I’ve been covering some of these issues since all the way back when I was doing the Texas vs. California updates, but this video offers a nice summary.
“Texas has been one of the biggest winners of the blue state exodus, and now it’s pushing to become a real financial powerhouse.”
“If Texas were its own country, its economy would be the eighth largest in the world. Bigger than Russia, bigger than Canada, bigger than Italy. That’s the state’s preliminary 2025 GDP, $2.9 trillion, measured against every other nation on Earth.”
“Goldman Sachs is building an 800,000 square foot campus in Dallas. When it opens, more than 5,000 people will work there. It’ll be the firm’s second largest office in the United States. Goldman isn’t moving its headquarters, but between 2015 and 2024, 314 companies did. Nearly half of them, 154, went to Dallas Fort Worth. By 2026, Texas had 57 Fortune 500 headquarters, more than any other state, with about $2.8 trillion in combined annual revenue.”
“The state that outsiders picture as a ranch currently produces the world’s richest person and the world’s richest woman at the same time. Elon Musk, based in Austin, is worth $839 billion. Alice Walton, based in Fort Worth, is worth $134 billion and has held the top spot amongst women for three straight years.”
“Forbes counted 43 Texans on its 2025 list of America’s 400 richest people worth more than $1 trillion combined, the first time the group has cleared the mark.”
“Dallas Fort Worth does finance and corporate services. Houston does energy, chemicals, and ports. Austin does technology and semiconductors. San Antonio does military, healthcare, and manufacturing.”
“Those four metros sit inside a triangle bounded by Interstate 35, Interstate 45, and Interstate 10. Together, they employ more than 10 million people, more than the entire workforce of Sweden, and run about 2 trillion a year in a combined economic output. Over the last decade, 85% of all Texas population growth happened inside that triangle, which is why the state can carry finance, energy, technology, and manufacturing investment all at the same time.”
“Oil still anchors the biggest of those four economies. In 2025, Texas pumped 5.75 million barrels of crude oil a day, 42% of all US production. If Texas were a country, it would rank fourth in the world in oil output behind only the United States, Russia, and Saudi Arabia.”
“Texas is the only state that spent nine years as its own sovereign nation, the Republic of Texas. from 1836 to 1845, before voting to join the union.”
“That history still shows up in how the state regulates business today. No state income tax, a right to work law, and a legal and regulatory environment built to keep the cost of doing business low.”
“Chief Executive Magazine has ranked Texas the best state in the country for business every year since the survey started in 2001.”
Fort Worth rent is less than half that of Manhattan.
“Since February 2020, finance, insurance, and real estate employment in Dallas grew 23.2% versus 6% in New York City. Dallas now has about 317,000 people working across those sectors, 10.1% of local employment, just above New York City’s 9.9%.”
“New York Stock Exchange Texas says Texas headquartered companies listed on the exchange represent more than 5 trillion in market value, up 1.5 trillion in a year.”
“Texas is also becoming a place where capital intensive companies build physical things at a scale most states can’t host. Samsung is spending more than 37 billion on two logic fabs and an R&D fab near Austin, with the first set to begin production this year. Texas Instruments is spending up to $40 billion on four connected fabs in Sherman, part of a $60 billion commitment the company calls the largest in US semiconductor history. Between those two projects alone, more than $77 billion in committed capital is going into two Texas counties.”
“Once you can manufacture at that scale, the parts have to come from somewhere. For Texas, the answer is 150 miles south. Port Laredo handled $353 billion in trade in 2025. More than 97% of it tied to Mexico, making it the busiest inland port in the Western Hemisphere. Mexico passed China in 2023 to become America’s largest trading partner.”
“Companies assemble AI hardware in Mexico using Nvidia chips, then just ship it north through Texas.”
“All of that growth is now straining the infrastructure underneath it. Dallas Fort Worth became the third largest collocation data center market in the country in the first quarter of 2026, with capacity up 43.7% in a single year, and 88% of what’s under construction has already been pre-leased.”
“ERCOT was tracking roughly 410 gawatt of proposed large loads seeking grid connection by 2030. Enough that regulators changed how they study new loads.” Hence Texas Governor Greg Abbott telling data center companies they had to pay for their own data centers.
“Housing shows the same pressure. DFW home prices were up about 33% above 2020 levels by 2025. In Austin, it was about 23%.” Maybe, but Austin experienced a huge housing price spike in 2021-2023 before coming down again.
“In 2024, the state still authorized 225,000 new housing units, more than California and New York combined. In Dallas and Houston were the two busiest metro areas in the country for new home construction.”
“This shows that capital trusts Texas can build.”
“From the 1990s through the 2010s, Texas competed on cost. Cheap land, cheap labor, no income tax.”
