Didn't we already cross this particular Rubicon during the auto bailout a decade ago?
Other examples:
> Since the 1950s, the federal government has stepped in as a backstop for railroads, farm credit, airlines (twice), automotive companies, savings and loan companies, banks, and farmers.
Every situation has its own idiosyncrasies, but in each, the federal government intervened to stabilize a critical industry, avoiding systemic collapse that surely would have left the average taxpayer much worse off. In some instances, the treasury guaranteed loans, meaning that creditors would not suffer if the relevant industry could not generate sufficient revenue to pay back the loans, leading to less onerous interest rates.
A second option was that the government would provide loans at relatively low interest rates to ensure that industries remained solvent.
In a third option, the United States Treasury would take an ownership stake in some of these companies in what amounts to an “at-the-market” offering, in which the companies involved issue more shares at their current market price to the government in exchange for cash to continue business operations.
Each example industry continues to require some sort of government intervention to remain solvent at one point or the other. Auto/banks/saving and loans getting bailouts in 2008/2009. Airlines in 2020/2021 due to COVID etc. These industries employ a lot of people and now have become a political hot zone for voters so there is no way to remove these backstops now.
And whether these industries remain competitive globally is another question. Because it is always funny to hear countries accuse each other of propping up one industry or other through government intervention.
Second, these were industry wide bailouts. This action is not.
The genesis of CHIPS Act is a 2020 deal to onshore TSMC. The idea was to further persuade Samsung and Intel to produce chips in US through tax benefits, loan guarantees and grants. But now with US taking a stake in Intel, the strategy for onshoring TSMC and Samsung becomes unclear. Maybe the idea is to use tariffs to make TSMC and Samsung uncompetitive if they don't onshore but that is a bad idea. Because if Intel finds it easier to just coast on "national security" and continue producing last gen chips, they are going to do that and lower innovation even more. This is a win-win for Intel though.
Also, if you are TSMC and Samsung, why bother “on-shoring” to America and not just make Americans pay the tariffs since there are no alternatives and it is unlikely that America can really compete. They will also be fighting the current as BRICS/Asian momentum picks up right in their front yard.
> the federal government intervened to stabilize a critical industry
They intervened to maintain the status quo. Industries are neither stable or unstable for a long period of time without external influences forcing that outcome. Short term turbulence is to be expected and is beneficial for the market as a whole.
They destroy markets and then lie to your face about it.
> industries remained solvent.
How does an _industry_ become insolvent? Only when it's nearly fully monopolized and when there is no difference between an industry and a single entity. This is where we are currently.
> more shares at their current market price to the government in exchange for cash to continue business operations.
Couldn't they just offer those shares to _any investor at all_? Why is the government special here?
> Is there some society you know that doesn’t run on greed? … What is greed? Of course none of us are greedy. It’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests.
since some of the criticisms of Chicago style thinking include blindness to greed and profiteering, or actively promoting them, it would seem more reasonable to argue the criticisms of Chicago school thinking were correct, that Chicago school thinking worked as planned, and this is what we got out of it.
> Didn't we already cross this particular Rubicon during the auto bailout a decade ago?
This Darth Vader style "I am altering the deal, pray I do not alter it any further" gambit is new to the best of my knowledge. If the CHIPS Act had been structured so that it was equity purchases that would be one thing.
The other day I went down a rabbit hole reading about the history of insulin, and learned about the Canada Development Corporation:
>The Canada Development Corporation was a Canadian corporation, based in Toronto, created and partly owned by the federal government and charged with developing and maintaining Canadian-controlled companies in the private sector through a mixture of public and private investment. It was technically not a crown corporation as it was intended to generate a profit and was created with the intention that, eventually, the government would own no more than 10% of its holdings; it did not require approvals of the Governor-in-Council for its activities and did not report to parliament. Its objectives and capitalization, however, were set out by parliament and any changes to its objects decided upon by the Board of Directors had to be approved by parliament.
The CDC was created as a result of Walter Gordon's Royal Commission on Canada's Economic Prospects, and the 1968 Watkins Report commissioned by Gordon, in an attempt to redress the problem of foreign ownership in the Canadian economy by stimulating the development of Canadian owned corporations, particularly in the field of natural resources and industry
About 31,000 private shareholders invested in the corporation. An early purchase of the corporation was Connaught Laboratories, the original manufacturer of insulin.
Major investments owned by the CDC included holdings in petroleum, mines and petrochemicals including Polymer Corporation, an asset transferred to it by the Canadian government. By 1982 the Canadian government had a 58% stake in the Savin Corporation.
In 1986 the Corporation was dismantled as part of the Mulroney government's program of privatization.
Yes and the scale was far larger, over $80 billion given to GM and Chrysler. GM was majority owned by the US government for a number of years after that too.
“The Chips Act wasn’t about raising revenue, and an equity share wouldn’t enhance national security.”
Every generation of fab is increasingly expensive. TSMC has over 500 customers, including Intel. Intel basically only has Intel to pay for those $20 billion fabs.
> could not generate sufficient revenue to pay back the loans
I think there's an oversimplification here. Even at 0% interest the government gets returns on those loans. "Death and taxes", right?
Governments aren't people. If I gift you money, that money doesn't come back to me. But if a government gifts someone money, it makes its way back. As long as that money gets spent, there's returns. Even if you die, and even if you don't have that $14m for the death tax, that money still pays dividends back.
The only way it doesn't is if the economy crumbles or that money is taken out of the entire economy (which is much harder to do considering the dollar being the current global currency). So basically you need to light it on fire.
You can do things to slow that flow but it does come back. A low interest loan is just increasing that flow and this is why a negative interest rate can still generate a return. A company can fail and there'd still be returns through taxes in the mean time. The money doesn't just evaporate.
I think a lot conversations about money get weird because we over generalize what money means, applying money's context for an average person more broadly. But money has a very different context when you're talking about governments, corporations, or even billionaires (due to the shear amount). Nor are those examples the same either.
In this case I think it matters. The government already has a stake in Intel, and in all companies. Shares only decrease the pie available to the public while increases the ability for government official to do insider trading and increases nationalization.
Intel fell behind TSMC around ten years ago and the resulting malaise—still not fixed—almost put them out of business. So yes, they needed a bailout and got one.
> They got incredibly lucky with IBM choosing the 386 for the PC platform...
1. IBM picked the 8088 for the PC platform. This was part luck, part Motorola being too slow to market with the 68k.
2. The first PC with an 80386 was made by Compaq, not IBM.
3. A big part of what held OS/2 1.x back was IBM insisting on it working with the 80286, which made properly supporting DOS programs challenging. OS/2 2.0 came out 6 years after the first 386 based machine from Compaq.
> Itanium was a flop from bad business decisions IIRC.
Itanium was a flop from a technical standpoint but not from a business one. Intel spent roughly a gigabuck and effectively scared every competitor out the pool except for IBM and AMD.
Intel is suffering because their old fab folks all retired, and no young, smart engineer over the last 20 years wanted to work for any semiconductor company let alone Intel.
> Itanium was a flop from a technical standpoint but not from a business one. Intel spent roughly a gigabuck and effectively scared every competitor out the pool except for IBM and AMD.
Even without the Itanium, the economies of scale in the x86(-64) world would have driven the RISC vendors out of the game.
My intel powered workstations from 2008 have chips that are more than decent enough for modern computing.
But in reality, they gave up on R&D, Missed Apple mobile chips and then put a lot of MBAs in top leadership positions to make their financial schemes work. Those schemes did not work and they were left without technical leadership. When they got the tech leadership, the board just gave up and fired him and brought in a chop shop CEO to part intel out.
For some reason, the US admin thinks this is a good buy. You probably would too, if you bankrupted multiple casinos.
Intel is going the way of SunBeam, Sears and Toys r Us. The board failed to stop that. And failure attracts more failure.
