GlobalFoundries wins $3.1B in CHIPS Act subsidies for NY, Vermont

https://www.syracuse.com/business/2024/02/globalfoundries-wins-31-billion-in-chips-act-subsidies-for-upstate-ny-vermont-expansion.html

by geox • 2 years ago

171 167 2 years ago

syracuse.com

minroot• 2 years ago

man, the parking lot! couldn't they make it underground?

vitro• 2 years ago

Or at least put solar panels on top of it. Provides electricity and shades cars. It should be a norm.

sofixa• 2 years ago

It's the law in France over a certain size of parking lot, which is great.

mschuster914• 2 years ago

Intel in Germany is even worse. The parking lot is larger than the plant [1]!

For fucks sake, large commercial (both office and industry) zones should only be permitted when the developers show a viable mass transit solution for their employees. Even if it's just buses, that's still better than thousands of cars.

[1] https://www.mdr.de/nachrichten/sachsen-anhalt/magdeburg/magd...

geraldwhen• 2 years ago

Most office complexes have parking lots larger than buildings. People are smaller than cars, commute one person to car, and buildings are often multi story where parking is not.

Hence campuses that are 85% parking lot.

raverbashing• 2 years ago

There probably is mass transit access to the Magdeburg plant (or the state can guarantee an expansion there)

I'm thinking that "excess parking" is usually due to wanting to secure a site with enough expansion potential but also putting it to use in the most cheap way possible (like, you won't verticalize the parking until needed and that would require more planning, permits, etc)

selimthegrim• 2 years ago

You should see the Jones Farm parking lots.

edgyquant12• 2 years ago

No we definitely should not enforce a ridiculous regulation like that. Again people like you miss the entire point by thinking everything should exist only in big cities where public transportation makes sense. We need to bring these factories back to small towns and regulations like you’re proposing completely kill that.

vel0city4• 2 years ago

Look at Malta, NY on satellite view. Then tell me mass transit makes sense for that location. Tell me a few good bus routes that would actually make sense for people to take instead of driving their car.

Not every spot on Earth is a dense urban area.

infecto• 2 years ago

Why? That would probably cost many multiples more than what exists above ground. I am guessing upstate New York and where this plant is located, is not incredibly dense.

ambrose2• 2 years ago

I used to work there, and can confirm that there’s plenty of space there for more parking lot, there’s woods in all 4 directions and it sits on an old super fund site (former rocket fuel testing).

jprd• 2 years ago

When I worked at Malta 5y ago, that parking lot was too small. If you didn't get in at an early hour, you were parking in the gravel lots that are off this picture to the right.

Combine that with the actual size of the Fab, hella lot of walking :)

As for solar panels, the Fab operates 24/7/364 (usually 1 downtime day a year). Which means even with the large amounts of snow that will build-up in the winter, there are always cars in the lot - clearing that is a big job and not sure how to do it with solar panels.

Alpha30312• 2 years ago

Which means even with the large amounts of snow that will build-up in the winter, there are always cars in the lot - clearing that is a big job and not sure how to do it with solar panels.

I'm not sure how much sense it'll make in this specific case, but in general, interestingly, with a high albedo (e.g. snow covered or white for some other reason) ground surface, vertically mounted bifacial panels produce very close to equator facing panels with the appropriate tilt. The value of that generation might actually be greater, as it obviously spreads out the profile towards the evening peaks.

For the regular horizontal/tilted ground mounts, NY is quite far north, so you're looking at a mount angle of 43° or so to optimise overall power production, and you can go about 15° more tilt and only lose maybe 1 or 2% of summer production, but increase production in winter when the sun is angled lower. If you go for like 55° to 58° tilt, there's probably not going to be very much snow accumulating on the panels themselves.

csomar3• 2 years ago

The GlobalFoundries expansion would create up to 1,500 manufacturing jobs and 9,000 construction jobs over the next 10 years, federal officials said.

