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R_Colin_Johnson
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Re: 15B
R_Colin_Johnson   9/4/2013 2:23:59 PM
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jwalter: Good points all. A case in point: after I bought a Chrysler PT Cruiser some years ago I found out that only 55 percent of its components were make in U.S.--just barely enough to qualify as American made. I also see your point about Samsung's fabs in Texas versus GF in NY. In any case, I'm sure that foundry customers will, and should, make their decisions based on business considerations, as you point out.

DMcCunney
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Re: 15B
DMcCunney   9/4/2013 10:59:51 AM
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Not if the main customer is to be Apple.  Most of their current chips are made in Texas (closer to Apple HQ in Cali) and if you really think about cycle time of product then Taiwan (TSMC) is actually a better choice considering Foxconn is in China.

Foxconn does assembly, and the chips used will be incorporated there, but do not need to be made there.  I haven't looked at an iPhone teardown in a bit, but my recollection is many of the components aren't made in China.  They get shipped there as part of supply chain activities,

I'm thinking about design time, and the added advantage of not having cultural and languages differences impede understanding.  A fair bit of work that got outsourced flowed back to the US because cultural barriers created roadblocks.

Unfortunately what is understated in this article are the real jobs that will be created.  They mention only the GF jobs, but what about the constructions workers, road builders, tool installers, etc, etc, etc.

Most of the latter are temporary.  The jobs will exist while the fab is being built, and go away once it's running.  Many of the workers who do those jobs will not be local, and will be imported from elsewhere.

There will be ongoing benefits to the local economy if and when the fab is up, because local industries will be involved in supplying the needs of the plant and the work force, but quantifying what that will mean in terms of additional jobs is difficult.

jwalter
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Re: 15B
jwalter   9/4/2013 10:55:21 AM
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GM is actually a good point in my argument. Most of the components used in the cars are made outside the US (think radio, seat belts, tires, etc).  I happen to own 3 GM vehicles and only 1 was assembled in the US (the other 2 in Canada).  I think a study was done a few years ago on which vehicle brand is most made in the USA...and I think it was Toyota that came out on top. 

Here is a recent breakdown of by car model for 2013...half of the top 10 are foreign automakers and Toyota has 4 models, more than GM at 3 and Ford/Chrysler at 1 each.

http://www.cars.com/go/advice/Story.jsp?section=top&subject=ami

 

Oh...and I don't understand how Samsung, a korean company operating their major fabs in Texas is less American than GF funded from a middle eastern government being run in NY.

R_Colin_Johnson
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Re: 15B
R_Colin_Johnson   9/4/2013 7:21:43 AM
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Intellectually you are right--Samsung is hare to beat business-wise. But the PR value of a "Made in U.S.A." moniker is not to be undervalued--that's why GM is back on the top of the heap in sales--although I see your point that most people don't care where  the chips inside their devices are made (just like most people don't care where thier car is made--but just enough do to put GM on topn again).

R_Colin_Johnson
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Re: 15B
R_Colin_Johnson   9/4/2013 7:21:42 AM
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Intellectually you are right--Samsung is hare to beat business-wise. But the PR value of a "Made in U.S.A." moniker is not to be undervalued--that's why GM is back on the top of the heap in sales--although I see your point that most people don't care where  the chips inside their devices are made (just like most people don't care where thier car is made--but just enough do to put GM on topn again).

jwalter
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Re: 15B
jwalter   9/4/2013 6:59:52 AM
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The question is what does GF offer in the US that Samsung doesn't? Other than not being a direct competitor of Apple, not a lot.  Samsung has proven an ability to ramp foudry capacity like none before have.  GF still has a lot to learn about the foundry business and a company like Apple can't risk that quite yet.  I predict TSMC to have the upper hand for at least the next 3-5 years.

 

Besides...very few consumers care where the chips inside the phone are made (99% have no clue what the radio, gps, wifi, touch screen, etc even are let alone what company made them and where). I think the made in USA label actually requires nothing more than assembly to be done in the US.

R_Colin_Johnson
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Abu Dhabi and GlobalFoundries
R_Colin_Johnson   9/4/2013 6:54:55 AM
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Regarding "GlobalFoundries is planning for an initial public offering (IPO) of shares, but this could also mean that it is unlikely to get any more multibillion-dollar investments from Abu Dhabi

Don't count Abu Dhabi out so quickly. Recently, the Semiconductor Research Corporation (SRC, Research Triangle, N.C.) opened its first international semiconductor research center, to be located in Abu Dhabi. GlobalFoundries is a long-time memory of SRC and cooperation with the cash-rich capital of the United Arab Emerites (UAE) is likley to continue unabated. 

R_Colin_Johnson
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Re: 15B
R_Colin_Johnson   9/4/2013 6:44:10 AM
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You may be right that "Apple will have to foot the bill for this fab" but once its built GF will be able to offer all its U.S. customers a "Made in U.S." branding option, which at the risk of sounding patriotic, could convince other fabless U.S. companies to come on-board (that plus the convenience of eliminating the constart back-and-forth of engineering personel on long-range flights just to keep the tech on track in far-away fabs).

jwalter
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Re: 15B
jwalter   9/4/2013 1:15:07 AM
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"The fab has the advantage of being closer to the customer for faster design cycles and quicker time to market, which is likely to offset the higher costs."

Not if the main customer is to be Apple.  Most of their current chips are made in Texas (closer to Apple HQ in Cali) and if you really think about cycle time of product then Taiwan (TSMC) is actually a better choice considering Foxconn is in China.

Unfortunately what is understated in this article are the real jobs that will be created.  They mention only the GF jobs, but what about the constructions workers, road builders, tool installers, etc, etc, etc.  That being said the track record of GF is not that great so far and they are far from fully utlizing Fab 8.1 so to be planning Fab 8.2 is a bit premature in my opinion.

DMcCunney
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CEO
Re: 15B
DMcCunney   9/3/2013 3:33:15 PM
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Also, only 2000 more jobs does not sound like much given the scale of investment.

It's not, but that's the nature of high-tech.  It's a classic capital-intensive business.  Semi-conductor fabs are astronomically expensive to build, and getting more so, because the euipment installed in the fabs to make the semi-conductors is fantastically expensive, and getting more so as process geometries shrink.

It's not like the old fshioned factory with lots of guys in the assembly line.  The machines do the work, and the people are there to program and maintain the machines and the plant the machines are installed in.  It doesn't take a huge worforce to do it.It will benefit the local economy as the source of some jobs when up and running, and have secondary benefits to the region in terms of supplying what the plant and its workers need, and to the regions and the state in terms of tax revenues.

There are somewhat higher costs because of the location, land cost, construction cost. and tax structure.  While the plant will offer likely higher wages than an offshore fab, wage costs are unlikely to be a significant addition to the overall cost of operating the fab.

The fab has the advantage of being closer to the customer for faster design cycles and quicker time to market, which is likely to offset the higher costs.

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