New computers aren't as much faster as benchmarks would lead you to believe. If your code relies on unpredictable branches, dependept memory accesses in a tight loop, or very tight feedback loops inside computations, new CPUs won't have that much of an edge.
as a counterpoint, I did all of my rust contributions including creating rustdoc on a $300 walmart laptop w/2GB RAM my parents got me in december 2007. you just work differently when that’s your tool :)
I have a Core 2 Quad machine around from 2008 for nostalgia reasons and retro computing, and even with a modern lightweight Linux on it, it's definitely not enough for modern computing unless what you consider modern computing is writing text documents and viewing websites ... slowly, and for that it's extremely wasteful since it has a 95W TDP while a 2W modern smartphone/tablet can do that even faster and more efficient, plus it's also portable.
Having to do any kind of 2025 type of work on it would be testing my patience to the extremes because all SW and media has grown in size and/or complexity(AV1 encoding, etc) requiring faster CPU, GPU, storage and RAM for the optimum experience. The only things that run fast on it are period accurate Linux 2.6 and Windows XP with websites form 2008, but I wouldn't call that modern computing.
Computers have gotten night and day faster and especially more efficient since 2008, pretending otherwise would be in bad faith.
The current lowest speced Mac can absolutely dominate my previous 2012 2x20c ivy bridge era Xeon tower. And on top of that, the power and heat are drastically less with the new machine.
The only reason a system of this era even kept up is the years Intel just didn’t do anything that was that much better and because of ram and pci express expansion which allowed for upgraded faster storage and faster gpus.
These days I can get better performance in a system that I can hold in my palm (Apple m4, amd ryzen ai 9) that doesn’t produce enough heat to keep my entire room toasty in the winter.
It seems we need a system where these failures are visible earlier. If you consider the current economy a strategy game, our game dynamics incentivise bad short-term optimisation.
We can blame the MBAs, but we really should see how we can propose a better system. And then convince people of that.
Sure, it's been done before, but looking at the end result though, I'm not sure if that's a strong argument for whether it should be done again.
Look at the end state of the US auto industry. It's uncompetitive in basically every part of the world and thus basically irrelevant, except in the US. Unless somehow something different is going to happen here, this could end up with Intel continuing to perform poorly, negating the point of keeping it alive to begin with.
Did you also oppose the government stepping in when Silicon Valley Bank collapsed? The FDIC had a clear upper limits. It shouldn't have paid depositors more than that.
Yes, but no. The bailout was companies that were headed for bankruptcy. Is Intel? My impression is that they're a lot further from it than GM and Chrysler were.
Intel had been trading below its cumulative physical assets for a pretty long time.
This means the market believes they have a path to bankruptcy. Since markets are forward looking, how close it is to bankruptcy does not matter too much. In this case they needed money and the government provided a relatively low amount for a pretty significant stake in the company.
Intel the advanced IC manufacturer is worth effectively nothing right now.
If they can prove a successful advanced manufacturing process and start making chips on it that will likely reverse fairly quickly, but it's been a decade since they held fab leadership.
Perhaps the government should have required Intel be split into a fab business and a chip design business (as Intel has planned to do itself but hasn't been able to, for reasons). The chip design part can survive on its own without subsidies. Then the government can pump money into the fab business for national security reasons without affecting the chip design market too much.
And, so? Government back then wanted something, government right now wants something (slightly?) different?
The reality is any government (USG included) getting 10% share ownership in a company is ... barely news. The more interesting news (or speculation) is whether this is a smart move or not.
> Unlike grants, equity comes at a steep cost to Intel. Transferring grants into equity therefore risks putting Intel at a cost disadvantage relative to other chip makers
A lot of this article seems to rely on this point but the possible cost isn't clarified. I can understand equity arrangements affecting shareholders but how would it reduce the product's competitiveness, notably the unit cost which seems to be the point regards to other chipmakers. If it's about stock price going down, employee comp going down and product effects from that, it seems too speculative?
On the flip side, it sounds like instead of cash over time it becomes a lump cash infusion, which seems like it could result in benefits of its own such as bringing forward timelines.
The problem here isn't that the government gets involved in businesses. That has always been something they do.
The problem is that these days they do it capriciously, without any sort of plan or intention.
The government played a foundational role in supporting the early stage research that enabled companies like Intel to emerge. Underwriting that sort of long-term investment that wouldn't easily attract commercial capital is a great place for them to be.
Meanwhile, is it even the case that the American chip industry is declining? Apple, Nvidia, and Google all have significant chip manufacturing operations. And this isn't an industry I even follow particularly closesly.
> Apple, Nvidia, and Google all have significant chip manufacturing operations
No, they all (as well as AMD) all have significant chip designing operations. Not one of them can actually fabricate their own chips. Every single one of them must speak to TSMC or Samsung if they want to take their designs from the whiteboard to the physical world.
Thanks for clarifying! I misspoke there, but from my standpoint (portfolio manager/equities investor) that's better.
Wafer fabs are capital intensive, complex, and need constant retooling. The bulk of the commercial value lives in the stuff you do on your whiteboard.
From a geopolitical standpoint, I'll concede there's value in having the ability to actually make the stuff without acceding to the duopoly. But I'd still rather see the capital invested in basic research which might change the capital dynamics of the industry in the intermediate to long term.
> Thanks for clarifying! I misspoke there, but from my standpoint (portfolio manager/equities investor) that's better.
From a national security point it really, really isn't. Like, I'm not a fan of the Trump administration, but having basically all chip manufacturing in Asia is not a good idea if you think there'll be a war with China in the next few decades.
If you can't manufacture your chips while your only geopolitical rival is pumping infinite money to homegrow their own fab business, it probably should cause some concern.
If the only source of high quantity and high quality chips is located in your competitor's backyard, and they spent several decades repeating how it's their wayward province that they fully intend to reclaim one way or another, it's pure stupidity to sit around and do nothing.
Let's not pretend that the money would be spent on basic research instead, by the way. US pumping some money into chip production is a rare spark of intelligence amidst an avalanche of stupidity and grift.
Which American companies manufacture chips on the latest node? Certainly not Texas Instruments, Global Foundries and one might even argue Intel, compared to Samsung and TSMC. It is a matter of national security that Intel not fail.
It is a matter of national security that state-of-the-art fabs exist within the nation and that the expertise to operate them also exists within the nation.
As you point out, it is questionable whether Intel has either of these.
It might be argued that it is critical to national security that Intel be replaced by HP. Or Nvidia. Or Sun, or Motorola, or Micron, or TI, or...
What's that you say? Most of those companies had their chance and failed? None of those companies are really in the game?
Why among all the list of failed or current fab owners is it so important that Intel be declared sacred?
Why not recognize that Intel is getting its clock cleaned by a company that doesn't design chips? Why not look outside of the chip design industry to save the chip fab industry?
The bet seems obvious - Intel has been failing for a while, but they're still much better positioned to produce what the US government wants than some random companies like HP or TI. Their fabs aren't quite on the bleeding edge and the yields aren't quite what they'd like to have but it's still much more advanced than TI's 45-250nm fabs.
If HP, or Nvidia, or Sun, or Motorola wanted the bag maybe they should've tried building their own modern fabs.
I would agree with your approach if we were simply discussing whether the government should fund intel, but we’ve already committed to funding intel via the government. Pulling back would hurt intel and our interests. Now that intel has become reliant on our promised funding, it makes sense to attach conditions to the funding we need to do instead of just handing it out while getting nothing in return.
The first thing that jumps out is that it is impossible to avoid the absurd juxtaposition of a republican led major national corporate stake, after a decade of the auto bailouts being used as a poster child of policy that the current party in charge doesn't agree with.
