US-China semiconductor battle: Second and third order consequences

[kiwigraeme]

As a neutral observer who's neither American nor Chinese, I must say some Westerner's view on China is hilarious to watch. The sentiment that China has to steal all their innovation may have had some merit few decades ago. It is simply not true anymore. For starters, did you know China leads the world in cutting-edge scientific research?

Reference:
https://www.theguardian.com/world/2022/aug/11/china-overtakes-the-us-in-scientific-research-output

Thanks, I have no skin in the game except Chinese human rights violations , and building roads into remote areas to plunder throughout the world . I accept all major nations have done this and do industrial espionage .

My point ( no pun intended ) about ballpoint pens ( it was the point - high precion ball bearings were imported from Switzerland )
Is that applying stolen knowledge is still hard .
I've seen the belittling of
Made in Japan post war
Made in Taiwan
Made in Hong Kong
Made in China
Vietnam - whereever
( TBF this countries started with low grade stuff )

Your point is why The USA wants to slow down China - they know lots of new tech is coming from China - Solar panels etc

As I stated Foreign policy is economiv domination .
Yet its not a zero sum game - every country needs to export - even when they are not the most efficient ( the models support this )
Plus there is a reason mega corps are international and have invested in infrastructure in their big markets see ( Japanese car manufacturers for example ) .
New Chinese companies will need employees in Europe , USA etc

See my comments about IQ - I backpacked for 10 years plus - watched middleclass tourists underestimating locals heaps of time . Seen their paternalistic racism ( saying how spiritual they are are , and they need to protect them from pranksters like me ) - I enjoyed meeting everyone rich , poor , able bodied , not so able . - made no diff to me when I worked in Corp to speak with cleaner or CEO in the coffee area.

 

[dalpilot]

There's nothing vague about the US government's goals - its just far too little, far too late. China has stolen every piece of intellectual technology that the moronic Wall Street tycoons handed them (because DC rewarded them for offshoring American jobs). Somehow these greedy fools created a mutual delusion that America would switch to a purely financial and "information" economy and everyone else would do the dirty work. Not sure how they overlooked the fact that phone lines and the Internet work the same everywhere and lax environmental laws are a huge economic advantage. Now their trying to stop China from stealing the very last high-tech sector that the US has a corner on, which is high-end chip fabrication. The shift can certainly be slowed down, perhaps for many years, but if we don't start seeing OTHER types of manufacturing jobs being protected as well the effort will ultimately fail. You can't pick and choose with protectionism - even China tarriffs the hell out of practically everything except food and oil they desperately need.

Respectfully disagree. The bigger entity (that most people have never heard of) is convincing ASML (a Dutch Company) and the manufacturer of ALL the latest node technologies equipment (which I believe applies to all chips at 14nm and below (and may extend to 28 nm and below)). Without this chip manufacturing equipment, China's Semi-Conductor Manufacturer's (like SMIC) will have to to work to TRY and build (from scratch) advanced EUV equipment FROM SCRATCH. Russia is finally feeling the effects of losing access to Western Semis as they have run out of chips for precision guided munitions. They have LOTS of dumb artillery, missiles, and bombs (although the Russian Air Force has been mostly invisible in the Ukraine war.

 

[dalpilot]

The other thing to recognize about China is their military and commercial aircraft manufacturing capability is dependent on licensed Russian designs (military) and completely Western Commercial fleet is ALL Airbus or Boeing. They recently introduced the CS-900 which is a copied 737 design that was the state of the art in the 1960s. Also, no countries (outside of Russia) have the capability to manufacture modern jet engine turbofans - all commercial Aircraft in the world fly with engines from one of three companies - Rolls-Royce (British), General Electric (US) and/or Pratt-Whitney. Countries like Turkey are "Attempting" to have self sufficiency in weapons and their "Fighter Aircraft" (think F-16) is delayed until 2030 because they are having problems with developing the jet engine on their own.

 

[wiyosaya]

What did Barry do except slap the hands of some hackers? Give credit where it's due, President Trump started the trade/tech/economic war. Too bad he wasn't elected in 2000, China would have been delayed entry into WTO. Clinton/Bush/Obama all stunk on ice when it came to China!

Placing economic "sanctions" on any other nation that then end up being paid out-of-pocket by US citizens does nothing to deter the sanctioned nation, and only hurt US citizens without offering any real solutions. This is the result of the Tariff/trade/tech/economic war from the previous administration.

I know. I bought some transistors from Digi-Key during that period when the "tariffs" were in place and with some of the transistors I bought, came a charge - TO ME - that was labeled as import tariffs.

IMO, the current administration's policies toward China make more sense because, at the least, the current administration is attempting to bring semiconductor manufacturing back to the US. This might result in the US gaining back high-paying technical jobs rather than service sector jobs at McDonalds, Burger King, Amazon, or Walmart. As the article more or less points out, other manufacturing will also have to be brought back to the US, too. What good are chips without the boards that use them? If this plays out and companies like Apple actually decide that they want to be a part of a prosperous America, it will be far better, IMO, than making US citizens pay more for the products they want by applying inane tariffs on those same products.

