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Inside a Heist of American Chip Designs, as China Bids for Tech Power

232 points by f3f3_ 8y ago

fermienrico 8y ago
Having worked in China in the semiconductor industry, it really saddens me what the Chinese are trying to do. You simply cannot out innovate 4 decades of work in a few years no matter how much money you throw at it. Also, China has a branding problem and it is only going to get worse. They can make short term progress but it takes a long time to build a great brand.
- RamshackleJ 8y ago
  Stealing IP mostly helps manufacturing, It doesn't really help innovation. If they want to build up their semiconductor industry they need to steal the people who are creating IP, which is kinda the opposite of what is happening. the culture that creates new tech is something that china can't steal and it can't replicate it without giving up authoritarian rule.
  - krapht 8y ago
    People write this glibly without understanding history. Soviet Russia made great leaps in science and technology where it was a national priority. You can have academic freedom in most scientific disciplines without the political freedom to criticize the government.
    - tryptophan 8y ago
      Have any examples? As far as I am aware, the USSR only beat USA at getting into space first.
      - jacquesm 8y ago
        The Russians had a head start in various materials sciences knowledge, notably metallurgy.
      - timonovici 8y ago
        They also had great chemists and physicists. Many of them were awarded nobel prizes, so you can look it up.
      - deepnotderp 8y ago
        Soviet materials science was quite advanced. Mechanical engineering and weapons technology was also advanced.
      - tormeh 8y ago
        The NK-33 engines from 1960s and 70s Soviet Union were used by American space companies as late as 2014. These were just stuck and forgotten in a Russian warehouse. Doubtlessly other Soviet technology has also been lost and awaits rediscovery. https://en.wikipedia.org/wiki/NK-33 https://en.wikipedia.org/wiki/NK-33
        jonhendry18 8y ago
        Not sure if that's a testament to innovation, or to the American tendency to throw things away. American engines of the same vintage probably would have been used if they were available for a similar price.
        blattimwind 8y ago
        It's not just about the price; these engines are still highly competitive fifty years after they were designed. That's quite a feat. They're also based around unique technology.
    - gaius 8y ago
      There is a good book Stalin and the Soviet Science Wars about this. Imagine the dilemma: you are a nuclear physicist and Lenin says that atoms are indivisible. What do you do? (This really happened)
      - the-dude 8y ago
        You fuse two atoms.
        gaius 8y ago
        You look Stalin in the eye and tell him he has to choose between Marxism-Leninism and having an atom bomb...
        the-dude 8y ago
        That is unfair : you have read the book!
        gaius 8y ago
        It’s not clear why Lenin felt the need to state this, he obviously didn’t know anything about it, but he did, and so it became the official position of Soviet science. But Stalin was nothing if not pragmatic so...
    - RamshackleJ 8y ago
      TLDR; But the soviets lost. I'm not an expert in soviet history but I feel like their efforts around science and technology were economically unsustainable and almost all of them were directly or tangentially related to the military. I don't remember the soviets exporting consumer goods to the west. Academic freedom isn't the only freedom that scientists and engineers care about. I don't doubt that china can spend a ton of money, trap its engineers/scientists and use its media machine to try to keep its population focused on nationalism. I just think that if that didn't work for the Soviets it wont work for China. That said china's current system will probably work great right until it doesn't. Idk I'm just some person on a computer though....
      - tomcam 8y ago
        Please explain downvotes?
        frockington 8y ago
        My experience with hacker news is that comments with China mentioned in a not so positive way will result in a flood of initial downvotes. As to the the why, I haven't a clue
        mistermann 8y ago
        My observation is that on certain topics, HN votes and comments become largely based on ideological stances rather than objective reality. Take this thread for example: "the culture that creates new tech is something that china can't steal and it can't replicate it without giving up authoritarian rule" This truism that China "can't innovate" because they live under an authoritarian government is very commonly believed on HN, but it's nothing more than an opinion. However, if you were to suggest to these same people that China is a poor source for sourcing immigrants, because <some unique characteristic of China>, the logical parts of their brains would fire into action and point out how "wrong" that statement is, for obvious reasons. A lot of people, including people on HN, passionately believe things that are absolutely contradictory, and they vote accordingly.
      - 8y ago
    - lainga 8y ago
      They also slid backwards several decades in agronomy, and possibly caused famines, when that was a national priority. https://en.wikipedia.org/wiki/Trofim_Lysenko https://en.wikipedia.org/wiki/Trofim_Lysenko
    - avmich 8y ago
      Soviet Russia had a rather different trajectory than China. By the 1917 Russia had significant ties with Europe, which helped both economically and scientifically. Having good pre-revolution scientific schools helped to maintain the lead in hard sciences - military tech like planes and artillery. Then achievements were also demonstrated in rockets and space (up to orbital stations), nuclear area (competing program for nuclear power plants, thermonuclear weaponry, particle accelerators), quantum physics (e.g. lasers), computers and material science (friction welding and Al-Li alloys come to mind as examples). It could be possible to maintain lower level of life comfort while keeping the "academic part" competitive, if the world outside USSR wouldn't demonstrate that a better life is possible. So, I think for some time USSR could maintain the lead, which it did, but then it wasn't enough. China has tremendous advantage in number of people - 4x compared to USSR - and way better economical system, but disadvantage in scientific schools traditions (which it tries - up to a point - to improve) and similar problems with freedoms. Improving scientific level takes time and may lead to conflicts with societal limitations. China may have some years - or even decades - before such problems will become critical.
    - baybal2 8y ago
      >Soviet Russia made great leaps in science and technology Yes, we sent rockets to the moon, but an average Ivan couldn't have proper plumbing in his apartment. Those great leaps were made in things without real life value. P.R. China on other hand, can't be bothered with "prestige project." The only thing that can bother a government official here is money. And money undoubtedly have value in everyday life... unlike moon rovers.
      - vkou 8y ago
        Meanwhile, in the United States, we can figure out how to send a robot to kill a family on the other side of the world, but we can't figure out how to supply drinking water in Flint. Human welfare is always a priority that competes with 'national interests'.
      - rm_-rf_slash 8y ago
        I want to pick at your “moon rovers” comment because I think it’s somewhat misguided (although, yes, it does apply specifically to Chinese government officials). One of the reasons that the United States won the race to the moon (while definitively losing the race to space and manned space flight) was because we were the first to dump exorbitant sums of money into the hot (and extremely expensive) new kid on the computing block: integrated circuits. Before ICs, computer parts were often hand-welded, which NASA determined was too failure-prone to reliably control the lunar lander, as such a device had to be able to handle shaking, cosmic radiation, temperature shifts, extreme G-forces from liftoff, and so on. For that same reason, the Soviets were also unable to complete a reliable lunar lander before the Americans, regardless of their past successes with spaceflight. NASA’s immense investment in integrated circuits greatly accelerated their adoption, and as a result, computers became much faster, and much cheaper, than ever before. The history of computing goes straight through the Apollo 11 lunar lander, which does not get nearly as much credit as it deserves.
        deepnotderp 8y ago
        This ^^ 100x. If it wasn't for integrated circuits, the u.s. likely would not have won the race. And it's not just because I'm a chip guy.
  - jacquesm 8y ago
    Stealing IP definitely helps innovation. To get to the innovation stage you first need to reach parity. There is no faster way to reaching parity than to steal IP. As for the "the culture that creates new tech is something that china can't steal and it can't replicate it without giving up authoritarian rule", that's nonsense that would have found an audience in the 1950's or so when talking about Russia, but it really is out of place in 2018 when talking about China. China has a lot of catching up to do but this kind of reasoning is so far off-base that it makes me wonder whether or not you've given it much thought at all. The political system of a country does not magically stop people from thinking about technological problems. It's mostly a matter of degree of efficiency than it is of achieving a certain capability.
