Let the Semiconductor Cost Overruns Begin

[excalibur]

What could possibly go wrong when the Feds get involved and start picking winners? Let me count the ways.

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It was a narrow bill justified by national-security concerns, we were told of the CHIPS Act. Government was going to do what the markets couldn’t, or wouldn’t, and bring semiconductor manufacturing back home.​

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After passage, the newly empowered Democratic commerce secretary Gina Raimondo began using her authority under the law to talk about how this narrow national-security law would be “transformational” to the broader economy and “[reimagine] our national innovation ecosystem well beyond Silicon Valley.”​

​

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That entirely predictable mission creep then manifested itself in the form of child-care mandates and pro-union labor provisions in the Department of Commerce’s implementation of the law. The government will also be collecting “excess profits” from semiconductor companies that receive subsidies.​

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...​

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Now, we’re getting the classic cost overruns, too. Reuters reports:​

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A chip plant that South Korea’s Samsung Electronics Co Ltd is building in Taylor, Texas, will cost the world’s biggest memory chipmaker over $25 billion, up more than $8 billion from initial forecasts, according to three people familiar with the matter.

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The increase in cost is primarily due to inflation, the people said, declining to be named because the information was not public.

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“The higher construction cost is about 80% of the cost increase,” one of the sources said. “The materials have gotten more expensive,” the source added.

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A second source said “the newly estimated cost could go up even more if the construction of the Taylor plant gets delayed,” adding that the estimate could be fluid. “The later the plant is completed, the higher cost we would be looking at.”

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Environmental regulations are one of the top things standing in the way of timely construction, but rather than reforming the permitting processes that drag out projects, the government is promising to comply with them as currently written.​

​

Inflation was also partly caused by the government, with the Fed’s expansionary monetary policy lasting far too long after the pandemic shock, and the Trump and Biden administrations spending trillions of dollars, with Democrats’ American Rescue Plan being especially bad.​

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The Reuters story says: “U.S. Commerce Department officials said early this month that most government grants will only cover up to 15% of the cost of new plants.” That’s basically just paying back companies for the inflation that has occurred since the bill was written. It was first introduced in Congress in July 2021. The Consumer Price Index has increased by 10 percent since then, and by the time these projects actually get going in a year or two, it will likely be more than 15 percent.​

​

The increases in costs are not evenly distributed, though, as is evidenced by Samsung’s estimate of a 47 percent increase in costs above the initial price tag of $17 billion from 2021. That’s a ballooning price tag for a project that isn’t even supposed to be completed until 2024, with production starting in 2025. Stay tuned for timetable overruns next — with politicians demanding that we pour even more taxpayer money into what’s quickly becoming a bipartisan boondoggle.​

Let the Semiconductor Cost Overruns Begin | National Review

It was a narrow bill justified by national-security concerns, we were told.

www.nationalreview.com

 

[JGalt]

What could possibly go wrong when the Feds get involved and start picking winners? Let me count the ways.

​

It was a narrow bill justified by national-security concerns, we were told of the CHIPS Act. Government was going to do what the markets couldn’t, or wouldn’t, and bring semiconductor manufacturing back home.​

​

​

After passage, the newly empowered Democratic commerce secretary Gina Raimondo began using her authority under the law to talk about how this narrow national-security law would be “transformational” to the broader economy and “[reimagine] our national innovation ecosystem well beyond Silicon Valley.”​

​

​

That entirely predictable mission creep then manifested itself in the form of child-care mandates and pro-union labor provisions in the Department of Commerce’s implementation of the law. The government will also be collecting “excess profits” from semiconductor companies that receive subsidies.​

​

...​

​

Now, we’re getting the classic cost overruns, too. Reuters reports:​

​

​

​

​

​

​

​

Environmental regulations are one of the top things standing in the way of timely construction, but rather than reforming the permitting processes that drag out projects, the government is promising to comply with them as currently written.​

​

Inflation was also partly caused by the government, with the Fed’s expansionary monetary policy lasting far too long after the pandemic shock, and the Trump and Biden administrations spending trillions of dollars, with Democrats’ American Rescue Plan being especially bad.​

​

The Reuters story says: “U.S. Commerce Department officials said early this month that most government grants will only cover up to 15% of the cost of new plants.” That’s basically just paying back companies for the inflation that has occurred since the bill was written. It was first introduced in Congress in July 2021. The Consumer Price Index has increased by 10 percent since then, and by the time these projects actually get going in a year or two, it will likely be more than 15 percent.​

​

The increases in costs are not evenly distributed, though, as is evidenced by Samsung’s estimate of a 47 percent increase in costs above the initial price tag of $17 billion from 2021. That’s a ballooning price tag for a project that isn’t even supposed to be completed until 2024, with production starting in 2025. Stay tuned for timetable overruns next — with politicians demanding that we pour even more taxpayer money into what’s quickly becoming a bipartisan boondoggle.​

Let the Semiconductor Cost Overruns Begin | National Review

It was a narrow bill justified by national-security concerns, we were told.

www.nationalreview.com

Ask me how I knew that was gonna happen. Everything Biden touches turns to shit.