That was already China's stated goal in their "Made in China 2025" initiative.
> The initiative encourages production of high value products and services, like aerospace and semiconductors, to help achieve independence from foreign suppliers.[1]
That'll probably happen in the long term. In the short term, China might answer by completely banning US companies from the Chinese market.
I don't see anything to win here. Probably every large company, including those from the US, have some kind of production facilities, storage or supplies in China. China applying similar restrictions would probably be a worse hit for the US than the current situation is for China.
I doubt the Chinese will take any rash, knee-jerk reaction here. They are very predictable and will stick to what is in their best interest. Since there is no democratic government either, these decisions are not at risk of changing - unless XiJinping loses a coop, which at this point is an impossibility.
I think the die has been cast. A lot of people in fact most americans I would argue not only would be ok with that but want that. Theres two options here. China flourishes and the world is in different start, or it doesn't and the worlds fine. But the current relationship is wholly untenable
That was always the outcome. It's the road China has been traveling down intentionally. Before the ability to use it against China runs out, the US is using it while they have it to use. China does it everywhere they compete out of a sense of hyper nationalism, necessity to become a superpower and independence (the ability to pursue its national objectives without concerns for sanctions or outside opinion). Russia would love to have the competence to do the same thing (so far all Russia has managed, mostly, is de-dollarization; China can't de-dollarize at this stage due to its exports and tight link with the global economy). China has known for two decades or more what they had to do. Mostly the only difference will be China will pull forward their plans, if and where they can.
They always planned to build up their own semiconductor industry and become heavily independent of foreign semiconductors.
They always planned to build up their own software industry and become heavily independent of foreign software.
They always planned to build up their own jet industry and become heavily independent of Boeing and Airbus.
They always planned to build up their military tech and become heavily independent of Russia.
I think the more you must guard your words, the things you say, watch how you act, and the more you grow up with this as a child?
The more restrictive your thoughts may be as an adult. The less 'free wheeling', and therefore, more locked into tight, controlled paths.
Further to that, even if the above is not significantly true, there is still the entire "does the work I want to do, the research, threaten PRC dogma in any way?"
And worse...
"Will the work I do, threaten PRC dogma in the future."
On top of all of that, a reduction of international collaboration with others in the field, and so on.
Of course, I could be entirely wrong. But I do think that "restrictive environment" leads to "less creative output", at least in visible output.
You act as if the US doesn't do this. But it has the highest incarceration rates in the world, often for petty crimes like smoking weed. And it also puts prisoners to work.
China made a big mistake in being too reliant on TSMC, etc. or maybe it did not have the capacity to go after too many targets. Or maybe it simply did not think it could be a problem.
They are quick to learn and adapt, though, not least when the Chinese state throws its whole weight behind something, so I'm thinking that after this initial shock, in a few years the result will be a decline of the relative importance of the Taiwanese semi industry because mainland China will have its own, with all the potential strategic consequences that this might mean.
I don't think it's a mistake. It's more that they don't have a choice. There are very few (maybe even only one?) foundries in the world with advanced processes. Building a foundry is not trivial. For how long has Intel stuck with 14nm now? The Dutch ASML lithography machine is one of the most advanced machines in the world, and it's pretty much the only one of its kind. China has been investing heavily in domestic foundries for years now, but it takes time.
I think it's just greed and poor risk management. Up until recently, china couldn't even manufacture ball point pens (which I think only 2 companies in the world produced). There's no money to be made at the bottom of the inverted tech pyramid. They rather put their energy in buying ball point pens and using those pens to write stuff that will in the short term make them more money on to of a foundation of sand. Similarly all of the investment from giants like Alibaba etc went into developing e-commerce on top of a tech foundation of sand
This is reason US needs to ensure that a US company can make the latest and greatest technology. You never know what geopolitical issue might cut your supply off.
Look up Fujian Jinhua plant 2018. Truth is US has been sanctioning and using CFIUS to undermine Chinese IC for a while now. Many blocked acquisitions under Obama. Relationship was just less acrimonious and less public. I suspect even Nvidia's ARM ambitions is part of plan to undermine Chinese IC efforts. Like how William Barr floated idea to get CISCO to buy controlling share in SE or Nokia to rival Huawei 5G.
