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The US is trying to block China's access to EUV lithography devices as well, which are required to fabricate chips at the 7nm scale and below. The lithography m

The US is trying to block China's access to EUV lithography devices as well, which are required to fabricate chips at the 7nm scale and below. The lithography machines that Chinese companies (in particular, SMIC) want to buy are produced by a Dutch company, ASML. The US government recently pressured the Dutch government into blocking a sale of such machines by ASML to SMIC.[1] The US government has identified EUV lithography as a bottleneck in the semiconductor industry, and is trying to keep that bottleneck in place, as a pressure point that can be used against China in the future. The Brookings Institution has laid out the strategy.[2] Of course, that means that the Chinese government will now probably invest heavily in domestic lithography companies. The Brookings Institution thinks that the US can shut China out of high-end semiconductor production indefinitely. That seems like a pretty foolish conception to me. 1. https://www.reuters.com/article/us-asml-holding-usa-china-insight/trump-administration-pressed-dutch-hard-to-cancel-china-chip-equipment-sale-sources-idUSKBN1Z50HN https://www.reuters.com/article/us-asml-holding-usa-china-in... 2. https://www.brookings.edu/wp-content/uploads/2020/04/FP_20200427_computer_chips_khan_flynn.pdf https://www.brookings.edu/wp-content/uploads/2020/04/FP_2020...

rfoo 6y ago
That's not foolish. Modern lithography technology (and in general high-end semiconductor production) is complicated enough that neither US nor China may catch up in reasonable time, if they are targeting a domestic supply chain. That said, the caveat here is the "neither US nor China" part, why would ASML, a Dutch company, align itself with US?
- DiogenesKynikos 6y ago
  What I mean by "foolish" is that in the long run (a decade), it will not work, and the entire policy of trying to stunt China's economic development will lead to conflict sooner or later. ASML didn't have a choice in the matter. The US government pressured the Dutch government to withdraw the export license. That's at the diplomatic level, way above the heads of company executives. The Netherlands is part of NATO and is more closely aligned with the US than with China. But the Netherlands could at some point decide that it just wants to do business with everyone.
  - mytailorisrich 6y ago
    The US are trying to delay the inevitable but they might instead precipitate it, and that is costing them at the same time. The second issue here is Europe's continued weakness. If ASML controls EUV lithography then Europe should be much more assertive.
    - DiogenesKynikos 6y ago
      My impression is that the European Union is too politically fractured to mount any consistent policy. Just one example: the French government has made noises about doing something to counter the United States' extraterritorial application its sanctions regime. US sanctions against Iran effectively apply to European companies, even if they have basically nothing to do with the US. The US can unilaterally force the EU to stop doing business with Iran. The French see that as a violation of their sovereignty. The problem is, if France proposes to do anything about it, Germany will object, because Germany fears that the US will retaliate against the German automotive industry. Imagine if the US could only take action when 50 states all agreed. There's no powerful central government in Europe that can decide to temporarily sacrifice some interests in order to achieve something more important - establishing independence of action from the US on sanctions policy.
      - yorwba 6y ago
        > The problem is, if France proposes to do anything about it, Germany will object, because Germany fears that the US will retaliate against the German automotive industry. I was under the impression that Germany is generally on board with the idea of using the INSTEX special-purpose vehicle to trade with Iran despite US sanctions. Of course the first (and only?) transaction was only completed this year, so the mechanism doesn't look too successful so far: https://www.auswaertiges-amt.de/en/newsroom/news/instex-transaction/2329744 https://www.auswaertiges-amt.de/en/newsroom/news/instex-tran...
        DiogenesKynikos 6y ago
        INSTEX has done virtually nothing to weaken the sanctions regime. The EU would have to take much stronger measures if it was really serious about preventing the US from imposing its sanctions regime on European companies. I'm not an expert, so I can only guess at what sort of measures Europe would have to take, but I imagine they would involve reciprocal retaliation for any measures the US takes to punish European companies.