Moving on from that, you make a good point that it may be the best compromise if the original deal is off the table. That said, in my eyes the implementation could be better. On both a practical and ideological level, I think it would behoove the dealmakers to lay out clear exit conditions. That could look something like anything from signing a covenant with Intel to freeze dividends and corporate buybacks and pay down debt (which is dangerously high for them currently), and then once the corporate balance sheet gets to a safer level, the US gov could run a public auction for the equity once that strike level is hit. I'm sure they could come up with something palatable. What's unexcusable is to apparently enter into a seemingly permanent zone of CCP-style state corporate capitalism without clearly laying out what that means for America going forwards. As an average citizen, I certainly have questions about the precedents being set, and to me it just looks haphazard and off-the-cuff.
> The first thing that jumps out is that it is impossible to avoid the absurd juxtaposition of a republican led major national corporate stake, after a decade of the auto bailouts being used as a poster child of policy that the current party in charge doesn't agree with.
The only absurd here is to think republicans care about anything other than power . Doesn't matter what they did or said yesterday, what matters is what can they say and do today to remain in power and enable their deep pocketed donors to make more money and gain more power.
People really have to stop thinking there's anything there, there's nothing, its all about acquiring and using power. Trying to come up with ideological reasons as to why they do this or that is useless.
>The only absurd here is to think republicans care about anything other than power . Doesn't matter what they did or said yesterday
Right, but it's an absurd juxtaposition when taken at face value none the less. I agree with what you said, but my point was more about other possible structures for the deal rather than political conclusions. I was attempting to brush aside the political considerations and take a somewhat tabula rasa approach, not spur a partisan political conversation, which clearly I failed at by mentioning the absurdity in messaging.
Pray that before 2026, you won't have had any DOJ approved FBI raids to Trump political enemies.
How I guess it will happen: first target 'close ennemies': same party, small public recognition, but opposite views on specific policies you want to denounce. No charge filed, just good old intimidation: raid the home, take the files an computer, then say "sorry we didn't find anything" after a few months.
My mother hosted political refugees from Russia and Kazakhstan, I've heard a lot of story, and that shit seems to always starts the same way.
Why have an exit condition at all? I'm not sure what's so inexcusable about what China is doing, by the looks of it, for their nationally important industries, they're doing pretty well.
> The first thing that jumps out is that it is impossible to avoid the absurd juxtaposition of a republican led major national corporate stake
The GOP overthrew its leadership in 2016 and a different faction took control of the party. The GOP started out as an economically interventionist party: https://www.journalofthecivilwarera.org/2017/04/gops-civil-w.... Then it went through a libertarian phase in the mid 20th century. Now its back to an economically interventionist party.
This is misunderstanding what really happened. The oroginal agreement with the CHIPS act is that if your company is profitable post expansion funding then you will profit share with the federal government. Trump changed that original agreement to one of stock ownership. Now the federal government can reneg the deal by selling back for their money any time. Arguably more dangerous than profit sharing.
It was never a nothing-in-return agreement, that is fiction.[0]
> if your company is profitable post expansion funding then you will profit share with the federal government.
Not to mention... taxes...
I mean I agree with you but even that article is talking about how it's not a free handout. It never could have been. A government could hand out money unconditionally and they'd still get a return as long as taxes exist. Intel's (or any company's) success results in them paying more taxes. Not just corporate taxes either.
The entire point of the funding is the strategic benefit that Intel's fabs in the US provide. That's the thing the US would get out of it.
Also consider: Who is the $10 billion coming from? Because it's not Intel. Intel just prints the shares out of thin air. This is Trump stealing $10 billion directly from Intel's shareholders, who get nothing in return because Trump is legally required to disburse the CHIPS Act money.
It's also just a complete misunderstanding in how a governments vehicle for investment works compared to a person's.
A person invests in a stock, hopes it goes up, and makes a profit (or loss) when they sell. That money isn't real until a sale occurs.
A government gives a grant and gets a return tomorrow and every single day of the company's existence as well as every single day each employee exists (even if the company doesn't). If a company exists, it pays corporate taxes. If that company has employees (as every company does), it pays payroll taxes. If that company has employees, they pay income taxes and various forms of consumption taxes.
IDK why we act like a grant is akin to lighting money on fire. Governments don't give out grants for nothing. They're still benefiting from it. Sure, the vehicles for return are different from a standard investment but also a government isn't a person. Well I should take that last part back. A government is a person in an autocracy (monarchy/dictatorship/theocracy/etc), but that shouldn't even be on the table.
It's also just crazy to see nationalization being packaged as capitalism. Those screaming for privatization while nationalizing. It's not even being done covertly either
TSMC was funded by government. The cost requirement for new fabs is beyond the funding private enterprises can muster. Perhaps through funding, years down the road, it may make sense. This isn't about Intel IP, it's about manufacturing high end chips on US soil.
this is the logical conclusion of outsourcing: we kept giving away the low end electronics and now we can't compete on the high end w/o government subsidy
the supply chain moved to asia and the just so stories about ricardian free trade + an inflated stock market made everyone believe, while the ultra-rich got ultra-ultra-rich
and now we sit down to our banquet of consequences
From my pov, it looks more like intel shit the bed repeatedly.
Missed on: mobile, custom chips in the data center, graphics cards, ai, and building out fab services they can sell.
Meanwhile, they took at least 5 years off of making their chips faster, and we're treated to the absurdity that the m-series chips are as performant in single core as anything Intel can build on a power budget 1/10th of Intel's.
I'm not sure what that has to do with outsourcing? It looks more like a comprehensive lack of execution.
Intel should have spun out their fab in 2009-2010 when the signs were clear: Mobile was taking off, AMD spun out their fab, Intel had missed the boat on mobile CPUs, and Apple had acquired PA Semi and was investing heavily in custom silicon.
High-end fab is a volume game and that was the time frame when Intel was still process competitive and could have competed for Apple's business (and Nvidia's, ...). But that would never happen as a division of Intel, nobody wants to send their designs to a competitor.
Thats such a rear view mirror take. I am not in this industry but it's was obvious Intel had a manufacturing advantage back then and this let them be the dominant player in this space for decades. High margins and they were the only game in town for the x86 in most key markets (AMD was just a cover for antitrust cases).
Even 10 years ago Intel was a blue chip stock, saying they should have cannibalized their lead to go into a lower margin market for volume would have gotten you kicked off any executive role.
Imagine being in a boardroom in 2010:
- You're printing money with 60%+ gross margins
- You have a 2-3 year process lead over everyone
- Your R&D budget dwarfs competitors because of your integrated model
- PC sales are still growing and servers are booming with cloud build-outs
- Also you are betting that Apple is going all in on your foundry to drive the volume and R&D
And someone proposes: "Let's split the company, cut our margins for a bet against our design team in mobile volume, and start manufacturing chips for companies that might become our competitors."
You're probably right; either that or beat Qualcomm/Samsung at providing the non-Apple chips.
How they fiddled and watched Apple take the phones that make a profit; Samsung/Qualcomm provide chips to the rest; and all the hyperscalers make their own arm chips in the data center while doing nothing. Absolutely nothing. Is beyond comprehension.
Meanwhile, (I think Asianometry?) pointed out that Intel's headcount was recently as large as AMD, nVidia, and TSMC combined.
Intel was (is?) the largest sponsor of EE H-1Bs. Most such people coming from two countries where it's practically impossible to win the green card lottery. The upshot of that is a massive brain drain when these people have to leave.
You have no idea if those Indians are here on a visa, greencard, or have American citizenship.
You just see brown people, some of whom may or may not have accents, and are angry they’re making “six figure salaries” while people you define as Americans (I wonder how your Americans look like) are “struggling to put food on the table.”
I am not one of these people who spend their lives on Twitter or Bluesky or whatever calling everything under the sun racist. But your comment here is actual racism.
It's capitalism when you're winning, and socialism if you're losing.
Or: "Privatised profits, socialised losses".
I understand why in this case, Intel is very much in bed with the US Government and likely makes a strong case for being a national security interest, but it feels icky.. especially as AMD is an American company too.
If the issue is the node fabrication then why wasn't their an investment in Fabs before now? Intel got its big start on government grants iirc.