    - RamshackleJ 8y ago
      I disagree with your opinions and your characterization of my argument. I didn't say people will not think about technological problems. Despite the incredible amount of good the party has done for the people of china they are still an authoritarian regime. I don't think authoritarian regimes are good at fostering innovation.
      - lovich 8y ago
        They've got such a large population they just need to concentrate a relatively small section where they have looser rules and it would work as an engine for them much like SF does for the US. Look at cities like Shenzhen
        hangonhn 8y ago
        Precisely. This is why China started out with a few special economic zones with Shenzhen being the most successful example.
      - jacquesm 8y ago
        They don't need to be 'good' at anything, they just will move slower than an equivalent market based system but eventually they will get there. As long as the rest of the world out-innovates them they may not catch up but do not underestimate the power of over 1 billion people, especially not when a large number of them are very smart. Have a look at China 30 years ago and China today and tell me that that authoritarian regime isn't moving forward, and relative to the rest of the world they are moving at an incredible pace. We, the West (assuming you are in the West like I am) should count our blessings that China isn't going full-bore on a market economy and democratic system because the Chinese in such a configuration would be absolutely un-stoppable.
  - rm_-rf_slash 8y ago
    It’s the same culture that sends tidal waves of students to American universities to earn Ph.Ds, and because of our piss-poor immigration system, most of them have to go back home with all of that valuable education and use it in China or India or wherever instead of the USA.
    - forapurpose 8y ago
      The U.S. helps to educate and provide opportunity to people, regardless of national origin - regardless of the arbitrary, invisible lines on a map, drawn by the powerful, in which they were born. Partly as a result, the greatest economic miracle in history has occurred since WWII (and especially since the end of the Cold War), with hundreds of millions of people pulled from millennia of hopeless, abject poverty. Another great result is that U.S. businesses now have enormous markets in China and India in which to sell, vendors from which to buy, and more talented employees which to hire. China and India are the top two markets in the world for many products, including cell phones IIRC. Imagine the impact on the bottom line of SV companies if they went away. A smart businessperson wants other businesses to do well; they want rich, successful neighbors; otherwise, who do they sell to? Who do they hire? Who provides goods and services to them? Yet another result is that those people are familiar with the United States and its values, and can bring them home. Wars start because political leaders can propagandize about how evil the <other people> are, which is hard to do with populations that have direct experience with each other. And the values of democracy and universal human rights (i.e., regardless of political borders) have revolutionized humanity. And finally, due to immigrants the U.S. has become the academic center of the world. You may notice that much of the great scientific work before WWII was done in Europe, but then nationalism and ideology in Europe chased out their great scientists, who emigrated to the U.S. English become the language of science. The halls of U.S. academia have been filled with immigrants since then. If the center of knowledge and research moved someplace else, the U.S. will have lost what has really become an enormous, and really an unfair benefit. How much does SV benefit from all that research, talent, and knowledge at Stanford and Berkley? So I want more immigration, more opportunity for more people. How absurd that people with the talent and drive to get PhDs would never have had the opportunity. If the U.S. has to build more universities, that's great.
  - spitfire 8y ago
    I've seen papers from back in the cold war documenting a study regarding east german IP theft. The conclusion was stealing IP actually put them behind. You steal the IP, then have to learn how to make it without the context. So you end up only learning how to reverse engineer production processes - which takes longer without the context, and don't build the skills needed to create the technologies in the first place. It's like being handed the answers to your calculus class then being asked to move on. It doesn't help.
  - hangonhn 8y ago
    Not sure if you know but the American industrial revolution was largely kicked off with stolen IP from the UK and would later overtake it. I'm not trying to condone a wrong with another previous wrong but rather to point out that such methods can lead to something in the long run.
  - gaius 8y ago
    Stealing IP mostly helps manufacturing, It doesn't really help innovation One of the lies we were told was that only manufacturing and other low-value-add activities would be going offshore, all the high-pay and -prestige design work would be staying in the West. But Japan showed in the 80s and 90s that once a country has achieved a level of manufacturing, design comes naturally and quality comes naturally, and the hollowing out of the West shows that once you lose manufacturing, your design capabilities stagnate. And now the West is squandering what little it has left making the same mistake with China. We even say it on this site often enough, ideas are cheap, executing is hard. Manufacturing is executing.
  - sangnoir 8y ago
    > the culture that creates new tech is something that china can't steal and it can't replicate it without giving up authoritarian rule. I've seen this trope repeated here, and it needs to die (IMO). Where's the evidence for this assertion? The soviet union with it's command economy saw plenty of innovation coming out of its design bureaus (weaponry, rocketry, aerospace engineering). Present-day China seems less authoritarian than cold-war USSR, but I could be wrong.
  - stale2002 8y ago
    There is another word for "stealing IP" that has worked quite well in the software industry. It's called open source. Yes, most startups aren't releasing all their code or anything, but there is a huge culture of open source development tools and software. I think this open source culture, where lots of stuff is available easily and for free, is a big reason why the software industry has been so successful, and why places like SF have been so successful. (IE, SF job hopping, and "stealing"/poaching engineering talent, so that knowledge transfers).
- ksk 8y ago
  >You simply cannot out innovate 4 decades of work in a few years no matter how much money you throw at it. Could you explain your reasoning?
  - fermienrico 8y ago
    I can give you an example of semiconductor manufacturing and its supply chain. Say, I am a company with X billions to throw at building a Fab. You could probably build one, but finding lithography suppliers, automation, building long term relationships with them and being able to do it in a cost effective manner is a monumental challenge. Intel, Global Foundries, TSMC runs on decades of internal knowledge to be able to manufacture silicon. Furthermore, you now need to package silicon, test it, and post-silicon assembly is insanely complex as we go towards chip-scale manufacturing. Another example is Tesla. They will and in the past have throw billions of dollars to build a solid manufacturing lines, suppliers and personnel; but you can see the challenge today when theyre trying to ramp up. On small scale, you can buy time with money; but on a large scale, that transaction often becomes difficult or simply impossible.
    - ksk 8y ago
      >I can give you an example of semiconductor manufacturing and its supply chain. Say, I am a company with X billions to throw at building a Fab. You could probably build one, but finding lithography suppliers, automation, building long term relationships with them and being able to do it in a cost effective manner is a monumental challenge. Okay, all that sounds logical, but they're not building a fab from scratch here. They already have (IIRC) 30 operational fabs in China. If you said this in 1999 or 2000 when China had no fabs you could have had a point - but they would have proven you wrong because they did precisely what you said they couldn't do by throwing money at the problem. >Another example is Tesla. They will and in the past have throw billions of dollars to build a solid manufacturing lines, suppliers and personnel; but you can see the challenge today when theyre trying to ramp up. Tesla had never built a single car before they got started, I do not think its a comparable example.
- alexbeloi 8y ago
