So i think this may be a mistake in the very long run - the profits are denied to the western chip makers, and such profits are necessary for continued investment and innovation; and secondarily, sanctions like this will give a massive incentive for indigenous industry development. If successful, their competitiveness is going to be higher than that of the US & west's.
Sure some countries could leverage the recent flushout of corruption and hundreds of thousands of employees of the microchip industry looking for work. But I doubt China will be able to.
Not really, it's expected quirks of ambitious PRC industrial policy which have historically been successful. Spam it until you make it. Inefficient on paper, but ultimately extremely efficient because the alternative is to have no indigenous options. Losing few billions out of ~100B worth of big funds over ~10 years is just cost of business (fast, cheap, good etc). It's about as inefficient as Intel insisting on divident payments + layoffs even with CHIPs. But in PRC, folks actually get punished / incentives aligned via anti-corruption / CCDI. Meanwhile, actual PRC semi capacity has increased dramatically in last few years, after leadership decided to stop halfassing post Huawei sanctions.
> some countries
Thousands semi shops closed down because that's what it takes to speedrun the ENTIRE semi supply chain, an effort no other country can even attempt.
> looking for work
US export controls just destroyed 1/3 of western semi revenues, there will likely be mass layoffs in west coming. Meanwhile PRC domestic semi industry just became a gold rush for non-American companies / talent and the incentive to de-Americanize US origin tech to create parallel semi supply chain to service PRC's 400B semi industry. There's a reason US Gov had to unilaterally announce these new measures on the steps of CHIP4 when other countries said they're not interested in proposed level export controls.
I've read about this, and chip manufacturing is not like other manufacturing. It's like when other places try to duplicate Silicon Valley, or Hollywood. I've read about this for 40 years, yet no one has made any significant inroads.
Why? The infrastructure. In Hollywood, for example, it isn't just about the physical act of making the movie - get a camera, some lights, bank you are done. There's a whole infrastructure - accountants that only work in the film industry, caterers that specialize in it, mobile dressing room companies, prop companies, movie animal companies, lawyers specializing only in movies. Advertisors, product placement specialists, casting companies, photographers for headshots, agents - the list is truly endless but it all works together in a symphony because everyone knows everyone and how the machine works.
I've lived in Silicon Valley for a long time, and it is out of the world how the entire SF Bay area - and especially San Jose to Palo Alto is geared to tech. Two world-class universities - Stanford and UC Berkeley, and other schools - San Jose State, SF State, East Bay, University of Santa Clara, University of San Francisco - and more - all contribute talent to Silicon Valley. It's literally everywhere, it is almost inescapable.
Hollywood's been there for more than 100 years, Silicon Valley for a long time.
Or like Delaware and corporations - I've read in depth about them and it's the same - their infrastructure and ecosystem is the geared towards corporations. Too long to go into. .
The same is true for Taiwan's chip industry. It is impossible to duplicate, even in the USA. They have the same infrastructure that I've read about. Anyone can go down to xyz nanometers, but go farther than that, and no.
For example, the Dutch company ASML, a $350 billion 37-year-old company with 31,000 highly specialized staff, is the ONLY firm in the world that can make the most advanced chips and Taiwan semiconductor companies buy their machinery to make chips. USA could put incredible pressure on that company not to sell to China, and that would be yet another completely different technology that China would have to develop, but by then, if they could even do that, technology would have improved and China would always be behind the curve. Here's the thing - they make $350 billion by selling to VERY fewe clients - TSMC, Samsung, Intel. Each machine has over 100,000 specialized components. It takes 40 fright containers or four jumbo jets to ship one. In 2020, it sold 31 of them. Trump did stop sales of them to China, and Biden is continuing this policy. ASML has 4,000 suppliers, and those suppliers have suppliers.
Their mirrors, for example, are made by German firm Zeiss in partnership with ASML and they’re the flattest structures humans have ever made.
In the 1960s and 1970s, they used a regular lightbulb to create wafers. Now they have carbon dioxide lasaers that is 400,000 degrees F in temperature. The process to make it took 30 years.
It’s an insane process to ship them and there’s a big learning process to get them up and running because the machines are so complicated. They’re not like an off the shelf, plug it in, turn it on and go. You need to be able to train the staff that are operating them. ASML staff is at every site that there is a machine. ASML is planning to release a next generation machine called High-NA, which stands for high numerical aperture, around 2025.
ASML’s headquarters is in Veldhoven, Netherlands - home to around 45,000 people and thousands of ASML employees, for full assembly. And all those people there and in the surrounding area, who don't work directly at ASML, work for companies that work for ASML, and all part of the ecosystem that supports ASML.
And PRC is not like any other country.
At the end of the day semi is just a niche industry iterated by combined talent from US/TW/SKR/JP/NE (maybe DE). PRC now produce more STEM talent than all these countries combined. I think too many people drink the semi conductor is thinking sand indistinguishable from magic juice. Same was said about aerospace and other precision manufacturing sectors that many predicted PRC wouldn't surmount but now have indigenous solutions and rapidly closing high-end/value gap on. Yes, semi has very high walls / barriers, but PRC's advantage is being able pile enough bodies against a high wall until they climb over, freqently quicker than anticipated.
What group of countries need to collaborate on, PRC has talent and resources to do indigenously. After elevating semi to first-level dicipline in 2018, PRC is spitting out 30k IC graduates per year. They're still about 200k short, ~520k/720k out of what IC talent white paper estimates PRC needed for competitive semi industry. I wadger that's comparable to total _direct_ semi industry talent globally. Consider PRC is graduating 11m STEM talent a year, and the amount of resources they can spam into strategic industries is enormous. The reality is, PRC can duplicate what others do, and do so at larger scale. Or that industrially, PRC is TW on steroids, nearly every sector TW has outsource onto mainland, PRC has been able to replicate, scale and then inject extra does of performance, unlike TW semi expansion in west running into culture (read: work ethic) issues.
Ultimately it's about talent and time and these bans are about denying talent and buying (US) time. Consider ASML CEO last year thought PRC was 15 years from tech soverignty. IMO PRC could likely do it sooner, otherwise US would not have unilaterally place these export restrictions when last year US strategist thought it was merely enough for US to "sprint" and stay a few generations ahead. Now it's as big of a lead as possible, which either insinuates greater lead than before or more likely, the race is closer than we thought.
China's morals hasn't changed since the west outsourced it's production to it.
What has changed is that China has gone from being a contractor to a competitor.
The Biden administration has simply acted on the reality that the PRC to all extent and purpose is an enemy of the USA as it strive to undermine our political system and influence around the world, and is preparing for more aggressive action to support that agenda.
Clear as day, expect more action on that front.
It is too early to tell how it will play out.
Here is another perspective:
https://asiatimes.com/2022/10/china-chip-ban-a-us-exercise-i...
China chip ban a US exercise in extreme self-harm
CapEx and R&D implode in hard-pressed Western semicon industry while China pours massive funds into chip independence
Also note that Asia Times is out of Hong Kong and we know that press there has to tow the CCP party line or face ramifications if they don't.
Also it is not correct that the value the Chinese semiconductor industry has been "reduced to zero overnight". If anything, judging by the stock market price of the China's largest contract fab SMIC relative to TSMC, the Chinese have been hurt less.
All this does is push Russia and China into each others arms – not a strategy designed to maintain a globally dominant position.