“From 2015 to 2020, corporate migration accelerated on that same cost advantage.”
“From 2020 to 2024, COVID, remote workers, and a wave of relocations turned migration into a flood. Texas added residents faster than any other state.”
“From 2024 to 2026, finance, AI, infrastructure, semiconductors, manufacturing, and logistics arrived on top of that migration at a scale the cost argument alone would have never attracted. Texas isn’t competing on cost anymore. It’s competing on scale, on the ecosystem that scale builds around itself.”
“Tesla announced Gigafactory Texas in 2020 with more than one billion of expected investment, moved its headquarters to Austin in 2021, and had about $2.7 billion in Travis County by 2022.”
“Then Musk’s other company did something bigger. SpaceX went public in June 26 at $135 a share, raising about $75 billion, the largest IPO in history.” Actually, $86 billion. “And Musk crossed a trillion dollars in net worth within minutes of the open. More than 4,400 current and former SpaceX employees became millionaires the same day the company listed and roughly 400 of them cleared 100 million or more.”
“Dallas has the labor pool, the exchanges, and nearly half of the headquarters that moved here. Sherman and Taylor have the fabs. Laredo has the border. The Permian still pumps more oil than any other basin in the country. Every new campus, every new fab, every new resident adds another user to the infrastructure underneath it.”
“That’s what Goldman is buying here. A seat in the place where American capital is choosing to live for the next 20 years.”
Somehow he failed to mention that Republicans have held every statewide office in Texas for closing in on 30 years…
Enough links have filtered into the semiconductor bucket to be worth doing a roundup. This one touches on China and the corruption of our political elites.
The congressional Democrats’ attempt to throw money at the problem is going nowhere fast.
The Biden administration is laser-focused on sending Ukraine billions of dollars in weapons, including the latest round of anti-ship systems, artillery rockets, and rounds of 105 mm ammo for howitzer cannons that it has entirely lost focus on reshoring efforts to boost semiconductor production Stateside.
Multiple manufacturers of semiconductor wafers have announced plans for new multi-billion dollar factories across the U.S. but are contingent on Congress allocating funds to aid in building facilities under the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act.
Congress passed the CHIPS Act in January 2021 as part of last year’s National Defense Authorization Act, which proposed $52 billion in funding for increasing the domestic capacity of chip production, though the House and Senate have come to a standstill over disagreements on certain parts of the bill that have sparked so much uncertainty among companies set to build new factories.
In a letter on June 15, dozens of technology executives from IBM, Intel, Microsoft, Analog Devices, Micron, Amazon, and Alphabet called on Congress to move quickly on the CHIPS Act. They wrote, “the rest of the world is not waiting for the U.S. to act,” and funding for new chip factories must be achieved immediately.
Taiwan’s GlobalWafers announced a new $5 billion factory in the U.S. on Monday, but contingent on subsidies from the federal government.
“This investment that they’re making is contingent upon Congress passing the CHIPS Act. The [GlobalWafers] CEO told me that herself, and they reiterated that today,” U.S. Commerce Secretary Gina Raimondo told CNBC, the same day GlobalWafers announced its development plan.
Notes:
IBM doesn’t own any fabs any more, having sold them all to GlobalFoundries.
Intel runs a huge number of very profitable fabs (troubles with their sub-10nm process yields notwithstanding) and doesn’t need federal subsidies.
Microsoft doesn’t own any fabs and is deeply unlikely to build any; their flagship Xbox Series X uses a custom AMD Zen 2 fabbed by TSMC as its CPU.
Analog Devices is an Integrated Device Manufacturer that owns several fabs with pretty old technology; they don’t have any 300mm fabs. They closed a small fab in Milpitas they got from their acquisition of Linear Technology last year. Designing analog chips is its own black art, and not everything that applies to shrinking digital circuits applies to the analog realm.
Amazon has no fabs and probably won’t be building any, but they do have a chip design division to support Amazon Web Services, and recently designed a cloud computing chip. They work closely with AMD (fabbed at TSMC), Intel (own their own fabs) and Nvidia (another fabless design house that also gets their chips fabbed at TSMC).
Alphabet AKA Google has no fabs and probably won’t be building any, though they do have a lot of AI chip design work going on.
GlobalWafers isn’t a semiconductor manufacturer, it’s a silicon wafer manufacturer. Making such wafers (the substrates upon which semiconductor fabrication depends) has its own challenges, but they are several orders less difficult than cutting edge chip fabrication. Maybe I’m quite far out of the loop, but I’m deeply suspicious that GlobalWafers planned wafer plant in Sherman, Texas will cost $5 billion. That’s a relatively piddling sum for a new semiconductor fab, but extremely expensive for a wafer factory. This makes me suspect a subsidy grab is afoot.