- markvdb 6y ago
  The US have a long track record of using soft power and extraterritorial law to punish foreign states and companies, including supposed allies. The two most interesting cases where high profile European companies were targeted had something to do with US sanctions against Cuba and Iran. Examples abound. Look at what happened to BNP Paribas. This is how it looks in a press release: https://www.reuters.com/article/us-bnp-paribas-settlement-sentencing-idUSKBN0NM41K20150501 https://www.reuters.com/article/us-bnp-paribas-settlement-se...
  - nyolfen 6y ago
    if a country does not do this, it is only because they lack the strength
  - exclusiv 6y ago
    Can you explain this from the article: "Georges Dirani, BNP’s general counsel, told the judge that the bank accepted “full responsibility for its conduct" "There’s no question the organization will not tolerate the kind of behavior we have seen in this case,” Dirani said." Am I missing something or did you just submit a terrible example for your allegation?
    - markvdb 6y ago
      I suspect you're missing somethingindeed. Of course, BNP's general counsel sounded submissive. His company entered a plea deal in the US. The issue at stake is how extraterritorial the US legislation is. Should the US government be able to determine that an EU company cannot do anything anywhere anytime involving US dollars if it has Iranian clients for example?
      - exclusiv 6y ago
        I reviewed more and I don't appear to be missing anything. Yes to your question. "BNP Paribas has been present in the United States since the late 1800s and currently has over 16,000 employees in North America." [1] From the article: "The sentencing followed BNP Paribas’ guilty plea in July to conspiring from 2004 to 2012 to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act." You violate Acts and you want to operate in the US, you get sentenced. If they want to play ball, they need to follow the laws. "Authorities said that BNP essentially functioned as the “central bank for the government of Sudan,” concealing its tracks and failing to cooperate when first contacted by law enforcement." You had written - "The US have a long track record of using soft power and extraterritorial law to punish foreign states and companies, including supposed allies" Again, you submitted a terrible example. [1] https://usa.bnpparibas/en/bnp-paribas/bnp-paribas-us/ https://usa.bnpparibas/en/bnp-paribas/bnp-paribas-us/
- amelius 6y ago
  > Modern lithography technology (and in general high-end semiconductor production) is complicated enough that neither US nor China may catch up in reasonable time I suppose that much of the tech is already in the scientific literature, and the "only" problem left is putting the pieces together.
  - Olreich 6y ago
    Intel can’t do it. The leader of chip fans for near half a century failed to deliver on this generation of lithography. That’s the level of difficulty we’re talking about.
    - amelius 6y ago
      Intel is stuck in fierce competition. They don't have the money that China has. I suppose that Apple or Google would be able to pull it off though.
      - BobbyJo 6y ago
        Neither of those two companies have any of the needed expertise. If all you have is money, it will take you decades to catch up.
      - flyinglizard 6y ago
        Neither have any fab operations, what makes you think they could make a dent? Mind you don’t have to just make chips. You can’t make inferior chips and brand them a certain way. You need to be an actual market leader at the cutting edge of fab technology, otherwise Apple devices will not be competitive.
  - ktta 6y ago
    There is a reason TSMC is the only fab working on <='7nm' class lithography. It is hard. It also requires massive amounts of capital expenditure. And that's the case when the critical equipment is bought from a different company that's again, in a league of its own. So even if the 'only' problem is putting the pieces together, that doesn't mean it is even possible. Look at it another way-- same thing can be said about Nuclear Fusion :D
- the-dude 6y ago
  > why would ASML, a Dutch company, align itself with US? Are you kidding me? Why do you think we ( the Dutch ) are in Iraq and Afghanistan? If the US asks, we ask : how high?
  - NicoJuicy 6y ago
    The sentiment is changing somewhat though. The US used to be a leader in the Western world. Currently: not so much. The value of the US with shared 'western' values is greatly declining, since they are retreating from almost every partnership.
    - avmich 6y ago
      This effect wasn't visible during previous White House administration and perhaps will be reversed within the next one. Current isolationist politics, with explicit mantra "America first" looks more like an aberration rather than a long term reality.
