Scott Kennedy on rebuilding semiconductor manufacturing in the U.S.

The economic security concerns are paramount, but there's also the question of jobs and rebuilding America's own manufacturing prowess, which has both economic and national security benefits to it.  But the facts are that you can friendshore, onshore some semiconductor manufacturing capacity, but the U.S. right now is about 12% [of global chip production], Taiwan's at 60%.  You've got China and others making up the rest.  Even at the pace which the U.S. is adding capacity, that 12% number is not going to radically change because everyone else is also adding capacity as fast as possible.  We are going to be in a globalized semiconductor industry as far as we can see.

~ Scott Kennedy, China Expert, Center for Strategic and International Studies, "Under Threat! How New Semiconductor Plants Are Facing Big Problems," Interesting Engineering, 9:05 mark, January 6, 2025

Torsten Sløk on policy inflation

We know there has been more deglobalization since 2019, which means more onshoring, friend-shoring, near-shoring, and home-shoring.  That means more production is coming home to the U.S. and Europe, in particular, which means the cost of production is likely to go up.  Generally, deglobalization is inflationary.

Next, the energy transition is a significant investment theme and implies significant costs.  It, too, is broadly inflationary.

Third, we are likely to see more military spending, which is also inflationary.  Spending more on missiles and tanks takes investment away from other productive uses like capital spending.

Fourth, and finally, we could see more restrictions on immigration in both the U.S. and Europe, which is inflationary.

If there is one major economic theme in the next three to five years, it’s the risk that we will see permanent upside pressure on inflation.

~ Torsten Sløk, "The Economy Is Fine. The Market Will Be, Too," Barron's, August 10, 2024

Marc Faber on tariffs and onshoring

Now they have this brilliant idea to impose tariffs.  It's an absurd idea because the tariffs will increase the prices of just about everything.  And the employment gains will be very minimal because companies will pay the tariffs rather than move production into the U.S. where there is not sufficient technological skills, nor are there enough people to do the jobs that the Chinese or the Indians or the Vietnamese do.

~ Marc Faber, "High Risk of Market Crash as Smart Investors Sell with Marc Faber," WTFinance, 5:45 mark, December 11, 2024

Alphonse Chan on the U.S. push to onshore high end semiconductor manufacturing

Q: The United States has also taken a number of steps to insulate itself from the risk of Taiwan being attacked or some kind of disruption abroad by bringing chip manufacturing home to the United States.  How has that been going?

Alphonse Chan: Well, it's the United States and other countries in Europe and Japan as well.  They are all trying to secure their chip supply by again onshoring, as you mentioned.  And I'd say so far that has not led to chip production in the United States as of today.  Manufacturing chips is a hugely complex process and you simply can't throw up a factory with cinder blocks.  These are actually engineering marvels of the world.  And Taiwan Semiconductor has had trouble, number one building these facilities in Arizona and staffing them, and they continue to have labor issues today.  When this [the CHIPS Act] was announced it was thought that that would bring leading edge chips manufacturing to the U.S. and that might be a nice political statement, but by the time these facilities are up and running, those chips will no longer be leading edge.

~ Alphonse Chan, Jr., "Taiwan, Semiconductors, and the Global Economy - Silvercrest," 8:40 mark, June 18, 2024

WSJ on how Tesla alums are cleaning up on green energy

Governments everywhere are trying to build domestic clean-energy industries, from electric cars to solar panels.  No company has had more recent success doing that than Tesla, and no executives are in greater demand than the auto maker’s alumni. 

More than 30 companies led or launched by former Tesla employees have raised more than $26 billion in the past decade, most in the past few years, a Wall Street Journal analysis of data from PitchBook shows.  Much of that money went to a handful of companies in the electric-car and battery supply chain: luxury electric-vehicle company Lucid Group, European battery upstart Northvolt and battery-recycling firm Redwood Materials. 

Many of these companies focus on domestic manufacturing, as Tesla has for more than a decade.  They are well-positioned to take advantage of last year’s U.S. climate law and Europe’s response to it.  A key goal for both is to whittle away at China’s dominance in critical clean-energy industries. 

~ The Wall Street Journal, "Tesla Alums Win Big in Green Energy Bonanza: Executives who survived EV maker’s dark days have raised billions from investors," by Ed Ballard and Amrith Ramkumar, August 15, 2023

George Koo on economic ties between the U.S. and China

Including and working with China is potentially an all-around win-win situation.  Everybody benefits because the economies are so integrated, the skills and strengths are complementary.  But to turn it into a decoupled situation is a lose-lose situation.  I don't think China will benefit from a decoupled situation, but I can certainly say that the U.S. is also going to lose on a decoupled situation.

~ George Koo, "'Containing China' is Making America Weaker," 26:50 mark, August 27, 2022