AMD Receives $683M for Dresden Plant

Cocooner writes "Infoworld has an article explaining how AMD received $683 million in grants from Germany and the state of Saxony for its next-generation microprocessor wafer facility. The new plant will be located in Dresden, adjacent to Fab 30 and will be called Fab 36. It will be the first AMD 300mm manufacturing facility."

ROI?

[Ralph Wiggam]

"The new Dresden facility ... will employ 1,000 local workers when it is completed"

Why would the government give a $683M break to AMD to get 1000 jobs? That's two thirds of a million bucks per job. It's amazing that a $2B facility can be staffed by only 1000 people.

-B

Re:ROI?

[Xeth]

That may seem initially true, but there are bound to me massive general economic effects from employing 1000 highly skilled workers and their families, and all the increased support business that would come up around them.

Re:ROI?

[MadAnthony02]

Why would the government give a $683M break to AMD to get 1000 jobs? That's two thirds of a million bucks per job.

Well, first of all it's in grants and allowances, so the governemnt probably doesn't look at it as "real money" - and I'm guessing it's probably spread out over a long period of time, ie tax breaks for the next x years.

Secondly, they are probably figuring that the plant will make suppliers and customers of AMD move nearby, thus providing more jobs and taxes. It's debateable if this actually works, but that's probably their thought process.

Avoid production stop

[rif42]

AMD, based in Sunnyvale, California, has no plans to convert its existing Dresden fab to 300 millimeters because it wouldn't be a cost-effective way to introduce that technology, Prairie said.

Probably also because it would for a longer time block the main production facility for Athlon and Optoron chips.

If you have many fabs doing the same kind of chip process like Intel it is much easier to temporary stop one of them.

think back!

[Anonymous Coward]

"...AMD received $683 million in grants from Germany and the state of Saxony for its next-generation microprocessor wafer facility."

it's not like AMD is gonna change the money into
euro coins and stack them to make a nice looking
factory made from coins, no sir.

the question really is:
who owned the land before AMD bought it (tax?).
who is building the factory(tax?).
who is supplying power(tax?).
who is building the generators that produce
the needed electricity(tax?).
who gets to have a peek at the technology (know-how) once complet(no tax!) :)
who gets know-how for building a chip
producing factory? (def. more to come!)
etc.

this is a micro investment and the reward is def.
going to pay off as long as people have to use
computers (e.g. no telepathy available).

Re:In Socialist Germany

[selderrr]

it has been tried. it's called communism. it failed. miserably.

Re:In Socialist Germany

[BenjyD]

Because this way creates 1000 skilled jobs directly in the area, which increases tax income and reduces unemployment payments. The local economy is helped by the money from the jobs, other companies (builders, suppliers etc) in the area benefit. All round the area's economy improves. This is about long-term growth, not the short term benefits.

It is the job of the government, after all, to improve the lot of its people.

Re:ROI?

[sjwt]

no, but the other 2billion Euro's that AMD is spending will stay in the german ecconomy..

So the govermnet spends 600millon,
to put a total of 2.5 billion in the ecconomy.

you are right, its not 1 becomes 2,
its 1 becomes 4.

Re:In Socialist Germany

[JanneM]

You may "STRONGLY disagree" - but it is the will of the local population that sets the goals for any government.

If, the voters does set the goal of it's govenment to be improvement of the lot of the people, then so be it. Who are you to disagree - unless you live there and have a right to vote, in which case you can make your views heard just fine.

Re:What about returns ??

[tempfile]

Eastern Germany suffers from extreme unemployment (up to 20% in some areas) and has been in an economical crisis since the wall came down. The unemployment is the reason for the collapsing German welfare state.

Creating jobs and building an industry should be the #1 East German priority. The government did the right thing.

It's rarely remarkable

[Duhavid]

when a US company builds a US factory.

In the same way it would not be remarkable when a German company built a German factory, nor when an Indian company built an Indian factory.

It is a bit more remarkable when the US business drones without brains build another facility outside the US, then complain that US consumers arent buying it's products. Everyone is worried about the "jobless recovery", but they fail to point the fingers at themselves for shipping the jobs ( and salaries ) overseas. Mind you, I am not nessesarily of the "protectionist" mindset, but it does seem that some moderation is called for.

Re:ROI?

