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Apple Outsources A5 Chip Manufacture ... To Texas 330

Posted by timothy
from the texas-visitor's-guide-free-on-request dept.
Lindan9 writes "In a 9 billion dollar investment, Apple's A5 chips will now be produced in Austin, TX, in a new Samsung factory that is apparently 'the largest-ever foreign investment in Texas.'" According to the article, the factory's been churning out chips since the beginning of this month.
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Apple Outsources A5 Chip Manufacture ... To Texas

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  • Asia goes up! (Score:5, Insightful)

    by InsightIn140Bytes (2522112) on Saturday December 17, 2011 @05:36PM (#38411334)
    US is now officially destination country for cheap outsourcing.
    • by msauve (701917) on Saturday December 17, 2011 @05:38PM (#38411350)
      The 25 employees of the new automated plant will appreciate that fact.
      • Re:Asia goes up! (Score:5, Insightful)

        by Anonymous Coward on Saturday December 17, 2011 @05:41PM (#38411382)

        So will the hundreds in the local construction industry, those in the power industry, transport industry, and the local government who collect property tax.

        • Re:Asia goes up! (Score:5, Insightful)

          by msauve (701917) on Saturday December 17, 2011 @05:51PM (#38411442)
          Construction is temporal. We're trying to _reduce_ energy usage, believe it or not. A billion dollars worth of chips really isn't that much to transport. You're assuming they weren't given massive tax breaks to build the plant there (they were - 100%).

          To be fair, it looks like this actually created 500-700 jobs. That's still not what people might expect from a $9 billion plant, so the point of my facetious comment stands.
          • Re:Asia goes up! (Score:4, Insightful)

            by durrr (1316311) on Saturday December 17, 2011 @06:03PM (#38411526)
            The numbers of jobs created should be ~10 of "mostly useless emergency supervisors"
            But of course, given the trend of politics-driven inflation and wage-stomping movement seen in general in the US you could probably create ~20000 jobs at $1/hour(counting 1970 equivalent USD) in a year or two.
            China 2.0 bitches, enjoy nation-wide degeneration.
            • Re:Asia goes up! (Score:5, Insightful)

              by Nutria (679911) on Saturday December 17, 2011 @07:46PM (#38412178)

              wage-stomping movement seen in general in the US

              It's called Supply And Demand: when (a) the supply of labor jumped by 2 billion as the result of India and China turning their countries semi-capitalist and open to foreign investment, and (b) the demand for labor drops due to automation, the natural wage rate must and does drop like a stone. Combine this with the extra costs incurred from environmental and workplace safety laws, and it's no wonder that the number of industrial jobs in the US has plummeted.

              The smart person accepts this fact and adjusts him/herself accordingly (either by living with a lower wage or doing what it takes to have a higher-paying job).

              • Re:Asia goes up! (Score:5, Insightful)

                by Opportunist (166417) on Saturday December 17, 2011 @08:41PM (#38412542)

                But with a wage rate plummeting like a stone, demand for goods is not far behind. Ya know, demand for goods ain't just "what people want". It's also, and at least as important, "what people can afford".

                And "doing what's necessary to get a higher-paying job" isn't going to cut it either. Because if everyone does it... well, can you guess it?

            • Re: (Score:2, Informative)

              by Anonymous Coward

              The article states that there are ~1100 jobs created out of this. I work in the semiconductor manufacturing industry (major competitor to Samsung) and can tell you that of those 1100 jobs my estimate is that >600 of those are college graduates (engineers of some kind mostly) and I would estimate that there are probably ~100 PhDs. With a state of the art facility that cost $9bn you can bet that there are lots of technical hurdles that are constantly springing up especially as new products are being manu

            • Re:Asia goes up! (Score:5, Insightful)

              by unkiereamus (1061340) on Sunday December 18, 2011 @06:55AM (#38415142)

              "mostly useless emergency supervisors".

              Honestly, I couldn't quite parse your entire comment, let alone this particular bit, but taking my best guess as to what you meant by this statement, I felt the need to respond.