  >Having worked in China in the semiconductor industry, it really saddens me what the Chinese are trying to do. I too have worked in China, and there is nothing sad about fighting and investing heavily to catch your competition. If the competition isn't careful, they'll get blindsided just like auto companies were by similar looking Japanese manufacturing investments in the 80s. Japan used to have a reputation for really low-quality manufacturing.
  - fermienrico 8y ago
    Equating China with Japan is totally asinine. Japan long before the 70's had always been considered as a culture that respected quality and efficiency. In fact, every major manufacturing industry in the world today adopts some form of Japanese manufacturing principles. From airports to cancel hospitals; systems such as Kanban and Kaizen have been universally adopted. Name one thing we have adopted from China in terms of manufacturing principles/philosophy. Saying that China is what Japan was in the 80's is totally absurd and impossible to reason with. Not to mention, immense difference in Japanese and Chinese culture.
    - alexbeloi 8y ago
      It has little to do with culture and everything to do with current economic stage of development, Japan was known for making faulty mass produced garbage in the 50's and 60's, they used that economic model to bootstrap the manufacturing industry and to make investments in education, science, tech and manufacturing. From 1950 to 1970 Japan went from 40% agricultural to 17%. [0] Similar story taking place in China, just 30 years later (following the cultural revolution). From 1980 to 2010 China went from 33% agricultural to <10%.[1] Now you're seeing deep investments in education, software, high tech manufacturing, science. In 20 years, it will be normal to see Chinese brands leading the market in some areas the way Toyota, Honda, Sony and Panasonic did in the 90s and 2000s (and still now in some areas). >Name one thing we have adopted from China in terms of manufacturing principles/philosophy. I don't know who we are in this conversation, but from my point of view, there seems to be some kind of hegemonic-cultural war going on in the JAPAC region. I have no stake in the fight, so arguments stemming from the point of view of cultural superiority will fall on deaf ears. [0] https://en.wikipedia.org/wiki/Economic_history_of_Japan#Factors_of_growth https://en.wikipedia.org/wiki/Economic_history_of_Japan#Fact... [1] https://en.wikipedia.org/wiki/History_of_agriculture_in_the_People%27s_Republic_of_China https://en.wikipedia.org/wiki/History_of_agriculture_in_the_... edit: A side note is that Japan in the 80s was exporting their highest quality goods to the US while leaving lower-mid quality goods for the domestic market, this is also contributed to Japan's good brand growth internationally.
- paidleaf 8y ago
  > You simply cannot out innovate 4 decades of work in a few years no matter how much money you throw at it. Sure you can, as long as you have the people, resources and the infrastructure. > Also, China has a branding problem and it is only going to get worse. So did every country. When we were starting out as a nation, we stole IP from britain and we were known as the nation of the shoddy. Believe it or not, germany was once known as a nation of terrible brands and shoddy products. So was japan. Ask your grandparents. "Made in japan" was equivalent to junk in our grandparents time. The same with korea. It's only within the past 20 years that korea shed the "junk" image with Samsung, LG, etc. Also, for most of history, "made in china" was considered high quality. That's why we have terms like "fine china". Until the opium wars and the collapse of china, china was renown for quality goods. History has shown that countries move from shoddy manufacturing reputation to quality reputation. Don't really see why china would be the exception to the rule.
crb002 8y ago
DOD would have way more cost effective spending ditching the F-35 flying turkey and buying the IP for TSMC, and moving US fab to Virginia/Austin.
- fermienrico 8y ago
  But that takes more than 3 years. So not an option for Trump. Tariffs are instant.
- HillaryBriss 8y ago
  yeah, but ... does the IP for TSMC reside in some easily transferred tangibles? wouldn't the DOD really need to transfer the whole community of engineers and ecosystem of suppliers?
  - woolvalley 8y ago
    Engineers in Taiwan don't make that much money. Just saying you'll pay them standard US engineer salaries and add instant green cards for their families as part of the acquisition and you'd probably get most of them to move. TSMC although is a pretty foundational company of Taiwan. It would be like the US buying samsung and then moving everyone to the USA. Taiwan might stop you.
- tooltalk 8y ago
  can't read through the paywall, but what's TSMC got to do with it? Intel, Micron, GlobFo and Samsung all have fab capacity in the US.
lsiq 8y ago
Considering the two sticks of Micron RAM I purchased in mid 2016 have appreciated 2-3x value, I don't have much sympathy for the big three DRAM producers. There's a reason the Chinese are looking so longingly at their lunch.
- tooltalk 8y ago
  Micron and other DRAM producers were losing money due to DRAM gluts two years ago. That discouraged capacity investment and, as many insiders had predicted, it led to eventually higher price today. Sure, you got bargain at their expense two years ago and now everyone is complaining about the higher cost of DRAM today. But that still doesn't justify IP theft.
  - baybal2 8y ago
    DRAM makers make $10k per platter. A single fab pops 20k - 30k complete wafers a month, and each top tier maker has 4 to 6 of them. Thought, all makers are working at only 60 to 70 percent capacity now. You can guess, they are plump with money, and MOFCOM officials naturally want to communize some part of this money pile.
    - chollida1 8y ago
      Is your math really right? > DRAM makers make $10k per platter. A single line pops out 40k a month, a single fab has 20+ lines, a fab complex has up to 8 fabs. Each DRAM maker has few fab complexes. If I do this I get 10,000 * 40,000 * 20 * 8 which is $64 Billion.... per month. Are you suggesting that the average DRAM maker should have revenue of $64 Billion a month or $768 Billion a year? It sounds like you know the industry and I'm looking for some additional colour here.
      - baybal2 8y ago
        my bad, my bad. Corrected my digits. We are looking at around 20 to 30k complete DRAM waffers per fab. For god knows what reason, digits for a line and a whole fab swapped places in my head.
Invictus0 8y ago
Corporate and national espionage are as old as time, and senior leadership needs to wise up to this threat. China is running the most broad and sophisticated IP espionage campaign in history, and most companies think a 15m PowerPoint about not responding to phishing emails is sufficient protection against this. Until we get some strong legislation on corporate data security, this is just going to keep happening.
- HillaryBriss 8y ago
  US corporations are willing players in this game. in exchange for their IP, US corporations are promised vast revenue from access to China's markets. the C-suite benefits. shareholders probably benefit. does the average US resident benefit?
  - hotdog97 8y ago
    Why should the average US resident benefit from what you describe? (I mean - what did they contribute?)
groupthinking 8y ago
Worth reading this blog; they tend to cover related issues: https://www.chinalawblog.com/2018/03/how-to-give-away-your-ip-in-china-without-realizing-it.html https://www.chinalawblog.com/2018/03/how-to-give-away-your-i...
genericone 8y ago
I mentioned this in a previous comment I made: "It's a very secret industry, and getting even tighter now since China has been blocked from acquiring the latest semiconductor technology. China has so far invested over $40 billion in boosting their chip-making abilities, to acquire capital, IP, and knowledge-workers. Given their history of borrowing technology from other countries without attribution, if I were at the head of a semiconductor related company, I would clamp down on the secrets ahead of the danger." Looks like the clamp-down didn't happen soon enough...
- baybal2 8y ago
  >China has so far invested over $40 billion in boosting their chip-making abilities, to acquire capital, IP, and knowledge-workers. There is a rumour going that the ministry of commerce has been given a war chest of ~$140B+ to establish self sufficient semiconductor industry in China. I can guess that those $40B is just a part of it that was spent on direct funding of their chipmakers. Another big part probably goes to "one day funds" like Canyon Bridge Capital that appear out of nowhere with few billion bucks just to disappear a year later when they are done buying a target company.
baybal2 8y ago
My comment on the article. Usually I am of higher opinion of NYT, but now this piece of writing is simply tendencious The court case covered there is just plainly the case of plaintiff's lawyers being paranoid about about petty theft case, and having rich imagination. Think of Aron Schwartz case, except even more absurd here, as the defendant have called police on himself. An employee from mainland who previously worked at a competitor company accidentally put coworker's phone into her bag along with papers on the table. They guy thought that his phone was stolen and called police, police found his phone in a locker of a coworker. During investigation of that theft, they stumbled on some company docs on the phone, and opened an espionage case based on that. Why a defector would file a police report on his accomplice? For it to be an espionage, a less lame way to exfiltrate information would be employed, and certainly, a spy will not call the police to arrest his accomplice. Just thinking that somebody can carry netlists for a chip which take few hard drives to store in compressed form on a tiny memory of a smartphone does not pass a BS test.