Most people in the US seem to not realize that a social healthcare system is better for all of them due to all of them sharing the bill.
Now only companies are left to pick up the bill, because a republican administration won't ever consider doing it.
I still wonder when CEOs will realize that lack of education and lack of healthcare will eventually land at their doorsteps because they won't have immigrant workforces anymore that can compensate for it.
> Most people in the US seem to not realize that a social healthcare system is better for all of them due to all of them sharing the bill.
As a high-income earner I used to be in favor of privatizing healthcare here in Italy/Europe.
I've always seen the public healthcare system wasteful and inefficient. Our healthcare system really is in a terrible spot.
Then few years ago, a very close friend of mine, had to give birth to her child. She had chosen one of the most expensive hospitals in the region, where there would be a huge staff all for her, not that crappy public service she would get.
Then tragedy struck: in all the luxury and care she was receiving, her newborn had huge problems staying alive, and died of respiratory issues few minutes after birth.
A very preventable death the autopsy stated moreover if she was in an appropriate public hospital.
Why? Because larger public hospitals have all a newborn reanimation unit with trained staff exactly for these kind of emergencies. Private ones? They are virtually non existent, doesn't matter the country or budget, no private hospital can afford such an expensive unit that requires extremely specific training and equipment but gets to act rarely if ever. So they don't exist in those contextes.
Since then I realized how naive I was: private healthcare just cannot justify investing in a huge amount of treatments that are a financial disaster for the private clinic/hospital. They just can't.
Thus, at the end of the day, you don't really want private healthcare that has to choose what to provide on a $ basis, you just don't. You want a as comprehensive and available public service that needs the right amount of money and incentives to work properly.
I don't know how can it be achieved, but you really don't want to be that father/mother, sister, friend or patient that cannot access an important procedure because it makes no financial sense to offer it.
> the US has no leverage to demand 10% of healthcare companies' stocks
The US government doesn't need leverage. It just needs an act of Congress. Corporations are convenient fictions that exist at the pleasure of our legal system, which can be changed.
I agree that this could be done as it has happened before, but I don’t think anyone would go quietly. It’s expropriation without pay or eminent domain if it’s with pay, but I would expect a Supreme Court challenge if Congress came anywhere near this, either way.
the US has no leverage to demand 10% of healthcare companies' stocks.
US federal government is the biggest player in healthcare, by far. 32% of all healthcare spending is Federal government dollars. They have plenty of leverage. Bad if they use it, but they have it.
$900+ billion in Medicare yearly
$600+ billion in Medicaid yearly
Why would the government taking a stake of the insurance companies be a benefit from the point of view of the federal government or the insurance companies?
That money almost seems like ill-gotten gains at this point. To a certain reading, it’s blood money.[0] If the insurance rates are too high, I don’t see how another cook in the kitchen is going to cook the books better, but I’m willing to believe that it could be a shakeup that might work. I just don’t have high hopes.
Unless the workers own the means of production, it isn't socialism. The government is just another agent of capitalism here. Can we call this sparkling capitalism?
I think this war is lost. The word socialism means different things to different people. It all depends on where you stand and what you are looking at. If you are on the far right, most things the government does is socialism. If you are on the far left, everything the government does is to support capitalism. And in between the two everything goes.
I frequently say the same thing about the word Capitalism. (Communism too). They're second only to 'god' in terms of historical baggage.
If you say 'I like Capitalism', a significant minority will hear 'I love US imperialism and hate nature', despite that almost certainly not being what you meant. Similarly, if you say 'I like Communism', many hear 'I love dictators, gulags, 5 year plans and famine'.
A word of advice: if you actually want to have valuable political conversations with people, don't start by identifying yourself with ideology that's arguably responsible for various atrocities and millions of deaths.
> if you actually want to have valuable political conversations with people, don't start by identifying yourself with ideology that's arguably responsible for various atrocities and millions of deaths.
So neither capitalism nor communism? What's left, anarchism? I guess they haven't killed that many people.
The post from yesterday was news; this is commentary, as in, not a dupe.
To your point, it's arguably closer to state capitalism, which may be a distinction without a difference if you paint it with the same brush as socialism, but it's one worth mentioning.
The phrase "lemon socialism" used to be applied to the UK. The Government had managed to acquire the steel industry, the railroad industry, and the auto industry - all dying industries in the UK. They became British Steel, British Rail, and British Leyland.
The end result wasn't good. They turned into jobs programs.
Eventually those were privatized. Now, the railroads are being socialized again.
It's a pendulum effect, with nationalization on one end, and privatization on the other. If capitalism and money itself is the best organizing principle that works around the world, it does limit the opportunities for change and growth. Socialism doesn't have a counter to the market principle, so they can only incorporate it. The US has a branding problem; freedom ain't free, but nobody even votes, so we earned what we got.
China is trying to beat US at its own game. US (or at least its current political leader) is trying to beat Russia at its own game. Russia is trying to remain relevant. Russia is the muscle, China is the finance.
China needs Russia just like Google (Chrome) needs Firefox. Without Russia around, China would get all of the attention instead. Without Firefox existing, Google would have no counter to antitrust allegations in the web browser space.
Anything you can do, I can do better. I can do anything better than you.
No, not like that!
It's like that Spider-Man meme where everyone is Spider-Man pointing their fingers at each other. All the power structures are mirroring each other. It's all kayfabe, all the time. Everything is wrestling.
Maybe those are cost-plus contracts, so they would be able to claim hardship and incompatibility and send you a bill for even considering it, with an attached estimate for compliance at 10-1000x the last quote.
That seems a rather aggressive response to someone suggesting you read the manual in order to enable a legitimate conversation about the topic. I explained why the shares aren’t given and why benefit still accrues to the public.
> That seems a rather aggressive response to someone suggesting you read the manual in order to enable a legitimate conversation about the topic. I explained why the shares aren’t given and why benefit still accrues to the public.
I disagree, but in the interest of not painting the mods into a corner with my reply, I won't pursue this thread further.
> Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that".
You didn't quite say that, but it rhymed. The sentence I quoted upthread added nothing to your comment, and that is that part I took issue with.
So should the government give bailouts without getting any equity back? Only deal in loans?
Intel is strategically important. As nice as it is to pretend that the whole world plays by the same rules, that the free market exists everywhere and that we'll never to to war, there are bad actors and the US (rest of the collective West as well) need to ensure that we won't be completely crippled if China attacks a single island off their coast...
Better to be diluted than continue to invest in a company that goes to zero.
And it's the standard refrain: if this money helps Intel get back on its feet, the stock price will go up, presumably to the point dilution won't matter.
But who cares, really? If it's true that Intel is actually strategically important to the US, the shareholders are irrelevant if need be. It's not a great outcome, sure, but Intel has been mismanaged for a long time, and investors should have known the risks of investing in a company like that.
Maybe their shares get bought, in this case it looks like Intel might have simply issued the shares. In this case, shareholders have equity in a company that just had $10 billion added to the balance sheet and which the government signalled can't fail. INTC was up over 5% on Friday, obviously shareholders think the government investment is good for them.
Versus in most nationalisation events their shares simply get taken away or diluted to pennies.
> That and when most governments "nationalise" corporations they seize them and don't give the owners/shareholders anything.
First you get the money, then you get the power.
Money is fungible, but power isn't. Arguably, taking away my power is an affront to my human rights. Taking my money is an affront, but it never was my money to begin with, as I don't control the value or creation of it. My rights are inalienable.
I wonder if the libertarians and the socialists are already clashing behind the scenes. Trump struck me as the latter and his vice president as the former.
So maybe 50/50 that the top of the pyramid doesnt just take the free printed money and keep running the company into the ground.
If they pass that hurdle, its more like 70/30 Dump says put backdoors into all processors, and says it loud and proud. Assuming intel is smart enough to be able to fuse that functionality out entirely (not that anyone would believe they disabled the functionality)... That leaves somewhere about 15% chance that Intel survives 5 more years
Of course the WSJ is against anything even vaguely gesturing towards nationalization, how could this possibly be considered a reputable source for info on this topic?