      - close04 6y ago
        Trust is easier lost than gained. In international diplomacy "losing trust" simply means you get a wake-up call: what happens next time the White House decides to squeeze their allies? With populism on the rise the next president might go for the jugular for next to nothing because that's what voters with no understanding of international diplomacy and politics want and expect. Right now the US "pays" for the support of other western countries by footing the bill for everything military. When this is outweighed by the abuse of soft power it may just start pushing allies towards other soft power projecting countries.
        avmich 6y ago
        > Trust is easier lost than gained. Completely agree. America has a lot to do to gain it back; it's a long process. "Squeezing allies" sounds interesting. Maybe they shouldn't be "squeezed" in the first place, so it's good that they can't? On the other hand, if, for example, Europe sees the benefits in countering some specific China expansion issue, USA won't need to ask too much for a concerted response. And frankly, Western alliance has no alternative today; maybe only going alone - or as a European Union, but USA (and Canada to a degree) are still the best partners. That doesn't mean, of course, that USA doesn't make bad mistakes lately.
- rapsey 6y ago
  > why would ASML, a Dutch company, align itself with US? Netherlands is a founding NATO member. It boggles my mind how this is even a question to anyone.
  - temac 6y ago
    Not really a strong criteria: so is France but we are kind of tired of US bullshit.
    - rapsey 6y ago
      Tired of US or not France is firmly in the western world.
      - temac 6y ago
        But that's so vague that so what? Tons of high profile people have been talking about how it is not tolerable that the US is unilaterally forcing embargoes using the $US and tech as a weapon. Development of alternatives take time, but this has already started. The goal is not to replace the US with China. Not only things are not reducible to a single dimension, but even if they were, it does not make the need to enforce our own sovereignty disappear.
        082349872349872 6y ago
        Et que nos champions songeaient à se défendre / Arrive un troisième Larron / Qui saisit Maître Aliboron ?
    - rumanator 6y ago
      > so is France but France has always been kind of contrarian. For example, they are NATO members but unbelievably they were also selling Russia a couple of Mistral landing platform docks.
    - ardit33 6y ago
      No one in NATO trusts France (especially former communist countries). France left once, and came back. They used to pander to communist regime during the Cold War. During the NATO bombing during the Yugoslavian dissolution, a French General was caught giving out the bombing plans to the enemy. No wonder nobody likes their foreign policy, and Macron is puzzled why the other EU countries don’t follow France in creating a Common EU military force. The other countries know when push comes to shove, the US is a reliable partner, while France is not.
- markus_zhang 6y ago
  Because if you don't align itself with US there is going to be extended trouble from all angles.
- devy 6y ago
  Because ASML uses lots of technologies and IPs originated from the U.S., consequently is subject to export control & entity list restrictions. Semiconductor industries has been growing into a very tightly coupled and globalized eco-systems these days. No one country can own or domesticate the entire ecosystem or supply chains, albeit companies headquarters in the U.S. still own a significant portion of the technologies and intellectual properties.
  - DiogenesKynikos 6y ago
    This tight global integration is why US sanctions policy is so disruptive. The US is asserting the right to tell European, Japanese, Korean and Taiwanese companies who they can do business with, based on those companies' connection to the US economy. Use of American-designed software, interactions with a US bank, engagement in dollar-denominated transactions, etc. can all put a company under American jurisdiction. It will be interesting to see if European countries begin to try to push back against this policy. Imposition of American sanctions against Iran on European companies have already caused a good deal of consternation in Europe. But so far, the EU has been too fractured to do anything serious about it.
    - HenryBemis 6y ago
      "We" give them the right, USA cannot stop a bank transacting with X or X company in Iran, Cuba, etc. but since USA owns the USD they can block these banks from using/clearing USD which is a lethal blow for a bank. But if USA gets on the wrong side of this and countries start phasing out $ and start favouring € (this is a 50 year process btw) then USA will have an empty threat in its hands. And I do know that there many connecting points/sanctions that can be imposed, not just the currency.
    - thejynxed 6y ago
      It's supposed to cause consternation because even the UN has declared Iran a state sponsor of terrorism for the last fifty years and nobody in the EU should even be considering doing business with them.