So assuming the construction jobs are temporary and the manufacturing jobs is what remains, this works out at around $2.066 million per employed personnel. Assuming a federal income tax rate of 20% and a 30 year tenure, this means the personnel should have a take home pay of $344k/year. And this is just for the scheme to break-even.

I think this IRA (the act) and CHIPS act are going to be just another wealth transfer where the "work" being done just to check boxes to be eligible for the money getting sloshed around.

ericmay2• 2 years ago

But those employees also do things like buy cars and lattes, and they also pay state and local taxes, sales tax, etc. as does the foundry.

There are other economic benefits too.

But even if your simple calculation was correct and all there was to this story, what you’re missing in your post is that America as a nation has decided we need to produce semiconductors here for economic and national security purposes and so therefore subsidizing their manufacture is a normal thing that would occur.

gosub1003• 2 years ago

they would buy cars, lattes and pay tax on non-subsidized jobs, too. Why should the latte shop owner have to pay tax to run their business, while the chip mfg doesn't? it just creates two classes of people.

America as a nation has decided we need to produce semiconductors here for economic and national security purposes

a few decades ago we decided to move manufacturing jobs overseas because paying people who had families and bought "cars and lattes" here was just too expensive. Why reneg on that commitment?

Nevermark• 2 years ago

The point of all these breaks is to alleviate a critical dependency on two foreign advanced chip makers. Especially one that is under military threat by a huge political economic and military rival.

Losing out on a big percentage of advanced chip making capacity could be catastrophic for the US economy and technological advancement. And military.

This is not an "investment" in future tax revenue via jobs, although jobs are nice.

csomar3• 2 years ago

I understand the point of these subsidies. I am just doubting (a personal opinion) that they'll actually work and calculating the wealth transfer happening here.

zer00eyz• 2 years ago

Its not about this being a "winner" it's about being able to make the dam things domestically. Full Stop.

We have national defense concerns and zero faith in intel.

EDIT: This makes it "defense spending" in a civilian line item.

Dalewyn5• 2 years ago

Intel is one of the recipients/beneficiaries.[1]

[1] https://www.intel.com/content/www/us/en/corporate/usa-chipma...

konschubert• 2 years ago

This isn't about creating jobs. The US has more Jobs than people who're willing to work.

This is about creating strategic independence.

edgyquant12• 2 years ago

No a big part of the chips and inflation reduction acts are definitely the creation of jobs and the bringing of manufacturing back to parts of America that has been deindustrialized due to offshoring.

formerly_proven• 2 years ago

The value of a job for the state is limited to ... federal income tax? That's certainly a view to hold.

myrmidon4• 2 years ago

It's always good to question subsidies like this, but the question you ask ("does income tax on the created jobs pay for the subsidies") is the wrong one: The state is not investing into this for a monetary return from income taxes-- he is paying for strategical reasons/supply chain security, and the "price" is to compensate for the fact that labor costs and regulations make building chip foundries in the US more expensive.

So what you would need to ask would be more like: Is the subsidiy higher than it needs to be to lure chipmakers into the US? And that is much harder to answer...

zitterbewegung• 2 years ago

You are absolutely right but missing the point. The CHIPS act is to make domestic foundries for companies where the manufacturing is outside of the United States. It is to make us resistant to supply chain problems and also the possibility of tampering of computer components. Foundry creation is incredibly expensive and to get to the state of the art lithography is hard but global foundries can make chips for things that don't require that. The subsidies should reflect that (Intel / TSMC have had this grant also).

On the other hand they could just not complete what they promised and we would be in a bad position: https://www.theverge.com/2019/4/10/18296793/foxconn-wisconsi...

Others have said about trickle down economics (this can be debated).

melling• 2 years ago

This has nothing to do with jobs.

Read Chip War by Chris Miller

https://en.m.wikipedia.org/wiki/Chip_War:_The_Fight_for_the_...

mattmcknight• 2 years ago

In addition to the point of this not being to make money, more than half of this is loans, so is intended to be paid back. 1.5B is grants, so closer to $1M per manufacturing job in your framing.