That said, TSMC is too successful for it's own good. Once their Arizona plant opens on US tax dime, Taiwan will loose security guarantor. I suspect they'll delay for as long as they can. SMIC is basically sufficient to make IC for Chinese military use in any case. The main, and huge problem, is being commercially competitive.
Interesting theory re Arizona meaning Taiwan loses its advantage. Although no one can ascribe too much (or really any) foresight to the current US admin, I have to imagine there's a domino theory w.r.t. to Taiwan and the SCS region. Ceding China's control (military, economic, or otherwise) of Taiwan would panic every other independent nation in the region into striking a good deal with China to hopefully maintain their autonomy.
Ugh. The West has had the tail wagging the dog for so long. Arrogant transnational corporations and the rich think they can control China like everything else. It's the same arrogance on display with coronavirus: they play by very different rules and don't care who you are.
When you have a billion people + unlimited funds + some industrial espionage I am sure china will get their chip manufacturing industry built up quickly.
For very technical things, having the information is not the same as having the ability to manufacture. Some industries don't lend themselves to catching up rapidly, you have to go through all the mistakes yourself. I think semiconductors is one of those industries.
An example (unrelated to semiconductors) is China's failure to manufacture a decent jet engine even though they've been trying for 30 years. It turns out that the metallurgy required for a jet engine is more complicated than what is needed for household appliances. They aren't even dealing with incomplete stolen information, they have a license from Russia and the full technical information and still can't do it (although Russia isn't sharing their most modern designs, but China still struggles to make an engine with 1980's tech).
The West has been unwilling to use its economic levers to preserve competition and a healthy market. China has no problem using state control and doesn't care much for fair competition either. The West isn't doomed but we're not in a very defensible position either.
I think the more worrying thing is what happens to the West if, when it has built it's own fab capacity (which is much easier said than done, but China will throw enormous resource at it because it has to), China decides to destabilise Taiwan's semiconductor industry.
Western nations would be smart to try and decentralise some of that production capacity (also easier said than done) before that could come to be, but does anyone think the Western nations current or foreseeable leadership really have the strategic foresight to do so?
> Western nations would be smart to try and decentralise some of that production capacity (also easier said than done) before that could come to be, but does anyone think the Western nations current or foreseeable leadership really have the strategic foresight to do so?
Yes, that's what I meant by 'strategic consequences', including in case of a cross-straight conflict.
At the moment it is in everyone's interest that Taiwan's foundries stay up and running. But in the future, in case of a hypothetical conflict it might even be in the mainland's interest to bomb them and create havoc for Western companies.
I don't have enough knowledge of chip's logistics so my less informed 2 cents would be, thinking from a business perspective, if eventual dominance of chip supply-chain was in cards, Chinese businesses would have had done it regardless of ban existed or not.
So, this ban gives Taiwan and US businesses some breathing space to keep that lead. How its leveraged, is upto the governments and business's .
Huawei will replace Kirin with other chips manufactured in TSMC fabs (MediaTek for example). Huawei is forbidden using their own chip designs if there is come US based IP components, not from buying TSMC manufactured chips.
The chinese govt is indeed throwing their weight behind developing a local semiconductor industry capable of rivaling TSMC. They are making heavy investment in SMIC for example.
However, at the same time, unfortunately the Chinese government doesn't play fair, and they are ramping up state sponsored industry espionage and hacking of American and Taiwanese semi-conductor firms to speed up the process.
This best describes China's perspective towards "technology acquisition"
“They want technology by hook or by crook. They want it now. The spy game has always been a gentleman’s game, but China has taken the gloves off,” said John Bennett, the special agent in charge of the FBI’s San Francisco office, which battles economic spies targeting Silicon Valley. “They don’t care if they get caught or if people go to jail. As long as it justifies their ends, they are not going to stop.”
+1 to this, China has never made anything real themselves. It is all stolen property from countries who actually play fair.
Until the general U.S population realizes that china's end goal is to eat them alive and unanimously supports putting china in its place, nothing will change and by then I fear it will be to late.