- jmknoll 6y ago
  Because the US and the Netherlands are long-term strategic allies and partners in NATO, share a broadly similar vision of a world governed by international institutions and the rule of law (if the current US decline into authoritarianism can be reversed), and largely share a common culture and history? The Netherlands has benefited greatly from 400 years of the dominance of western civilization, and I assume they would want to see that continue?
  - Udik 6y ago
    Much more simply, because the US is a rich customer and military giant with a population of 330 million, and has the means to hurt the Netherlands, a country of only 17 million people. This is not moral suasion, this is pure and simple bullying.
    - fastball 6y ago
      Pretty sure China has a handful more than 330 million people.
      - Udik 6y ago
        Sure, but the Netherlands is not as interdependent with China as it is with the US. The point is that the US is not convincing the Netherlands that blocking China is a smart move (because it isn't), it's forcing it with threats.
    - HenryBemis 6y ago
      USA can bully many countries, but NL is part of the EU so sit back, shut up, and play nice. To make this even more political, UK is (finally) leaving the EU, and as they have been USA's little bitch/snitch for the past few decades that makes many Europeans happy. EU is not the enemy of USA. If anything we are trying to create a peaceful union based on collaboration and respect. And we want to form a unified culture of respect and peace with freedom and progress. And on the EU side we are making it happen slow and steady. "You Americans" go and clean up the shitshows you have caused in your backyard and then come talk to us. And with that said, I have really enjoyed every of my visits to the USA, vast majority of the people are friendly and open hearted. It is the stupid politics and the lobbying politicians I can't stand. I strongly believe that once USA stops the race to "global domination" (that MAGA stuff) and starts on global unification we will succeed to have a better life all over the planet. And even those who disagree with our way of life will sooner or later join us or wither and die (and I don't mean we bomb them).
- skrebbel 6y ago
  Yes it is foolish. I know quite some people at ASML and I worked a bit in lithography in the past. Yes, it's extremely hard to make a machine that can compete with ASML's. But given enough smart people, I'm convinced that it's totally possible. Making a machine that can compete with what ASML could do, say, 20 years ago is a matter of 10 people and 2 years (I did some contracting at a company that did just that). If you start there and then just keep adding the right kind of talent, then I bet in 10-15 years you can get impressively close. Don't underestimate the enormous amount of technical and engineering debt ASML has accumulated through decades of mad deadline pushing. Nobody has time to invest in eg automated tests or anything that lets you guard code quality because all the good engineers are needed on the critical path to make the next deadline, and there's always a next deadline and it's always 3 months sooner than in any way reasonable. This is how they became a world monopoly, effectively. It's been a good strategy. They ship so early that the machines they sell simply don't work yet, so they put two engineers inside the box with it who (together with 50 more engineers back home) make the thing actually work while the customer sets it up in their fab. As a result, their codebase is a steaming pile of shit. Copy & paste galore. An example: the code is so bad that you can't just fix bugs. If you find an off-by-one error in the code and you want to fix it, you first write a "risk assessment document" where you describe what the bug does and whether any code could potentially rely on the presence of the bug. Then multiple layers of risk assessment officers assess whether you get a go. Then, if you get a go, you can go and fix your off-by-one error in similar-but-not-the-same C files across 7 product families. To be honest I don't know if the same holds for ASMLs mechanical engineering, physics, electro etc departments, but their software dept (a large percentage of their entire R&D) is easily 10x less productive than similarly sized and skilled software teams elsewhere. It's really mind boggling. I'm convinced that a good startup with a good mindset, plus sufficiently good funding, can totally build a competitor. China just has to fund 20 litho startups so that 19 can mess it up and 1 makes it big.
  - andy_ppp 6y ago
    I think you should write out that YC application... oh and just start believing you’re the one who’s actually going to do it because you are ;-)
chvid 6y ago
But will it work? If China simply throws enough money at it. The US maybe is able to prevent a Dutch company selling to China. But what if China goes "Hey mr. Dutch lithography specialist and mr. Taiwanese electrical engineer. Come work for us for couple of years and help us build this. Nice flat here in Shenzhen and plenty of money. Bring your family as well." How can the US prevent that?
