President Obama Announces Semiconductor Industry Working Group To Review US Competitiveness (venturebeat.com)

The Obama administration has announced the formation of a working group to study issues affecting the US semiconductor industry, especially as they pertain to the nation's economic and security interests. From a report on VentureBeat:Chips are the heart of everything electronic, and they have become a $330 billion worldwide industry. U.S. companies have held the leading market share in the industry -- which puts the "silicon" in Silicon Valley -- for decades. The Semiconductor Working Group includes 11 experts on chips and the broader economy. John Neuffer, president of the Semiconductor Industry Association, the U.S. industry trade group, said in a statement: "SIA welcomes this timely announcement, given new challenges facing the U.S. semiconductor industry, including unprecedented government investment programs from some countries and the increasing technological complexity involved in achieving new innovation breakthroughs. These developments have implications not only for the economy and society, but also national security. In fact, SIA earlier recommended the Administration form a public-private advisory group to help guide government policy related to improving the competitiveness of the U.S. semiconductor industry.

Comments

Re:No study needed. Not competitive.

[rickb928]

As one who lives within a few miles of several working fabs, I can assure that high-value semiconductors are being made here.

The cheap stuff (and a good share of the high-value stuff) is being made where it should be - where it is cheaper.

Economics 101.

Re:Corporate tax reform

[hey!]

Business taxes in the US are 39% on paper, but in practice average around 27% when you count deductions US law allows. The effective US rate is about the same as the average for OECD countries (27.7%) and is only slightly higher than the Netherlands' 25%. China's tax rate is 25% as well, although it goes down to 15% for certain industries. Both China and the Netherlands have a national value-added-tax (17% and 21% respectively); the US has in-state sales taxes in some states but no cross-state sales tax.

Of course 2% of a 1.4 billion in profits is a lot of money, but even if the US dropped its effective rates to 25% I doubt you'll see a lot of new semiconductor fabs going up in the US.

In an era of free trade, nobody's going to locate many manufacturing jobs in the US with a median wage of $51K when the median wage in China is $4755, and in Indonesia less than half that. The only reason to make anything here is to get something that you can't get elsewhere, and lets face it there are plenty of tax havens out there with lots of unemployed people. So what can you get here? Access to US universities and research centers. The US, at least for now, is a natural tech incubator. That won't last long under an austerity program.

So until US wages drop by about 90%, even a major cut to effective business tax rates aren't going to make us competitive with China for commodity manufacturing jobs.