              I am a paramedic, almost the very definition of an emergency worker (though firefighters might come closer to the mark), we are staffed to the level that actuarial types say we can reasonably be expected to be needed. Note the emphasis. When I worked in the states, I spent roughly 25-50% of my time doing a) shit all and b) nothing...watching TV, surfing the web, etc.

              What I'm getting at, though, is that emergencies happen, and they cost a lot of money when they do, though that cost can be mitigated by having someone properly prepared to meet the emergency.

              While I personally have no aptitude for that particular sort of number-crunching, I can respect it, and if the actuarial types are doing their jobs right, even if I spend 99.9% of my time sitting with my thumb up my ass, in that last 0.1% of the time, having me, a trained and prepared emergency responder able to cope with the emergency saves the company (or in my case, the government/society at large) enough money to justify my salary for the other 99.9% of the time.

              Emergency personnel aren't "mostly useless", we're "(sometimes) mostly idle", there's a difference.

          • "To be Fair" (Score:5, Insightful)

            by SuperKendall (25149) on Saturday December 17, 2011 @06:05PM (#38411544)

            Construction is temporal. We're trying to _reduce_ energy usage, believe it or not.

            You might be. Countries or states that would like a growing economy are not among those interesting in giving in to entropy.

            To be fair, it looks like this actually created 500-700 jobs.

            One would think being "Fair" would be to quote the jobs figure from the original Reuters article - 1100 for just the chips, never mind the flash - instead of a number pulled from thin air but put forth as fact.

            You go ask your local chamber of commerce if they care at all about 1100+ technical jobs appearing where they are.

          • Re:Asia goes up! (Score:5, Insightful)

            by marnues (906739) on Saturday December 17, 2011 @06:27PM (#38411692)
            I'm not reducing my energy. I'm using it smarter and expecting it cleaner. I have no plans to give up my electrical appliances, nor will I unless the need actually arises. And that need will not come.
          • by Ruie (30480)

            To be fair, it looks like this actually created 500-700 jobs. That's still not what people might expect from a $9 billion plant, so the point of my facetious comment stands.

            But, suppose each person costs the company $200K on average (with the salary being $100K), then each employee is responsible for $20M worth of equipment - a factor of 100 over what they are paid in a year. This is actually quite reasonable and what you would expect for the society.

            It also makes sense from economic standpoint - the equipment depreciates and the cost to have an employee maintain it can be factored in. If it is substantially more than 1% then you are more in the service business rather than m

        • by erroneus (253617)

          This is Texas we're talking about. The property tax will likely be at the "agricultural rate" because they will have a few head of cattle living on the manufacturing campus like Exxon does... in fact, they'll probably be Texas Longhorn cattle and they will end up with a tax credit.

          When Apple starts moving the actual assembly of their iDevices to the US, I might be more impressed. Don't get me wrong, I'm glad to see SOMETHING being made in the U.S. and I hope more is made here too.

          • by Drakino (10965)

            Their Mac Pro towers are assembled in the US (as seen on the bottom label from a 2008, 2009 and 2010 model). I wonder how much of that workstation cost is assembly, vs the high priced server level hardware.

          • Re:Asia goes up! (Score:5, Insightful)

            by grainofsand (548591) <{moc.liamg} {ta} {dnasfoniarg}> on Saturday December 17, 2011 @08:16PM (#38412372)

            I have been to manufacturing centres (we used to call them factories) and I can promise you we do not want them back nor the jobs.

            When ever I hear someone talking about the loss of manufacturing jobs, especially no-skill or low-skill jobs, I ask them if they hope their own children will one day work in such a job. They always say no.

            Working in a no-skill / low-skill job in a factory is awful. We should not want any part of our labour market filling jobs like those.

            • Re:Asia goes up! (Score:5, Insightful)

              by erroneus (253617) on Saturday December 17, 2011 @08:40PM (#38412534) Homepage

              Actually, I say "yes." Such jobs aren't meant to be careers. They are a means to getting where you want to be next. When I was young, I did non-career work to keep myself going until I could get where I wanted to be. But where I came from, "fast food" was almost all there was.