wishart_washy 8y ago
Notes from the ground here. My undergrad was in EE at an "elite" school - I can say definitively that ~50% of the MS/Ph.d. students in EE were from China (with the other 50% largely from India). They TA'd many of the graduate level courses and were the majority of the students taking high level semiconductor design courses that centered on fabrication and nanotechnology. China's short term goal is clearly to reach parity so these students can enter a mature semiconductor industry. Give these students ~5-15 years to gain expertise from the American academic system and industrial research base and I think we'll start seeing China innovate. American expertise will naturally decline because we don't have students studying EE. To many good full-stack jobs that pay ~40% more.
- vkou 8y ago
  Throughout the 20th century, the United States benefited greatly from this sort of knowledge drain, from war-torn Europe, and from the Soviet sphere of influence. The trend is just reverting to the mean.
  - frozenport 8y ago
    Nonsense, many of these countries didn't exist long enough to establish "mean" trends. How old is China? Confucius Institute progpoganda not withstanding, maybe 30 years? There is only what is now, and how we stop China from fucking us over.
  - andygrovetheman 8y ago
    Many scientists and academics immigrated to the US because of its values: it was a free country and a multicultural country where immigrants are welcomed. The knowledge drain moved smart people to a free country to build a knowledge economy. (Economists too: the Bretton Woods system was built in part by smart people who fled the autocratic or fascist countries). That system of free exchange between stable democracies with social safety nets kept peace in the world for 50 years. Not sure this brain drain has equal intentions for rule of law and democratic societies.
  - worldengineer 8y ago
nimish 8y ago
History rhymes. American industrialists famously begged, borrowed and stole machine designs from Europe -- Slater the traitor kickstarted the American cotton industry. Of course, the lack of foresight of Wall St is legendary! Many companies have traded long term loss for short term gain.
- andygrovetheman 8y ago
  IP and knowledge was much less valuable in the 19th C industrial economy than it is today. Back then execution and raw materials and access to semiskilled labor was most important. The Chinese (NK, Iranian, Russian) corporate hacks we have seen recently could have a MUCH larger economic effect.
  - nimish 8y ago
    Not really. Britain banned textile technicians from leaving the country because textile machinery knowledge was overwhelmingly valuable. Semiconductor IP is not nearly that important.
  - imglorp 8y ago
    The problem was recognized at the time, though. The first US patent was in 1790 (a process to make potash), the beginning of the industrial revolution. Of course, now we buy portfolios of patents as an investment backing extortion as a business model, or as bludgeon to slow competition.
  - paidleaf 8y ago
    > IP and knowledge was much less valuable in the 19th C industrial economy than it is today. Actually it was far more valuable because it was far rarer and you could do far more with it. With IP you could own/dominate the entire textile market, the entire cotton market, the entire oil market, etc. With IP you could dominate the world's oceans with your navy. It's counterintuitive but IP at the beginning stages was far more important. > The Chinese (NK, Iranian, Russian) corporate hacks we have seen recently could have a MUCH larger economic effect. This is simply not true. The markets today are much larger and far more diverse and the IP space is ridiculous complex, large and diverse. Of course IP theft has a significant economic impact today, but IP theft 200 years had a far greater effect when industries and IP was so limited.
oh_sigh 8y ago
Is there a 'fruit of the poisoned tree' rule in international trade and tariffs? If the US puts tariffs on Chinese chips because they think they are derived from knowledge that was stolen from a US company, will they get chastised by the big international trade organizations?
newnewpdro 8y ago
Apparently this is what war between nuclear nations looks like in 2018.
- wetpaws 8y ago
  Thanks god we live in an age of globalized economy
oldandtired 8y ago
It has been interesting reading the various opinions being expressed here in this discussion. As a couple of writers have noted, the appropriation of knowledge (without attribution to the source) has been the mainstay of technological advancement by the major powers over many decades, if not centuries. Even though it is popular to classify such appropriation as "theft", it isn't theft. The term is used often in a cynical way by those who have appropriated such knowledge from others before them to provide a justification to maintain an advantage over those who follow them. Theft requires that the original party no longer have access to the items in question. For theft of knowledge, one would have to ensure that the deaths of those who know it have occurred and that there are no extent records available for that knowledge. There have been many in the USA, including government organisations (civil and military), who have appropriated knowledge from others for their own benefit. One only needs to look at the history since the late 1800's to see many of these appropriations. Many countries, organisations and individuals have done this. It has happened in the past, it happens today and it will happen in the future. In one sense, the only solution is for the free dissemination of knowledge in every area, but in many areas that will not happen. I have a friend who will be prosecuted if he releases any information about a certain subject matter that he developed and was going to use commercially because a certain government pushed another government to appropriate that knowledge. These things happen and happen regularly. So China appropriating technological know-how to various areas is nothing new and is just following in the footsteps of those who have gone before. So getting in a tizzy about it is not helping. If one wants to make a difference then be better at that area than anyone else. Produce what the consumers want at a price they are willing to pay and you will get a market share. If someone copies you, then use that as a marketing strategy. Make sure that you can do it better than them. There are enough examples of companies and individuals that produce quality and still make enough to keep going. Look at your game plan and stop worrying inappropriately about the competition. If you are being copied then you must be doing something right and you can use that to your advantage, even if you are a one-man shop.
DyslexicAtheist 8y ago
I worked for Nokia when we outsourced part of our R&D to Huang Shu. 2 years later many of the sites employees moved on to work for Chinese gov backed tech firm, and the source code of what I wrote for Nokia and that of several colleagues popping up on github. It wasn't critical in terms of copyright or deep secrets about the product. But it contained info that allows an outsider get a very accurate picture of the software supply-chain and a potential gold-mine for further social engineering and/or attacks against the firms supply chain security. So if you have the habit of adding your name in the /* comment stanza */ in all your source code, I urge you to "vanity search" your name in github/gitlab repos. Also if you are serious about supply-chain security, and go to great lengths of buying in China but assembling your IP in Malaysia, Vietnam, etc, ... remember to compartmentalize. If you're a person of interest (any engineer in a larger tech-company is), then use a dedicated phone for communicating with China where you install WeChat and be careful how you move information across the 2 domains. edit: WeChat Security concerns: https://en.wikipedia.org/wiki/WeChat#Security_concerns https://en.wikipedia.org/wiki/WeChat#Security_concerns
- optimalKEK 8y ago
  So are you a Trump supporter who HATES free trade and immigrants??
prirun 8y ago
Boo hoo, poor Micron. Seems there are some hidden costs to exporting all manufacturing to China. This has happened over and over (see because China often requires American companies "partner" with a Chinese company to setup shop in China: https://www.chinalawblog.com/2011/04/fellowes_brought_to_its_knees_in_china_blame_the_joint_venture.html https://www.chinalawblog.com/2011/04/fellowes_brought_to_its... US companies like cheap foreign labor and manufacturing, but need to realize there could be a high long-term cost - one that could put them out of business. We Americans seem to have a hard time focusing on long-term results. If an action boosts short-term profits or the stock price, we do it.