- sq_ 6y ago
  I think the key to the US strategy here is that the lithography tech and hardware, especially for EUV, is insanely complex and difficult to get working correctly. Even if you entice a lot of engineers and researchers from around the world to come work for you, it'll still take a very long time to build up the capability yourself.
  - dragandj 6y ago
    Not to mention that these researches might be incentivized by the opposite side to stall your progress from the inside.
- chx 6y ago
  You can't solve this with an engineer or two. If you look at the next-generation lithography road maps, even in the early 90s EUV was just beyond the horizon, but it was on the road map. By 2014 more than twenty billion dollars were spent by various governments and private research when ASML began to ship these https://web.archive.org/web/20150920221539/http://www.asml.com/asml/show.do?lang=EN&ctx=5869&rid=50281 https://web.archive.org/web/20150920221539/http://www.asml.c... and even so it was another four years before the first actual devices using EUV CPUs shipped. And, let's not forget, the first device was the A12 Bionic for the iPhone XS/XS Max/XR and some iPads. In the fourth quarter of 2018 alone, Apple sold 46.89 million iPhones worldwide. And there were other companies jumping on the bandwagon but that's a lot of preorder money to help bootstrapping this.
  - chvid 6y ago
    This article is almost 2 years old: https://www.scmp.com/news/china/politics/article/2162684/taiwanese-engineers-lured-mainland-china-chip-makers-go https://www.scmp.com/news/china/politics/article/2162684/tai... Taiwanese engineers lured to mainland China as chip makers go into overdrive "More than 300 senior engineers from Taiwan have moved to mainland chip makers so far this year, joining nearly 1,000 others who have relocated since Beijing set up a US$22 billion fund to develop the chip industry in 2014" Even with the "chokepoints" it is just a question of time and money, no? In particular now that China essentially is being forced to be self-sufficient.
ahmedalsudani 6y ago
Yup, it’s clear if you pay attention that the US is aiming to stunt China technologically. I have been surprised at the kind of blows they have been able to land-but I don’t see this strategy working out in the medium term. Previous admins all used the carrot much more than the stick with other countries regarding their relationships with China. The current admin is all stick. There’s a point where you overshoot and lose allies.
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gdy 6y ago
I don't think China will forgive or forget this and other American efforts to stifle its technological development. Does the US really want to antagonize 1.5 billion people?
- deleted 6y ago
  [deleted]
- 0xFFC 6y ago
  As a foreigner this completely makes sense to me. Left and right, us tries very hard to stop other countries development. That is what make us extremely bad actor in the eyes of people.
- refurb 6y ago
  I don’t think China really cares if it antagonizes the US.
temac 6y ago
State of the art chips are only partly starting to be produced with EUV. You can do 7 nm without. And even then you don't do all chips with 7, specifying all "high-end" as a race to the smallest node is completely insane, the design space permitted by "just" 14 has yet to be fully explored, and I'm not even talking about the other applications where you absolutely don't even want the smallest node. The strategy makes no sense at all IMO. This is a (very time limited) commercial war over gadgets, and this will clearly lead to China eventually developing and owning their whole stack.
ashtonkem 6y ago
They will invest, but it’s unclear if they’ll succeed. China has been trying to catch up with the US in this area for a while, to not much success.
- harpratap 6y ago
  Have you looked at Kirin 990? It beats Exynos 990, a design team who started working on mobile chips even before Apple. Their 5G chips are undeniably superior to anything on the market and by a huge margin.
  - ashtonkem 6y ago
    This is actually an excellent example of what I’m talking about. The Kirin 990 might be great, but it’s actually manufactured by TSMC in Taiwan. China can design chips, but they currently can’t make them.
    - harpratap 6y ago
      True, but that wasn't the point of my argument. The point is you can actually throw money at a problem and get it to work. There are 4 big ARM chip designers in the world right now - Qualcomm & Apple in the West and Samsung & Huawei in the East. Both Samsung and Huawei have reached this stage by being pumped with lot of cash and backing by their government in the past. So this model has proven that it works.
