a great risk of confiscation of their assets by investing, Chinese companies are subject to a lot of other rules even when operating outside China, etc.

The difference is that patents for inventions made for Intel by Intel employees go to the US, whether or not that employee is an US person. Those inventions, if made by Germans, could instead help the German - or European - tech sector. That's kind of brain drain without actually leaving your country and sustainably hurts European competitiveness.

> Does it really matter which country is the headquarters for the corporate owner? It's still a German plant hiring Germans and subject to German laws. The rule of law exists in both Germany and the US.

Of course it matters. The profit goes in the direction of headquarters, tax is paid in the country of headquarters, and the government of the country of headquarters has much bigger influence to the company.

I'd say it's German economic (and more and more political) dominance over the EU and US geopolitical dominance over Germany...

Right...

"TSMC, Samsung want slice of America's $52b chip subsidies" -- https://www.theregister.com/2022/03/28/tsmc_samsung_chip_sub...

"Intel and Micron pushing hard for subsidies from the US government" -- https://www.pcgamer.com/intel-and-micron-pushing-hard-for-su...

"Subsidy Tracker: Intel" -- https://subsidytracker.goodjobsfirst.org/parent/intel

"Intel boss presses Congress for manufacturing subsidies" -- https://www.theregister.com/2022/03/24/intel_chips_subsidy/

Sure, but that's US money propping up US companies, what's wrong with that?

It’s all interconnected, Intel fabs are worthless without ASML, you can think of Intel as almost like a general contractor at this point pulling capabilities from everywhere.

ASML should demand 30% of profits, like Apple does with its App Store.

If you want Europe to be as attractive as headquarter location of mega-companies as USA is, you may have to compete with USA on a lot of policies (taxes, labor laws, etc) that would turn Europe into a different kind of society. Do we really want that?

Many of these mega-companies are publicly listed. Norway alone owns a significant amount of stock in some of these companies. I'm not sure we have a problem. But I'm not gonna complain about trying to change this and get giant high-margin tech company going here in Europe. I'm just not sure how to do it.

>If you want Europe to be as attractive as headquarter location of mega-companies as USA is, you may have to compete with USA on a lot of policies (taxes, labor laws, etc) that would turn Europe into a different kind of society. Do we really want that?

No, but do you really have a choice? When you're selling tech products, you're competing on the international market, against everyone, including USA and China. If you work 35h/week and you get outmatched by a team who worked 60h/week, the end user will not care, they go for the best one, and the others loose. That's how international competition works.

And if they can deliver a better product at a cheaper price, they get the customers. The customers don't care if the devs who worked on that product are from US, China, or Europe and if they worked 35h/week or 60+.

That's why Europe is so underrepresented in big-tech internationally and the biggest wealthiest European companies are fashion related(LVMH) where the selling point is the name brand without any substance. That's why EU has not developed the iPhone and why Nokia, Ericsson, Sagem, Alcatel are gone from the mobile space.

Ideally, this brings a great deal of domain-specific knowledge to the EU and then the workers of this Intel plant are able to go create their own EU plants with their new knowledge.

Whether or not that extremely ideal scenario actually happens remains to be seen.

Zeiss-makes all the highly complicated mirrors that go into asmls machines

XFAB-specialty fab in germany

> domestic semi companies (NXP, ST, Ericsson, Nordic, Infineon, Bosch, AMS, etc.) are only competing for relatively low margin chips with high competition

Then maybe they should compete? (though those are not small companies - and with most products that are not as popular with Intel but are popular in other areas)

I think they missed the ARM boat, possibly. But they should go and ask for a slice of that money.

> please name me another EU company

There isn't any. That's because EU taxes and regulations make running a large-scale business less attractive - and because there really is no market for another big-chip manufacturer; if you want to break into that segment (even if it was a 'fair' market), the only way to compete is on the price, and that China can do better.

FTA: Whether or not additional funds are available from the EU is not known.

This is just Germany paying Intel to make unreasonable business decision reasonable.

These things usually happen for strategic reasons. For example, it could be possible that from purely business perspective it's the best to produce all the food in Africa, Russia or China but this leaves EU vulnerable to stuff going on in these places or conflicts with them, therefore you have common agriculture policy and food import-export controls.

The decision makers probably decided that completely relying on foreign IC supply is a risk they cannot afford, therefore they will pay to make it fixed. I wouldn't be surprised if EU also chips in.

If Intel’s new EU fabs operate under the TSMC foundry model, is that not a good thing for the EU? Let’s say I’m a smaller company in France looking to get a chip made on a bleeding edge node. I don’t have existing contacts in Taiwan. Surely I just go next door to Intel, right? If Global Foundries couldn’t pull off the leap to 7nm even with ASML next door, who do you suggest is capable of doing so other than Intel, Samsung, and TSMC, and is EU based?