232 points by f3f3_ 8y ago

Having worked in China in the semiconductor industry, it really saddens me what the Chinese are trying to do. You simply cannot out innovate 4 decades of work in a few years no matter how much money you throw at it. Also, China has a branding problem and it is only going to get worse. They can make short term progress but it takes a long time to build a great brand.

RamshackleJ 8y ago
Stealing IP mostly helps manufacturing, It doesn't really help innovation. If they want to build up their semiconductor industry they need to steal the people who are creating IP, which is kinda the opposite of what is happening. the culture that creates new tech is something that china can't steal and it can't replicate it without giving up authoritarian rule.
- krapht 8y ago
  People write this glibly without understanding history. Soviet Russia made great leaps in science and technology where it was a national priority. You can have academic freedom in most scientific disciplines without the political freedom to criticize the government.
  - tryptophan 8y ago
    Have any examples? As far as I am aware, the USSR only beat USA at getting into space first.
    - jacquesm 8y ago
      The Russians had a head start in various materials sciences knowledge, notably metallurgy.
    - timonovici 8y ago
      They also had great chemists and physicists. Many of them were awarded nobel prizes, so you can look it up.
    - deepnotderp 8y ago
      Soviet materials science was quite advanced. Mechanical engineering and weapons technology was also advanced.
    - tormeh 8y ago
      The NK-33 engines from 1960s and 70s Soviet Union were used by American space companies as late as 2014. These were just stuck and forgotten in a Russian warehouse. Doubtlessly other Soviet technology has also been lost and awaits rediscovery. https://en.wikipedia.org/wiki/NK-33 https://en.wikipedia.org/wiki/NK-33
      - jonhendry18 8y ago
        Not sure if that's a testament to innovation, or to the American tendency to throw things away. American engines of the same vintage probably would have been used if they were available for a similar price.
        blattimwind 8y ago
        It's not just about the price; these engines are still highly competitive fifty years after they were designed. That's quite a feat. They're also based around unique technology.
  - gaius 8y ago
    There is a good book Stalin and the Soviet Science Wars about this. Imagine the dilemma: you are a nuclear physicist and Lenin says that atoms are indivisible. What do you do? (This really happened)
    - the-dude 8y ago
      You fuse two atoms.
      - gaius 8y ago
        You look Stalin in the eye and tell him he has to choose between Marxism-Leninism and having an atom bomb...
        the-dude 8y ago
        That is unfair : you have read the book!
        gaius 8y ago
        It’s not clear why Lenin felt the need to state this, he obviously didn’t know anything about it, but he did, and so it became the official position of Soviet science. But Stalin was nothing if not pragmatic so...
  - RamshackleJ 8y ago
    TLDR; But the soviets lost. I'm not an expert in soviet history but I feel like their efforts around science and technology were economically unsustainable and almost all of them were directly or tangentially related to the military. I don't remember the soviets exporting consumer goods to the west. Academic freedom isn't the only freedom that scientists and engineers care about. I don't doubt that china can spend a ton of money, trap its engineers/scientists and use its media machine to try to keep its population focused on nationalism. I just think that if that didn't work for the Soviets it wont work for China. That said china's current system will probably work great right until it doesn't. Idk I'm just some person on a computer though....
    - tomcam 8y ago
      Please explain downvotes?
      - frockington 8y ago
        My experience with hacker news is that comments with China mentioned in a not so positive way will result in a flood of initial downvotes. As to the the why, I haven't a clue
        mistermann 8y ago
        My observation is that on certain topics, HN votes and comments become largely based on ideological stances rather than objective reality. Take this thread for example: "the culture that creates new tech is something that china can't steal and it can't replicate it without giving up authoritarian rule" This truism that China "can't innovate" because they live under an authoritarian government is very commonly believed on HN, but it's nothing more than an opinion. However, if you were to suggest to these same people that China is a poor source for sourcing immigrants, because <some unique characteristic of China>, the logical parts of their brains would fire into action and point out how "wrong" that statement is, for obvious reasons. A lot of people, including people on HN, passionately believe things that are absolutely contradictory, and they vote accordingly.
    - 8y ago
  - lainga 8y ago
    They also slid backwards several decades in agronomy, and possibly caused famines, when that was a national priority. https://en.wikipedia.org/wiki/Trofim_Lysenko https://en.wikipedia.org/wiki/Trofim_Lysenko
  - avmich 8y ago
    Soviet Russia had a rather different trajectory than China. By the 1917 Russia had significant ties with Europe, which helped both economically and scientifically. Having good pre-revolution scientific schools helped to maintain the lead in hard sciences - military tech like planes and artillery. Then achievements were also demonstrated in rockets and space (up to orbital stations), nuclear area (competing program for nuclear power plants, thermonuclear weaponry, particle accelerators), quantum physics (e.g. lasers), computers and material science (friction welding and Al-Li alloys come to mind as examples). It could be possible to maintain lower level of life comfort while keeping the "academic part" competitive, if the world outside USSR wouldn't demonstrate that a better life is possible. So, I think for some time USSR could maintain the lead, which it did, but then it wasn't enough. China has tremendous advantage in number of people - 4x compared to USSR - and way better economical system, but disadvantage in scientific schools traditions (which it tries - up to a point - to improve) and similar problems with freedoms. Improving scientific level takes time and may lead to conflicts with societal limitations. China may have some years - or even decades - before such problems will become critical.
  - baybal2 8y ago
    >Soviet Russia made great leaps in science and technology Yes, we sent rockets to the moon, but an average Ivan couldn't have proper plumbing in his apartment. Those great leaps were made in things without real life value. P.R. China on other hand, can't be bothered with "prestige project." The only thing that can bother a government official here is money. And money undoubtedly have value in everyday life... unlike moon rovers.
    - vkou 8y ago
      Meanwhile, in the United States, we can figure out how to send a robot to kill a family on the other side of the world, but we can't figure out how to supply drinking water in Flint. Human welfare is always a priority that competes with 'national interests'.
    - rm_-rf_slash 8y ago
      I want to pick at your “moon rovers” comment because I think it’s somewhat misguided (although, yes, it does apply specifically to Chinese government officials). One of the reasons that the United States won the race to the moon (while definitively losing the race to space and manned space flight) was because we were the first to dump exorbitant sums of money into the hot (and extremely expensive) new kid on the computing block: integrated circuits. Before ICs, computer parts were often hand-welded, which NASA determined was too failure-prone to reliably control the lunar lander, as such a device had to be able to handle shaking, cosmic radiation, temperature shifts, extreme G-forces from liftoff, and so on. For that same reason, the Soviets were also unable to complete a reliable lunar lander before the Americans, regardless of their past successes with spaceflight. NASA’s immense investment in integrated circuits greatly accelerated their adoption, and as a result, computers became much faster, and much cheaper, than ever before. The history of computing goes straight through the Apollo 11 lunar lander, which does not get nearly as much credit as it deserves.
      - deepnotderp 8y ago
        This ^^ 100x. If it wasn't for integrated circuits, the u.s. likely would not have won the race. And it's not just because I'm a chip guy.
- jacquesm 8y ago
  Stealing IP definitely helps innovation. To get to the innovation stage you first need to reach parity. There is no faster way to reaching parity than to steal IP. As for the "the culture that creates new tech is something that china can't steal and it can't replicate it without giving up authoritarian rule", that's nonsense that would have found an audience in the 1950's or so when talking about Russia, but it really is out of place in 2018 when talking about China. China has a lot of catching up to do but this kind of reasoning is so far off-base that it makes me wonder whether or not you've given it much thought at all. The political system of a country does not magically stop people from thinking about technological problems. It's mostly a matter of degree of efficiency than it is of achieving a certain capability.
  - RamshackleJ 8y ago
    I disagree with your opinions and your characterization of my argument. I didn't say people will not think about technological problems. Despite the incredible amount of good the party has done for the people of china they are still an authoritarian regime. I don't think authoritarian regimes are good at fostering innovation.
    - lovich 8y ago
      They've got such a large population they just need to concentrate a relatively small section where they have looser rules and it would work as an engine for them much like SF does for the US. Look at cities like Shenzhen
      - hangonhn 8y ago
        Precisely. This is why China started out with a few special economic zones with Shenzhen being the most successful example.
    - jacquesm 8y ago
      They don't need to be 'good' at anything, they just will move slower than an equivalent market based system but eventually they will get there. As long as the rest of the world out-innovates them they may not catch up but do not underestimate the power of over 1 billion people, especially not when a large number of them are very smart. Have a look at China 30 years ago and China today and tell me that that authoritarian regime isn't moving forward, and relative to the rest of the world they are moving at an incredible pace. We, the West (assuming you are in the West like I am) should count our blessings that China isn't going full-bore on a market economy and democratic system because the Chinese in such a configuration would be absolutely un-stoppable.
- rm_-rf_slash 8y ago
