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Near-Collapse of ZTE May Be China’s Sputnik Moment
- jphalimi 8y agoI'm surprised nothing has been said about Huawei's HiSilicon Kirin ARM chips. Their latest mobile chips are definitely on par with the best on the market. Mediatek is also another big player among the chip manufacturer and they make their own-designed chips as well.
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- zeth___ 8y agoIf Chinas leadership was smart they would push for open source commodity ics. Opensource always wins and they could do a run around the US where old technologies like x86 die and all the experience built around then becomes irrelevant.
- JumpCrisscross 8y ago> Opensource always wins Zero evidence of this claim at any level.
- Iolaum 8y agoLinux Kernel vs Windows NT kernel
- yborg 8y agoIn what sense did the Linux kernel "win"? Microsoft continues to make a lot of money from Windows Server. Nobody but Red Hat makes any money off the Linux kernel.
- zeth___ 8y agoThat you mistake a monopoly for a victory and not a market failure says a lot more about your values than about the relative merits of open source vs closed source.
- JumpCrisscross 8y ago> That you mistake a monopoly for a victory and not a market failure says a lot more about your values One, insulting others on this forum isn't productive. Two, our broader discussion is about Chinese technological policy. I doubt anyone in Beijing is concerned about victory by way of market failure.
- cynwoody 8y ago>Nobody but Red Hat makes any money off the Linux kernel. You forgot about Canonical. But the real point is, in the wild, the Linux kernel predominates. Every Android user is a Linux kernel user. Every Chromebook user is a Linux kernel user. Every iOS user is a Unix user. Every Google server is a Linux kernel installation. The fact is, Linux/Unix rules. Except for the corporate desktop, where Windows predominates, at least for most (uninteresting) instances of "corporate".
- liotier 8y ago> Nobody but Red Hat makes any money off the Linux kernel Only if you define making money as directly selling... A big point of free software is that it is the user who makes the money !
- analognoise 8y agoIf it was smart, wouldn't the people who possess the knowledge and talent to turn sand (silicon) into borderline magic (modern nanometer fab) currently be doing that? They aren't. So they are themselves either 'not very smart' or the contributions from 'open sourcing' is not actually very valuable. I think it's the latter.
- maskedSlacker 8y agoValuable for who? Open source (at the margin) is more valuable for everyone--except the inventor, for whom it is not as valuable. So the inventor keeps the design proprietary, and keeps more money for themselves. But, as is often the case, decisions that are optimal at the margin can often lead to suboptimal outcomes in aggregate. I'm not convinced that's the case in IC fabrication, but its not impossible.
- zeth___ 8y agoThey were the first movers so they cornered the market with an inferior product. Now that China has no hope of capturing the market to extract rents the next best alternative is to make extracting rents impossible, destroying the business model of the US companies who rely on said rents. In terms of a trade war this has all the downsides of dumping products on the US firms with none of the downsides to the rest of the economy outside of the very top end of the supply side.
- analognoise 8y ago'Inferior product...rent seekers' - Yeah, that's why the Soviet Union started the silicon revolution, and why the Chinese currently lead the field, right? They open sourced their fabs, and random farmers on collectives would come home (while starving) and make improvements in fab technology by candlelight. If only they had you to guide them, with your advanced knowledge of economics, trade and process technology.
- zeth___ 8y agoEvery communist nation had a much larger high technology sector than similarly developed capitalist nations. Unless you want to talk to me about the fabs in Portugal and Mexico in 1990 when compared to the ones in Bulgaria and the USSR you're making my point for me.
- thisisit 8y agoCurious how will this workout with Xi's unlimited terms presidency?
- ttflee 8y agoThis will not work, unless Xi resigns with his staff, replacing them with actual competent ones. That would be a miracle.
- fspeech 8y agoWhile there couldn't be a better case than ZTE for the Chinese government to muster domestic support for its "Made in China 2025" policy, the Sputnik analogy is actually wrong for China. Sputnik was a national security matter and ZTE is a case about commerce. China can actually supply most what ZTE needs to build functional telecom products (for example when the Obama administration cut off Intel sales to Chinese supercomputer projects, China went ahead and built the world's then fastest supercomputer with domestic chips anyway), it is just that they won't be competitive enough commercially. If both Huawei and ZTE were denied access to US products the pair could probably survive nicely in a closed Chinese market with somewhat inferior but perfectly functional offerings to Chinese telecoms. As it currently stands ZTE can't survive when its competitors don't suffer the same disadvantage. This being a commercial matter means the Chinese effort may very well be commercially wasteful even if their defense ministry might appreciate the enhanced capability. Indeed if they could make commercially competitive products in the area there is no reason why they would not have made them already. The right way to deal with this really is to just treat it as a commercial matter. ZTE would have failed with its resources transferred to a more capable firm. This still could be the effective outcome -- it is hard to imagine how telecoms world around can have confidence in ZTE when the supply could be turned off again over any minor infractions in the next ten years. The fine may be just the price to pay to buy time for a more orderly re-org.