I have some confidence that the EU would set favourable terms for given the level of investment.

It would maybe make more sense if it was a foundry offering their services to numerous fabless companies. Having an advanced one in the EU would be beneficial regardless of where the headquarters of the foundry is. But this one is just going to produce Intel chips as I understand, so basically it's just workplaces, and not a huge lot of them compared to the investment made.

We will have more semico experienced people how actually worked with state of art / bleeding edge stuff

with them you'll be able to build start ups, etc.

there was a strong chip industry in saxony decades ago, but they became way too expensive when china came. they are slowly starting to built back there, but progress is slow.

Bosch and Infinion have the fabs there

You are refering to Robotron, which mostly is known for their Z80s knockoffs (which often were less buggy than the originals.) Given that they did not create chips of their new design, I would not describe them as having been 'strong', though.

sorry, misspelled infineon

Should have just bought AMD a few years ago...

That’s called interest on the Marshall plan.

> It has been suggested that already-allocated funds from the €95.5-billion Horizon Europe budget could be re-purposed. EC president Ursula Von der Leyen has said that, in addition, she’ll find €12 billion from public/private sources.

The rich get richer and stay rich. It's hard not to get cynical about the fact that the whole of Europe is working so that a couple of countries ensure their continuing wealth.

German investment again going to foreign companies, the very opposite of strategic sovereignty. The Trump era should be enough evidence that there are no friends in geo-politics, just temporary alliances of convenience.

That was only 4 years, hardly an era.

Also hardly anomalous. Trumpism didn't vanish just because Trump lost the election, rather it's become mainstream within the political establishment. Every four years now the world has to wonder whether the coin is going to land again on sane or crazy.

Trump was yet another demonstration that Americans can't be trusted.

we are living the Trumpian timeline, nonetheless

Germany and strategic sovereignty… Looking at gas pipes, they have an alternative understanding of sovereignty.

Well, if you have any alternative than gas pipes please let us know. Germany is already pushing for green techs. And, gas coming from another part of the continent is always more expensive than neighboring countries? Yes, they shouldn't have dismantled Nuclear Power. But after an incident in Japan, many people were nuclear phobic so can't blame politicians alone?

That being said, I do agree that paying 5.5bn of taxpayers money to foreign tech is silly. Such money can be easily used in investing local companies which will provide more employement and ROI to Germany.

an unstated and unrequited aspiration for sure.

Increasing trade with Russia is a good strategy. No need to follow America to WW3 or a new cold war.

Stupid move by Germany, giving even more money to the US corporations. In fact, the EU as a whole is presently doing just that, those Next Generation EU funds will, for a great part, find their place in the coffers of the big US tech companies.

It goes like this: EU gives billions of dollars to EU national governments but with many strings attached -> an important part of those strings is related to digitisation -> the EU national governments redirect the money they received from Brussels to digitisation implementations -> US tech companies get even more wealthy, as there's almost no local European competitor that can compete when it comes to the cloud, hardware and even software (just think of all the EU funds that will go almost directly to paying Oracle licenses).

Similar thing happens with re-directing EU money into China's coffers, as most of the EV batteries are now produced in China and there's a big push at the EU level for us, EU, citizens, to purchase EVs.

It's not very well stupid though if there isn't a great viable alternative, is it?

The issue with there being no good local competitors is a more fundamental one-- it's extremely difficult to spin up a viable tech business in the EU, period. In part, this boils down to regulatory issues including tech companies needing to abide by a myriad of complex regulations but also things like fairly costly labor regulations.

???

Why intel??? Why not ASML???

I wouldn't be surprised if Germany would also find value in an ASML facility, but as I understand it, ASML doesn't make fabs. They make the tools technology used in fabs. They're different parts of the supply chains.

Even if they were both in the same business, it's not like ordering whichever brand you want from Amazon. If ASML wants to build something in Germany, they will, and Germany can incentivize that, but it's still up to them. Germany can't just tell them to do it anyway.

So the 50 billions euros fund which is supposed to be used to build a EU own top-notch chip foundry will be own and built by the US?

Is this a joke?

It's too late for Intel. x86 doesn't have a future, ARM64 SoC architectures like Apple's M1 (TSMC) are the future of computing. Just as fast (and often faster in many benchmarks) with only 20-25% the power consumption and heat. Even Microsoft is preparing for the shift to ARM, at Build 2⁰22 they announced project Voltera, an ARM Windows 11 PC loaded with Visual Studio 2022 and .NET 7 all for ARM to give devs a head start for the coming ARM Microsoft systems. Microsoft will partner with Qualcomm and have their own custom SoC like the M1. Intel is toast (because their CPUs are too hot). This is going to be a massive shift in the PC industry.