              And people entering the workforce in the career of their choice aren't usually the best as far as I'm concerned. In fact, I have a young trainee right now who never comes to work on time and I find it more than a little annoying. But since I am training her to take my place so I can relocate myself to another office, I'm not going to complain. This is her first job and she's not off to a great start exactly. Had she started off doing "lower work" she might have developed a better work ethic and an appreciation for the type of work she's doing now.

              I could go on about "kids today" and their poor work ethic and all that, but I think that situation doesn't need any elaboration as it pretty much speaks for itself. But at least my two older sons are doing things the way I would prefer them to do. My oldest worked long and hard at "Whataburger" and is now well on his way to being a nuclear engineer. My second son is currently working his ass off at a fabric/craft store to save money for college. I couldn't be more proud of them.

              We need more young people in the work force working these types of jobs. It's not just good for the economy, it's good for our work force at all levels.

            • by Kohath (38547) on Sunday December 18, 2011 @04:18AM (#38414614)

              All honest work is noble. Anyone who does an honest day's work and tries to do a good job should have our respect. They certainly have mine.

              • by unkiereamus (1061340) on Sunday December 18, 2011 @07:01AM (#38415172)
                The corollary to that that I live by is that "Anyone who does a job I wouldn't do, deserves my respect.".

                I worked as a temp on a construction job once. After a week, I quit. I couldn't take it, my back and knees were killing me, not to mention I was bored out of my mind. I will never work construction again, I'd rather flip burgers for less money, but despite the fact that I've since found my niche in a semi-professional field, I still respect those that work as unskilled construction labor...those poor bastards.
            • Re:Asia goes up! (Score:5, Insightful)

              by Dhalka226 (559740) on Sunday December 18, 2011 @04:30AM (#38414652)

              When ever I hear someone talking about the loss of manufacturing jobs, especially no-skill or low-skill jobs, I ask them if they hope their own children will one day work in such a job. They always say no.

              Of course nobody wants their child to be a factory worker. They are all meant to grow up and be president or win the Superbowl.

              Now ask them if they would like jobs to be available when reality hits and it turns out that little Johnny is going to be in the majority of Americans who never have a high-paying job or a nice office. Ask if they have enough tucked away in that retirement fund (what, no retirement fund?!) to support 40 year old Johnny because, gosh, he's too good for that kind of work!

              Nobody wants their kid to have a job like that. Nobody should want their kid to have a job like that. But it's a hell of a lot better than long-term unemployment. Service jobs and intellectual property can only employ so many people, and it's only going to get worse.

        • by Ihmhi (1206036)

          local government who collect property tax.

          The standard sweetheart deal is no property tax for the first 5-50 years depending on how good the negotiators are on either side.

          Then usually the plant/stadium/etc. is "getting old" and a new one "needs" to be built somewhere. Maybe somewhere that's willing to offer a tax break...

          Granted they do help create jobs in an area, but it's sort of foolishly wasted on certain things. A supermarket, for instance, will never really go away - it will just likely be bought out by a competitor. One building in my neigh

        • by PopeRatzo (965947) *

          So will the hundreds in the local construction industry, those in the power industry, transport industry, and the local government who collect property tax.

          I'm guessing that the tax subsidies that Apple got were worth a lot more than the property taxes Apple would pay to the local government.

          No big corporation is going to build a plant or bring any jobs anywhere in the US unless the local government cuts a vein for them. I don't care if it's Apple or Wal-Mart or Sears or Ford. They go to whichever local g

      • Re:Asia goes up! (Score:5, Interesting)

        by samkass (174571) on Saturday December 17, 2011 @05:56PM (#38411474) Homepage Journal

        1,100 high-tech employees on the processor side of the fab, and more than that on the flash memory side. A $3.6 billion construction project. Yes, I'd say they will appreciate it.