All those three, from what I can see, is a bit different though. Samsung is basically a part of the government, because of its history. TSMC is the market leader, so it’s in government’s best interest to protect its future.
Chinese large scale investments are a bit different. It’s not just SMIC who gets a lot of funding, but others as well, so they can still compete with each other, until the winner is chosen and the others fade away. Similar to what is happening in EV market in China.
Intel… there is a decent chance that company fails even after this investment. They basically need to force other companies to use Intel chips instead of competitors for them to be viable at some point.
Yes. So there are two considerations. One is competitive balance internationally. That is a consideration.
But you also have to consider whether the government has the legal authority to make the investment. For a country claiming a limited government and the rule of law, that is a serious consideration.
You seem to be focused on the first consideration, but do not overlook the second one.
Governments owning stocks feels like double dipping with a touch of socialism.
I get why the idea seems sane, you want to get returns on investments, right? But with governments the vehicle for returns is taxes and investments are often called "grants" (but also loans, credits, etc). The tax system means you can make investments and always get some return. FFS you could invest in a company going nowhere and you still recoup through taxes. The only way you lose in this system is by tanking the entire economy. Idk why this is so hard to understand. Why people think things like research grants is akin to tossing money into a pit and burning it.
I know the current party is anti tax but aren't they also anti nationalization (Words, not actions)? Changing (or adding) your returns vehicle to be through stock only creates nationalization. It increases returns but also puts an additional thumb on the scale. It's very short sighted.
Who knew socialism would come to America wrapped in an A̶m̶e̶r̶i̶c̶a̶n̶ capitalism flag?
neonate's archive link doesn't include the actual article, just the lede. I don't know why I can't reply to them, but I suspect it's because their post is pinned by mods, but it doesn't work properly for that purpose, so this may help:
typical tech bro - they don't want any government regulation and want all the federal dollars they can get for nothing in return. we shouldn't be giving tax payer money to any private or public profit driven corporation ever. Mind you that's also a libertarian principle but tech libertarians always leave that part off.
The handwringing over Trump continues and is completely unwarranted. Obama bailed out the entire banking industry to horrifying moral hazard. The US is bailing out Intel for national security reasons and taking a 10% stake is a better deal for US taxpayers than how typical bailouts like GM played out. Sheesh! It's like you can't even read a news story these days without seeing the anti-Trump bias programmed into the article.
Aside from the fact that Bush signed the banking bailout bill, not Obama, it is absolutely possible and reasonable to believe that -- on the differing merits of each case -- bailing out the banks was a good (even if fraught) idea, but that bailing out Intel is foolish.
I'm not in either camp at the moment, as I don't have a deep understanding of Intel or its finances, but I'm tired of people whining about how others could possibly have a different opinion about two similar but different events, separated by nearly two decades, as if this is some sort of "gotcha!" moment. It's not. Move on.
But even if -- let's just say if -- this Intel bailout were identical to the bank bailouts in every way... priors matter! Even someone who agreed with Bush back in 2008 that the bailouts were necessary, someone who was largely in agreement with much of what Bush did during his presidential terms... that person could very much disagree with what Trump has done in the past 7 months (as well as what he did 2017-2021), and that disagreement makes it entirely reasonable to question whether or not this particular move is a good decision. That's just... entirely normal.
So, the one bad thing that sticks out about what Trump is doing now, is that he's adding more conditions to the money that has already been legally disbursed by Congress. Under the CHIPS act, Intel is already eligible to receive the money; Trump is illegally adding more conditions for Intel to receive the money, after the fact. To do this legally, the act needs to be amended. As simple as that. Anything more than that is illegal.
Anyone here arguing that we should just let Intel fail in the market needs to understand that Intel is struggling right now partly because Asian nations like South Korea and Taiwan have for years subsidized their own chip making companies because they knew that in the long term, it was going to be an important strategic industry that would eventually be worth the effort and trouble. Now look where we are. Their long term strategy has paid off. Only TSMC is at the cutting edge, and Samsung is a fairly distant, but still reasonably close, secondary player.
Maybe there are better ways to prop up Intel besides the government taking a stake, but losing Intel would be a huge blow to American manufacturing interests. There's been a failure of strategic vision, both at Intel and in the American government. I think as a short term measure, taking a stake isn't the worst thing the government could do at this time.
Also to go off on a tangent a bit: this is one of the benefits of having a Trump-like character as President; he's clearly not beholden to any ideology and is extremely flexible when it comes to making policy decisions, even when a certain policy might be more at home with the opposing party or side of politics.
Other examples:
> Since the 1950s, the federal government has stepped in as a backstop for railroads, farm credit, airlines (twice), automotive companies, savings and loan companies, banks, and farmers.
Every situation has its own idiosyncrasies, but in each, the federal government intervened to stabilize a critical industry, avoiding systemic collapse that surely would have left the average taxpayer much worse off. In some instances, the treasury guaranteed loans, meaning that creditors would not suffer if the relevant industry could not generate sufficient revenue to pay back the loans, leading to less onerous interest rates.
A second option was that the government would provide loans at relatively low interest rates to ensure that industries remained solvent.
In a third option, the United States Treasury would take an ownership stake in some of these companies in what amounts to an “at-the-market” offering, in which the companies involved issue more shares at their current market price to the government in exchange for cash to continue business operations.
https://chicagopolicyreview.org/2022/08/23/piece-of-the-acti...
Each example industry continues to require some sort of government intervention to remain solvent at one point or the other. Auto/banks/saving and loans getting bailouts in 2008/2009. Airlines in 2020/2021 due to COVID etc. These industries employ a lot of people and now have become a political hot zone for voters so there is no way to remove these backstops now.
And whether these industries remain competitive globally is another question. Because it is always funny to hear countries accuse each other of propping up one industry or other through government intervention.
Second, these were industry wide bailouts. This action is not.
The genesis of CHIPS Act is a 2020 deal to onshore TSMC. The idea was to further persuade Samsung and Intel to produce chips in US through tax benefits, loan guarantees and grants. But now with US taking a stake in Intel, the strategy for onshoring TSMC and Samsung becomes unclear. Maybe the idea is to use tariffs to make TSMC and Samsung uncompetitive if they don't onshore but that is a bad idea. Because if Intel finds it easier to just coast on "national security" and continue producing last gen chips, they are going to do that and lower innovation even more. This is a win-win for Intel though.
They intervened to maintain the status quo. Industries are neither stable or unstable for a long period of time without external influences forcing that outcome. Short term turbulence is to be expected and is beneficial for the market as a whole.
They destroy markets and then lie to your face about it.
> industries remained solvent.
How does an _industry_ become insolvent? Only when it's nearly fully monopolized and when there is no difference between an industry and a single entity. This is where we are currently.
> more shares at their current market price to the government in exchange for cash to continue business operations.
Couldn't they just offer those shares to _any investor at all_? Why is the government special here?
> https://chicagopolicyreview.org/2022/08/23/piece-of-the-acti...
Of course. Chicago school thinking. It's infected our country for decades now. Certainly not to the benefit of it's citizens.
Milton Friedman when asked about combating greed.
- Communism is awesome!
- What about countries X, Y, and Z?
- Oh, that wasn't "real" communism!
This Darth Vader style "I am altering the deal, pray I do not alter it any further" gambit is new to the best of my knowledge. If the CHIPS Act had been structured so that it was equity purchases that would be one thing.
>The Canada Development Corporation was a Canadian corporation, based in Toronto, created and partly owned by the federal government and charged with developing and maintaining Canadian-controlled companies in the private sector through a mixture of public and private investment. It was technically not a crown corporation as it was intended to generate a profit and was created with the intention that, eventually, the government would own no more than 10% of its holdings; it did not require approvals of the Governor-in-Council for its activities and did not report to parliament. Its objectives and capitalization, however, were set out by parliament and any changes to its objects decided upon by the Board of Directors had to be approved by parliament.
