*Investors Blog*

[SC Maintenance]

Watch out for China to make strategic alliances, and they have the Mfg might. Global supply chains are highly tied to China.
Other countries are not gonna lie down. Not to mention Canada and Mexico are our closest neighbors and allies.

Everybody loses.

I'll play. Why would anyone align with China. They don't buy anything - they export.

The Germans alligned with them. They shipped them machine tooling for decades. Now the Chinese car industry is taking over German car industry and Germany is imploding.

China is a net exporter to everyone. Feel free to align with them if you like. Don't believe me - look at what has happened to the BRIC currencies in the last 3 years - since the whole BRIC thing got rolling. There currencies are cut in half.

USA is the least globally integrate country on earth. By design. Yet we run trade deficit with EVERYONE. So were a net customer of Everyone. Can't be replaced with China - they want you to be there customer.

The only exception I make is Mexico. We need Mexico as much as they need us. Seems the Mexicans are smart - they seem to be playing along this morning - at least for the press.

 

[JeffKeryk]

I'll play. Why would anyone align with China. They don't buy anything - they export.

The American tariffs are the catalyst. That's the point.

 

[Pablo]

The American tariffs are the catalyst. That's the point.

You never explained why EVERYONE else can have tariffs but not USA

 

[tbm5690]

The US needs to build new refineries. They haven't built any in at least 20 years.

This is the key. It's a slow process. All the light sweet stuff extracted from fracking in the Bakken has to be shipped literally across the country for refining. We have some refineries in ND for Bakken extraction but there needs to be many more.

 

[SC Maintenance]

This is the key. It's a slow process. All the light sweet stuff extracted from fracking in the Bakken has to be shipped literally across the country for refining. We have some refineries in ND for Bakken extraction but there needs to be many more.

Yes, refining is the bottleneck. The slogan needs to be build baby build, not drill baby drill.

 

[JeffKeryk]

You never explained why EVERYONE else can have tariffs but not USA

No one is denying tariffs have been around for a long time.
The point is, the tariffs will force alliances. And cause disruption all around. We live in a global economy; no economy is an island.

China manipulates markets and can do so with their Mfg might. No one country is holding all the cards and now we are messing with our strategic alliances. How can that be good? It's easier to break things than to put them back together.

 

[JHZR2]

No one is denying tariffs have been around for a long time.
The point is, the tariffs will force alliances. And cause disruption all around. We live in a global economy; no economy is an island.

China manipulates markets and can do so with their Mfg might. No one country is holding all the cards and now we are messing with our strategic alliances. How can that be good? It's easier to break things than to put them back together.

The thing the USA has is an economy that exceeds all the others. CA has an economy the size of that, Germany? So any other country out there will be smaller than that in terms of economic output…

So there is a lot of leverage there, for better or worse.

WW II era tariff decisions may. It make sense in the modern world. We are deeply in debt, yet still more stable than most anywhere else. If North American or European countries want to team with China instead, I doubt they’ll like the deal they get either.

Look at all the abandoned US manufacturing. Much of that is personal purchasing decisions over decades that we did to ourselves, and driven by greed at all levels. But others were very happy to take advantage.

 

[JeffKeryk]

The thing the USA has is an economy that exceeds all the others. CA has an economy the size of that, Germany? So any other country out there will be smaller than that in terms of economic output…

So there is a lot of leverage there, for better or worse.

WW II era tariff decisions may. It make sense in the modern world. We are deeply in debt, yet still more stable than most anywhere else. If North American or European countries want to team with China instead, I doubt they’ll like the deal they get either.

Look at all the abandoned US manufacturing. Much of that is personal purchasing decisions over decades that we did to ourselves, and driven by greed at all levels. But others were very happy to take advantage.

All true. An alliance with China plays into their hands and would be driven by need.

Mfg was offshored and championed by Jack Welch. Welch was laser focused on maximizing shareholder value with layoffs, outsourcing, offshoring, acquisitions, and buybacks. This was even taught in business schools and became the new strategy in American business. Short term goals, long term dependence.

Chip on-shoring (or re-shoring) is near and dear to my heart. It's no secret I strongly believe in the importance of the Semicondutor industry for reasons of national security, sustainability, supply chain control, jobs, intellectual property and more. And wealth!

