On the other hand, I wish it were a more formalized process rather than this politicized "our president made a deal to save america!" / "Intel is back and the government is investing BUY INTEL SHARES" media event. These things should follow a strict set of rules and processes so investors and companies know what to expect. These kind of deals should be boring, not a media event.
When the public asks for fully publicly-owned railways, universal healthcare, or any basic social safety assurances—“socialism”.
When a megacorporation struggles, immediately to the rescue.
The natural resources of the country should belong to all of us. Not just a select few.
No company is going to come out of someone’s garage and build a chip fab.
The only good news is that C-level suite can continue to do the same shit over and over again.
I can't wait for the "I don't think social credit scores are a bad idea. Cancel culture is good actually".
EDIT: Before downvoting, tell me where I'm wrong.
Imagine if the DMV and passport services had even the possibility of competition like a private company has. You bet all of a sudden the service would get much faster and better and with fewer mistakes and red tape with the same or fewer number of employees. Or someone would set up a competitor and imagine how many people would even pay extra just to not waste several hours of their time.
It's tax payer money so there is a lot more waste than even at big private companies. For example, the costs to just administer and operate the social security administration(not including any money paid out to recipients) is $15 billion dollars with a big B. There is no incentive for anyone to save the tax payer any money and there would be a huge pushback from govt contractors, unions and employeees. See how much hate DOGE gets for even proposing cuts or higher efficiencies.
Any large IT project in the government in almost any country and at any goverment costs huge amounts while not returning much value if any. Look at the state and costs of local metro stations and trains in almost any city.
I’m not sure what “more transparency would look like to you, but publicly traded companies with audited financials are quite transparent. As for the part about siphoning money, history has shown that taxpayers do well. In 2008, the US government took roughly 80% of AIG, sold off their stock by 2012, made a roughly $15 billion profit and AIG is no longer considered too big to fail. It worked and did what it was intended to do. There are reasons to be positive about this.
https://www.tomshardware.com/tech-industry/semiconductors/ta...
All the talk about this from a business / investment side leaves out the simple fact that this is not actually authorized by anyone with the power to actually do such a thing.
Essentially, the government, elected by the public, voted to offer grants to intel, and then intel shareholders woke up today to find their equity had been diluted.
For example, a quick Google search shows administrative overhead as around 0.5% of benefits: https://www.cbpp.org/research/social-security/top-ten-facts-...
If it were that easy, Apple, Amazon, Google AMD, Nvidia, etc who all design their own chips would have done it.
And people wonder why populism came back. Huge transfers of wealth aren't about 'fairness', its about preventing greater economic problems that the people who received the bailout say will happen if they don't get bailed out.
At the end of the day, this line of thought is going to fuck over the country far more than any depression would.
Companies are run to make a profit… they don’t care about sovereignty as long as the money is coming in.
I don't think many people believed DOGE was ever intended to improve government efficiency in any real sense.
There is no amount of scrappy cleverness that gets you from zero to manufacturing cutting-edge chips without shitloads of capital investment, years/decades of R&D, a huge manufacturing workforce, and big contracts.
There's no such thing as starting small and scaling in that business.
But part of that is lack of competition. I can't really switch to a different insurance company, because the one I am with is heavily subsidized by my employer.
Was.
The only real benefit I can see is it looks more revenue neutral because the government getting something of value and Trump is unpopular for spending so much money on unfunded tax cuts.
He kind of had everything going: extremely clever and motivated, cooperation with his parents (who also worked in the industry), access to equipment. Kind of hard to improve on that.
He was able to replicate most of Intel's SOTA process... from 50 years ago. That's more than almost everyone else has managed in their garage but that's about the best you can expect without insane capex and ramp up (and again, it's not like he didn't have access to capital, it just wasn't monetary.) Even still it took five or so years to work everything out.
The SOTA today is really kind of insane. It's right at the frontier of what all of humanity is capable of. Of course as time goes on we'll push that out and today's SOTA is tomorrow's commodity but that won't change everyone's concern with being unable to replicate the contemporary best process.
The reality is all our "defense" needs (and arguably most other needs too) are far more than adequately met with processes a decade old now. It's really not the big deal everyone makes it out to be.
USPS has also been great overall.
