Foxconn promised a giant fab in exchange for massive tax breaks, and then just took the tax breaks and did nothing. Any reason to expect this is different?
They didn't get the tax breaks because they didn't meet the targets.
From your article:
After Foxconn failed to meet its job creation targets, Wisconsin’s governor, Tony Evers, last month pulled a deal that would have handed the company nearly $4.5bn in incentives for completing its plans.
Hundreds of millions were spent on variously infra improvements, eminent-domaining people out of the way, lawyers, etc.
https://www.chicagotribune.com/suburbs/lake-county-news-sun/...
I actually don't know how much Foxconn did get out of it. They've apparently run similar scams elsewhere, it appears to be a Foxconn side gig.
There's a fun book in here for a scrappy investigative journalist.
This is potentially wasted money, but it did not go to Foxconn, and presumably created infrastructure jobs. Not defending the deal, but it is often mischaracterized. The benefits to the companies usually are tax rebates that are only valuable if the company makes real investments that are taxable. They are not direct payments.
> and presumably created infrastructure jobs
Usually you hear people complain about dig-a-hole-then-fill-it-up jobs. But if we're going to start supporting those, it would be best not to tie them to scams, I think.
Yeah. Sounds a lot like the dig-up-all-the-carbon-burn-then-bury-it-again civilizational project going on the past 100, and next 100 years.
What exactly was the purpose to "re-arranging small bits of matter near the surface of the earth" again? [1]
Basically I wanted to make a comment about greedy exploitation-exploration trade-off strategies here but will stop short at this kind of eliptical passing remark.
[1] paraphrasing Russell in https://en.wikipedia.org/wiki/In_Praise_of_Idleness_and_Othe... it is appropriate given current moment
From the same man that proposed the idea of "re-arranging small bits of matter near the surface of the earth".
>It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
It's a social hack to get around idiotic situations. It's like moving to mars because you are worried about a nuclear war or climate change. Dumb games require dumb players.
If Foxconn tricked a local government into providing free "useful" infrastructure it could just rent that "useful" infrastructure out to a different company and thus capture the entire tax benefit. However, they didn't even do that... The money was fully wasted.
On top of everything else, abuses of eminent-domain, civil forfeiture, and so forth really, really bother me.
In principle, I unconditionally support the right of the polis (the government) to do what needs to be done. My own city basically used extralegal means to wrestle numerous blighted, condemned properties away from a trust. The creators of the trust were dead and no one was left to negotiate.
But hot damn these levers of power get abused.
Please recommend any books, articles, etc advocating reforms.
Ilya Somin is a law professor who writes a lot on ED-reform.
As far as action, the Institute for Justice looks for cases they think they can make with, and lobby for legal reform.
https://ij.org/issues/private-property/eminent-domain/
You'll find they both come at things from a libertarian direction, but neither are rabid.
That said, yeah, I also have to be honest. We're down about 1 billion dollars on that Foxconn thing. That's what we're out of pocket. The new governor, wisely, took what remained of our chips and left that table. You get mad, but you just have to chalk it up to a learning experience.
The Illinois people are right on this one by the way. Not even in Illinois would their leaders get away with a 5.5 billion dollar con. The people in Illinois are so used to dealing with corruption that they would have started asking questions and raising a fuss long before it got to that point. Our problem is that we're so accustomed to our corruption that we never raised a fuss until it was way too late.
All that said, in Wisconsin our leaders didn't get away with 5.5 billion dollar con either technically speaking. Scott Walker and his boys got us for about a billion, but they didn't get as much as they wanted. So fibs shouldn't gloat too much, because while I can't see anyone in Illinois getting away with a 5.5 billion dollar pure con, I could see someone getting away with maybe a billion. (It's just that they're far more wealthy than we are, so that billion doesn't hurt as much.)
Everyone knew from the start this was a BS deal and never going to happen or make ANY sense. This was pure incompetence at a political level that was paid for by tax payers.
Hope that the Governor of Wisconsin stayed a Republican? Now, that's not to say Democrats can't engage in grift, but, the deal was started under a Republican Governor in a notoriously corrupt state where the promise of Foxconn jobs was lauded by legislators, the governor, and the former President as a win for the people of the state, for our country, and a blow to China (that we were taking jobs back).