  It’s the same culture that sends tidal waves of students to American universities to earn Ph.Ds, and because of our piss-poor immigration system, most of them have to go back home with all of that valuable education and use it in China or India or wherever instead of the USA.
  - forapurpose 8y ago
    The U.S. helps to educate and provide opportunity to people, regardless of national origin - regardless of the arbitrary, invisible lines on a map, drawn by the powerful, in which they were born. Partly as a result, the greatest economic miracle in history has occurred since WWII (and especially since the end of the Cold War), with hundreds of millions of people pulled from millennia of hopeless, abject poverty. Another great result is that U.S. businesses now have enormous markets in China and India in which to sell, vendors from which to buy, and more talented employees which to hire. China and India are the top two markets in the world for many products, including cell phones IIRC. Imagine the impact on the bottom line of SV companies if they went away. A smart businessperson wants other businesses to do well; they want rich, successful neighbors; otherwise, who do they sell to? Who do they hire? Who provides goods and services to them? Yet another result is that those people are familiar with the United States and its values, and can bring them home. Wars start because political leaders can propagandize about how evil the <other people> are, which is hard to do with populations that have direct experience with each other. And the values of democracy and universal human rights (i.e., regardless of political borders) have revolutionized humanity. And finally, due to immigrants the U.S. has become the academic center of the world. You may notice that much of the great scientific work before WWII was done in Europe, but then nationalism and ideology in Europe chased out their great scientists, who emigrated to the U.S. English become the language of science. The halls of U.S. academia have been filled with immigrants since then. If the center of knowledge and research moved someplace else, the U.S. will have lost what has really become an enormous, and really an unfair benefit. How much does SV benefit from all that research, talent, and knowledge at Stanford and Berkley? So I want more immigration, more opportunity for more people. How absurd that people with the talent and drive to get PhDs would never have had the opportunity. If the U.S. has to build more universities, that's great.
- spitfire 8y ago
  I've seen papers from back in the cold war documenting a study regarding east german IP theft. The conclusion was stealing IP actually put them behind. You steal the IP, then have to learn how to make it without the context. So you end up only learning how to reverse engineer production processes - which takes longer without the context, and don't build the skills needed to create the technologies in the first place. It's like being handed the answers to your calculus class then being asked to move on. It doesn't help.
- hangonhn 8y ago
  Not sure if you know but the American industrial revolution was largely kicked off with stolen IP from the UK and would later overtake it. I'm not trying to condone a wrong with another previous wrong but rather to point out that such methods can lead to something in the long run.
- gaius 8y ago
  Stealing IP mostly helps manufacturing, It doesn't really help innovation One of the lies we were told was that only manufacturing and other low-value-add activities would be going offshore, all the high-pay and -prestige design work would be staying in the West. But Japan showed in the 80s and 90s that once a country has achieved a level of manufacturing, design comes naturally and quality comes naturally, and the hollowing out of the West shows that once you lose manufacturing, your design capabilities stagnate. And now the West is squandering what little it has left making the same mistake with China. We even say it on this site often enough, ideas are cheap, executing is hard. Manufacturing is executing.
- sangnoir 8y ago
  > the culture that creates new tech is something that china can't steal and it can't replicate it without giving up authoritarian rule. I've seen this trope repeated here, and it needs to die (IMO). Where's the evidence for this assertion? The soviet union with it's command economy saw plenty of innovation coming out of its design bureaus (weaponry, rocketry, aerospace engineering). Present-day China seems less authoritarian than cold-war USSR, but I could be wrong.
- stale2002 8y ago
  There is another word for "stealing IP" that has worked quite well in the software industry. It's called open source. Yes, most startups aren't releasing all their code or anything, but there is a huge culture of open source development tools and software. I think this open source culture, where lots of stuff is available easily and for free, is a big reason why the software industry has been so successful, and why places like SF have been so successful. (IE, SF job hopping, and "stealing"/poaching engineering talent, so that knowledge transfers).
ksk 8y ago
>You simply cannot out innovate 4 decades of work in a few years no matter how much money you throw at it. Could you explain your reasoning?
- fermienrico 8y ago
  I can give you an example of semiconductor manufacturing and its supply chain. Say, I am a company with X billions to throw at building a Fab. You could probably build one, but finding lithography suppliers, automation, building long term relationships with them and being able to do it in a cost effective manner is a monumental challenge. Intel, Global Foundries, TSMC runs on decades of internal knowledge to be able to manufacture silicon. Furthermore, you now need to package silicon, test it, and post-silicon assembly is insanely complex as we go towards chip-scale manufacturing. Another example is Tesla. They will and in the past have throw billions of dollars to build a solid manufacturing lines, suppliers and personnel; but you can see the challenge today when theyre trying to ramp up. On small scale, you can buy time with money; but on a large scale, that transaction often becomes difficult or simply impossible.
  - ksk 8y ago
    >I can give you an example of semiconductor manufacturing and its supply chain. Say, I am a company with X billions to throw at building a Fab. You could probably build one, but finding lithography suppliers, automation, building long term relationships with them and being able to do it in a cost effective manner is a monumental challenge. Okay, all that sounds logical, but they're not building a fab from scratch here. They already have (IIRC) 30 operational fabs in China. If you said this in 1999 or 2000 when China had no fabs you could have had a point - but they would have proven you wrong because they did precisely what you said they couldn't do by throwing money at the problem. >Another example is Tesla. They will and in the past have throw billions of dollars to build a solid manufacturing lines, suppliers and personnel; but you can see the challenge today when theyre trying to ramp up. Tesla had never built a single car before they got started, I do not think its a comparable example.
alexbeloi 8y ago
>Having worked in China in the semiconductor industry, it really saddens me what the Chinese are trying to do. I too have worked in China, and there is nothing sad about fighting and investing heavily to catch your competition. If the competition isn't careful, they'll get blindsided just like auto companies were by similar looking Japanese manufacturing investments in the 80s. Japan used to have a reputation for really low-quality manufacturing.
- fermienrico 8y ago
  Equating China with Japan is totally asinine. Japan long before the 70's had always been considered as a culture that respected quality and efficiency. In fact, every major manufacturing industry in the world today adopts some form of Japanese manufacturing principles. From airports to cancel hospitals; systems such as Kanban and Kaizen have been universally adopted. Name one thing we have adopted from China in terms of manufacturing principles/philosophy. Saying that China is what Japan was in the 80's is totally absurd and impossible to reason with. Not to mention, immense difference in Japanese and Chinese culture.
  - alexbeloi 8y ago
    It has little to do with culture and everything to do with current economic stage of development, Japan was known for making faulty mass produced garbage in the 50's and 60's, they used that economic model to bootstrap the manufacturing industry and to make investments in education, science, tech and manufacturing. From 1950 to 1970 Japan went from 40% agricultural to 17%. [0] Similar story taking place in China, just 30 years later (following the cultural revolution). From 1980 to 2010 China went from 33% agricultural to <10%.[1] Now you're seeing deep investments in education, software, high tech manufacturing, science. In 20 years, it will be normal to see Chinese brands leading the market in some areas the way Toyota, Honda, Sony and Panasonic did in the 90s and 2000s (and still now in some areas). >Name one thing we have adopted from China in terms of manufacturing principles/philosophy. I don't know who we are in this conversation, but from my point of view, there seems to be some kind of hegemonic-cultural war going on in the JAPAC region. I have no stake in the fight, so arguments stemming from the point of view of cultural superiority will fall on deaf ears. [0] https://en.wikipedia.org/wiki/Economic_history_of_Japan#Factors_of_growth https://en.wikipedia.org/wiki/Economic_history_of_Japan#Fact... [1] https://en.wikipedia.org/wiki/History_of_agriculture_in_the_People%27s_Republic_of_China https://en.wikipedia.org/wiki/History_of_agriculture_in_the_... edit: A side note is that Japan in the 80s was exporting their highest quality goods to the US while leaving lower-mid quality goods for the domestic market, this is also contributed to Japan's good brand growth internationally.
paidleaf 8y ago
> You simply cannot out innovate 4 decades of work in a few years no matter how much money you throw at it. Sure you can, as long as you have the people, resources and the infrastructure. > Also, China has a branding problem and it is only going to get worse. So did every country. When we were starting out as a nation, we stole IP from britain and we were known as the nation of the shoddy. Believe it or not, germany was once known as a nation of terrible brands and shoddy products. So was japan. Ask your grandparents. "Made in japan" was equivalent to junk in our grandparents time. The same with korea. It's only within the past 20 years that korea shed the "junk" image with Samsung, LG, etc. Also, for most of history, "made in china" was considered high quality. That's why we have terms like "fine china". Until the opium wars and the collapse of china, china was renown for quality goods. History has shown that countries move from shoddy manufacturing reputation to quality reputation. Don't really see why china would be the exception to the rule.