        • Re:Asia goes up! (Score:5, Informative)

          by Pax681 (1002592) on Saturday December 17, 2011 @06:41PM (#38411782)

          1,100 high-tech employees on the processor side of the fab, and more than that on the flash memory side. A $3.6 billion construction project. Yes, I'd say they will appreciate it.

          not just that if you actually look it's more

          The 1.6 million square foot factory cost $3.6bn, but the total investment is closer to $9bn, according to Austin Chamber of Commerce, making it the largest-ever foreign investment in Texas. According to Reuters, the fab ramped up to full production at the beginning of December.

          that's a fair wad of cash injected into the local economy and not an investment to be sniffed at at all.
          Reuters has an article on it HERE [reuters.com]

        • by Trepidity (597)

          Depends on how much of that was actually paid for by Texas with "incentives" to bring the plant, I suppose.

          • My enthusiasm for parsing legalese waned too quickly to look up all the details for all the involved parties; but it looks like Samsung is certainly not being sent away empty-handed...

            The city of Austin's agreement [austin.tx.us] is one part, and looks like some rather nice tax 'incentives' and procedural waivers(two decades worth of municipal tax breaks, a variety of free infrastructure upgrades). Apparently the county, state, and school district(?!?) also have their own packages.

            I, for one, would like to thank the
            • Re: (Score:3, Insightful)

              by Nick_13ro (1099641)

              My enthusiasm for parsing legalese waned too quickly to look up all the details for all the involved parties; but it looks like Samsung is certainly not being sent away empty-handed... The city of Austin's agreement [austin.tx.us] is one part, and looks like some rather nice tax 'incentives' and procedural waivers(two decades worth of municipal tax breaks, a variety of free infrastructure upgrades). Apparently the county, state, and school district(?!?) also have their own packages. I, for one, would like to thank the citizens of Texas for subsidizing my semiconductor purchases!

              :) Coming from a country that used to subsidize everything I can tell you tax breaks is not subsidizing. A subsidy is giving money taxed or borrowed from somewhere else to some deadbeat factory that would otherwise go bankrupt the following month- the fact that said factory is never expected to pay any sort of tax or social security contribution just goes without saying. :)

      • by sgt scrub (869860)

        [snark] What? Ten of them are from the U.S! Considering the tax payers only had to pay 80% of the cost of the plant (bonds) to get them to hire that many it isn't
        THAT bad of a deal. Besides. Perry, through friends, made a nice chunk of cash. [/snark]

        • Thankfully, government 'job creation' spending is neither wasteful, nor evil, no matter what the cost ends up being, even if extraordinarily larger than the salary(just ask the local chamber of commerce to haul out the multiplier effect and solve the little numerical problem), if you launder the funds through a corporation.

          Direct payments are, depending on how you structure them, either wasteful big government bloat, or evil welfare; but obtaining them through 'public-private partnerships' or 'developmen
    • by should_be_linear (779431) on Saturday December 17, 2011 @06:08PM (#38411586)
      Wall Street: "$9b here? Are you fcking nuts?".
      Samsung: "We believe in american workforce!"
      Wall Street: "OK, so you ARE crazy... what the hell is wrong with China"
      Samsung: "No way, they wouldn't follow even basic environmental and working conditions. We are getting out of there"
      Wall Street: "NOOOOOOO!"
    • by allanw (842185)
      There's semiconductor fab companies that manufacture the wafers in the USA, but still ship them to Asia for packaging and testing, which requires less labor skill and investment. See this Micron video for instance: http://www.youtube.com/watch?v=kvf29R7nXlM [youtube.com]
  • Cheap labor (Score:3, Funny)

    by Animats (122034) on Saturday December 17, 2011 @05:36PM (#38411336) Homepage

    Texas just provides the cheap labor. They don't have the technology.

    • Re:Cheap labor (Score:5, Informative)

      by Svartalf (2997) on Saturday December 17, 2011 @06:04PM (#38411534) Homepage

      Heh... Says you...

      TI
      Freescale
      AMD
      IBM
      Qualcomm

      These and more have more than a piddling engineering presence in Austin.