Foxconn's incentives seemed aligned with promising the moon and if those people were reelected, well, wouldn't compensating Foxconn for those promises and their outcome (the election outcome, not the factories) be fair?
Many people's gut reaction to a whiff of partisanship here or suggestion of corruption or conspiracy is to push back hard. Well, dammit, what did Foxconn want to get out of it except for billions of dollars in ill-gotten tax incentives?
I'm responding so incredulously to you because everyone's motivations here was advertised loudly. It's not a conspiracy if it happens in broad daylight.
It seems clear to me that they wanted to not have to pay taxes in Wisconsin for many, many years to come.
https://apnews.com/article/technology-wisconsin-d3f025e43ab0...
Had those politicians stayed in office, it's possible they would reward Foxconn for participating in the charade that helped them obtain reelection. Is it certain? No, I won't say it is.
But, what else was Foxconn's goal if not to actually realize those incentives without having to make the investment to justify them? They knew they were promised an enormous incentive by the state, and they knew that they would not fulfill their end of the bargain. If they also knew that they wouldn't realize those incentives, why did they pursue them? The simplest answer is that they fully intended to realize them.
Surely at least some of the negotiators of that deal legitimately believed that the other party - the Republican Governor and majority legislature in the state - would play ball?
A lot of the reporting at the time emphasized that Foxconn had a history of doing this in other countries. It seems like a negotiating tactic that evolved in an age of cynical political environments where everyone's proximate goal is to announce a 'deal' with the full expectation that they won't be in a position to take credit (or blame) for the quality of that deal.
What would have happened if this deal had been done in China?
No one would have reported on the failure. The local jobs numbers would have "jumped." Infrastructure would have been "built." Everyone would have gotten a pat on the back and/or promotion for hitting their economic targets.
The weakness of command-style political systems have always been that they incentize systemic lying.
The takeaway is that either (a) everyone who touched the Wisconsin project is an idiot, but an outlier in the company, or (b) the failure to execute in Wisconsin is indicative of the general state of the company.
(a) seems like a stretch, given the project's size and visibility. Ergo, (b).
A $1bn increase in revenue would be less than a 1% increase for Foxconn overall. That suggests they're probably willing to bear extremely high costs to establish new sites, as long as those sites will eventually yield significant revenue. Their negotiating tactics here seem short sighted from my point of view, but when you're as large as they are you create your own conditions.
Edit: Like...this deal seems to allow them to operate any of their businesses in Wisconsin. If they decide not to, they burn bridges in Wisconsin, but they wouldn't care about burning those bridges because burning them means they don't want to do business in the state. It seems like all they lose is their negotiators' salaries, small (for them) facilities costs, and whatever general goodwill they lose.
Which is not to say this won't become a cesspool, too. But at the very least, I don't see scummy pols waving wads of cash at Samsung right now.
I'm not going to say Foxconn was doing business the way Chinese do business, but maybe there's a culture thing there.
Every HN’er here promotes for the freedom and democracy loving people of Taiwan. They even claim it’s a country.
So get your “country” correct.
This. Samsung is another company like Amazon that takes long view and flywheel to another level. And to answer question to comment below. Yes at one point Samsung was trying to make their own EUV Scanner, if you consider their NAND and DRAM scale it should comes as no surprise. And Samsung has their own Chemical Subsidiary along with dozen of others for their Foundry. They are taking vertical integration to an extreme.
And that is speaking as someone who dont particularly like Samsung. But Credit where Credit's due.
Sure, they shelved it (Hard to compete with established players who can spread R&D over volume), but people were pretty amazed at how well Samsung did entering that market from a quality standpoint.
Why does that matter? Because that indicates they have plenty of skill in lens manufacture, which is another critical component to a good fab.
But the difference is that ASML + Carl Zeiss absolutely run the market.
Nikon has about 10% market share, and Canon 5%. The rest is basically ASML.
The thought on my mind is that any one of the major American semiconductor equipment manufacturers could partner with either of the two Japanese optics houses. Canon is worth about US $25B, and its semiconductor business generates about a fifth of its revenue. It's big enough to be useful, but small enough to be acquirable.
