That's a silly and naive take. This investment will tremendously boost the semiconductor ecosystem in Germany. In the long run, this will do wonders when German companies want to or have to expand their capabilities, find more employees, design, package or assemble chips, buy wafers, equipment, supply chain, you name it.
It's about building an ecosystem, much like SV. People on HN of all places should know this.
There will be a huge knowledge transfer into Germany during this process. Fab's are fabulously intricate and difficult to run. $5.5 billion to teach your populace how to make chips? Worth it.
>> $5.5 billion to teach your populace how to make chips? Worth it.
Germany already has advance chip fabrication - see Global Foundries (formerly AMD fab). It's not EUV, but even Intel still needs to figure out how to make those chips.
Ideally, the EU would be trying to build its own semiconductor industry. I don't see that kind of foresight in any of our political leaders, much less mine in Germany. So the next best thing is to ensure that the current company we're reliant on builds local production.
Note that the act of giving subsidies to foreign companies automatically kills any case for investing in a truly local chip company, because you can't easily compete against that.
Competing with Intel is out of the question for any local chip company.
But semiconductors is much much much more than high end CPUs. There’s totally a huge opportunity for local chip companies to grow. And having company like Intel may help, as people who work there will get a lot of know how that they can take to smaller local companies to help them grow.
> Competing with Intel is out of the question for any local chip company.
Why? Intell lost the mobile, and is currently losing desktop/server. RISC-V is more promising each passing day. If India can do this, why can't Europe: https://news.ycombinator.com/item?id=31243674
Germany used to have a semiconductor industry like Intermetall (acquired by micronas acquired by TDK). The problem is that IMHO German automotive industry is not willing to pay a cent more than necessary.
They do only care about short term profit. They triggered the chip crisis in Germany by stopping there orders and then restocking. I am not sure if any government can fix this.
>Germany used to have a semiconductor industry like Intermetall (acquired by micronas acquired by TDK). The problem is that IMHO German automotive industry is not willing to pay a cent more than necessary.
How about the three fabs that Bosch has in Germany? Or Infineon, X-Fab, Globalfoundries, TI, Prema, Elmos (now Siltech), Vishay, Nexperia?
Silicon on hacker news pretty much always means latest and smallest logic node, because most commenters aren’t aware of semiconductor applications beyond computer parts and assume everything is about 7 5 3 nm because that’s what gets in the news.
Sorry for being imprecise: I ment a much larger specialized semiconductor industry, that did not survive the market pressure. True that Bosch, Osram and Siemens (now Infineon) have survived. But I think things like RAM production moved out of Germany. Global foundries (formally th AMD fab) is an example of a non-European company, although certainly there fabs and are no clones of US fabs. However, afaik the industry used to be much more diversified and innovative at a time. Actually there is still some interesting exception in the list: https://en.m.wikipedia.org/wiki/List_of_semiconductor_fabric...
"The X-FAB Silicon Foundries is a German group of semiconductor foundries, with headquarters in Erfurt (X-FAB Semiconductor Foundries AG is located in the south east industrial area between Melchendorf and Windischholzhausen). The group specializes in the fabrication of analog and mixed-signal integrated circuits for fabless semiconductor companies, as well as MEMS and solutions for high voltage applications."
I mean, the fab is physically in Germany. That's what matters for national security.
As an American, would I (hypothetically) rather have a Germany company building F-35s in the US than an American defense contractor building F-35s in Indonesia? I think the answer is obviously "yes".
The fab is in Germany. In a scenario where the US and Germany are at odds Germany is the one with a fab. I doubt it weakens Germany's position unless they sacrificed funding some German chip maker, but I don't think they have anything near as huge as Intel.
They are dependent on and subservient to the US and its geopolitical interests. We see this right now with Germany self-sabotaging it's own economy and industrial power by cutting off cheap Russian energy at the direction of US policy interests (Nord Stream 2 was agreed upon for years between Russia and Germany but thwarted at every turn, sanctioned etc by US).
It wasn't thwarted at every turn. Maybe we should have but we didn't, at least not at every turn.
We did warn then it was a bad idea. Other countries especially countries in Eastern EU warned them it was a bad idea. And lo and behold trying to bring peace through trade didn't work with Russia.
Unless Germany wants to exit the EU like the UK it does have to take the interests of other EU countries into account, many of them are much more anti Russia then America for obvious reasons. And even if Germany were to leave, not sanctioning Russia now would still be bad even if only considering German interests
US sanctioned Swiss and Russian suppliers constructing the pipeline, and debated in Congress and Whitehouse various policies to ban it's activation.
>it was a bad idea
It isn't a bad idea. It's a very good idea for Europe. Cheap plentiful energy supply from your neighbor and expanded economic relations would be a very good thing for making Europe economy strong.
Sanctioning Russia is hurting Europe severely. They have massive gas and oil needs supplied by Europe. The sanctions hurt German industry and this energy cannot be replaced by other sources anywhere near similar prices or volumes
>President of the European Council Donald Tusk said that Nord Stream 2 is not in the EU's interests.[19] Italian Prime Minister Matteo Renzi and Hungarian Prime Minister Viktor Orbán have questioned the different treatment of Nord Stream 2 and South Stream projects.[19][20] Some claim that the project violates the long-term declared strategy of the EU to diversify its gas supplies.[21] A letter, signed by the leaders of nine EU countries, was sent to the EC in March 2016, warning that the Nord Stream 2 project contradicts the European energy policy requirements that suppliers to the EU should not control the energy transmission assets, and that access to the energy infrastructure must be secured for non-consortium companies.[22][23]
Diversify the gas and oil supplies after you lock in a consistent steady supply, not before lol. Now European industrial capacity will crater. They need energy to fuel their economy. No nation ever became strong or a world power by consuming less energy, or paying more than their peers.
