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Full disclosure, I work for Intel. We have a fabrication plant in Chengdu, it's public knowledge that this fab is helping to manufacture products built on the

• jbay808 8y ago
  Why did Intel decide to build a fab in Chengdu?
  • rwmj 8y ago
    Rules of Origin & tariffs at a guess? Sometimes you can be creative with attributing value to each subassembly such that the place where you finally package something can make it "Made in China" (which in this case might be an advantage).
  • rb808 8y ago
    I guess nearly all laptops are made in China so it makes sense to make the CPUs nearby. Esp if cheap labor, cheap land, and low environmental standards.
• deleted 8y ago
  [deleted]
• devoply 8y ago
  > I really can't fathom how the American government let this deal occur. greed and cheap labor. the exploited become the exploiter.
• solotronics 8y ago
  The American government is not a single entity as much as the Chinese government is. Also, if you are a CEO in the US and your tech gets stolen by China what is the repercussion? Nothing really. If you are one of the critical companies in China and the government finds you are letting info leak out I would think there would be major problems for everyone involved.
  • chrisco255 8y ago
    I mean, your business might go down the tubes if you let trade secrets out in the wild, while Chinese manufacturers undercut you on cost.
    • markdown 8y ago
      Any adverse effects would be felt many quarters in the future.
• dmortin 8y ago
  The US government? Isn't it Intel's problem in the first place? Don't the leaders of Intel care if their latest processor technology is copied and then used by competitors?
  • 40acres 8y ago
    Yes absolutely, and look -- this is not to say that Intel does not have strict guidelines and processes that protect information. Certain things are definitely need to know around here. However, Intel is a business and if they've calculated that the cost of doing business is worth the risk they will take the risk. The government has put restrictions on semiconductors doing certain types of manufacturing in China but I wonder if these regulations are sufficient enough. For instance, you can only manufacture CPUs in certain countries if the process is a couple of generations old. As Moore's law slow down the improvement from generation to generation will become less, are our current regulations sufficient enough to address this coming future? That's my concern.
    • _cs2017_ 8y ago
      You say Intel decided the risk is worth the reward. Are you suggesting that the trade-off they chose is not the right choice for the US as a country? Why? Wouldn't Intel be the one hurt the most by any IP theft?
      • newnewpdro 8y ago
        I think it's not unusual for companies to be forced to accept such risks if their competitors have already done so and that's enabling the competitors to win. Governments can intervene to keep the playing field level, while protecting the national interests. If it's true that the US has a dominant position in this space, then it's true that the US government has an opportunity to prevent the US companies from shifting manufacturing to where it's likely to result in IP theft in the process of competing with eachother in the manufacturing costs deparment. If all the companies in the space are forced to ignore the cheaper manufacturing option, that self-destructive avenue of competition is off the table on equal terms. However there's still the threat of foreign competition undercutting on manufacturing, if they catch up in the IP department (which IP theft certainly accelerates).
• vokep 8y ago
  From people I've talked to who do manufacturing in China...if you aren't literally watching every single employee, every single moment, your IP is being stolen.
  • deleted 8y ago
    [deleted]
  • setquk 8y ago
    I’ve considered leveraging this in electronic manufacturing. Send design off to be cheaply fabricated, wait for it to appear on aliexpress as a clone with all BOM cost optimisation done free. Buy bulk lots and resell in local country. Bingo!
    • moflome 8y ago
      I agree. Doing this now for 5G "mesh" based BTLE devices which I hope will drop dramatically in price. Working out low-cost PMIC, crystal and passive component compatibilities for US based chipsets is a bit of a regulatory issue, but the "clones" iterate so fast I expect them to have complete designs available by mid-2019 and hope to make the money on the software / data.
      • setquk 8y ago
        Interesting. I suppose your value add could be EMC, packaging, support and infrastructure on that.
    • woolvalley 8y ago
      Then hire another factory to clone that BOM optimized part for v2 :p
      • setquk 8y ago
        Just wait :) If you look at the really cheap multimeters based on the DT830 design root they were originally derived from early Fluke DMMs circa 1985. Fluke hired Intersil to make the ASIC, Intersil second sourced it, the Chinese cloned it and cost optimised it, and then more Chinese guys cloned the target devices (panel meters and DMMs) and built mass production lines. Optimally they even optimised out the DIP packages as they were expensive and bonded the die straight to the PCB. Down from $500 a pop to $2.
• kevin_b_er 8y ago
  Intel would do well to be wary. AMD already gave away all their IP to their new CPUs to the Chinese government with the Dhyana cpus.