California is a huge economy and opportunity abounds. I believe our importance on education and innovation are key components. Of course there is much more.

Regarding tariffs, I do not believe in the sledge hammer approach to economic stability. There are times for such measures, but cutting off our allies is hardly an answer.

 

[supton]

Chip on-shoring (or re-shoring) is near and dear to my heart. It's no secret I strongly believe in the importance of the Semicondutor industry for reasons of national security, sustainability, supply chain control, jobs, intellectual property and more. And wealth!

I recall they are building some semi foundry's--are they building for packaging and test too? You have to test the wafer, then slice and package. Sometimes you test again before selling (or test multiple times even in package--expensive but sometimes necessary); I want to say, simple open/short at a minimum once packaged is the norm (if wire bonded). Let alone if it's anything automotive or higher grade. Automation goes a long ways but you still have to have clean facilities and people to do the work.

Adding import fees might not change the fact that labor off shore is cheap. The equipment costs the same, but the land it sits on/in and the people doing the work might cost less, and the total bill may still be competitive.

Also, I think where it's getting assembled onto PCB's, and the market it gets sold into, may drive something. Countries want to in-shore what they can. That may make for interesting times, having multiple assembly places for a given company; then again, if it's contract fabrication, contract packaging, contract packaging, then it's a matter of interfacing with the contractor, qualifying them, and proving that quality product is being made at each subcon.

I'm curious where this is going in the future.

 

[SC Maintenance]

Chip on-shoring (or re-shoring) is near and dear to my heart. It's no secret I strongly believe in the importance of the Semicondutor industry for reasons of national security, sustainability, supply chain control, jobs, intellectual property and more. And wealth!

So protectionism for chips and other silicon valley stuff is good. Protectionism for other industries bad?

I am quite happy with the Chips stuff FWIW. It needs to be expanded to other sectors.

 

[JeffKeryk]

So protectionism for chips and other silicon valley stuff is good. Protectionism for other industries bad?

I am quite happy with the Chips stuff FWIW. It needs to be expanded to other sectors.

No one is stopping other industries from on-shoring. The Chips Act is not protectionism like tariffs.

 

[JeffKeryk]

I recall they are building some semi foundry's--are they building for packaging and test too? You have to test the wafer, then slice and package. Sometimes you test again before selling (or test multiple times even in package--expensive but sometimes necessary); I want to say, simple open/short at a minimum once packaged is the norm (if wire bonded). Let alone if it's anything automotive or higher grade. Automation goes a long ways but you still have to have clean facilities and people to do the work.

Adding import fees might not change the fact that labor off shore is cheap. The equipment costs the same, but the land it sits on/in and the people doing the work might cost less, and the total bill may still be competitive.

Also, I think where it's getting assembled onto PCB's, and the market it gets sold into, may drive something. Countries want to in-shore what they can. That may make for interesting times, having multiple assembly places for a given company; then again, if it's contract fabrication, contract packaging, contract packaging, then it's a matter of interfacing with the contractor, qualifying them, and proving that quality product is being made at each subcon.

I'm curious where this is going in the future.

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s leading chipmaker, is making a $65 billion investment to establish its cutting-edge semiconductor production at its Arizona facility.

By far the biggest road block TSMC is having in Arizona is finding qualified American talent. That's the problem; we need to value education. Engineers and programmers. The physical work in a fab is not high tech; it can be taught.
There's more. Taiwan corporate culture clash and basic language barriers are biggies as well. Complex compliance issues (regulations), construction delays and supply chain issues have been problematic.

These delays and road blocks have made it increasingly unlikely that the Arizona plant will be able to implement TSMC’s most advanced chip technologies ahead of its Taiwanese counterparts, but they are committed to producing cutting-edge chips at their Arizona foundries.

This is big. Real big and we have to support it. The bipartisan Chips Act of 2 years ago is a huge step in realizing this goal.

 

[Owen Lucas]

By far the biggest road block TSMC is having in Arizona is finding qualified American talent. That's the problem; we need to value education. Engineers and programmers. The physical work in a fab is not high tech; it can be taught.