The other economic benefit is moving one part of the supply chain here may enable more of the supply chain to be completed here. For some of the hardware companies I work with, if you have to make a few parts in China, it's vastly cheaper and more flexible to do the whole assembly there.

dubcanada2• 2 years ago

Is the only reason governments subsidize things for employment? Could it not just be here, have $3.1B and further us as a species by producing chips needed for AI, ML, cars, cellphones, etc.

We give giant science grants all the time, tons of money for infrastructure, etc, what makes this one immediately go into X dollars / jobs created * tax generated?

dukeyukey2• 2 years ago

I imagine that $2 million also includes land purchases, materials, and equipment on top of salaries.

Shrezzing• 2 years ago

Oxford Economics estimates that there's a 6.7x multiplier on each new role created in the semiconductor industry[1]. That is, each role in the semiconductor industry supports an additional 5.7 jobs indirectly in other domestic industries. The only two sectors that are higher are Computer Storage manufacturing and Aircraft Manufacturing.

You'd need to split the pay between all 6.7 newly created roles, meaning they only need ~$60k take-home or so each - which is right around the US mean salary.

[1] https://www.oxfordeconomics.com/resource/chipping-in-the-us-...

lulznews• 2 years ago

It’s a money dump no question about it. America simply can’t do these things.

BeetleB2• 2 years ago

At $344K/year, I can assure you the federal income tax will be higher!

Also, did you not account for capital costs? I know that at Intel fabs, labor costs are significantly lower than capital costs.

Consider, for example, that ASML charges $0.5B for a single unit.

tqi• 2 years ago

National security considerations and second order economic stimulus effects aside, rounding 9000 construction jobs down to 0 is also doing a lot of work here. If you assume the average duration of those jobs is just 5 years, that doubles the number of job-years...

woah• 2 years ago

Don't you think they have to pay for the machines?

patmorgan232• 2 years ago

The government is not a business, it's "investments" do not have to "break-even" in raw financial terms.

Maintaining supply chain diversity is critical for national security. The US Military does not want to be dependent on foreign manufacturers for its equipment.

Furthermore the business and employees will be paying sales and property taxes, in addition to federal income tax, and will have 2nd & 3rd order effects from their spending.

imgabe• 2 years ago

The 9,000 construction jobs will also pay taxes while they're working for 2-3 years. The 1,500 people will buy houses and go to restaurants and dry cleaners and have lawn care and create much other economic activity that will also generate tax revenue.

Simply diving the subsidy by the 1,500 permanent employees doesn't capture the value that's created, along with the strategic value of bringing more chip manufacturing to the US.

dangus2• 2 years ago

But the jobs aren't the only nor primary benefit.

Don't forget that TSMC was essentially a government enterprise when it started.

Be cynical if you want, but the one thing that has a 0% track record of effective results is calling every government function wasteful, corrupt, and untrustworthy and responding by dismantling government institutions and investments.

802er• 2 years ago

Schumer said the deal includes a commitment from GlobalFoundries to continue to provide a $1,000-per-employee annual subsidy for childcare and to extend the benefit to construction workers who build the new plant.

So pacing inflation on the cost of childcare? What a joke. Childcare in Vermont is ranging between $15,000-$25,000 per year among families I know. That subsidy covers less than a month.

As the largest private employer in Vermont I think they can do more than that. It’s not like they pay well. I see on their advertisements that night shift operators are paid 21.93 hourly with a shift differential. So day shift makes even less. Looks like shifts are 7 to 7 am and pm night and day.