  • gscott 8y ago
    AMD gave away the farm but the money (I think 300 million) saved the company. All of this new innovation from AMD certainly arises from that money. Now however China has easier access to CPU's to build new supercomputer's find find ways to nuke the USA in new novel ways.
    • ethbro 8y ago
      > All of this new innovation from AMD certainly arises from that money. Just to be clear: Zen microarch design work started circa-2012. The USD$300m deal was circa-4/2016. It's accurate to say the capital from the deal likely helped AMD finalize, produce, and distribute Zen / Epyc. But the microarchitecture design innovation predated the cash infusion.
      • CathayRe 8y ago
        >It's accurate to say the capital from the deal likely helped AMD finalize, produce, and distribute Zen / Epyc. It didn't, it just gave a pass / access to Alibaba and Tencent as well as other Government related project to use AMD CPU.
        • ethbro 8y ago
          We're not talking about the same thing. You're talking about the deal, I'm talking about what AMD did with the cash from the deal. Look at their balance sheet, and note that without the $300M infusion, the market would have been spooked by their debt levels. https://finance.yahoo.com/quote/AMD/cash-flow?p=AMD https://finance.yahoo.com/quote/AMD/cash-flow?p=AMD
    • mtgx 8y ago
      Amd also gave away the GPU farm when it made a similar deal with Intel. Both are shortsighted.
• deepVoid 8y ago
  For that same reason, Intel's chips should not be trusted by other countries. It is highly likely that Intel has planted backdoor into their chips. Thus, China and other nations should foster and develop their own chip industry and abandon Intel altogether. India, Canada, Japan, Europe, Russia should all ban Intel chips.
• hungryhobo 8y ago
  packaging and assembly is kinda low on the value chain, where china has already developed the know how. That's probably why there's a fab there.
• princetontiger 8y ago
  The US became a soft country after the Apollo moon landings. When we look back, the 50s and 60s will be seen as the height of America. Another peak occurred in the late 90s. It's downhill from here, unfortunately.
• zerohp 8y ago
  A packaging facility is not a fab. It doesn't really give them any advantage in reverse engineering the silicon over someone that buys the end product and de-packages the die.
  • microDude 8y ago
    Nope. When you de-package the chip you damage it, especially on small features. They have access to the die bank, which means they have perfect die. Probably, with test pads still exposed. A microscope, etcher, etester, and patience is all you need to reverse engineer.
    • hakfoo 8y ago
      I always wondered about the latency on a successful reverse engineering of something like a modern CPU. I'd expect there's a huge validation stage involved-- flaws in the extraction process could give you a plausible looking but ultimately faulty design to work with, and you have to check and clean that up. Moreover, if you don't have exactly Intel's fab technology and oral-tradition knowledge, you probably have to retool the design to be more suited to the process you have. It might still be a boost over whatever they have to offer now, but by the time it hits the market, it would be a generation or two old.
• drharby 8y ago
  I can wholeheartedly believe to state of affairs as a nature of economics. Nobody bothers to quantify the risk of corporate espionage
• nickysielicki 8y ago
  When American companies cannot operate freely (in the economic sense) in China and, more recently, when Chinese companies cannot sell their products freely in America, does it really matter? They are basically isolated markets at some point.
  • eloff 8y ago
    This is hardly the reality, plus the world is bigger than just China and the US.
• AlexCoventry 8y ago
  > My concern is more about the ability for the Chinese to potentially reverse engineer these products at assembly Would that be substantially more difficult with the finished product?
  • akiselev 8y ago
    In order to push the performance on high end chips, you have to improve thermal conduction between the wafers and the chip package. This usually requires some sort of material (sort of like thermal paste) that doesn't interfere with the electronics but still provides excellent thermal conductivity. You can't use metallic compounds because it would short the wafer so in practice the material usually has strong bonding properties like a glue. The smaller your feature sizes, the higher the probability that opening the chip to reverse engineer the wafer will rip up part of the silicon you're trying to see. The most interesting pieces of an integrated circuit also tend to be thermal hotspots (i.e. the Intel CPU instruction pipeline vs the cache) which are more likely to be destroyed because they use a stronger bonding material.
• userbinator 8y ago
  My concern is more about the ability for the Chinese to potentially reverse engineer these products at assembly and derive IP. The Chinese are, along with the Russians, probably at the top of the world's best reverse-engineers. You can bet they'll have already reverse-engineered it even if it wasn't made in their country.