      - shdh 6y ago
        Works for design, not necessarily for lithography
ksec 6y ago
On the business side of things. NAND, DRAM, and CPU / SoC from TSMC are all going to or already need EUV. There is no shortage of sales even if you exclude SMIC. ASML currently only produce ~30 of their TwinScan EUV System per year, which is behind their target in 2019, and behind their original target in 2020. And that is without the pandemic shutting down the production for months. The backlog orders are already going all the way to 2022. And if Intel were to keep up with their promise of 7nm EUV you can expect 2023 and 2024 orders are filled as well. All of these are excluding the use of EUV on DRAM and NAND which Samsung is actively researching and testing. Basically ASML can just say their orders are already filled up to 2025 and tell SMIC to come back later.
devy 6y ago
> The Brookings Institution thinks that the US can shut China out of high-end semiconductor production indefinitely. That seems like a pretty foolish conception to me. U.S. had done that to Japanese Semiconductor industry in the 80s and 90s[1], which was why South Korean semiconductor industries flourished and Samsung became the king of Memory chips (it used to be Toshiba etc.) And today it's Huawei. Who's gonna be the next in the future? [1]: https://www.nber.org/chapters/c8717.pdf https://www.nber.org/chapters/c8717.pdf
- jorblumesea 6y ago
  The difference is that Japan and SK were strategic allies. Intelligence sharing agreements were strong, the US provided security guarantees. It's an acceptable loss, to a certain extent, to cede the market to the US, despite it hurting cutting edge domestic industries. China will not accept US market dominance in chip production, or frankly, US dominance in any industry.
  - Synaesthesia 6y ago
    I think you mean to say the US won’t accept a challenger to its dominance of the computer technology markets.
    - jorblumesea 6y ago
      No, what I said is exactly what I meant. Some countries will accept the gutting of certain domestic industries because it doesn't threaten national security interests or strategic goals.
  - russli1993 6y ago
    I want to bring a point of view from a Chinese person. These are questions Chinese people often ask: why is that a factory worker in China makes 4000rmb(560usd) per month, while a US worker makes 2000usd per month and work for less hours. Why is that pay for software engineers and researchers in China average are much lower than the US and the hours are much longer? The fundamental issue is that US companies can drive much higher margins than Chinese companies, and one of the reasons is they have much better technology. Technology increases the barrier to entry and increases the value add to a product. If we look a IPhone, Chinese companies and its workers only assemble the phone. While all of the high tech components that makes an Iphone what is, like chips, camera senors, display, even the glass panel are made in other countries. I don't remember the exact value, but its safe to say that out of a $1000 iphone, $300 is BOM, and Chinese companies and its workers gets $2 for assembling the phone. The rest all goes to high tech suppliers and Apple itself. This is true across a wide range of industries. If you think about it, in today's global economic system, China actually gets a small share of the value add in the economy chain because it only plays the low end. Industries that can generate high value add also benefit incomes of nearby industries because money flows. This is why restaurant workers in California earns more than the person doing the same job in Nebraska. (Btw, when US counts trade with China, an Iphone is counted for the export price from China to US, for example, $300 for the BOM. But China imported most of the most valuable/high margin components from outside, it only earned $2 for assembling the phone. US thought China made $300 making the phone, but it didn't. Also corporate earnings US companies makes in China are not counted in the US-China trade. So in my opinion, its not true to say China is ripping off the US in the China-US trade relationship because of the trade deficits) If you go to China, or other developing nations, for example, in South America or South Asia, you know that there is huge quality of life difference. Dont look at lives in Shanghai, look at Mid west of China. China is huge, while the median income today is 30,000 yuan/year, about 600million people still have 12,000 yuan/year (1600 usd). And Chinese people all ask "we are humans, why should there be such a massive quality of live difference. And how could we work towards to close the gap?" And given the world's economy system today, which is a free market, capitalist and "best product sells" systems, then the only way to increase qualify of life is to climb to value add chain. But that doesn't mean its a zero sum game, its China or US. Increasing income will increase people's buying power, making the market larger. Think about it, in 1990, GDP per captia in China was 300 USD, if Apple tries to sale a $700 iphone, no one in China will be able to afford it. Apple will not get any revenue. Today with 30,000yuan/year