crb002 8y ago

DOD would have way more cost effective spending ditching the F-35 flying turkey and buying the IP for TSMC, and moving US fab to Virginia/Austin.

fermienrico 8y ago
But that takes more than 3 years. So not an option for Trump. Tariffs are instant.
HillaryBriss 8y ago
yeah, but ... does the IP for TSMC reside in some easily transferred tangibles? wouldn't the DOD really need to transfer the whole community of engineers and ecosystem of suppliers?
- woolvalley 8y ago
  Engineers in Taiwan don't make that much money. Just saying you'll pay them standard US engineer salaries and add instant green cards for their families as part of the acquisition and you'd probably get most of them to move. TSMC although is a pretty foundational company of Taiwan. It would be like the US buying samsung and then moving everyone to the USA. Taiwan might stop you.
tooltalk 8y ago
can't read through the paywall, but what's TSMC got to do with it? Intel, Micron, GlobFo and Samsung all have fab capacity in the US.

lsiq 8y ago

Considering the two sticks of Micron RAM I purchased in mid 2016 have appreciated 2-3x value, I don't have much sympathy for the big three DRAM producers. There's a reason the Chinese are looking so longingly at their lunch.

tooltalk 8y ago
Micron and other DRAM producers were losing money due to DRAM gluts two years ago. That discouraged capacity investment and, as many insiders had predicted, it led to eventually higher price today. Sure, you got bargain at their expense two years ago and now everyone is complaining about the higher cost of DRAM today. But that still doesn't justify IP theft.
- baybal2 8y ago
  DRAM makers make $10k per platter. A single fab pops 20k - 30k complete wafers a month, and each top tier maker has 4 to 6 of them. Thought, all makers are working at only 60 to 70 percent capacity now. You can guess, they are plump with money, and MOFCOM officials naturally want to communize some part of this money pile.
  - chollida1 8y ago
    Is your math really right? > DRAM makers make $10k per platter. A single line pops out 40k a month, a single fab has 20+ lines, a fab complex has up to 8 fabs. Each DRAM maker has few fab complexes. If I do this I get 10,000 * 40,000 * 20 * 8 which is $64 Billion.... per month. Are you suggesting that the average DRAM maker should have revenue of $64 Billion a month or $768 Billion a year? It sounds like you know the industry and I'm looking for some additional colour here.
    - baybal2 8y ago
      my bad, my bad. Corrected my digits. We are looking at around 20 to 30k complete DRAM waffers per fab. For god knows what reason, digits for a line and a whole fab swapped places in my head.

Invictus0 8y ago

Corporate and national espionage are as old as time, and senior leadership needs to wise up to this threat. China is running the most broad and sophisticated IP espionage campaign in history, and most companies think a 15m PowerPoint about not responding to phishing emails is sufficient protection against this. Until we get some strong legislation on corporate data security, this is just going to keep happening.

HillaryBriss 8y ago
US corporations are willing players in this game. in exchange for their IP, US corporations are promised vast revenue from access to China's markets. the C-suite benefits. shareholders probably benefit. does the average US resident benefit?
- hotdog97 8y ago
  Why should the average US resident benefit from what you describe? (I mean - what did they contribute?)

groupthinking 8y ago

Worth reading this blog; they tend to cover related issues: https://www.chinalawblog.com/2018/03/how-to-give-away-your-ip-in-china-without-realizing-it.html https://www.chinalawblog.com/2018/03/how-to-give-away-your-i...

genericone 8y ago

I mentioned this in a previous comment I made: "It's a very secret industry, and getting even tighter now since China has been blocked from acquiring the latest semiconductor technology. China has so far invested over $40 billion in boosting their chip-making abilities, to acquire capital, IP, and knowledge-workers. Given their history of borrowing technology from other countries without attribution, if I were at the head of a semiconductor related company, I would clamp down on the secrets ahead of the danger." Looks like the clamp-down didn't happen soon enough...

baybal2 8y ago
>China has so far invested over $40 billion in boosting their chip-making abilities, to acquire capital, IP, and knowledge-workers. There is a rumour going that the ministry of commerce has been given a war chest of ~$140B+ to establish self sufficient semiconductor industry in China. I can guess that those $40B is just a part of it that was spent on direct funding of their chipmakers. Another big part probably goes to "one day funds" like Canyon Bridge Capital that appear out of nowhere with few billion bucks just to disappear a year later when they are done buying a target company.