What a schedule. It’s one thing if you’re a nurse making at least low six figures. But this? Grueling manual labor in those suits for twelve hours a day for a sub livable wage in Vermont and New York.

https://livingwage.mit.edu/states/50

verdverm• 2 years ago

I worked the overnight there when IBM still owned it, it was 4/4-3/3 on/off with 12 hours shifts, 8 overtime per paycheck

It was really, really nice having 4 days off. It's a super easy job, basically babysitting machines, more reading the Internet than anything else

fallingknife• 2 years ago

Or maybe they can mind their business, not concern themselves with how employees spend their salary, and pay the same to workers with and without children.

rasz2• 2 years ago

The 'we give up R&D' GlobalFoundries? https://www.anandtech.com/show/13277/globalfoundries-stops-a...

seventytwo3• 2 years ago

If it’s not TSMC, it’s bad?

jeanlucas• 2 years ago

How's that related at all to the link? It's just a news article pointing out that GlobalFoundries gave up on making 7nm chips.

icegreentea2• 2 years ago

From the Anandtech article, you'll note that a major challenge GloFo cited in bringing 7nm online was getting the fab space for it, citing that they would need to sink 10-15 billion to bring 7nm (and lower) nodes online.

You'll note that in the submitted article, GloFo is promising to do exactly that ("In return for the subsidies, GlobalFoundries said it would invest about $12.5 billion in the projects, most of which would be spent to expand the company’s Fab 8 in Malta, in Saratoga County."). Basically it seems like GloFo made a pretty hard nosed decision based on financing (guess they were just a few billion short last time) back in 2018, and now that they have those missing billions, they're going to go ahead.

Based on these numbers, it does seem likely this would allow GloFo to bring online 7nm. But getting much past that (5nm and lower) seems uncertain. That said, having additional domestic 7nm production (crucially, 7nm that does not displace existing 14nm+ production) would be useful.

seventytwo3• 2 years ago

A geo-strategic win for securing the semiconductor supply chain, and the top parent comments in here are complaints about the parking lot and how much tax money it’s going to take.

Sheesh.

Always42• 2 years ago

^it's crazy to me usa hasn't brought chip mfg in sooner, but easy to say in hindsight

seventytwo3• 2 years ago

Well, we’ve been of the collective mindset that internationalizing supply chains is best, for multiple reasons. And, under the right conditions, that may be true. However, the world is becoming morr multi-polar, so the calculations are changing. Lots of political, economic, and social inertia…

alephnerd• 2 years ago

It might be because GloFo always had foundaries in NY and VT (because it's the old IBM+AMD foundary spinoff).

IMO it's still fine to subsidize - everyone else (Taiwan, SK, China, MY) is doing it against WTO regulations, so we may as well

simpletone• 2 years ago

IMO it's still fine to subsidize

Of course it is.

everyone else (Taiwan, SK, China, MY) is doing it against WTO regulations, so we may as well

You have it backwards. The US was/is/will be doing it so taiwan,sk,china, MY) is doing it. The biggest violators of WTO regulations is the US. And the WTO is pretty much defunct because of the US. The biggest and most egregious mercantilistic country is the US. Not china or any of the country you listed.

The sad thing is, the rest of the world should be subsidizing far more to offset unfair help US corporations get.

devwastaken• 2 years ago

No one wants manufacturing in their back yard.

pxeger1• 2 years ago

Gina Raimondo said the plant will make “high-value chips” that are currently not made in the United States. The 300-millimeter chips are essential for national security [...]

300mm? What dimension is this measuring? I would expect feature size to be 300nm, but 30nm or 3nm is surely more likely.

stn8188• 2 years ago

This is talking about pre-diced wafer diameter.

https://en.m.wikipedia.org/wiki/Wafer_(electronics)

dubcanada2• 2 years ago

I suspect they mean wafer size, 300mm is a common wafer size.

Alpha30312• 2 years ago

What dimension is this measuring?

Twenty bucks says wafer size, since 300 mm wafers are standard.

Edit: Also, here's the press release for the announcement:

https://www.nist.gov/news-events/news/2024/02/biden-harris-a...

bee_rider7• 2 years ago

Certainly not the transistor size unless they’ve invented some new Gate All Around Ingot technology, hahaha.