median income, its said that China has about 200million people that can be considered middle class by PPP standards. Apple and a host of US companies can sell to this population, and China contributes a large percentage to Apple's revenue. Also in turns, Apple uses this revenue to continue invest in R&D, increasing the barrier to entry and competitiveness of its product around the world, earn more money in the process. Also, cheap assembly cost in China contributes to Apple's margins too. So its a collaboration, not a zero sum game. For past 20 years of Chinese industries increasingly competed with the outside industries, making more and more similar products, US GDP has continued to grow. Corporate revenue of the s&p500 has continued to increase to record levels. Also, its interesting that GM has not being that competitive in the US market, but is making a lot of sales in China. Also Tesla, if you look at the recent bullish analyst cases, China sales is one of the pillars. China never has a problem with US companies being successful. Its not like government is jealous of the US industries and want them dead. "oh the Americans shouldn't make money". But its "how should our people survive and live, how should their quality of life improve?". From an economic system and social development standpoint, its bound that the Chinese society will go up in the value add ladder. Chinese people want good jobs that pay well and have good work life balance too. But these things don't come from the thin air. In the world of free competition, the best product sells. These things have to be supported by a industry that can compete in the global marketplace. If you look at Chinese government's work during the last 40 years, starting from the reforms in the 80s, one of the primary goal is poverty alleviation, and build sustainable income sources for households under the principles of the market economy. That work is still going on today. Today the work is centered around the villages and poor neighborhoods in remote areas which faces systematic discrimination in the market economy. Solve the blockers that prevent them from joining the market economy, and jump start their place in the market economy. The result of this process is ordinary households have more income that they can earn by themselves, and they can choose to spend that money in a free open market however they want. And many spend their money on American products due to the superiority of the products. Also, if you look at the government's policies from the past and going forward, continue to increase foreign companies access to the Chinese market was and will continue to be a fundamental policy. Look at how quickly Tesla could set up shop in China, and much sales they are getting from Chinese market just after a few months. Also IP protection is getting much stronger as well. You can also look at the situation this way, the government invests in the people by doing things like: building bridges, improve educations and allow them to find work. That investment later becomes personal incomes, which flows to the domestic and the world's economy (including US). In summary: I think that US-China economy is not a zero-sum game. For us to win they have to lose. It could be a win-win situation.
m3kw9 6y ago
China can retaliate with rare earths, again.
- shdh 6y ago
  Rare Earth metals aren't actually rare. China just extracts them and places them in the market for the lowest price.
totalZero 6y ago
According to ASML, EUV requires an incredible amount of institutional knowledge to pull off, including for the optics involved. And they're not worried about a machine being taken to an unauthorized location because EUV machines are huge and assembled on-site for customers ("bolted to the ground") by ASML itself. Given the pace of chipmaking die shrink, I wouldn't be surprised if they can retard the ability of China to get up to speed on 7nm before the next lithographic generation becomes common.

rfoo 6y ago

That's not foolish. Modern lithography technology (and in general high-end semiconductor production) is complicated enough that neither US nor China may catch up in reasonable time, if they are targeting a domestic supply chain. That said, the caveat here is the "neither US nor China" part, why would ASML, a Dutch company, align itself with US?

DiogenesKynikos 6y ago
What I mean by "foolish" is that in the long run (a decade), it will not work, and the entire policy of trying to stunt China's economic development will lead to conflict sooner or later. ASML didn't have a choice in the matter. The US government pressured the Dutch government to withdraw the export license. That's at the diplomatic level, way above the heads of company executives. The Netherlands is part of NATO and is more closely aligned with the US than with China. But the Netherlands could at some point decide that it just wants to do business with everyone.
- mytailorisrich 6y ago
  The US are trying to delay the inevitable but they might instead precipitate it, and that is costing them at the same time. The second issue here is Europe's continued weakness. If ASML controls EUV lithography then Europe should be much more assertive.