It's not acceptable at all to make private companies look bad.
are you worried that china will invade taiwan, and then somehow taiwan will still be around to prevent the US fabs from making the best chips?
its a bit far fetched
> In total, U.S. government economic bailouts related to the 2008 financial crisis had federal outflows (expenditures, loans, and investments) of $633.6 billion and inflows (funds returned to the Treasury as interest, dividends, fees, or stock warrant repurchases) of $754.8 billion, for a net profit of $121 billion
TSMC can’t do it either without xUV lithography machines made by ASML in the Netherlands.
Furthermore there isn’t anything magical about about the current generation of chips that couldn’t be replicated at at a scale of 12 or 15 or 20 nanometers - it’s just that scaling down to that small allows for a greater density of transistors per wafer and thus increased power efficiency. An AI supercomputer could be built with chips with bigger transistors than 3nm it would just run hotter.
And investing in intel aside, one of Nvidias great competitive moats is CUDA and that’s software not hardware.
And Apple needs their chips fabbed, so why not have Apple invest $50B into Intel? Nvidia could afford to chip in too. These companies that face a huge amount of geopolitical risk because they've put all of their eggs in the TSMC basket should have to pay for this not US taxpayers.
https://www.energy.gov/lpo/advanced-technology-vehicles-manu...
TBF garage fabs -are- a thing but it’s in the hundreds of nanometers scale. Thin film technology is also promising for low tech tape outs, but neither of those is going to be practical for anything better than 1980/90s tech. A modern die would be in the square meters range on those process densities, and could never achieve ghz speeds.
That said, there are a ton of scrappy companies sending out designs to 30-100nm scale fabs, companies with 5-10 employees cranking out cool designs and custom silicon… but they are still sending their tape-outs to giant companies to fab, just on their old, obsolete machines.
Silicon foundries are incredibly capital intensive, and short SOTA process lifespans burn through that investment at a frantic pace.
https://fedscoop.com/problem-project-threatens-progress-soci...
> The program, called the Disability Case Processing System, or DCPS, was designed to improve case processing and enhance customer service. But six years and $288 million later the program has “delivered limited functionality and faced schedule delays as well as increasing stakeholder concerns
For the main system they're still using COBOL, which has no Date data type, causing issues even in 2025.
> The program, called the Disability Case Processing System, or DCPS, was designed to improve case processing and enhance customer service. But six years and $288 million later the program has “delivered limited functionality and faced schedule delays as well as increasing stakeholder concerns
https://fedscoop.com/problem-project-threatens-progress-soci...
And that's just one instance.
Can you imagine raising $288 million from VCs for a software application while delivering so little?
But taxpayer money? Free and easy money to keep wasting coz no one cares. Tragedy of the commons.
For the main system they're also using COBOL, which has no Date data type, causing issues even in 2025.
the threat Taiwan faces is existential, and one of the only things that the US has at stake are these chips
I think you should be aware that “proposing cuts” is not why people why DOGE got hate. I find it disappointing that serious people believe that.
Yes, absolutely. I think you might be overestimating VC’s a little bit.
You have proposed a “free market” system in which if you choose the wrong competitor you can be forced to bail out the chosen one. The economics of that don’t work at all.
While not walked back completely, a lot of what Trump does is minimized and scaled back after the initial theatrical moment. Still in a bad place, but usually some TACO moment happens.
And then, in the end, it’s some executive action that lasts as long as the current president is in power.
There are governments which can take a stake and be ok, and then there are governments which are setting up to set money on fire.
You let them fail because that ensures that everyone else in the economy fixes their shit and stays competitive. America developed more world class successes, by getting out of the way and letting badly run firms fail.
Especially since NVIDIA is a competitor.
To be fair, a lower court ruled it “illegal exaction” but awarded $0 in damages as the illegal exaction prevented bankruptcy which would have zeroed out the investment anyways. Then the Federal Court of Appeals tossed that ruling as the plaintiffs did not have standing to pursue action.
There is no current ruling that the acquisition was illegal.
What? You're imagining VCs caring about pizza money? Should I mention, perhaps, the AOL-TimeWarner merger? Or maybe AT&T buying DirecTV for $50B and essentially giving it away for $8B?
Heck, I was a part of an utterly failed project with a $150m budget (in 2005), in a large European company.
> For the main system they're also using COBOL, which has no Date data type, causing issues even in 2025.