The CDC was created as a result of Walter Gordon's Royal Commission on Canada's Economic Prospects, and the 1968 Watkins Report commissioned by Gordon, in an attempt to redress the problem of foreign ownership in the Canadian economy by stimulating the development of Canadian owned corporations, particularly in the field of natural resources and industry
About 31,000 private shareholders invested in the corporation. An early purchase of the corporation was Connaught Laboratories, the original manufacturer of insulin.
Major investments owned by the CDC included holdings in petroleum, mines and petrochemicals including Polymer Corporation, an asset transferred to it by the Canadian government. By 1982 the Canadian government had a 58% stake in the Savin Corporation.
In 1986 the Corporation was dismantled as part of the Mulroney government's program of privatization.
https://en.wikipedia.org/wiki/Canada_Development_Corporation
We nationalised passenger rail in the 60s.
“The Chips Act wasn’t about raising revenue, and an equity share wouldn’t enhance national security.”
Every generation of fab is increasingly expensive. TSMC has over 500 customers, including Intel. Intel basically only has Intel to pay for those $20 billion fabs.
Governments aren't people. If I gift you money, that money doesn't come back to me. But if a government gifts someone money, it makes its way back. As long as that money gets spent, there's returns. Even if you die, and even if you don't have that $14m for the death tax, that money still pays dividends back.
The only way it doesn't is if the economy crumbles or that money is taken out of the entire economy (which is much harder to do considering the dollar being the current global currency). So basically you need to light it on fire.
You can do things to slow that flow but it does come back. A low interest loan is just increasing that flow and this is why a negative interest rate can still generate a return. A company can fail and there'd still be returns through taxes in the mean time. The money doesn't just evaporate.
I think a lot conversations about money get weird because we over generalize what money means, applying money's context for an average person more broadly. But money has a very different context when you're talking about governments, corporations, or even billionaires (due to the shear amount). Nor are those examples the same either.
In this case I think it matters. The government already has a stake in Intel, and in all companies. Shares only decrease the pie available to the public while increases the ability for government official to do insider trading and increases nationalization.
Itanium was a flop from bad business decisions IIRC. Note too that x86-64 was developed by AMD, and Intel licensed it from them.
1. IBM picked the 8088 for the PC platform. This was part luck, part Motorola being too slow to market with the 68k.
2. The first PC with an 80386 was made by Compaq, not IBM.
3. A big part of what held OS/2 1.x back was IBM insisting on it working with the 80286, which made properly supporting DOS programs challenging. OS/2 2.0 came out 6 years after the first 386 based machine from Compaq.
Itanium was a flop from a technical standpoint but not from a business one. Intel spent roughly a gigabuck and effectively scared every competitor out the pool except for IBM and AMD.
Intel is suffering because their old fab folks all retired, and no young, smart engineer over the last 20 years wanted to work for any semiconductor company let alone Intel.
Even without the Itanium, the economies of scale in the x86(-64) world would have driven the RISC vendors out of the game.
But in reality, they gave up on R&D, Missed Apple mobile chips and then put a lot of MBAs in top leadership positions to make their financial schemes work. Those schemes did not work and they were left without technical leadership. When they got the tech leadership, the board just gave up and fired him and brought in a chop shop CEO to part intel out.
For some reason, the US admin thinks this is a good buy. You probably would too, if you bankrupted multiple casinos.
Intel is going the way of SunBeam, Sears and Toys r Us. The board failed to stop that. And failure attracts more failure.
The random acquisitions and board leadership didn't help intel but r&d had plenty of money poured in
https://www.youtube.com/watch?v=m7PVZixO35c
New computers aren't as much faster as benchmarks would lead you to believe. If your code relies on unpredictable branches, dependept memory accesses in a tight loop, or very tight feedback loops inside computations, new CPUs won't have that much of an edge.
Having to do any kind of 2025 type of work on it would be testing my patience to the extremes because all SW and media has grown in size and/or complexity(AV1 encoding, etc) requiring faster CPU, GPU, storage and RAM for the optimum experience. The only things that run fast on it are period accurate Linux 2.6 and Windows XP with websites form 2008, but I wouldn't call that modern computing.
Computers have gotten night and day faster and especially more efficient since 2008, pretending otherwise would be in bad faith.
The current lowest speced Mac can absolutely dominate my previous 2012 2x20c ivy bridge era Xeon tower. And on top of that, the power and heat are drastically less with the new machine.
The only reason a system of this era even kept up is the years Intel just didn’t do anything that was that much better and because of ram and pci express expansion which allowed for upgraded faster storage and faster gpus.
These days I can get better performance in a system that I can hold in my palm (Apple m4, amd ryzen ai 9) that doesn’t produce enough heat to keep my entire room toasty in the winter.
Has it ever worked?
We can blame the MBAs, but we really should see how we can propose a better system. And then convince people of that.
Okay okay, I give up already.
Look at the end state of the US auto industry. It's uncompetitive in basically every part of the world and thus basically irrelevant, except in the US. Unless somehow something different is going to happen here, this could end up with Intel continuing to perform poorly, negating the point of keeping it alive to begin with.
I guess we'll never know what would have, no matter how sure you seem to be.
I, for one, am still a little bitter about what could have been if not for a couple of those bailouts.
This means the market believes they have a path to bankruptcy. Since markets are forward looking, how close it is to bankruptcy does not matter too much. In this case they needed money and the government provided a relatively low amount for a pretty significant stake in the company.
Intel the advanced IC manufacturer is worth effectively nothing right now.
If they can prove a successful advanced manufacturing process and start making chips on it that will likely reverse fairly quickly, but it's been a decade since they held fab leadership.
The reality is any government (USG included) getting 10% share ownership in a company is ... barely news. The more interesting news (or speculation) is whether this is a smart move or not.
Major news nevertheless.
A lot of this article seems to rely on this point but the possible cost isn't clarified. I can understand equity arrangements affecting shareholders but how would it reduce the product's competitiveness, notably the unit cost which seems to be the point regards to other chipmakers. If it's about stock price going down, employee comp going down and product effects from that, it seems too speculative?
On the flip side, it sounds like instead of cash over time it becomes a lump cash infusion, which seems like it could result in benefits of its own such as bringing forward timelines.
The problem is that these days they do it capriciously, without any sort of plan or intention.
The government played a foundational role in supporting the early stage research that enabled companies like Intel to emerge. Underwriting that sort of long-term investment that wouldn't easily attract commercial capital is a great place for them to be.
Meanwhile, is it even the case that the American chip industry is declining? Apple, Nvidia, and Google all have significant chip manufacturing operations. And this isn't an industry I even follow particularly closesly.
No, they all (as well as AMD) all have significant chip designing operations. Not one of them can actually fabricate their own chips. Every single one of them must speak to TSMC or Samsung if they want to take their designs from the whiteboard to the physical world.
Wafer fabs are capital intensive, complex, and need constant retooling. The bulk of the commercial value lives in the stuff you do on your whiteboard.
From a geopolitical standpoint, I'll concede there's value in having the ability to actually make the stuff without acceding to the duopoly. But I'd still rather see the capital invested in basic research which might change the capital dynamics of the industry in the intermediate to long term.
From a national security point it really, really isn't. Like, I'm not a fan of the Trump administration, but having basically all chip manufacturing in Asia is not a good idea if you think there'll be a war with China in the next few decades.
If the only source of high quantity and high quality chips is located in your competitor's backyard, and they spent several decades repeating how it's their wayward province that they fully intend to reclaim one way or another, it's pure stupidity to sit around and do nothing.
Let's not pretend that the money would be spent on basic research instead, by the way. US pumping some money into chip production is a rare spark of intelligence amidst an avalanche of stupidity and grift.
As you point out, it is questionable whether Intel has either of these.
