As electronics giant Samsung pondered where to build a state-of-the-art, $17 billion chip manufacturing plant, it seemed that Austin, Tex., had the inside edge.
Samsung already had its only U.S.-based factory in the talent-rich Texas capital, along with another 250 acres of land adjacent to the plant that it had purchased last year.
But Austin trailed its competitors in one major area: tax credits and subsidies. The city, county, and school district where the plant would be located all refused to cough up generous benefits to Samsung. Meanwhile, the local government and school district in tiny Taylor, Tex., pop. 17,000, on the outskirts of Austin, pledged to deliver more than $650 million in tax breaks if Samsung plopped down its plant there.
Maybe it was the tax credits. Maybe it was the abundant land or fine Texas country air. But something worked for little old Taylor, as Samsung is expected to announce Tuesday that it has selected the town for its landmark investment, Bloomberg and The Wall Street Journal reported.
The decision, which Samsung officials have not yet confirmed, figures to put even greater pressure on federal, state, and local officials grappling with how to bring chip manufacturing back to American soil—and how much to prop up an electronics industry salivating over government subsidies.
The dilemma has come into sharp focus over the past two years, as American companies struggle with a COVID-induced shortage of chips largely made in Asian countries that offer huge financial incentives to chip manufacturers. About 12% of global semiconductor manufacturing was in the U.S. in 2020, down from 37% in 1990, the Semiconductor Industry Association reported.
Some federal officials also argue that the U.S. dependence on chips made overseas presents an economic and national security threat, particularly given China’s influence in the semiconductor market.
Several of the world’s top electronics companies, including Intel and Taiwan Semiconductor Manufacturing, have also signaled their intent to expand chip manufacturing in the U.S., which boasts high domestic demand and a skilled workforce. But like any good capitalist, executives leading those companies have sought to play the U.S. and East Asian countries against each other, hoping to extract generous government subsidies.
The question, now, becomes whether this phenomenon plays out on a local and global scale. In an interview last month with Quartz, Harvard Business School professor Willy Shih, an expert in semiconductor supply chains, argued that multinational companies will expand in the U.S. regardless of how much the government eases their tax burden.
So far, President Joe Biden’s administration and many members of Congress aren’t taking that risk. A bill that would inject $52 billion in federal subsidies into the American semiconductor sector passed the Senate in June and awaits movement in the House. Biden and Commerce Secretary Gina Raimondo have signaled strong support for such measures.
While Samsung has not specified how much the tax breaks figured into Taylor’s reported victory, the message can’t be denied: electronics manufacturers aren’t bluffing when they say subsidies matter.
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Jacob Carpenter
NEWSWORTHY
Elizabeth Holmes, back on the stand. Theranos founder Elizabeth Holmes attempted Monday to shift blame for her company’s downfall and cast doubt on whether its tech failures constituted a crime during her second day on the stand at her fraud trial, The New York Times reported. Holmes, whose blood-testing company collapsed when its claims of superior technology were proven false, testified that Theranos scientists and doctors told her the company’s products worked as promised. As a result, Holmes argued, she couldn’t have knowingly deceived investors, patients and the public, as prosecutors allege. Holmes is charged with 11 counts of fraud and faces up to 20 years in prison if convicted on all counts.
Zoom falling back to Earth. Investors unloaded Zoom stock Tuesday after company executives warned that they expect use of their video conferencing service to start declining as more employees return to the office, CNBC reported. Zoom’s share price dropped 17% in early afternoon trading, falling to about $200 per share. The company’s stock has declined precipitously from its October 2020 all-time high of $559. Despite the warning, Zoom beat analysts’ third-quarter earnings estimates by 2 cents per share.
The European tech crackdown continues. Silicon Valley giants took another hit overseas as Italy’s antitrust watchdog fined Apple and Amazon a combined $225 million for teaming to limit the resale market of Apple and Beats products, the Associated Press reported. The Italian Competition Authority concluded that the two companies violated European Union rules when they agreed to only allow certain resellers to access Amazon’s e-commerce platform. Amazon called the fines “disproportionate and unjustified,” while Apple denied any wrongdoing. European regulators have been more aggressive than their American counterparts at enforcing antitrust and anti-competition rules against companies like Apple, Amazon, Google, and Facebook parent Meta.
Tokyo plays catch-up on EVs. The Japanese government plans to double its rebate given to consumers buying electric vehicles and quintuple the number of charging stations, part of an effort to increase EV purchases in a country that has been slow to adopt them, Nikkei Asia reported. EVs made up less than 1% of new passenger vehicles sold in Japan last year, well behind the 10% market share in the European Union. The consumer credits will bring Japan closer on par with the U.S., where electric vehicle buyers typically receive a tax credit of roughly $4,000 to $7,500.
FOOD FOR THOUGHT
Chaos with ConstitutionDAO. Maybe there’s a reason so much of our society is centralized. In the aftermath of ConstitutionDAO’s failed attempt to buy a rare copy of the U.S. Constitution at auction last week, some investors in the decentralized autonomous organization are mad, argumentative, and just plain confused, VICE reported. The disagreements center on fees extracted for processing investors’ Ethereum transactions, the wildly-fluctuating value of a “governance token” issued to investors and the future of any similar crowdfunding attempts by the organization. ConstitutionDAO, led by a loose band of Internet acquaintances, raised more than $40 million from about 17,000 investors, each of whom would have had some say in where the Constitution copy would be displayed.
From the article:
The community of crypto investors who tried and failed to buy a copy of the U.S. Constitution last week has descended into chaos as people are realizing today that roughly half of the donors will have the majority of their investment wiped out by cryptocurrency fees.
Meanwhile, disagreements have broken out over the future of ConstitutionDAO, the original purpose of the more than $40 million crowdfunding campaign, and what will happen to the $PEOPLE token that donors were given in exchange for their contributions.
Over the weekend, the next steps of the project repeatedly changed. In the immediate aftermath of the Sotheby's auction, in which ConstitutionDAO lost to hedge fund CEO Ken Griffin, the founders of the project asserted on its official Discord that, though they lost, "we still made history tonight."
IN CASE YOU MISSED IT
Paytm stock plummets for a 2nd straight day, fueling criticism it was overpriced in its record-breaking IPO, by Biman Mukherji
High-flying fintech Atom Bank moves to a 4-day work week—without cutting pay, by Tom Metcalf and Bloomberg
Jeff Bezos donates $266 million to the Obama foundation and NYU medical center on the same day, by Haleluya Hadero and the Associated Press
Why investors think ‘everyone’s going to talking about crypto’ at your Thanksgiving table this year, by Vildana Hajric and Bloomberg
Polka-dotted Crocs and the war over copyrights in NFT art, by Nimrod Kamer
TikTok TV launches on Samsung, LG and more, by Chris Morris
What China’s new data privacy rules mean for foreign companies and the future of regulation, by Nader Henein
BEFORE YOU GO
Uber gets into the weed(s). For some Canadians, it’s now easier than ever to get pot and Taco Bell. Uber announced Monday that Ontario residents can now order cannabis from a retailer through Uber Eats, the company’s first foray into delivering marijuana to customers, Reuters reported. Uber chose the more mature Canadian market for its cannabis debut, while the Great White North sees marijuana delivery as a chance to blunt the nation’s still-burgeoning underground pot market. Uber hopes to expand the service to the U.S., but too many legal and regulatory hurdles remain at the moment. Bummer, man.
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