DIE Kills American Chip Manufacturing

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In their analysis, Matt Cole and Chris Nicholson explain that those hoping to build advanced U.S. chip factories have encountered all the usual DIE-imposed box-checking requirements, and this agenda is hardly hidden. DIE is explicit:  diversity is “critical to strengthening the U.S. semiconductor ecosystem.”

These chipmakers must hire and train the “right number” of women, people of color, and “justice involved individuals” (i.e., “ex-cons). The bill calls for using “minority-owned businesses” and cooperation with ““minority-serving institutions.” There are 19 sections in the legislation dealing with minority groups, including hiring a Chief Diversity Officer at the National Science Foundation to promote national security.

Perhaps as a sop to conservatives, the legislation calls for hiring veterans and rural people. Chipmakers are also required to hire women when constructing these factories and remove degree requirements from job descriptions. That manufacturing cutting-edge chips is exceedingly difficult technically, is irrelevant since we need a workforce that “looks like Amerca” when competing with our foreign tech rivals.

The cost of this social engineering is enormous. These proposed chip plants will often be located away from large minority populations, so workers of color must be relocated and then trained to the highest levels regardless of past academic shortcoming and is it just assumed that these employees would embrace a strong work ethic — being punctual, working dutifully, avoiding drugs and alcohol, cooperating with other employees and so on. Firms will naturally need large recruitment and legal departments to resolve the inevitable tensions in this diverse workforce while addressing the litigation that comes from terminating underperforming minority employees.

Faced with such nearly impossible-to-implement DIE rules, chip makers are looking elsewhere. The world’s largest, Taiwan Semiconductor Manufacturing Company (TSMC), is shifting its second of two promised Arizona plants to Japan while seriously considering locating in Germany. Intel, an American company, originally promised a factory in Columbus, Ohio but is now instead building factories in Poland and Israel despite the risk of armed conflicts. Samsung, a Korean chipmaker, has delayed it promised Texas factory and is closely looking at investing more at home rather than the U.S.

Avoiding building in the United States is hardly surprising. Generous subsidies cannot compensate for incompetent, litigation-prone workers. U.S. lawmakers obviously prize social engineering over national security.