It might be argued that it is critical to national security that Intel be replaced by HP. Or Nvidia. Or Sun, or Motorola, or Micron, or TI, or...
What's that you say? Most of those companies had their chance and failed? None of those companies are really in the game?
Why among all the list of failed or current fab owners is it so important that Intel be declared sacred?
Why not recognize that Intel is getting its clock cleaned by a company that doesn't design chips? Why not look outside of the chip design industry to save the chip fab industry?
If HP, or Nvidia, or Sun, or Motorola wanted the bag maybe they should've tried building their own modern fabs.
Government should own a stake in every business, and citizens should then get shares in that government fund.
Moving on from that, you make a good point that it may be the best compromise if the original deal is off the table. That said, in my eyes the implementation could be better. On both a practical and ideological level, I think it would behoove the dealmakers to lay out clear exit conditions. That could look something like anything from signing a covenant with Intel to freeze dividends and corporate buybacks and pay down debt (which is dangerously high for them currently), and then once the corporate balance sheet gets to a safer level, the US gov could run a public auction for the equity once that strike level is hit. I'm sure they could come up with something palatable. What's unexcusable is to apparently enter into a seemingly permanent zone of CCP-style state corporate capitalism without clearly laying out what that means for America going forwards. As an average citizen, I certainly have questions about the precedents being set, and to me it just looks haphazard and off-the-cuff.
The only absurd here is to think republicans care about anything other than power . Doesn't matter what they did or said yesterday, what matters is what can they say and do today to remain in power and enable their deep pocketed donors to make more money and gain more power.
People really have to stop thinking there's anything there, there's nothing, its all about acquiring and using power. Trying to come up with ideological reasons as to why they do this or that is useless.
Right, but it's an absurd juxtaposition when taken at face value none the less. I agree with what you said, but my point was more about other possible structures for the deal rather than political conclusions. I was attempting to brush aside the political considerations and take a somewhat tabula rasa approach, not spur a partisan political conversation, which clearly I failed at by mentioning the absurdity in messaging.
How I guess it will happen: first target 'close ennemies': same party, small public recognition, but opposite views on specific policies you want to denounce. No charge filed, just good old intimidation: raid the home, take the files an computer, then say "sorry we didn't find anything" after a few months.
My mother hosted political refugees from Russia and Kazakhstan, I've heard a lot of story, and that shit seems to always starts the same way.
https://www.nytimes.com/2008/12/20/business/20auto.html
Perhaps I should have nixed the political aside at the top. Wasn't my intent to bring that to HN.
The GOP overthrew its leadership in 2016 and a different faction took control of the party. The GOP started out as an economically interventionist party: https://www.journalofthecivilwarera.org/2017/04/gops-civil-w.... Then it went through a libertarian phase in the mid 20th century. Now its back to an economically interventionist party.
It was never a nothing-in-return agreement, that is fiction.[0]
[0] “Biden to require chips companies winning subsidies to share excess profits” >> https://www.reuters.com/technology/us-require-companies-winn...
I mean I agree with you but even that article is talking about how it's not a free handout. It never could have been. A government could hand out money unconditionally and they'd still get a return as long as taxes exist. Intel's (or any company's) success results in them paying more taxes. Not just corporate taxes either.
Also consider: Who is the $10 billion coming from? Because it's not Intel. Intel just prints the shares out of thin air. This is Trump stealing $10 billion directly from Intel's shareholders, who get nothing in return because Trump is legally required to disburse the CHIPS Act money.
A person invests in a stock, hopes it goes up, and makes a profit (or loss) when they sell. That money isn't real until a sale occurs.
A government gives a grant and gets a return tomorrow and every single day of the company's existence as well as every single day each employee exists (even if the company doesn't). If a company exists, it pays corporate taxes. If that company has employees (as every company does), it pays payroll taxes. If that company has employees, they pay income taxes and various forms of consumption taxes.
IDK why we act like a grant is akin to lighting money on fire. Governments don't give out grants for nothing. They're still benefiting from it. Sure, the vehicles for return are different from a standard investment but also a government isn't a person. Well I should take that last part back. A government is a person in an autocracy (monarchy/dictatorship/theocracy/etc), but that shouldn't even be on the table.
I wish that were so.
It's also just crazy to see nationalization being packaged as capitalism. Those screaming for privatization while nationalizing. It's not even being done covertly either
the supply chain moved to asia and the just so stories about ricardian free trade + an inflated stock market made everyone believe, while the ultra-rich got ultra-ultra-rich
and now we sit down to our banquet of consequences
Missed on: mobile, custom chips in the data center, graphics cards, ai, and building out fab services they can sell.
Meanwhile, they took at least 5 years off of making their chips faster, and we're treated to the absurdity that the m-series chips are as performant in single core as anything Intel can build on a power budget 1/10th of Intel's.
I'm not sure what that has to do with outsourcing? It looks more like a comprehensive lack of execution.
High-end fab is a volume game and that was the time frame when Intel was still process competitive and could have competed for Apple's business (and Nvidia's, ...). But that would never happen as a division of Intel, nobody wants to send their designs to a competitor.
Even 10 years ago Intel was a blue chip stock, saying they should have cannibalized their lead to go into a lower margin market for volume would have gotten you kicked off any executive role.
Imagine being in a boardroom in 2010:
And someone proposes: "Let's split the company, cut our margins for a bet against our design team in mobile volume, and start manufacturing chips for companies that might become our competitors."How they fiddled and watched Apple take the phones that make a profit; Samsung/Qualcomm provide chips to the rest; and all the hyperscalers make their own arm chips in the data center while doing nothing. Absolutely nothing. Is beyond comprehension.
Meanwhile, (I think Asianometry?) pointed out that Intel's headcount was recently as large as AMD, nVidia, and TSMC combined.
You have no idea if those Indians are here on a visa, greencard, or have American citizenship.
You just see brown people, some of whom may or may not have accents, and are angry they’re making “six figure salaries” while people you define as Americans (I wonder how your Americans look like) are “struggling to put food on the table.”
I am not one of these people who spend their lives on Twitter or Bluesky or whatever calling everything under the sun racist. But your comment here is actual racism.
It's capitalism when you're winning, and socialism if you're losing.
Or: "Privatised profits, socialised losses".
I understand why in this case, Intel is very much in bed with the US Government and likely makes a strong case for being a national security interest, but it feels icky.. especially as AMD is an American company too.
If the issue is the node fabrication then why wasn't their an investment in Fabs before now? Intel got its big start on government grants iirc.
Not sure where I read that (I think it was some dude's Tweet), but it seems relevant here.
Please think of the poor, poor shareholders.
Covered yesterday on YC.[1]
[1] https://news.ycombinator.com/item?id=44989773
Now only companies are left to pick up the bill, because a republican administration won't ever consider doing it.
I still wonder when CEOs will realize that lack of education and lack of healthcare will eventually land at their doorsteps because they won't have immigrant workforces anymore that can compensate for it.
As a high-income earner I used to be in favor of privatizing healthcare here in Italy/Europe.
I've always seen the public healthcare system wasteful and inefficient. Our healthcare system really is in a terrible spot.
Then few years ago, a very close friend of mine, had to give birth to her child. She had chosen one of the most expensive hospitals in the region, where there would be a huge staff all for her, not that crappy public service she would get.
Then tragedy struck: in all the luxury and care she was receiving, her newborn had huge problems staying alive, and died of respiratory issues few minutes after birth.
A very preventable death the autopsy stated moreover if she was in an appropriate public hospital.
Why? Because larger public hospitals have all a newborn reanimation unit with trained staff exactly for these kind of emergencies. Private ones? They are virtually non existent, doesn't matter the country or budget, no private hospital can afford such an expensive unit that requires extremely specific training and equipment but gets to act rarely if ever. So they don't exist in those contextes.
Since then I realized how naive I was: private healthcare just cannot justify investing in a huge amount of treatments that are a financial disaster for the private clinic/hospital. They just can't.