 

[Walid1]

@kiwigraeme

Do you know why it was important to build a ballpoint for China?
Most people don't know, but with an internationally intertwined supply chain, not a single country in the world is able to build a complete pen from natural resources to the finished product.
China was just missing that ballpoint to claim the repatriation of the whole supply chain.
A feat accomplished by only one country so far.

 

[kiwigraeme]

@kiwigraeme

Do you know why it was important to build a ballpoint for China?
Most people don't know, but with an internationally intertwined supply chain, not a single country in the world is able to build a complete pen from natural resources to the finished product.
China was just missing that ballpoint to claim the repatriation of the whole supply chain.
A feat accomplished by only one country so far.

I only found out about it a month or 2 ago - I was well surprised .
This type of tech favours countries small high tech countries like Switzerland , Sweden - even my country has a few cutting edge techs ( NZ ) . See Netherlands with extreme UV lithography.

I found out due to russia/ukraine - it's not just chips , ball bearings , tyres - you would think tyres would be pretty straightforward .
As Kiwis we are dependant on imports massively - but we can power and feed ourselves .

Still most western countries should be able to do 30 year old tech .
High precision lathes , laser cutters , 3D metal printers etc - wonder how much pressure USA puts on say Germany , Switzerland for those kind of machines .

We saw it with Covid - preferential access to new drugs , vacines .

In my travels through Africa 25-30 years ago - with their poor infrastructure - someone needed a solution for farmers to cheaply get to and from the market - given broken roads, mud etc - they had to go through the tax of truck drivers and extortion points - I think the tech is all here now to make a solar power lightweight all terrain cart

 

[Walid1]

What westerners are losing perspective on: They think they 're the only one who can invent. They also think all inventions are from a stroke of genius.

So, if Chinese start creating stuff, it must be stolen.

We are about to wake up to some harsh reality, 30% of patents of ASML have Chinese names on them.

China produces 10 times more STEMs than the US...You debate quality...Just think who was able to build a space station lately, go to the far side of the moon and land a rover at first attempt on mars...Who is the on the bleeding edge of 5G...Yeah, you get the picture.

Patents are nothing but a description of an invention, Building the invention is a totally different matter. Give the patents to Zimbabwe or Sri-Lanka and see if the can build a space station and go to Mars at the speed the Chinese did.

To use the patent you need other information and know how. That's what the Chinese have. They did a worldwide assessment of math skills worldwide.
Ranking was as follows (if I remember correctly):

1-China Shanghai
2-Hong Kong
3-Taipei (in Taiwan)

The first 3 spots are Chinese. Yes, Taiwan is part of China and Hong kong too...Whether we like it or not. The US, Australia, EU all recognize that officially, they're just stirring up trouble to try to destabilize China, a foolish endeavour if you ask me.

with a gap of 5.7 million STEMs a year, it's not difficult to see where the innovation will be coming from.

 

[BadThad]

Today, most of that work is done by Taiwanese companies' factories in China. Can Nvidia ship those chips to China? Technically, we think the answer is yes, but it is easy to see how this process can get easily derailed.

If it's a US company, they must comply with the CFR . The US has extremely complicated export rules and such a transaction is reportable. If anyone wants to get a taste for how all this works, you can google ECCN as a staring place.

 

[Gastec]

The US only ever looks 5 years into the future. The Chinese are looking 100 years into the future. That is why all the worlds top universities are awash with Chinese students.
The future does not look good for the US, now the petro-dollar is waning. Best get used to your new masters....

You can become distracted if you spend too much time looking into that future-predicting crystal ball and miss the army of orcs gathering at your gates.

 

[Knot Schure]

As a neutral observer who's neither American nor Chinese, I must say some Westerner's view on China is hilarious to watch. The sentiment that China has to steal all their innovation may have had some merit few decades ago. It is simply not true anymore. For starters, did you know China leads the world in cutting-edge scientific research?

Reference:
https://www.theguardian.com/world/2022/aug/11/china-overtakes-the-us-in-scientific-research-output

I call BS.

20+ years of doing business in China, and they would steal an odd sock if they can.

Try living there for a while.

 

[yannus]

Very good article.

I don't think US/Western technological superiority will last very long. East Asians have a significantly higher IQ than Westerners, and there are far more of them. They graduate far more technical degrees. Our universities are awash with Asian students.

Lots of 'US technology' is actually Asian. Did TSMC steal tech from the US? Or did they develop it themselves. I would bet that China has access to most of the tech at TSMC. It should be noted that Intel's tech is primarily Israeli. And note that both AMD and Nvidia's ceos are Asian.

As the situation develops, Russia will be a huge beneficiary. China will be happy to trade their tech for Russian oil/gas/fertilizer/food. Russia is no techno slouch either.

In the long run this is all for the better good. Trump very wisely tried to bring US industry back to the US. We need to make these things at home rather than buy them from foreigners.

Asians aren't more clever, they just work as slaves and produce a lot. And as they're slave, they don't threaten the government so they are allowed to prosper as a country but not individuals. In western countries, governments are promoting laziness, blocking individuals who seek progress and sabotaging their economy.