      • Re:Cheap labor (Score:4, Informative)

        by Pharmboy (216950) on Saturday December 17, 2011 @06:10PM (#38411594) Journal

        Dell and HP are also Texas corporations, which are two giants in producing end products for the entire globe. Of course, Dell finishes their stuff in Mexico (which is still better than China).

      • you were trying to prove that Texas is a technology hub, by rattling off various tech companies in Austin.

        you didn't mention Dell.

        that makes me laugh all kinds of horrible laughs that i am kind of embarassed to be laughing.

        • Dell is, arguably, more of a logistics and integration company than a tech company(which isn't necessarily a bad thing, they are pretty decent at it, and somebody has to do it)...

          They are pretty good at providing a one-stop-shop for a variety of Intel and AMD silicon, with supporting chips from a number of other vendors, mounted on a standardized set of boards from a few pacific rim OEM shops, and stuffed into plastic boxes in Mexico according to your order. Juggling that worldwide logistics effort is no
          • Juggling that worldwide logistics effort is no mean feat; but they don't mix much in the way of dell technology into the sauce. It's like fedex with driver updates

            You call Dell a "logistics" operation and then compare it to FedEx? I was waiting for the UPS punchline [youtube.com].

    • Re:Cheap labor (Score:4, Insightful)

      by martin-boundary (547041) on Saturday December 17, 2011 @07:32PM (#38412102)
      That's not so bad. I think the biggest problem will be the language barrier. Texans have a peculiar version of English that could potentially lead to millions of dollars wasted when the managers in Cupertino try to communicate exactly what they want over the phone...
  • Samsung... (Score:5, Interesting)

    by Joce640k (829181) on Saturday December 17, 2011 @05:39PM (#38411358) Homepage

    The same company they're suing for imitating (int their eyes) the same product they're going to make in the new factory? Strange bedfellows indeed.

    • The only part that Apple is sourcing from this Samsung plant is the A5 processor. I don't think that any Android phone or tablet uses this chip so that's not the issue at all.
    • by AmiMoJo (196126)

      Maybe it's a cunning trap!

      More seriously it is probably a case of having the contracts signed long ago, and it is only for the fabrication (not design). Still seems somewhat risky.

      Then again Samsung always make sure their flagship products have a better CPU than Apple's, and the A5 is looking a pretty ordinary these days. In short they can already easily compete on specs, it is just the legal wrangling and Apple's massive lifestyle marketing techniques that are a challenge.

    • That seems to happen a lot with these big east Asian electronics firms, they get so big they end up competing with themselves. Look at Sony, they used to(and maybe still do?) manufacture a lot of the parts that went into Apple computers such as the battery, while at the same time competing with Apple in both the laptop and the personal media player fields...... Though Samsung would be wise to make sure they don't end up going down the same path that Sony did, i.e. get so big and have so many conflicting g
    • by Anonymous Coward

      Business relationships among large corporations are not so simplistic as slashdotters like to assume.

      1)
      Pre existing contracts are not usually nullified by new lawsuits unless specified in the terms of said contract.

      2)
      Large companies, such as Samsung, often have multiple business units that operate mostly independently and may or may not care, or even know details of, legal action underway in another business unit. There are even examples (Sony and Fox come to mind.) of one division of a company suing anothe

    • by Smurf (7981)

      The same company they're suing for imitating (in their eyes) the same product they're going to make in the new factory? Strange bedfellows indeed.

      True but it's a mistake that's not so hard to make [imgur.com].

  • Damned both ways? (Score:4, Insightful)

    by Anonymous Coward on Saturday December 17, 2011 @05:40PM (#38411364)

    Dear America, do you want to work or not?

    • by Ethanol-fueled (1125189) on Saturday December 17, 2011 @06:08PM (#38411576) Homepage Journal
      1. Destroy economy so wages are depressed
      2. U.S. now source of cheap labor
      3. Best of both worlds - outsourced wages with domestic location
      4. Profit!
      5. Rich get richer, poor get poorer
      6. Repeat as desired
      • Well, there is a hard limit, ya know? It's rather hard to find people willing to pay to work. Aside of that, I bet by now they're quite happy the slaves were "freed". Slaves have to be fed and sheltered, I guess soon they'd be more expensive.