Thus, at the end of the day, you don't really want private healthcare that has to choose what to provide on a $ basis, you just don't. You want a as comprehensive and available public service that needs the right amount of money and incentives to work properly.
I don't know how can it be achieved, but you really don't want to be that father/mother, sister, friend or patient that cannot access an important procedure because it makes no financial sense to offer it.
Have you considered that they don't care? They can make a better profit now, so why worry about what is happening 5 to 10 years down the line?
The US government doesn't need leverage. It just needs an act of Congress. Corporations are convenient fictions that exist at the pleasure of our legal system, which can be changed.
https://en.wikipedia.org/wiki/State-owned_enterprises_of_the...
US federal government is the biggest player in healthcare, by far. 32% of all healthcare spending is Federal government dollars. They have plenty of leverage. Bad if they use it, but they have it.
$900+ billion in Medicare yearly $600+ billion in Medicaid yearly
What would the value add for either party be?
[0] https://en.wikipedia.org/wiki/Famine,_Affluence,_and_Moralit...
The chip fab industry builds billion dollar bespoke superfund sites, and they're paid for the privilege.
https://www.jstor.org/stable/j.ctv65swcp.5 | https://doi.org/10.2307/j.ctv65swcp.5
https://en.wikipedia.org/wiki/Superfund
If you say 'I like Capitalism', a significant minority will hear 'I love US imperialism and hate nature', despite that almost certainly not being what you meant. Similarly, if you say 'I like Communism', many hear 'I love dictators, gulags, 5 year plans and famine'.
A word of advice: if you actually want to have valuable political conversations with people, don't start by identifying yourself with ideology that's arguably responsible for various atrocities and millions of deaths.
So neither capitalism nor communism? What's left, anarchism? I guess they haven't killed that many people.
Talk about policies and their effects, not about what bucket you might put them (and yourself) in.
> Covered yesterday on YC.[1]
> [1] https://news.ycombinator.com/item?id=44989773
The post from yesterday was news; this is commentary, as in, not a dupe.
To your point, it's arguably closer to state capitalism, which may be a distinction without a difference if you paint it with the same brush as socialism, but it's one worth mentioning.
https://en.wikipedia.org/wiki/State_capitalism
The name of the (sub)site we're posting on is HN; YC is the host. :P
Eventually those were privatized. Now, the railroads are being socialized again.
China is trying to beat US at its own game. US (or at least its current political leader) is trying to beat Russia at its own game. Russia is trying to remain relevant. Russia is the muscle, China is the finance.
China needs Russia just like Google (Chrome) needs Firefox. Without Russia around, China would get all of the attention instead. Without Firefox existing, Google would have no counter to antitrust allegations in the web browser space.
Anything you can do, I can do better. I can do anything better than you.
No, not like that!
It's like that Spider-Man meme where everyone is Spider-Man pointing their fingers at each other. All the power structures are mirroring each other. It's all kayfabe, all the time. Everything is wrestling.
https://www.nytimes.com/2016/05/27/magazine/is-everything-wr... | https://archive.is/muwUp
Seems like a bad combination to me, a net positive tax payer.
Everyone benefits from more medicine, weapons, food, etc.
Dude, this attitude is against guidelines. I'm OP: I posted this post. I'm asking in good faith. I'm forwarding this to mods.
I disagree, but in the interest of not painting the mods into a corner with my reply, I won't pursue this thread further.
https://news.ycombinator.com/newsguidelines.html
> Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that".
You didn't quite say that, but it rhymed. The sentence I quoted upthread added nothing to your comment, and that is that part I took issue with.
Intel is strategically important. As nice as it is to pretend that the whole world plays by the same rules, that the free market exists everywhere and that we'll never to to war, there are bad actors and the US (rest of the collective West as well) need to ensure that we won't be completely crippled if China attacks a single island off their coast...
Fab capability on US soil is strategically important. Intel is one of many possible routes to that.
That and when most governments "nationalise" corporations they seize them and don't give the owners/shareholders anything.
And it's the standard refrain: if this money helps Intel get back on its feet, the stock price will go up, presumably to the point dilution won't matter.
But who cares, really? If it's true that Intel is actually strategically important to the US, the shareholders are irrelevant if need be. It's not a great outcome, sure, but Intel has been mismanaged for a long time, and investors should have known the risks of investing in a company like that.
https://www.intc.com/news-events/press-releases/detail/1748/...
Versus in most nationalisation events their shares simply get taken away or diluted to pennies.
First you get the money, then you get the power.
Money is fungible, but power isn't. Arguably, taking away my power is an affront to my human rights. Taking my money is an affront, but it never was my money to begin with, as I don't control the value or creation of it. My rights are inalienable.
The state should get equity for the money it spent on bailouts (or other purposes).
And this money should be put to work on social programs ;)
Nvidia/AMD offer 15% profits
Intel offers 10% share
I think, as a TV star, Trump enjoys all the circus. And everyone else is playing along so it's fun.
If they pass that hurdle, its more like 70/30 Dump says put backdoors into all processors, and says it loud and proud. Assuming intel is smart enough to be able to fuse that functionality out entirely (not that anyone would believe they disabled the functionality)... That leaves somewhere about 15% chance that Intel survives 5 more years
Chinese large scale investments are a bit different. It’s not just SMIC who gets a lot of funding, but others as well, so they can still compete with each other, until the winner is chosen and the others fade away. Similar to what is happening in EV market in China.
Intel… there is a decent chance that company fails even after this investment. They basically need to force other companies to use Intel chips instead of competitors for them to be viable at some point.
But you also have to consider whether the government has the legal authority to make the investment. For a country claiming a limited government and the rule of law, that is a serious consideration.
You seem to be focused on the first consideration, but do not overlook the second one.
I'll be blunt - I don't think anyone takes either of those seriously, not since Wickard v. Filburn in 1942.
GeekyBear gives a less blunt similar argument: https://news.ycombinator.com/item?id=45008439
I get why the idea seems sane, you want to get returns on investments, right? But with governments the vehicle for returns is taxes and investments are often called "grants" (but also loans, credits, etc). The tax system means you can make investments and always get some return. FFS you could invest in a company going nowhere and you still recoup through taxes. The only way you lose in this system is by tanking the entire economy. Idk why this is so hard to understand. Why people think things like research grants is akin to tossing money into a pit and burning it.
I know the current party is anti tax but aren't they also anti nationalization (Words, not actions)? Changing (or adding) your returns vehicle to be through stock only creates nationalization. It increases returns but also puts an additional thumb on the scale. It's very short sighted.
Who knew socialism would come to America wrapped in an A̶m̶e̶r̶i̶c̶a̶n̶ capitalism flag?
https://pastebin.com/raw/vL07QfVi
I'm not in either camp at the moment, as I don't have a deep understanding of Intel or its finances, but I'm tired of people whining about how others could possibly have a different opinion about two similar but different events, separated by nearly two decades, as if this is some sort of "gotcha!" moment. It's not. Move on.
But even if -- let's just say if -- this Intel bailout were identical to the bank bailouts in every way... priors matter! Even someone who agreed with Bush back in 2008 that the bailouts were necessary, someone who was largely in agreement with much of what Bush did during his presidential terms... that person could very much disagree with what Trump has done in the past 7 months (as well as what he did 2017-2021), and that disagreement makes it entirely reasonable to question whether or not this particular move is a good decision. That's just... entirely normal.
Maybe there are better ways to prop up Intel besides the government taking a stake, but losing Intel would be a huge blow to American manufacturing interests. There's been a failure of strategic vision, both at Intel and in the American government. I think as a short term measure, taking a stake isn't the worst thing the government could do at this time.
Also to go off on a tangent a bit: this is one of the benefits of having a Trump-like character as President; he's clearly not beholden to any ideology and is extremely flexible when it comes to making policy decisions, even when a certain policy might be more at home with the opposing party or side of politics.