Kirin's probably source something from U.S. designs right? Hence it's production run must end. I am guessing this means Huawei needs to switch to a design that is wholly originating from China (with possible input from Japan and Korea) but right now they are not up to the level of the Kirins.
This may really just mean Xiaomi or Oppo gains an advantage over Huawei and takes the top crown.
Huawei can still buy SoC with US technology in it if it's designed and manufactured by others.
US restrictions are all about Huawei’s ability to use U.S. technology and software to design and manufacture semiconductors abroad. BIS made targeted rule "to impose a new control over certain foreign-produced items, when there is knowledge that such items are destined to a designated entity on the Entity List."
> (i) Items, such as semiconductor designs, when produced by Huawei and its affiliates on the Entity List (e.g., HiSilicon), that are the direct product of certain U.S. Commerce Control List (CCL) software and technology; and
> (ii) Items, such as chipsets, when produced from the design specifications of Huawei or an affiliate on the Entity List (e.g., HiSilicon), that are the direct product of certain CCL semiconductor manufacturing equipment located outside the United States. Such foreign-produced items will only require a license when there is knowledge that they are destined for reexport, export from abroad, or transfer (in-country) to Huawei or any of its affiliates on the Entity List.
>Huawei can still buy SoC with US technology in it if it's designed and manufactured by others.
I don't get it, if the U.S. wants to cripple Huawei why would they let you buy SoC that way? The whole point I thought was that any company dealing with Huawei that used some material proportion of U.S. originated technology to deliver goods to Huawei had to stop. Which means in order for Huawei to build chips it needs a supply chain that is almost completely independent of the U.S.
The closets analogy I can think of is like building nuclear submarines. They are notoriously hard because its not possible to globalize the supply chain, everything in its design must be sourced within the country thus requires a specialized supply chain.
When rereading the article with this in mind, Yu only announced the end of "Kirin high end chips", not of the complete Kirin line. So I assume those are still alive?
Readit News
> The initiative encourages production of high value products and services, like aerospace and semiconductors, to help achieve independence from foreign suppliers.[1]
[1] https://en.wikipedia.org/wiki/Made_in_China_2025
I don't see anything to win here. Probably every large company, including those from the US, have some kind of production facilities, storage or supplies in China. China applying similar restrictions would probably be a worse hit for the US than the current situation is for China.
They always planned to build up their own semiconductor industry and become heavily independent of foreign semiconductors.
They always planned to build up their own software industry and become heavily independent of foreign software.
They always planned to build up their own jet industry and become heavily independent of Boeing and Airbus.
They always planned to build up their military tech and become heavily independent of Russia.
Insert any given prominent technology here.
The more restrictive your thoughts may be as an adult. The less 'free wheeling', and therefore, more locked into tight, controlled paths.
Further to that, even if the above is not significantly true, there is still the entire "does the work I want to do, the research, threaten PRC dogma in any way?"
And worse...
"Will the work I do, threaten PRC dogma in the future."
On top of all of that, a reduction of international collaboration with others in the field, and so on.
Of course, I could be entirely wrong. But I do think that "restrictive environment" leads to "less creative output", at least in visible output.
From a competitive landscape, yes it sucks. But Huawei / China needs to be punished for its blatant IP theft, I think this is a great place to start.
China is despicable but I think that the moral ground of the US regarding this kind of issue is quite shaky.
There's also Apple doing high performance ARM, but only for their own stuff.
They are quick to learn and adapt, though, not least when the Chinese state throws its whole weight behind something, so I'm thinking that after this initial shock, in a few years the result will be a decline of the relative importance of the Taiwanese semi industry because mainland China will have its own, with all the potential strategic consequences that this might mean.
That said, TSMC is too successful for it's own good. Once their Arizona plant opens on US tax dime, Taiwan will loose security guarantor. I suspect they'll delay for as long as they can. SMIC is basically sufficient to make IC for Chinese military use in any case. The main, and huge problem, is being commercially competitive.