- gkanai 8y ago> Sputnik was a national security matter and ZTE is a case about commerce. China views not having full control of semiconductors and operating systems (desktop and smartphone) as a national security matter.
- SilasX 8y agoAnd not unreasonably, given the possibility of putting backdoors into these.
- bhouston 8y agoIt is possible for China to catch up here relatively fast. I give it 3 years and China will likely be better than Qualcomm although the maybe not Apple.
- ttflee 8y agoThe recent rhetoric of NYTimes around a Trump-administration related issue is always like 'Why A would actually become not-A'. A professor in physics dept. in University of Science and Technology of China at Hefei has complained that he could not find any student able to solve problems in textbooks, e.g. condensed matter physics, for years. Demography together with education reforms favoring liberal arts has destroyed tomorrow's engineers in China. Salary gaps from IT and financial sectors prohibited talents from entering traditional industries. Investment into the new tech surely helps but is not likely to completely overcome existing shortcomings in traditional materials and manufacturing industry in China.
- kerng 8y agoI found this article pretty educating personally. Somehow, I always assumed/believed microchip tech is very advanced in China, but apparently its quite behind. 90% of the chips are imported according to this.
- fulafel 8y ago> In return, the company — once a symbol of China’s progress and engineering know-how — will be allowed to buy the American-made microchips, software and other tools it needs to survive. Aren't most mobile device SoC/ASICs made by non-US companies like TSMC and Samsung?
- adventured 8y agoYour premise is very narrow. Six or seven of the ten largest semiconductor companies are American. The US has a lot of big companies working in or around the semiconductor market. Eg - Texas Instruments, Qualcomm + NXP, Apple, Intel, AMD, Applied Materials, Cisco, Xilinx, Analog Devices, GlobalFoundries, Maxim, Microchip Tech + Microsemi, KLA-Tencor, Lam Research, Marvell, Broadcom, Micron, nVidia, Teradyne, Cypress, On Semi, Praxair, Skyworks, Ambarella, Cirrus Logic, Diodes Inc, Integrated Device Tech, IPG Photonics, Semtech, Qorvo, Cavium, Mellanox (US-Israeli), Inphi, Monolithic Power, Lumentum Now you've even got Microsoft, Google, Facebook, Amazon looking into/working on their own chips.
- xevb3k 8y agoUnless I’m mistaken, your list contains both semiconductor companies with and without fabs. I think for this discussion semiconductor companies with fabrication facilities are more interesting. How much fab is still done in the US?
- dmode 8y agoI believe almost no Fab manufacturing happens in the US anymore. This is why the article seems a little hyperbolic to me. I understand US companies lead in chip design, but if Asian companies are manufacturing the chips, how long will it take to reverse engineer? To add to this, many engineers working for these American Giants are Asians and can be poached back. Look how it little it took for Chinese manufacturers to produce state of the art smartphones that are "almost" Apple level.
- adventured 8y ago
- shasheene 8y agoI think history will suggest that the end of Deng Xiaoping's long-term strategy of "hide our capacities and bide our time" around 2015 was too premature to meet the government of China's long-term goals. The moderate amount of international goodwill that existed seems to have completely evaporated and been replaced with significant amounts of suspicion following the events of the past few years in the region. Because of this, China finds it harder than ever to access US semi-conductor technology through financial means, being blocked from acquiring companies due to national security concerns. Even deals without any immediately obvious problems such as Broadcom/Qualcomm are being blocked. Additionally, the demographics situation is very severe in China, and made worse by the gender-imbalance among young people caused by the One Child Policy. While Chinese government debt and household debt rates are relatively low, company debts are extremely high. Far too high for a nation without a high per-capita GDP. Interestingly enough, the demographic situation in the US is highly favorable compared to all other advanced economies (it also has a debt problem though) The demographic situation dovetails into this interesting op-ed piece [1] about offering more green cards to international students -- it argues that even with the high risks of espionage in certain areas, it's well worthwhile for the long-term US economic competitiveness. I submitted this article to HN a few hours ago, but after 10 upvotes it was flagged -- which is unfortunate, I thought it's a very intellectually stimulating topic of discussion that's urgently required in our open, inclusive society. I highly recommend people read the article and think deeply about it. [1] https://www.bloomberg.com/view/articles/2018-06-04/trump-is-closing-doors-to-world-s-smartest-people https://www.bloomberg.com/view/articles/2018-06-04/trump-is-...
- obelix_ 8y agoIdk I think US has bigger problems than whether it's semiconductor tech gets stolen. Social media and the news media have created such a dysfunctional environment that I am finding it increasingly hard to believe constructive debate/solutions on anything are possible until the underlying environment producing the dysfunction is cleaned up. If not we are just going to get more and more leaders from both sides propped up purely for skills to pander.