baybal2 8y ago

My comment on the article. Usually I am of higher opinion of NYT, but now this piece of writing is simply tendencious The court case covered there is just plainly the case of plaintiff's lawyers being paranoid about about petty theft case, and having rich imagination. Think of Aron Schwartz case, except even more absurd here, as the defendant have called police on himself. An employee from mainland who previously worked at a competitor company accidentally put coworker's phone into her bag along with papers on the table. They guy thought that his phone was stolen and called police, police found his phone in a locker of a coworker. During investigation of that theft, they stumbled on some company docs on the phone, and opened an espionage case based on that. Why a defector would file a police report on his accomplice? For it to be an espionage, a less lame way to exfiltrate information would be employed, and certainly, a spy will not call the police to arrest his accomplice. Just thinking that somebody can carry netlists for a chip which take few hard drives to store in compressed form on a tiny memory of a smartphone does not pass a BS test.

wishart_washy 8y ago

Notes from the ground here. My undergrad was in EE at an "elite" school - I can say definitively that ~50% of the MS/Ph.d. students in EE were from China (with the other 50% largely from India). They TA'd many of the graduate level courses and were the majority of the students taking high level semiconductor design courses that centered on fabrication and nanotechnology. China's short term goal is clearly to reach parity so these students can enter a mature semiconductor industry. Give these students ~5-15 years to gain expertise from the American academic system and industrial research base and I think we'll start seeing China innovate. American expertise will naturally decline because we don't have students studying EE. To many good full-stack jobs that pay ~40% more.

vkou 8y ago
Throughout the 20th century, the United States benefited greatly from this sort of knowledge drain, from war-torn Europe, and from the Soviet sphere of influence. The trend is just reverting to the mean.
- frozenport 8y ago
  Nonsense, many of these countries didn't exist long enough to establish "mean" trends. How old is China? Confucius Institute progpoganda not withstanding, maybe 30 years? There is only what is now, and how we stop China from fucking us over.
- andygrovetheman 8y ago
  Many scientists and academics immigrated to the US because of its values: it was a free country and a multicultural country where immigrants are welcomed. The knowledge drain moved smart people to a free country to build a knowledge economy. (Economists too: the Bretton Woods system was built in part by smart people who fled the autocratic or fascist countries). That system of free exchange between stable democracies with social safety nets kept peace in the world for 50 years. Not sure this brain drain has equal intentions for rule of law and democratic societies.
- worldengineer 8y ago

nimish 8y ago

History rhymes. American industrialists famously begged, borrowed and stole machine designs from Europe -- Slater the traitor kickstarted the American cotton industry. Of course, the lack of foresight of Wall St is legendary! Many companies have traded long term loss for short term gain.

andygrovetheman 8y ago
IP and knowledge was much less valuable in the 19th C industrial economy than it is today. Back then execution and raw materials and access to semiskilled labor was most important. The Chinese (NK, Iranian, Russian) corporate hacks we have seen recently could have a MUCH larger economic effect.
- nimish 8y ago
  Not really. Britain banned textile technicians from leaving the country because textile machinery knowledge was overwhelmingly valuable. Semiconductor IP is not nearly that important.
- imglorp 8y ago
  The problem was recognized at the time, though. The first US patent was in 1790 (a process to make potash), the beginning of the industrial revolution. Of course, now we buy portfolios of patents as an investment backing extortion as a business model, or as bludgeon to slow competition.
- paidleaf 8y ago
  > IP and knowledge was much less valuable in the 19th C industrial economy than it is today. Actually it was far more valuable because it was far rarer and you could do far more with it. With IP you could own/dominate the entire textile market, the entire cotton market, the entire oil market, etc. With IP you could dominate the world's oceans with your navy. It's counterintuitive but IP at the beginning stages was far more important. > The Chinese (NK, Iranian, Russian) corporate hacks we have seen recently could have a MUCH larger economic effect. This is simply not true. The markets today are much larger and far more diverse and the IP space is ridiculous complex, large and diverse. Of course IP theft has a significant economic impact today, but IP theft 200 years had a far greater effect when industries and IP was so limited.

oh_sigh 8y ago

Is there a 'fruit of the poisoned tree' rule in international trade and tariffs? If the US puts tariffs on Chinese chips because they think they are derived from knowledge that was stolen from a US company, will they get chastised by the big international trade organizations?

newnewpdro 8y ago

Apparently this is what war between nuclear nations looks like in 2018.

wetpaws 8y ago
Thanks god we live in an age of globalized economy

oldandtired 8y ago

It has been interesting reading the various opinions being expressed here in this discussion. As a couple of writers have noted, the appropriation of knowledge (without attribution to the source) has been the mainstay of technological advancement by the major powers over many decades, if not centuries. Even though it is popular to classify such appropriation as "theft", it isn't theft. The term is used often in a cynical way by those who have appropriated such knowledge from others before them to provide a justification to maintain an advantage over those who follow them. Theft requires that the original party no longer have access to the items in question. For theft of knowledge, one would have to ensure that the deaths of those who know it have occurred and that there are no extent records available for that knowledge. There have been many in the USA, including government organisations (civil and military), who have appropriated knowledge from others for their own benefit. One only needs to look at the history since the late 1800's to see many of these appropriations. Many countries, organisations and individuals have done this. It has happened in the past, it happens today and it will happen in the future. In one sense, the only solution is for the free dissemination of knowledge in every area, but in many areas that will not happen. I have a friend who will be prosecuted if he releases any information about a certain subject matter that he developed and was going to use commercially because a certain government pushed another government to appropriate that knowledge. These things happen and happen regularly. So China appropriating technological know-how to various areas is nothing new and is just following in the footsteps of those who have gone before. So getting in a tizzy about it is not helping. If one wants to make a difference then be better at that area than anyone else. Produce what the consumers want at a price they are willing to pay and you will get a market share. If someone copies you, then use that as a marketing strategy. Make sure that you can do it better than them. There are enough examples of companies and individuals that produce quality and still make enough to keep going. Look at your game plan and stop worrying inappropriately about the competition. If you are being copied then you must be doing something right and you can use that to your advantage, even if you are a one-man shop.

DyslexicAtheist 8y ago

I worked for Nokia when we outsourced part of our R&D to Huang Shu. 2 years later many of the sites employees moved on to work for Chinese gov backed tech firm, and the source code of what I wrote for Nokia and that of several colleagues popping up on github. It wasn't critical in terms of copyright or deep secrets about the product. But it contained info that allows an outsider get a very accurate picture of the software supply-chain and a potential gold-mine for further social engineering and/or attacks against the firms supply chain security. So if you have the habit of adding your name in the /* comment stanza */ in all your source code, I urge you to "vanity search" your name in github/gitlab repos. Also if you are serious about supply-chain security, and go to great lengths of buying in China but assembling your IP in Malaysia, Vietnam, etc, ... remember to compartmentalize. If you're a person of interest (any engineer in a larger tech-company is), then use a dedicated phone for communicating with China where you install WeChat and be careful how you move information across the 2 domains. edit: WeChat Security concerns: https://en.wikipedia.org/wiki/WeChat#Security_concerns https://en.wikipedia.org/wiki/WeChat#Security_concerns

optimalKEK 8y ago
So are you a Trump supporter who HATES free trade and immigrants??

prirun 8y ago

Boo hoo, poor Micron. Seems there are some hidden costs to exporting all manufacturing to China. This has happened over and over (see because China often requires American companies "partner" with a Chinese company to setup shop in China: https://www.chinalawblog.com/2011/04/fellowes_brought_to_its_knees_in_china_blame_the_joint_venture.html https://www.chinalawblog.com/2011/04/fellowes_brought_to_its... US companies like cheap foreign labor and manufacturing, but need to realize there could be a high long-term cost - one that could put them out of business. We Americans seem to have a hard time focusing on long-term results. If an action boosts short-term profits or the stock price, we do it.