> Microsoft will partner with Qualcomm and have their own custom SoC like the M1

Microsoft partnered with Qualcomm 6 years ago and there have been a number of terrible systems released. You probably haven't heard of them because of how bad they are. If there's any progress for Windows+ARM, it's really from Qualcomm's exclusive agreement expiring. They're hyping the Nuvia team right now, but Qualcomm's track record is ridiculously bad, and there's a bit more work involved here than incanting "ARM".

But Intel is investing in ARM/RISC-V and x86 will be with us a bit longer (probably even 10+years). I would be more concerned about AMD then I'm about Intel tbh.

AMD recently acquired Xilinx, who makes ARM SoCs https://www.xilinx.com/products/silicon-devices/soc.html

than

And the desktop will die as well. Even the fans of x86 say that it sucks but it still remains the main target for serious software.

Microsoft first needs to recapture their developers. They still have those that target their platform with Visual C++.

Desktop will never die.

The form factor might change. We might go from a large box to a docking station for a tablet or laptop, but the mouse + keyboard + monitor(s) is never going away.

Been thinking for a while - I need some serious BGA rework equipment and some training because I'd rather die in a ditch than not be able to replace any components in my computer :D

At that point, might as well start my dream recycling business where we desolder, test everything and sell them as parts. They do it in China at scale, why not Europe... Main question is, would there be enough buyers? Small repair shops are also dying...

Intel protects itself against x86_64 becoming deprecated by investing into RISC-V.

A more interdependent world is a friendlier and more secure world. When countries are completely independent of each other they will be able to more easily shrug off economic consequences of their aggression.

Economic ties also foster greater cultural exchange and understanding, so the less of those there are the insular and navel-gazing the inhabitants of such countries will tend to be, which will also increase the likelihood of conflict as people tend to fear those who they aren't in close contact with and don't understand.

As bad as the world is today, it'll get much worse as countries isolate.

I think that argument has been lost. Russia still invaded Ukraine and China still took Hong Kong backwards. America has invaded many countries. Taiwan is under threat. Interconnectedness doesn’t seem to matter a great deal when you have either a ruthless dictator in power or a country has a strong military advantage.

> A more interdependent world is a friendlier and more secure world.

No, it's not. Wars between major trading partners aren't historically uncommon at all.

> When countries are completely independent of each other they will be able to more easily shrug off economic consequences of their aggression.

When countries (particularly those toward opposite ends of the extraction -> intermediate goods -> finished goods -> finance & services spectrum) are integrated with trade, it produces durable inequalities through ricardian specialization and strong resentments that are either subjugating through imperial domination, mollified through political union and welfare policies, or expressed in war. Sometimes the latter even after the former through political union.

That has been the prevailing thought since before WWI, but multiple World Wars and Russia's invasion of Ukraine this year have proven otherwise.

Do you know who was the biggest trading partner of Nazi Germany on the eve of Operation Barbarossa? You guessed it, the Soviet Union. It was responsible for the vast majority of imports of critical resources like various metals, oil, grain, etc. It didn't stop Hitler.

Do you know who were the main buyers of Russian gas, and via which country that gas arrives to them? You guessed it, EU, and the main pipelines pass through Ukraine.

On paper, yes, you're absolutely right. But you're assuming rationality where it's far from certain. Same as in the 1930s, we have a bunch of empty populists everywhere who are anything but rational, intent on blaming everything bad on "bad guys of today", be it the EU, migrants, Soros, the Jews, Nazis, have your pick. With those types of people, you can't assume rationality of actions. Brexit wasn't a rational decision, to give but one example. Poland infringing on press and human freedoms against the will of the EU, while receiving billions of aid from the EU, isn't rational.

The difficult thing about even very good prevention is that the absence of events is difficult to prove.

Is interconnection perfect? obviously not. Does interconnection prevent more conflicts vs fully independent nations? Likely yes.

I think what we are seeing is societies and governments forgetting how bad wars are for stability, on a backdrop of slowing or reversing quality of life for many modern nations.

That's true, but the other side of the coin is that richer/more developed countries take all the specialists and raw materials from poorer countries, set up low level factories for the remaining idiots, control the IP and sell them finished products.

Leaving them in a perpetual "developing" state, unless they smarten up, which is really hard without all the smart people that left, and even harder because the people in power are more than happy to keep things as they are because they get paid for it.

You can tell that to all the countries in Africa that are interdependently connected to Ukraine's grain.

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