      • Brilliant! (Score:3, Insightful)

        by tlambert (566799)

        1. Destroy economy so wages are depressed
        2. U.S. now source of cheap labor
        3. Best of both worlds - outsourced wages with domestic location
        4. Profit!
        5. Rich get richer, poor get poorer
        6. Repeat as desired

        And they'll have a built-in market, with all those people in the U.S. who are flush with cash.

        Wait...
        I think I'm sensing a flaw in your logic about that actually being the plan, here...
        If only I could put my finger on the place it was broken...
        And then push to kill that region of your brain so you'd stop saying stupid things like this.

        -- Terry

  • by Anonymous Coward on Saturday December 17, 2011 @05:40PM (#38411366)

    It's not Apple that made the $9b investment - Samsung did. The headline to the news entry suggests that it was otherwise. Grammer is so hard i kno lol!

    • I'd like to hear them explain how, for chips meant to be used in the USA, Samsung decided it would be more practical to build a factory here. But every American company decided it would be cheaper to use factories elsewhere and have them shipped here. It kind of seems like there's nothing impractical about having a factory here. They just want to make sure no American company builds anything.
      • I'd like to hear them explain how, for chips meant to be used in the USA, Samsung decided it would be more practical to build a factory here. But every American company decided it would be cheaper to use factories elsewhere and have them shipped here. It kind of seems like there's nothing impractical about having a factory here. They just want to make sure no American company builds anything.

        Offshoring/outsourcing overseas has always been about shifting costs overseas in the name of efficiency, quality or even profit. It has always been about reducing costs to increase the pockets of those who sell the idea of outsourcing, everything else be damned. I know it sounds like a slogan, but that's what makes it terrifying because it is true. That's the type of mercenary mentality that has been cultivated in our business ruling classes for the last 2 decades.

        You will not see that in the Toyotas, Me

  • by Anonymous Coward on Saturday December 17, 2011 @05:43PM (#38411392)

    I for one welcome our new Korean overlords.

  • Judging from the popularity of Apple / Samsung products that are made in Asia I do not see the move to America making a difference.
  • . . . so they won't have to worry about Thailand-like floods stopping the production. At least if they stay away from the lakes and rivers . . . or what is left of the lakes and rivers.

    Austin also has plenty of other high-tech companies around. But that air conditioning bill will be mighty high . . .

    Although I seem to remember that Intel started building something there, but stopped went the Internet bubble busted. The local folks called empty frame. "Intel NOT inside . . . "

    But if this here factory is already bakin' chips . . . that's sumtin' different.

    • by Elbart (1233584)
      Isn't Texas one of the high-risk-targets of hurricanes?
      • Isn't Texas one of the high-risk-targets of hurricanes?

        Not Austin. We are an evacuation destination for Houston ;-). A few years ago, a hurricane caused enough panic in Austin for people to strip store shelves for supplies, which is completely retarded considering how far inland we are. Wherever you go, there are stupid people.

      • by AHuxley (892839)
        Just your usual US pay-to-play political donations ect.
  • It's the cheapest major part in the whole unit. cynical me says that is just a token gesture by Samsung, and may be just part of a deal to stop Apple shopping elsewhere.

  • by maxwells_deamon (221474) on Saturday December 17, 2011 @09:36PM (#38412844) Homepage

    Factories in China are known for making clones in the same factory after hours. If you can count the numbers of a critical chip exported, you can delay the introduction of clones to market. Yes, I know you can not prevent copies eventiually

  • by Guy Harris (3803) <guy@alum.mit.edu> on Sunday December 18, 2011 @01:31AM (#38413978)

    ...at least not in the sense that they used to make those chips in their own fabs and are now having somebody else fab them. They've always outsourced the production of all their chip designs, as they've never owned any fabs. (Well, not as far as I know, at least.)

    (And, unless you consider either the California Republic or the Republic of Texas to still exist, they didn't offshore it, either - not even if you include doing stuff across one or more land borders "offshoring". :-))

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