[christophe]

>Why would the government give a $683M break to >AMD to get 1000 jobs? That's two thirds of a >million bucks per job. It's amazing that a $2B >facility can be staffed by only 1000 people

Germans don't care about the 1000 people working there, they care about:
- the other $1.4B that will come and will be spent in Germany for a good part,
- the thousands people needed to build a high-tech plant,
- the hundreds of firms and thousands people needed to provide (high tech) "raw" materials, and provide outsourced services to the plant (food, cleaning, software, maintenance, tools...) : do not forget that Germans are good at making tools and chemical products (which such a plant really need),
- the money that will go through their banks,
- the fact that this part of country really need jobs (previous Eastern Germany, 20% unemployment).

BTW: If you have an opportunity to visit this part of Germany, do no hesitate. Dresedn was totally destroyed in February 1945, but the Communists really succeeded in building it again [about their only success], and the area is very nice.

Re:ROI?

[I Be Hatin']

Not really, let's say they're each making 50k. 50 million a year. It stays 50 million a year, no matter how many people become the beneficiaries. Money isn't magical, one euro doesn't magically become two because another business moves into the neighborhood in order to serve the workers.

And what do they do with that 50 million a year? Stuff it under their mattresses? No, they spend it in the local economy, buying food, clothes, etc. for their families... and the local government gets a cut via the sales tax. Further, this increased spending on necessities and luxuries of life spawns the need for new workers, who receive a paycheck... and the government gets a cut via the income tax. And with this money, they spend it in the local economy... and the local government gets a cut via the sales tax. And so forth. So yes, money is magical as far as the government is concerned, since they get a cut out of any transaction.

Now, the above assumes that all new workers have to move to Dresden from other areas. But the same statements are true if the new workers are local residents who are receiving a lower salary (in which case it's less than 50 million, of course) or unemployed, which actually doubles the benefit, as they're no longer receiving public assistance.

Re:See, Communism works!! Thanks, Germany!

[Elektroschock]

It is nothing *unusual* to support investments as high as 2.5 billion. 20% is more or less moderate.
This is usual economic policy in most states around the globe. Anti-Capitalists and Communists will critzise it though because they prefer state run chip production, haha.

It's better than paying 520m to a patent privateer [eolas.com] via a stated granted monopoly system. :-)

But I believe a 600 Million German Free Software Fund would be a better investment.

Actually, no.

[snarkasaurus]

"It is the job of the government, after all, to improve the lot of its people."

Actually, no. In a -free- republic the job of government is to manage the rule of law, provide for the common defence of the nation, and enforce contracts. Other than that they are supposed to stay out of the road and let people get on with their lives.

Anything else is just the forced redistributuion of wealth,otherwise known as stealing. Which is why East Germany is such a basket case in the first place. People are not inspired to work hard when they know the government is just going to take their money.

Re:ROI?

[gr8_phk]

Remember, a large portion of that money will go straight into the local economy. Construction will be done by local companies. Only the special equipment will come from outside, and most of that will be purchased with other money. I bet most of the money will be spent locally, and when it's done, they'll have a nice new fab in town.

Re:Taxes...

[he-sk]

Germany's economy is stagnating, because money is being wasted by corrupt politicians and greedy corporate managers. Note, that Germany is right now richer than it was ever before (along with the rest of the western world) as expressed by the GNP. Right now, some unionists are rallying behind warning strikes, because the metall industry is offering an 1,2 increase (just around the inflation rate, after years of no increases), but only if the employees accept an unpaid increase in the working hours from 35 to 40 hours a week.

Now, what is wrong with this picture?
a) The employers want the unionists to accept less money for more work
b) Requiring individuals to work more time while we have 11% unemployment and more part-time work would significally decrease unemployment
c) The average income has decreased in Germany in the last 10 years, when you account for inflation, while the income of top managers has increased more than tenfold
d) All of the above.

I'm not promoting Socialism, at least not in the way it was done in the GDR, in which I was born by the way. I'm promoting transparent and democratic decision making processes which is currently not happening in the system we have here. I'm also opposed of putting the economy above all, especially above the interests of people that are actually in need.

I have no sympathy for this system at all, because I had to find out that all the things I once cherished after the Wall came down in Berlin, eg free speech, privacy laws, free demonstrations, and all that liberty stuff, aren't worth the paper on which they are printed on. As soon as you're critical to the system and claim your rights, you get bullied around by police and the media doesn't care at all. And I have a feeling that the corporate sector is the driving force behind this, too.

This is getting OT.

Re:Taxes...

[he-sk]

I forgot:

I'm not against private property and a capitalist system, I am however deeply concerned, that huge corporations and few individuals accumulate too much power simply because they are insanely rich. I think this has already happened.

By the way, in ancient Sparta, when a person became to wealthy (and thus too powerful) it was exiled. Think about it for a second.