Chapter 1: What is the main topic discussed in this episode?
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From The New York Times, I'm Michael Barbaro. This is The Daily. The construction of a massive factory in Arizona was supposed to embody the Trump administration's ability to bring manufacturing back to the U.S., Instead, as my colleague Peter Goodman found out, it's provided companies around the world with literally 18,000 reasons to think twice about building in America.
It's Monday, December 22nd. Peter, good of you to come into the studio. Delighted. I wonder, just to start this conversation, if you can describe this factory that you recently visited to us. Yeah, sure.
So it's about 9.20 in the morning on Friday, and I'm just arriving.
I mean, there's this giant, mostly empty desert valley in the extreme north of Phoenix, as far as the eye could see, really. Emptiness.
I'm standing on a gravel road, looking at cactuses and various desert scrub just flowing out to the horizons, that this is all going to get filled up with housing and offices.
So this factory, I've seen a lot of factories in my day. You sure have. Is on a scale that I've never even imagined. We're talking about more than a thousand acres.
The complex itself, I'm looking at a long, low gray building with a bunch of smokestacks visible on top. You can see at least a dozen cranes. You can hear the roar of something. There's black smoke now coming out of the top of one of these buildings. And beyond, you can see these cranes that are working.
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Chapter 2: What is the significance of the factory being built in Arizona?
Of scale. Not just scale, but that this is important beyond the thing itself.
What does it represent, this gargantuan, crane-filled factory-ville?
It represents a moment when a consensus broke out in the American political system, in the business world, that globalization... This system that we've been living under for most of our adult lives has been very fruitful and beneficial in all sorts of ways, but there are some things where it matters where we make them. And one of those things is computer chips.
We need to have our own stock of computer chips. We need to make them at home in the event of war or disaster. And that's what they're making in these factories that I saw. Computer chips are the brains of just about everything. The iPhone in your hand, the data centers that are getting built all over the place to make artificial intelligence work. They're going into our cars.
They're going into our appliances. I mean, it's pretty hard to think about any manufactured product now that doesn't have some kind of computer chip.
So it would seem like a very, very big and... overdue thing to have such a factory building those chips right here in America.
It's a big deal. I mean, it is the most palpable manifestation of this really, I think you can say national aspiration to build things in America again. But there are some complications. This company that's building these factories is not American. It's Taiwan Semiconductor Manufacturing Corp., TSMC as it's known. It is a Taiwanese company. It is a very successful Taiwanese company.
But it's also been an excruciating pain for TSMC to get this thing built. With American subsidies, with a whole political process designed to bring this about, it's still been slow, expensive, and difficult. And so it really raises the question, is this a triumph? Is this the template for how we can do this going forward? Or is this the cautionary tale?
So, Peter, tell us the story of this factory and all the ways in which it suggests a potential future or perhaps the impracticality of that future.
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Chapter 3: What challenges did TSMC face during the construction process?
And we have to think about resilience. The way to think of it is we need some insurance. It's not that globalization is bad. It's that globalization without insurance against the risks that are an inevitable part of life, that's not so good.
And what does that insurance actually look like?
It looks like the government saying we're going to have to play a direct role in making sure that certain things are built in the United States, and that's going to require subsidies. So along comes the Biden administration, and the Biden administration breaks from doing generations of free trade dogma, this idea that we just let the market sort out what gets built and where.
And they say efficiency only takes us so far. The government's going to have to play a role in making sure that certain things like computer chips are built in the United States. And this becomes the Chips and Science Act. This landmark piece of legislation that's got tens of billions of dollars in subsidies given to companies that build computer chip factories in the United States.
One of those companies, Taiwan Semiconductor, actually participates in the writing of this bill. Mm-hmm. And that company, TSMC, ends up with a $6 billion plus grant to then build this complex of factories in Phoenix. At the end of the day, when it's all built, they'll be making roughly a third of all the advanced chips they make worldwide right there in Phoenix, Arizona.
That's a really, really big deal given just how much of that... work was concentrated in Taiwan.
It's a very big deal. It's a very big deal for TSMC. It's a very big deal for the United States. And it's certainly a very big deal for the local economy in Phoenix, which has traditionally been very tied to the boom and bust cycle of real estate. And now we're talking about thousands of jobs and construction to build this, thousands more to eventually make the chips themselves.
And then there's all sorts of associated services, lawyers, insurance companies, caterers, truck drivers, where Right.
A state would, in theory, kill for this kind of economic activity.
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