And? They haven't missed a single payment day in all their existence, moving data between multiple types of media. While working with staff levels that won't even qualify as "skeleton" in plenty of companies.
You can buy one, if a suitable one exists, but there isn’t spare stock sitting around; the lead time is long, especially for high end nodes.
That wasn't the question. The question, at least for me, is can you build non-zero chip production, enough to start building out a sustainable business. Obviously you're not going to compete with TSMC on day one, but there's a wide spectrum between that and "garage".
Right, this is why I think in-sourcing chip manufacture is totally viable (that is, if we were actually interested in that and not just using it as an excuse for corruption). The interesting exceptions I've heard about are things like, IIRC, high-power local AI for autonomous drones. But for SAMs and such, old tech will probably do it.
https://semiwiki.com/forum/threads/how-to-build-a-20-billion...
> USPS has also been great overall
USPS is an independent agency which is funded by its own fees charged to users, not taxpayer money. It's not like the other agencies.
From Wiki:
> The USPS is often mistaken for a state-owned enterprise or government-owned corporation (e.g., Amtrak) because it operates much like a business
It's also far from a monopoly unlike most other govt agencies and has competition in the form of UPS, Fedex, DHL, Amazon etc.
So it's not surprising that it runs better, if it loses user fees, it directly affects the bottomline and thus would have to downsize, no blank check from the taxpayer like other agencies have.
The very subsidies Intel now has to pay with shares for? How is that a subsidy? Companies now and in the future would be very concerned before taking any US subsidies because the terms can always change after the fact.
It's not like you can just look at the plans for a chip fab and copy/paste it into a new location and hire people to fill in who will have any idea how to work it.
Also Theranos was aiming for something very innovative that still does not exist, whereas the govt IT systems are essentially glorified CRUD apps(no doubt complicated and with tricky integrations and need for reliability and security). It's an example where VCs could've exerted more scrutiny but chose not to and wasted their own money, hopefully a lesson learnt. As taxpayers, we have far fewer options, we cannot just pass on paying out hard earned money if we don't want to "invest".
Another example, the Queensland payroll system cost $1.2 billion over 8 years to develop, repair and maintain, to pay just 87K people. The initial estimated budget? $6.9 million.
Was it a just a somewhat complex CRUD app like the SSA example or most govt IT projects? Or were you guys trying for something more complicated and innovative and failed?
But it still took a share in companies that participated in TARP which is why some payed back the loan instead of letting it convert into ownership shares if I recall correctly.
It’s fine for the consumer in the short term but a flawed long term strategy.
I can vote for a politician to fix the government services. And the local politicians know that keeping the government running well enough is needed to be re-elected.
I have zero leverage on AT&T.
Some services can be government-operated or private. Trash collection is one of them, for example. I lived in many cities, and municipal trash collection companies were always better and not any more expensive.
The hardware to deploy it was alone a couple of million. At least, I got to play with some rather cool gear (for that time).
Isn’t that exactly what the “too big to fail” bailouts were, in practice?
I worked both in the area of molecular biology and bioinformatics with some pretty nifty technology (which was later acquired by a large company). And in the area of giant ERP applications that are nothing but tons of boring forms.
I can confidently say that the complexity of ERP apps dwarfs anything that is needed for molecular biology.
I would rather have Intel go bankrupt, sell profitable pieces to private buyers, and if there are any pieces that are not profitable but crucial to national interests, create a company out of them and have the government buy them. This way you are not propping up a dysfunctional behemoth.
Things must die in order for new better things to take their place. This applies to companies as well.
One example that comes to mind is the current Fannie Freddie Mac.
Our lifespan is lower because we’re fat.
The public sector is great at two things: (1) getting literally millions of people to show up to work and do well-defined jobs (i.e. nothing outside the lines) that do not change from year to year, and (2) dumping billions into research, with very little of (2) affecting (1). Critically, the public sector has extraordinary difficulty with the agility needed for iterative product development.
If companies get to a certain size and their day-to-day operations are more-or-less fundamentally the same year-after-year, yeah there's an argument for nationalizing them. You see this in arguments to nationalize segments from oil refineries, apartment construction, and airlines. There's something coarse about caretaker CEOs and private shareholders getting rich, instead of the public purse, off the economic rents thrown off from a mature machine that doesn't have much more, if any, room for growth. But the key question is whether the potential for growth has been fully exploited or not; if it hasn't been, then the government certainly won't succeed at exploiting additional growth, and it's better for the company to stay in private hands, which will be motivated to privatize the wealth from achieving that growth, and the government will be paid more in taxes if they succeed.