And, just because they want to diversify, doesn't mean the present geological and economic reality allows for it. Utopian policy in place of realpolitik is foolish. Same with ESG and insane green anti hydrocarbon, anti-nuclear policies.
It is only my claim that their interests are not completely aligned. US is much more energy independent and gepolitically secure across the ocean from whatever happens on the "world-island" [0].
Whereas Europe might directly suffer from instability and chaos, as well as loss of Russian energy supplies, the US would not and in relative terms becomes stronger if Europe is severed from Russian energy, and the continent is in conflict and chaos.
Europe having tight relations with Russia, economically especially energy-wise, is greatly beneficial to Europe and detrimental to US hegemony.
The fab is still here. Ownership can change in the worst case. It would be nice to have a leading EU-owned chip maker, but we just don't have that yet. For the short term and the worst of cases, just having the thing matters a lot more than the profits staying here.
> It's about national security. A fab is necessary for national security
How does germany funding a foreign/non-german company's fab part of national security? What about expelling a foreign occupying force? If the germans cared about national security, shouldn't they be looking in that first?
If germany was funding a german company's fab, it would be national security. What germany is doing is paying tribute to a dominating foreign empire. No different than india sending their goods to britain during the colonial period.
What? It's only wrong for russia to occupy a foreign nation?
> Yes, I'm sure the Germans are eager to expel American troops right now.
If the germans were smart, they'd take this as an opportunity to liberate themselves. Besides what do they care? Trading one foreign master for another.
An ally doesn't firebomb a nation, murder thousands of innocent people and forcibly occupy it. Germany is a vassal.
> In fact, I believe “German” is the largest ancestry group in the US.
Who cares? We are not a german nation. We are an anglo nation. Germans don't have much political power in the US. If they did, we would have been allied with germany during ww2.
This idea that policy should be set based on a grossly oversimplified wrapping up of a huge surface area of agreements into the term "ally" and vague notions of ethnic similarity needs to die.
It gives the ruling class a mechanism to excuse war crimes of our supposed "allies" and drop bombs on supposed "enemies" for perceived minor infractions.
Also,
"Upcoming Dividends:
There are no future dividends presently declared for INTC as of Jun 7th, 2022. The declaration and payment of dividends are at the discretion of the Company."
I suppose one could argue that they shouldn't have done that in the quarters before now but they are where they are.
I think, declaring dividend is linked to their earnings report. For ex. last ER was on 4/28 and few days before that, they declared their dividend. So, its not given that there won't be any dividend in 2022 or so. Next earnings is in Jul, so we would get to know that sooner. As a side note, if any company declares dividend reduction or stops them altogether, I would expect the stock to drop like a rock. see AT&T in last year.
This sounds almost like a parody of an uninformed rant against capitalism.
Stock buybacks are a simple standard way to distribute company profit to it's owners (alternative options are dividends, retaining the profits in the balance sheet, or reinvesting them). This is decided by Intel's management and overseen by the board who represent the interest of the stock owners (who are widely dispersed and include lots of pension funds of commoners, not just billionaire fatcats).
The EU by way of the European Commission appears to have decided that it's of strategic interest to subsidize Intel fabs as a way to induce them to build in Europe, as opposed to Asia (which according to Intel is 30%-40% cheaper). The European middle class is not "bailing out" anyone here.
If you want to rant, a better starting point IMO is to
1) contemplate whether the European Commission is acting in the interest of the German/European citizen (and if not, how to fix this democratic deficit)
2) check if Intel's claims are truthful, and if so, why Asia is so much cheaper and whether that is worth doing something about that
In any case, I don't see what Intel's stock buybacks has to do with European taxation and inflation in this case.
Subsidies are always bad for the common citizen so no, it is not acting in the interest of German/European citizen. Subsidies are the product of flawed economical thinking even when "national interest" is used as a BS justification.
The "never spend on anything or get into debt" mindset is common, but it's odd to find it on the forum of a VC firm. Just because something is called "subsidies" doesn't mean you don't get things back in return.
Subsidies such as this are a net-loss for the average citizen of Germany and whatever country would have otherwise been host to this factory. It may well be in the interest of the German citizen, and it happening means that this is indeed the believed by people who studied the specifics.
A better example for wasteful subsidies may be the competition for their new HQ Amazon ran between US cities, only to place it where they wanted to go in the first place. There, as well as in the Intel case, a deal prohibiting competition by subsidy would be in everyone's interest.
A one time subsidy that likely pays out more over time than it cost is always a net negative? While obviously there are bad subsidies, I find it hard to believe that it is always the case.
Is it really necessary to establish the necessity of strategic domestic manufacturing capabilities in a post COVID world? We saw what happened when there was enormous need for masks, then later vaccines. The fact is that Germany as a nation that has so much of its economy linked to high tech manufacturing uniquely would benefit from securing a most domestic chip supply. The evidence for why it is necessary has already been laid bare in the past few years. The Chinese are already massively subsidizing their fabs. So is South Korea, Taiwan, and all the other major players. If you want fabs you must subsidize or die.