Not to mention they have to staff the thing, train the staff, etc.
From personal experience I would posit scaling semiconductor manufacturing as 10x to 50x harder than getting a process flow to work in a development fab. Ramps are absolutely killer.
Intel's last fab build took 9 years to go from green field to producing wafers (note...faster is possible)
https://www.tomshardware.com/news/intels-long-awaited-fab-42...
Some more realistic notes because I sound a little hyperbolic:
2011 - break ground
2013 - finish basic construction
2014 - stop progress
2017 - start install of tooling
2020 - production
Samsung's Pyeongtaek Line 3 fab broke ground in 09/2020, construction expected to be complete by 2H/2021, mass production by 2023. This is not an unreasonable speed for Samsung.
Of course, the slower rate of work by American construction companies could slow this down.
They build it in Arizona where Intel has several fabs and where TSMC is building their medium-sized 25K/month 5nm Megafab.
megafab means medium capacity in TSMC's terminology.
Let's restate the question. Which node can they get up by 2023 and how much of security critical U.S. consumption can that cover?
What US can't source for F-35 locally are Xilinx FPGAs at either 65nm, or 40nm nodes.
The question is not in node size as such as having an FPGA process capability.
FPGAs on generic CMOS don't work great. The ability to tweak, and optimize the process specifically for individual design is huge for FPGAs.
Intel with their CPUs are very much in the same situation, but in reverse. They cannot move from "hand polished" proprietary processes they've been developing for decades to anything else.
Later this year TSMC will be producing Intel CPUs on 5nm. Clearly contradicts your assertion.
And: Intel CEO Bob Swan said the company had identified a "defect mode" in its 7nm process that caused yield degradation issues. As a result, Intel has invested in "contingency plans," which Swan later defined as including using third-party foundries.
Major supppliers include:
Nikon
ASML
KLA-Tencor
Applied Materials (AMAT)
Lam Research
the timeline they are suggesting isn't literally impossible as a matter of phyics but is, to me, laughably unrealistic and likely done to try and extract tax incentives.
Unless they have already broken ground in Texas...and are just shopping for a better deal
Add like 100 more companies to the list.
A fab is not only a lithographic line, but a ton of other very unique, industry specific equipment.
Air handling for fabs stuff is up to 24 months lead time, and has no use in any other industry.
Ultra clean water plants — 9 to 18 months. Just two vendors on the planet.
Gas plants — take few years to construct by themselves
Chem plants — again years long lead time equipment from only one vendor in the world
On site mask shops — equipment, and processes not much cheaper, or less scarce than the last gen chip making gear itself.
Cleaning stations, degassing stations, industry specific SCADA hardware, AMHS... (https://youtu.be/XKXZT-BBUEE)
Post-backend stuff...
The list will go on for a few screens.
https://www.extremetech.com/computing/318554-a-massive-chip-...
Also, ASML’s EUV light source division was fairly recently (2013) acquired from... California. Cymer, LLC.
Retooling for EUV (or any new generation of such equipment) is very hard. Most (if not all) foundries build new factories rather than retooling old ones.
I know they're massive, but do you have a source for this? I was under the impression that construction and tool installation are two distinctly separate phases of construction due to the requirements for an immaculate environment. Also, my understanding is that companies like to bring the tools in as late as possible to shorten the delay between capex outlay (tools are expensive) and first production.
Unfortunately I don't have a more reliable source on that though.
Time, yields, line size.
Quadruple patterning quadrupples the lithography steps counts. And quadrupples thermal cycles. Which adds more than 4x impact on the number of bad wafers.
100% - 2% * 4 != 100% * 0.98⁴
You need 4x the equipment to complete the same volume of wafers in the same time, which means 4x the line length.
I don't see much retooling for anything below 45nm, if not 65nm.
As for lightsource, sure, that was/is a US company, but there's a lot more to a machine then just the light source.
Impossible.
Leads times on fab hardware are on all time high.
Not to say that construction, and setup itself would be extremely challenging in such timeframe.
And not saying that US has no supply chain locally for modern fabs. Intel famously flies a lot of its consumables from abroad.
Samsung will have similarly to transport its consumables by air if they go with this plan.