That's why I'm not convinced chip manufacturing is there when there is still yearly research into reducing process sizes. Maybe there's a case for nationalizing the foundry lines producing older, larger processes that are used in current weapons designs, but that's not the case for nationalizing the whole company.
It must at least involve Congress!
What's happening here is crazy: It's the same as if Congress authorized $X for a city bridge and Trump comes in and holds up the funds demanding a cut/kickback of the tolls.
The Constitution does not give the Executive the power to arbitrarily modify what Congress has authorized, converting between grants versus loans versus stock-purchases versus plain extortion.
The moment 10% stake was announced this became political. While the stated reason might be national security etc, in reality something else might be at play.
One, this government and its supporters have been talking about government "wasteful" spending. So, a stake shows that they got something in return for that public money. The money is now "well spent".
Second, it helps boost the political "dealmaker" image of POTUS and we all know how much he cares about his image.
US needed functional railroads and they took over the rr companies.
It is possible to nationalize a company, though. For example, Saudi Aramco is owned by the state.
How is that not common/collective control of the means of production?
Government benefits through one, generating employment - direct and indirect employment, raising taxes through personal taxes (indirectly impacting tax collection) or second the country being at the forefront of the innovation etc. That is how average tax payer was supposed to benefit.
But I guess trying to nationalize companies and "benefiting" from company profits was something people were missing. How did no one see that? Ah yes, third world countries try this routinely for "national security" and it always leads to moral hazard pointed out by the person above you.
I do believe the government is in a better position to provide services to the poor, but they are in no way going to be cheaper in the long run.
That being said, I do live in Seattle, which has a particularly “bogged down” government. Look up the “Seattle process” for some horror stories
That they were grants instead of any other instrument appears to be a Biden Commerce decision, not a congressional one.
I’m no lawyer and could certainly be missing something i the law that says it has to be grants but from what I see it looks like figuring out what to do the the money was pretty much delegated to dept of commerce with limited direction about eligibility and review criteria.
This isn't nationalizing it though, this is just an investment into it. Investments aren't bad.
> The Department of Commerce is authorized to provide funding in various forms, including grants, cooperative agreements, loans, and loan guarantees, in exercising its Section 9902 authorities
https://www.congress.gov/crs-product/R47523
AFAICT the relevant section of law says it is up to the Secretary of Commerce to determine the funding type to be used for the semiconductor financial assistance
https://www.congress.gov/116/plaws/publ283/PLAW-116publ283.p...
See my other comment : >>44995799
Unfortunately, this is in a country that China is threatening to takeover while building the largest bomb shelters and field hospitals right across the strait.
China is forcing us to invest kind of like they are forced to prop up Huawei to make GPUs for deepseek. Conflict makes irrational actions happen.
Their finance team axed a meager $10B dollar investment to improve Siri thereby making Apple the laughing stock of the tech industry players who say they are working on AI.
BUT - all you then need to do is create a Delaware LLC that buys the strategic stock, which is owned by $SCARY_FOREIGNERS
That is one issue among several reasons to pick a politician. Also politicians have limited powers to fire non-performers which gets bogged down in the court system to fire just one person.
> I have zero leverage on AT&T.
People can switch away easier from companies, it happens all the time, companies lose and gain customers all the time. Bad or mediocre service has killed many companies, the effect is far greater than on governments because they get to fund themselves from you even if you don't like or want them. Govt is the ultimate monopoly.
The problem with government taking stakes in private companies is that it creates moral hazard. By taking ownership in Intel, the government has effectively "propped it up". This means that Intel competitors that made less risky decisions to remain solvent are now losing; their bet was Intel was operating poorly, and instead of capitalizing on Intel's downfall so they can fill the gap, the government has plugged the gap. This action distorts markets away from their competitive equilibrium. In the process it generates moral hazard and deadweight loss.
Investments by the government can make sense, but generally it makes the most sense when investments support public goods (arguably also when supporting goods/services that the private market would not). Cpus are neither.
Just like the SVB bailout, or Freddie/Fannie/Sallie establisments, this is bad.
Not true. Intel failed because it failed to deliver its own products on its own timelines.