Maybe TSMC should have researched the education system of a state they plan on starting a STEM business in?

https://www.azfamily.com/2024/09/16/report-ranks-arizona-worst-nation-public-education/

 

[JeffKeryk]

Maybe TSMC should have researched the education system of a state they plan on starting a STEM business in?

https://www.azfamily.com/2024/09/16/report-ranks-arizona-worst-nation-public-education/

We have to do better. I am sick of excuses. A co-worker was an immigrant from Vietnam. Tony used to tell people, "Stop crying."

 

[SC Maintenance]

No one is stopping other industries from on-shoring. The Chips Act is not protectionism like tariffs.

Same net affect. I can tariff your competitor 25% to make them that much less competitive, or I can give you a 25% incentive to make you 25% more competitive. Econ 101. CHIPS act was protectionism. (and again, I have no issue with it).

How about this. You build something in the US you pay a payroll tax for SSI, medicare, Unemployment. I believe its 6.2% for employer and employee - so 12.4%. You want to ship manufactured goods into the US - you pay 12.4% into the system - just like employers here.

 

[Snagglefoot]

The Prime Minister of Canada just finished his presentation to Americans and Canadians. Its worth finding on You Tube but I don't want to be accused of bringing politics into play. Canada just placed a 25% Tariff on American made goods. Let's all play nice.

 

[cptbarkey]

The Prime Minister of Canada just finished his presentation to Americans and Canadians. Its worth finding on You Tube but I don't want to be accused of bringing politics into play. Canada just placed a 25% Tariff on American made goods. Let's all play nice.

How do you think the markets on monday are going to react? I think it will be a bloodbath after Elon's team hacked the treasury combined with this tariff nonsense, but we'll see.

 

[Owen Lucas]

How do you think the markets on monday are going to react? I think it will be a bloodbath after Elon's team hacked the treasury combined with this tariff nonsense, but we'll see.

I don't see the tariffs lasting more than a month, MX and CA will capitulate, there will be some short term pain.

I think the goal is to get MX and SA to deal with the drug cartels / border stuff. Low hanging fruit for MX to do but a lot of their govt is compromised by the cartels, so things will get spicy for a while. Lets remember that 250k people died from fentanyl which is more than any other terrorist attack on the US and 5x our Vietnam losses. I'm fine with the price of avocados going up or whatever the consequences. It's not the end of the world but having drugs and sex trafficking is for many...

The CA tariffs I think are more about regime change, crushing what's left of Trudeau's party and getting Pierre in.

 

[JeffKeryk]

Same net affect. I can tariff your competitor 25% to make them that much less competitive, or I can give you a 25% incentive to make you 25% more competitive. Econ 101. CHIPS act was protectionism. (and again, I have no issue with it).

How about this. You build something in the US you pay a payroll tax for SSI, medicare, Unemployment. I believe its 6.2% for employer and employee - so 12.4%. You want to ship manufactured goods into the US - you pay 12.4% into the system - just like employers here.

Please. The Chips Act's goal to bring back domestic semiconductor manufacturing, which is highly concentrated in Asia. There is some protectionist parts of the legislation but the goal is reshoring a critical technology. It was a mistake to offshore so much of this in the first place, IMO. America and Europe were kings; we used to call ST Micro the Intel of Europe. I have already listed the benefits.

The Chips Act is far different than tariffs on our allies. I'm sure you understand the China Taiwan affairs. It's important.

 

[Snagglefoot]

I don't see the tariffs lasting more than a month, MX and CA will capitulate, there will be some short term pain.

I think the goal is to get MX and SA to deal with the drug cartels / border stuff. Low hanging fruit for MX to do but a lot of their govt is compromised by the cartels, so things will get spicy for a while. Lets remember that 250k people died from fentanyl which is more than any other terrorist attack on the US and 5x our Vietnam losses. I'm fine with the price of avocados going up or whatever the consequences. It's not the end of the world but having drugs and sex trafficking is for many...

The CA tariffs I think are more about regime change, crushing what's left of Trudeau's party and getting Pierre in.

We’ll check in a month. Meanwhile, may I suggest you read up on who Mark Carney is.