- endtime 8y ago
- Animats 8y agoChina has an official plan, "Made in China 2025".[1] It's about moving up the value chain. Key areas are semiconductors, pharmaceuticals, and aircraft engines. China is still way behind in wafer fabs, but SIMC is coming along. Wikipedia says they're at 40nm, which is not close to the state of the art, but is good enough for much consumer electronics. [1] https://en.wikipedia.org/wiki/Made_in_China_2025 https://en.wikipedia.org/wiki/Made_in_China_2025
- shasheene 8y agoSlightly off-topic (sorry for taking oxygen away from the semi-conductor fabrication discussion): I find that Wikipedia page you linked to very frustrating: understanding the central economic policy document of a growing superpower is very important but it's just a stub. A stub that almost only links to the non-independent sources. The page history shows that it was once a much bigger article but just a copy/paste job from the source policy documents. At least the page doesn't seem appear actively sabotaged by highly-motivated, non-impartial user accounts like some others. I wish there was a way I could help fund some Wikipedia editors to write a long, impartial, well-cited article about this very important government policy document.
- toomuchtodo 8y agoYou might find a public policy institute who would be willing to accept financial compensation for creating the article you’re interested in.
- lopmotr 8y agoIt's grating to hear people calling each other shills. If the only evidence is motive then it's too weak to draw that conclusion. The world is full of politically motivated people on all sides who aren't being paid by anyone.
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- nickpsecurity 8y ago
- infinity0 8y agoMore funding coming this way for RISC-V
- fungi 8y agoAnd http://en.c-sky.com/ http://en.c-sky.com/
- chrischen 8y agoI think this article paints a picture that somehow China is incapable of making semiconductor technology, whereas I think the main problem is that they just focused a bit too much on new technology (internet and software) as opposed to older stuff like processors. That's understandable when you consider that it would be grossly inefficient to reinvent the wheel.
- makomk 8y agoTheir lack of working semiconductor technology is definitely not the result of any lack of attempts at it on China's part.
- mark_l_watson 8y agoGood article for information and anecdotes but it also rubbed me wrong: smacking a bit of American Exceptionalism. I am so used to hearing what is basically propaganda in our press about how much better we are than the rest of the world, that now articles like this inspire scepticism. Our country (USA) does indeed have a lot of advantages with: technology and geographic isolation. But we also have problems in income inequality and increasing corruption in our political system (Clintons, Trump, etc., etc.) I really like the ‘Sputnik’ analogy because just as my country had an ‘oh shit’ moment when we realized we were behind, I expect the Chinese to go through the expensive and long process of owning the entire stack, micro chips, and up.
- gkanai 8y ago> I expect the Chinese to go through the expensive and long process of owning the entire stack, micro chips, and up. None of America's allies have chosen to "go through the expensive and long process of owning the entire stack" - America's allies use Windows, Android, Qualcomm, Intel, etc. If China really does want it's own home-built silicon running it's own written-at-home operating systems, they need decades and they'd just replicate what Microsoft or Google have done to date (and probably less well.) I don't doubt that the CCP do want that independence from American technology, but to truly be independent is really quite an extreme proposition.
- dnomad 8y agoThere's certainly no need to write custom operating systems. China already happily customizes Android and Linux extensively across a wide range of devices. You can see this today just by walking down the street where there are street lights running linux. As for silicon China doesn't have much choice in the matter. Their dependence on American silicon may in fact be their greatest security risk. It's clear that the US and its allies will weaponize this advantage (see Stuxnet) so anybody relying on these chips is ultimately at their mercy.
- kinsomo 8y ago> Their dependence on American silicon may in fact be their greatest security risk. It's clear that the US and its allies will weaponize this advantage (see Stuxnet) Please elaborate on this point, my understanding is Stuxnet relied purely on software vulnerabilities (to spread and to take control of the centrifuges). I don't think it used any hardware backdoors or anything. If it did, I'd have expected the roar to be enormous, probably several times what we just had with Spectre/Meltdown.
- tabtab 8y agoThings move too fast for a country to be fully self-sufficient in ALL technologies, unless you either accept being behind, and/or be stuck in trade wars. Different countries have different "personalities" and thus will shine in some areas and stink in others. You have to think global to be competitive because you cannot do everything on your own. The US is mostly an integrator of hardware and technology made abroad, for example. US focuses on cutting edge stuff, and "glues together" the parts from abroad to make it. When a product becomes a commodity, it slips offshore and the US then jumps into the Next Big Thing. This model may not work for China. For one, they depend much more on personal relationships than contracts. Business relationships in the US are more transnational: easy come, easy go. This is well suited to fast-paced change. China's relationship model may struggle against this approach. But that doesn't mean there are not other niches. Germany and Japan do quite well by focusing on perfecting a niche(s) and less on changing quickly.