• sfifs 8y ago
  This should be a management problem - why is it a government problem? Basically you are saying that your capital structure incentivizes managers to value short term gain over long term costs and so you would like to short circuit that with government intervention. However, when a government intervenes, it will never really leave you alone :-)
  • 40acres 8y ago
    I'm concerned that a company like Intel, makers of some of the most valuable IP in the world, decided to invest in a foreign country instead of it's own when a company like Amazon -- which has great IP but don't get me wrong the Chinese have an equivalent (Alibaba) was able to scoop up prime real estate in NYC and DC. Now Intel has a lot manufacturing based in the US, like I said Congress passed a law to make that happen. But have we looked into why we're allowing Foxconn to get tax breaks to build in "heartland" America but not Intel? An iconic American name?
    • dillondoyle 8y ago
      I'm sure Intel could/does get tax subsidies for land/building. But I don't think that's major the driver of cost for what we're talking about here. It's cost of skilled & specialized labor, and externality costs of supply chain availability.
    • warrenm 8y ago
      So you think Intel should've setup shop in NYC or DC?
• thrower123 8y ago
  Is it really any cheaper to build things in China? There are enough broke-ass places in the US where you could open a plant and offer $9 an hour and get the cream of the crop
  • fooker 8y ago
    Can you get ~1000 9$ an hour employees with engineering degrees though? In China and most of Asia, you easily can. While these people won't be MIT grads, you can expect significantly higher scientific temperament compared to $MiddleOfNowhere, Utah.
    • RamanathanR 8y ago
      You have hit the nail on the head. The reason that Silicon Valley has so many of the Chinese/Indian/Other nationalities is simply because of the volume of available "Good Enough" Engineering talent. In most of these cultures a Master's degree is almost the norm. With this in hand, the practical aspects can often be learnt in training/on-the-job. Given that much of Modern Engineering has been systematically streamlined and commoditized, you really don't need very much "Creative" and "Out-of-the-Box" thinking as much as people who can manage and contribute within the existing framework and systems.
    • thrower123 8y ago
      I assume you can, because holy fuck, are these supposedly engineering grads that I deal with from tata and cognizent and att and others of these gawdawful out sourcing outfitz, fucking terrible. I wouldn't hire for them to mow my lawn. I can't express my distaste such companies any more without entering explicit territory.
      • fooker 8y ago
        > I wouldn't hire for them to mow my lawn You wouldn't but enough people are, apparently, hiring them to do quite a lot of IT work nobody else would touch. Otherwise their business model wouldn't work at all.
• onetimemanytime 8y ago
  >>so if you're reading this Intel folks don't track me down Should have changed your name for this post that doesn't put Intel in a good light: Just by your posting history they can probably track you down. Black activist--start from there and see if you made any complaints or suggestions to intel. Plus our style of writing is more or less unique. But I agree with others, Intel management (at a certain point) may have interests that might be against the long term interests of Intel. Say, bonuses. That's the worst, but they may also make mistakes in deciding pro-cons. Lastly, say that tech is worth $25Billion to Intel, and after x years is essentially worthless. Intel gets $15Billion from China in tax breaks, and sells more than $10B to others meanwhile. So economically it's worth to Intel and China gets the tech. But it is worth to our NatSec?
• mindentropy 8y ago
  The hype of China has been done by the different investment bankers who were going on an on about China in the 2000-2005 time frame. The governments are lobbied by these investment bankers.
• baybal2 8y ago
  Question, out of all places, why did Intel put plant in the middle of nowhere Chengdu?
• jnurmine 8y ago
  If this is a widespread issue, I wonder why do companies insist in building/keeping fabrication facilities in China? I would guess the cost structure of chip manufacturing is heavy towards things other than personnel costs... but is that really so? Is the waste management more "flexible"? Is it the price of electricity that is cheaper? Or what is it?
  • CathayRe 8y ago
    Because you can't access the market without giving in / setting something up in China. Which is the whole Trade War argument about Free market, access and IP. I am not sure how long before the West learn they can expect whatever International "Standard" and "Values" to ever work in China.
  • withhighprod 8y ago
    If you are big names like Intel, everything is cheap. Local government could give you insane special rates(remember China has no rules, what you need is just an approval from a single local leader) And the average salary in Chengdu CITY is about $400/month ($800 in tech and they might have master degree)
• liftbigweights 8y ago
  I see the same comments every time a china topic is posted on HN. I wonder why? > I don't think it would be far-fetched to assume that some very protected and valuable IP has leeched through our doors and into China's hands. China has a "technology transfer policy" for foreign companies doing business in china. So if intel has a fab in china, they agreed to the technology transfer. > In all honestly I really can't fathom how the American government let this deal occur. Probably because it benefited US companies and the wealthy. If china is stealing anything, it's here in the US, not from intel who agreed to trade technology for chinese market access.