So of the companies mentioned, Intel could suck up government funding to build a fab they were going to build anyway, I’m sure Analog Devices would build a fab with government money, but chances of them running an under 10nm process in said theoretical fab is extremely slim, none of the other mentioned copies are going to build a fab, and none of that government money is going to alleviate the main problem that the overwhelming majority of cutting edge chip designs have to flow through TSMC fabs in Taiwan. What will solve that problem is TSMC opening a state-of-the art fab in Arizona in 2024. No amount of U.S. taxpayer money will make that already-under-construction fab start producing chips any quicker.
$250 billion in taxpayer subsidies wouldn’t get you a single additional wafer start this year, and probably would accomplish little more than channeling money to politically connected firms and sticky pockets in a state (New York) that no one wants to build fabs in any more because of high costs, high taxes and union rule requirements.
So who expects to earn immediate gains from the taxpayers subsidizing semiconductors? Would you believe Nancy Pelosi?
I bet you would.
This past week it hit the terminal that House Speaker Pelosi was doing a little portfolio re-jiggering, including exercising $8 million of call options in Nvidia and selling Apple and Visa calls. The data was per CongressTrading.com and was reported on by Bloomberg.
The Nvidia LEAPS were bought June 3, 2021 with $100 strikes, set to expire June 17, 2022 and the position appeared to be disclosed on Thursday morning for the first time. $8 million trades seem a little odd for members of Congress to begin with, but who are we to judge?
But then, what did Speaker Pelosi do just hours after disclosing the trade, on Friday?
She threw her weight behind a stalled $50 billion CHIPS PLUS bill that “would provide $52 billion in funding for semiconductor manufacturing grants and investment tax credits for the chip industry.”
We tend to discuss leading-edge nodes and the most advanced chips made using them, but there are thousands of chip designs developed years ago that are made using what are now mature process technologies that are still widely employed by the industry. On the execution side of matters, those chips still do their jobs as perfectly as the day the first chip was fabbed which is why product manufacturers keep building more and more using them. But on the manufacturing side of matters there’s a hard bottleneck to further growth: all of the capacity for old nodes that will ever be built has been built – and they won’t be building any more.
Not strictly true. Remember, Bosch just finished building a 65nm fab.
As a result, TSMC has recently begun strongly encouraging its customers on its oldest (and least dense) nodes to migrate some of their mature designs to its 28 nm-class process technologies.
Nowadays TSMC earns around 25% of its revenue by making hundreds of millions of chips using 40 nm and larger nodes. For other foundries, the share of revenue earned on mature process technologies is higher: UMC gets 80% of its revenue on 40 nm higher nodes, whereas 81.4% of SMIC’s revenue come from outdated processes.
That’s because UMC has fallen woefully far behind TSMC, and no one trusts them because they let Chinese spies walk out the door with other company’s IP. SMIC is on Mainland China, sucks even more, and is trusted even less.
Mature nodes are cheap, have high yields, and offer sufficient performance for simplistic devices like power management ICs (PMICs). But the cheap wafer prices for these nodes comes from the fact that they were once, long ago, leading-edge nodes themselves, and that their construction costs were paid off by the high prices that a cutting-edge process can fetch. Which is to say that there isn’t the profitability (or even the equipment) to build new capacity for such old nodes.
This is why TSMC’s plan to expand production capacity for mature and specialized nodes by 50% is focused on 28nm-capable fabs. As the final (viable) generation of TSMC’s classic, pre-FinFET manufacturing processes, 28nm is being positioned as the new sweet spot for producing simple, low-cost chips. And, in an effort to consolidate production of these chips around fewer and more widely available/expandable production lines, TSMC would like to get customers using old nodes on to the 28nm generation.
“We are not currently [expanding capacity for] the 40 nm node” said Kevin Zhang, senior vice president of business development at TSMC. “You build a fab, fab will not come online [until] two year or three years from now. So, you really need to think about where the future product is going, not where the product is today.”
This video asks whether China can produce their own chips:
Obviously, they already produce some of their own chips, but the video covers most of the issues China has with fabbing more complex chips that I’ve already discussed here and here. They’re still dependent on the same three leading fab companies (TSMC, Intel and Samsung) everyone else is for sub 10nm feature chips, and are overwhelmingly dependent on both foreign talent and foreign semiconductor equipment manufacturers like ASML and Applied Materials.
Speaking of TSMC and Intel, India would really like them to build fabs there. The problem is, despite a whole lot of technical talent there, it doesn’t have a terribly large domestic electronics manufacturing base.