Ugh. The West has had the tail wagging the dog for so long. Arrogant transnational corporations and the rich think they can control China like everything else. It's the same arrogance on display with coronavirus: they play by very different rules and don't care who you are.
An example (unrelated to semiconductors) is China's failure to manufacture a decent jet engine even though they've been trying for 30 years. It turns out that the metallurgy required for a jet engine is more complicated than what is needed for household appliances. They aren't even dealing with incomplete stolen information, they have a license from Russia and the full technical information and still can't do it (although Russia isn't sharing their most modern designs, but China still struggles to make an engine with 1980's tech).
Western nations would be smart to try and decentralise some of that production capacity (also easier said than done) before that could come to be, but does anyone think the Western nations current or foreseeable leadership really have the strategic foresight to do so?
TSMC actually plans to set up shop in Arizona: https://www.tsmc.com/tsmcdotcom/PRListingNewsArchivesAction....
At the moment it is in everyone's interest that Taiwan's foundries stay up and running. But in the future, in case of a hypothetical conflict it might even be in the mainland's interest to bomb them and create havoc for Western companies.
So, this ban gives Taiwan and US businesses some breathing space to keep that lead. How its leveraged, is upto the governments and business's .
However, at the same time, unfortunately the Chinese government doesn't play fair, and they are ramping up state sponsored industry espionage and hacking of American and Taiwanese semi-conductor firms to speed up the process.
This best describes China's perspective towards "technology acquisition"
“They want technology by hook or by crook. They want it now. The spy game has always been a gentleman’s game, but China has taken the gloves off,” said John Bennett, the special agent in charge of the FBI’s San Francisco office, which battles economic spies targeting Silicon Valley. “They don’t care if they get caught or if people go to jail. As long as it justifies their ends, they are not going to stop.”
See:
https://www.wired.com/story/chinese-hackers-taiwan-semicondu...
https://www.reuters.com/article/us-basf-espionage/basf-worke...
https://www.wsj.com/articles/taiwans-technology-secrets-come...
https://www.theatlantic.com/politics/archive/2019/08/inside-...
https://www.latimes.com/politics/la-na-pol-china-economic-es...
https://www.justice.gov/opa/pr/prc-state-owned-company-taiwa...
Until the general U.S population realizes that china's end goal is to eat them alive and unanimously supports putting china in its place, nothing will change and by then I fear it will be to late.
This may really just mean Xiaomi or Oppo gains an advantage over Huawei and takes the top crown.
US restrictions are all about Huawei’s ability to use U.S. technology and software to design and manufacture semiconductors abroad. BIS made targeted rule "to impose a new control over certain foreign-produced items, when there is knowledge that such items are destined to a designated entity on the Entity List."
> (i) Items, such as semiconductor designs, when produced by Huawei and its affiliates on the Entity List (e.g., HiSilicon), that are the direct product of certain U.S. Commerce Control List (CCL) software and technology; and
> (ii) Items, such as chipsets, when produced from the design specifications of Huawei or an affiliate on the Entity List (e.g., HiSilicon), that are the direct product of certain CCL semiconductor manufacturing equipment located outside the United States. Such foreign-produced items will only require a license when there is knowledge that they are destined for reexport, export from abroad, or transfer (in-country) to Huawei or any of its affiliates on the Entity List.
https://www.commerce.gov/news/press-releases/2020/05/commerc...
I don't get it, if the U.S. wants to cripple Huawei why would they let you buy SoC that way? The whole point I thought was that any company dealing with Huawei that used some material proportion of U.S. originated technology to deliver goods to Huawei had to stop. Which means in order for Huawei to build chips it needs a supply chain that is almost completely independent of the U.S.
The closets analogy I can think of is like building nuclear submarines. They are notoriously hard because its not possible to globalize the supply chain, everything in its design must be sourced within the country thus requires a specialized supply chain.
Also: https://www.theepochtimes.com/chinas-neighbors-in-the-indo-p...
https://www.globaltimes.cn/content/1187993.shtml
Here is the same story from Gizmo China:
https://www.gizmochina.com/2020/08/07/huawei-mate40-last-fla...
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Huawei still needs license from BIS to use Snapdragons but it should be easier to get.