Kirby64• 2 years ago

That’s a shorthand for modern processes. Older process technology was made before 300mm wafers were standard, and retrofitting old processes to use larger wafers is generally considered to be not worth the cost since all the tooling is depreciated and paid for in 200mm or smaller wafers.

Anything made today from the ground up would use 300mm wafers, though. Even slightly older process nodes (55nm, for instance).

dragontamer8• 2 years ago

300mm is the new wafer standard.

200mm was the standard a few years ago.

georgeburdell2• 2 years ago

I was in the industry for a decade and never saw 200mm

capital_guy2• 2 years ago

As a native upstate new yorker, I root for the success of GlobalFoundries. But it was exceedingly frustrating to me that they went and did layoffs in 2022 despite their booming revenues and incoming subsidies [0].

It seems to me there should be some kind of rule to prevent these layoffs for companies that receive billions of federal dollars.

[0] https://vtdigger.org/2022/12/01/globalfoundries-to-cut-up-to...

nos4A2• 2 years ago

Such a rule can have the opposite effect though, a company may choose to hire/grow more conservatively if it is subject to a condition that it cannot layoff.

viscountchocula• 2 years ago

Isn't their layoff a tacit admission that they should have grown more slowly, though?

gizmo2• 2 years ago

Layoffs are necessary from time to time to keep org chart bloat down. It's not just about the money. I don't mean this in a callous way and I understand that layoffs are painful for those getting fired. But for a business to thrive it has to make the correct strategic choices.

capital_guy2• 2 years ago

I guess I am too humanist to believe this sort of rhetoric is not callous. I know people who lost their jobs in that layoff. It hurts a lot of families.

Companies should think about organizational bloat during hiring. If their revenues are soaring and they’re getting free money from the feds, they should shuffle the people they have into more efficient roles.

I know there are fiscal reasons why this kind of thing happens. But workers in the US do not have the protections to balance it out. Healthcare, unemployment insurance, etc are not sufficiently strong to keep people afloat for the sake of “reducing organizational bloat.”

maerF0x04• 2 years ago

While I agree with the geo-political arguments, I'd prefer to see regulations that allow the freemarket to design a solution, rather than a government contract to choose the winner. (eg: cars with 100% US made chips, or no chips, receive a tax rebate at the final consumer purchase)

I also feel the need to comment that this is corporate welfarism and that is very much contrary to free markets or capitalism. IMO the government should not be choosing winers, but incentivizing everyone who generates a benefit. As an illustration (but not neccesarily the exact policy), what if the government awarded a benefit per TFLOP produced in the USA, or per chip created etc. (up to some maximum). Then a handful of competitors could all participate and benefit from the incentives. As it stands now its $3.1B harder to compete with GlobalFoundaries on the open market, meaning competitors and thus innovation and supply will actually be harmed.

We also see time and again that corporate subsidies are not sufficiently beneficial to constituents to be worth the money.

The best data i can find is on stadiums[1], but also some about when amazon was shopping itself around for incentives.[3]

[1] https://reason.com/volokh/2023/12/16/virginia-should-refuse-... , https://reason.com/2013/12/21/why-stadium-subsidies-always-w...

[2] https://subsidytracker.goodjobsfirst.org/parent/tesla-inc is a good resource for seeing how much companies have been subsidized

[3] https://www.forbes.com/sites/teresaghilarducci/2019/02/27/sh...

DinoCoder993• 2 years ago

while I agree with the geo-political arguments, I'd prefer to see regulations that allow the freemarket to design a solution, rather than a government contract to choose the winner.

I think the market did choose and the choice was "not in the us".