TSMC was behind until Intel failed on its own. No government’s involvement changed things.
Nobody is entering the chip making business and growing to a size and scale to compete with Intel in 2025. If they collapse tomorrow there aren’t going to be startups filling in the gaps, there’s just going to be massive shortages of chips and chaos.
> It should enact preferential policies like grants, tax cuts, subsidies etc. for industries they want to promote.
And read the announcement again. Intel has not been given extra money. CHIPS Act money has been converted to stake. That means Intel wasn't going away, if that is your concern.
Government routinely provides grants or preferential treatments to certain sectors or industries. Like Tesla and the EV grant. That works fine. It doesn't mean government needs to acquire stake in Tesla and put their thumb on the market scale.
In case you miss it, let me repeat - industries needs to be supported. It is called CHIPS Act not Intel Act for a reason. Given the current POTUS propensity to hold aid/grant without a quid pro quo, we can guess what happened here. Intel doesn't gets the grant money unless they kiss the ring and polish POTUS' image.
I’d encourage you to “read again” the HN guidelines.
> Government shouldn't bail out anyone. Period. It should enact preferential policies like grants, tax cuts, subsidies etc. for industries they want to promote.
If Intel is at risk of going under, saving it is what’s understood to be “bailing out.” A grant that’s meant to save a major multi-billion dollar company isn’t quite what most people think of as a grant.
No, they did not. The government paid less than Softbank that also just purchased a stake. Unless forced, Intel could have likely gotten a better deal.
I said if by some magic Intel ceased to exist tomorrow, there wouldn't be some startup just filling the gap. So the idea that government investment in Intel somehow prevents a startup competitor is just nonsense. To compete with Intel would require trillions in investment and probably a decade+ of time to build the requisite organization and talent.
The government investment to prevent the catastrophe that would result in them declaring bankruptcy and the subsequent breakup of their assets has no bearing on whether or not a startup could replace them.
I don't know what's wrong with the US, but here in Poland, there are hardly any queues at the (equivalent of) DMV. And we're nowhere near US's wealth levels, so public services here (in Poland) should be worse, not better. There's something very wrong in how the US is organizing its DMVs, if the queues are such an universal problem. But, it's not an issue with government services per se, just with this one instance of government service.
It could be extremely lucrative if they get it right.
Simply trying to copy TSMC would also be a poor strategy.
Companies have "core competencies" (or should). The manufacture (not design) of high-end silicon has never been one for any of these companies except Intel, and they have just lost big time.
> strategically valuable to the US
Yeah, they don't care.
$31b put into Nasdaq would have netted investors $300b before dividends. So honestly it was a bad deal.
And let's not forget that Uber can be killed by self driving cars.
$31b put into S&P 500 would have netted investors are more in return over the last 15 years. So honestly it was a bad deal.
And let's not forget that Uber can be killed by self driving cars.
It’ll take them 7 years to make it back and keep generating for even longer. Whether or not self driving cars kills Uber will depend on how well or poorly they’ve diversified their business model.
But headwinds and risks are true of any business. You’re missing the larger point I’m making that investors and business people frequently do loss leading as a tactic to kill off competitors and once the competitors are gone they can milk the market. Whether or not it’s an effective strategy doesn’t matter - can companies are not coming back no matter what happens to Uber. Similarly, local industries that China kills won’t come back no matter what happens with China.
Also as a final nit - the data I’ve looked up suggests they only lost 16B since founding. This halves the payback time to a few years and then every year after that is many billions in profit.
Things like TARP bailouts and the auto industry bailout were weird one-off programs with very narrow beneficiaries that nobody else really had access to. This loan program in question is a normal, long standing program that anyone can apply for and has funded a lot of different things. Do you not see a difference between these?
> No golden parachutes, no deferred bonuses, no pensions
In my opinion, hard cutoffs like this create perverse incentives, but there definitely need to be consequences for actions.
I do think that you shouldn't be doing anything to destroy their lives "no pension" (outside of any judicial outcomes); but it should be sufficiently comprehensive such that you can declare both that no one profited from malfeasance/incompetance and that poeple in positions governed by these provisions are strongly encouraged to make sure that they don't fall foul of them.
I have a feeling you might enjoy that book as it goes into a LOT of detail about government dysfunction with respect to software.
I found the book eye opening and personally it provided me with some new perspective.