Vt71fcAqt73• 2 years ago

that is very much contrary to free markets or capitalism

Free markets and capitalism are related but not the same. The government using capital as an incentive for companies to increase output is an example of capitalism.

maerF0x04• 2 years ago

Correct, but I'd claim that there is a "freemarket" ethos in the US, despite the lack of them. People here often say they want freemarkets and hold it as an ethical and idealized system. Their government behaves very much in contradiction to that though.

onlyrealcuzzo• 2 years ago

eg: cars with 100% US made chips,

Isn't this about being able to build military aircraft and guided missiles w/o any foreign dependencies, not cars?

jgeada2• 2 years ago

A free market on capital intensive industries chooses for efficiency, and efficiency means having single large dominant players at each step in the chain. Free markets create monopolies.

Regulations are what prevent monopolies and we've forgotten about enforcement of those rules for decades. So we ended up with concentrated monopolies and single points of failures in these critical industries.

Paltry subsidies and no new regulations means nothing will actually change, other than a few billion dollars going from tax payers into some small number of wealthy people's pockets.

maerF0x04• 2 years ago

Free markets create monopolies.

I have never thought this to be the case, could you provide some backing to your claim?

tastyfreeze• 2 years ago

Free markets do not create monopolies. Monopolies require government carve outs that make competition less likely or impossible.

kredd• 2 years ago

You can't free-market your way in an industry that's heavily subsidized by other governments. Whatever local company you have will obviously lose to some other company that's getting the levies somewhere else to design a cheaper product which will win in the "market". So, you end up having two options:

a) Offer subsidies yourself b) Let other governments dictate the industry that you're crucially depended on

_giorgio_• 2 years ago

Billions... Just imagine what they could do with trillions, eh Sam?

downrightmike• 2 years ago

Apple and Microsoft seem to be doing pretty well

beezle• 2 years ago

From Vermont reporting -

"Meanwhile, part of the money will be used to modernize the Essex Junction campus. Officials say the upgrades will enable the Vermont operation to become the first high-volume manufacturing facility capable of making gallium nitride semiconductors, which are used in electric vehicles, power grids, smartphones and more."

thoughtstheseus• 2 years ago

Please stop the wasteful spending.

Concentrate semi development geographically to realize synergies and economies of scale. Building redundant and competitive production thousands of miles apart in the Northeast/Great lakes, Texas, and the west Coast is not the best idea when you are resource and labor constrained.

dangus2• 2 years ago

Wasteful? What is a better national investment than the semiconductor industry?

Look into the history of TSMC. It became what it is because of direct government investment. I'm sure to some people it seemed like a gamble at the time.

This amount of money is basically trivial on the national level and the upside is tremendous.

fxd123• 2 years ago

Building redundant and competitive production

You do realize these fabs already exist? There is no redundant or competitive production currently.

bobbylarrybobby• 2 years ago

With climate change getting more and more severe, I can't imagine a higher risk strategy (for anything) than geographic concentration. Talk about putting all your eggs in one basket.

garunski2• 2 years ago

what a crock of shit! no. none of this money will be spent wisely. these companies are requiring the government to subsidize their profits without having to spend their own money. the promise of jobs is all fluff. billions to buffalo didnt send even one billion to buffalo and certainly didnt improve any lives in that region. as someone who lives here, I wish I could trust these people but the reality is that the state is so corrupt and US government is on the same level, where all the money will be forced out of the people and nothing will be delivered.

garunski2• 2 years ago

the 3.1 billion could be spent on Education, Libraries, Updating Infrastructure that is destroyed by harsh winters, investing in restoration of natural resources, helping the failing farmers, updating rail and lake/river deliveries. But no. we should def give it to people that will spend exactly 1% pretending to develop a factory and claim the rest for themselves because they encountered problems.

rasz2• 2 years ago

You are right when it comes to subsidies in general.

Recent moves and voices send a clear signal across the world - US is not a reliable security guarantee partner. CHIPS subsidies is a hedge against China taking over Taiwan. US is building onshore capacity to be able to renege on defense promises given to Taiwan at minimum cost. I would be very worried if I was in Taiwan. Im already worried as it is living in Europe and learning article 5 might just be a mere suggestion to US.

GlobalFoundries wins $3.1B in CHIPS Act subsidies for NY, Vermont

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