  - DiogenesKynikos 6y ago
    My impression is that the European Union is too politically fractured to mount any consistent policy. Just one example: the French government has made noises about doing something to counter the United States' extraterritorial application its sanctions regime. US sanctions against Iran effectively apply to European companies, even if they have basically nothing to do with the US. The US can unilaterally force the EU to stop doing business with Iran. The French see that as a violation of their sovereignty. The problem is, if France proposes to do anything about it, Germany will object, because Germany fears that the US will retaliate against the German automotive industry. Imagine if the US could only take action when 50 states all agreed. There's no powerful central government in Europe that can decide to temporarily sacrifice some interests in order to achieve something more important - establishing independence of action from the US on sanctions policy.
    - yorwba 6y ago
      > The problem is, if France proposes to do anything about it, Germany will object, because Germany fears that the US will retaliate against the German automotive industry. I was under the impression that Germany is generally on board with the idea of using the INSTEX special-purpose vehicle to trade with Iran despite US sanctions. Of course the first (and only?) transaction was only completed this year, so the mechanism doesn't look too successful so far: https://www.auswaertiges-amt.de/en/newsroom/news/instex-transaction/2329744 https://www.auswaertiges-amt.de/en/newsroom/news/instex-tran...
      - DiogenesKynikos 6y ago
        INSTEX has done virtually nothing to weaken the sanctions regime. The EU would have to take much stronger measures if it was really serious about preventing the US from imposing its sanctions regime on European companies. I'm not an expert, so I can only guess at what sort of measures Europe would have to take, but I imagine they would involve reciprocal retaliation for any measures the US takes to punish European companies.
markvdb 6y ago
The US have a long track record of using soft power and extraterritorial law to punish foreign states and companies, including supposed allies. The two most interesting cases where high profile European companies were targeted had something to do with US sanctions against Cuba and Iran. Examples abound. Look at what happened to BNP Paribas. This is how it looks in a press release: https://www.reuters.com/article/us-bnp-paribas-settlement-sentencing-idUSKBN0NM41K20150501 https://www.reuters.com/article/us-bnp-paribas-settlement-se...
- nyolfen 6y ago
  if a country does not do this, it is only because they lack the strength
- exclusiv 6y ago
  Can you explain this from the article: "Georges Dirani, BNP’s general counsel, told the judge that the bank accepted “full responsibility for its conduct" "There’s no question the organization will not tolerate the kind of behavior we have seen in this case,” Dirani said." Am I missing something or did you just submit a terrible example for your allegation?
  - markvdb 6y ago
    I suspect you're missing somethingindeed. Of course, BNP's general counsel sounded submissive. His company entered a plea deal in the US. The issue at stake is how extraterritorial the US legislation is. Should the US government be able to determine that an EU company cannot do anything anywhere anytime involving US dollars if it has Iranian clients for example?
    - exclusiv 6y ago
      I reviewed more and I don't appear to be missing anything. Yes to your question. "BNP Paribas has been present in the United States since the late 1800s and currently has over 16,000 employees in North America." [1] From the article: "The sentencing followed BNP Paribas’ guilty plea in July to conspiring from 2004 to 2012 to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act." You violate Acts and you want to operate in the US, you get sentenced. If they want to play ball, they need to follow the laws. "Authorities said that BNP essentially functioned as the “central bank for the government of Sudan,” concealing its tracks and failing to cooperate when first contacted by law enforcement." You had written - "The US have a long track record of using soft power and extraterritorial law to punish foreign states and companies, including supposed allies" Again, you submitted a terrible example. [1] https://usa.bnpparibas/en/bnp-paribas/bnp-paribas-us/ https://usa.bnpparibas/en/bnp-paribas/bnp-paribas-us/
amelius 6y ago
> Modern lithography technology (and in general high-end semiconductor production) is complicated enough that neither US nor China may catch up in reasonable time I suppose that much of the tech is already in the scientific literature, and the "only" problem left is putting the pieces together.
- Olreich 6y ago
  Intel can’t do it. The leader of chip fans for near half a century failed to deliver on this generation of lithography. That’s the level of difficulty we’re talking about.
  - amelius 6y ago
    Intel is stuck in fierce competition. They don't have the money that China has. I suppose that Apple or Google would be able to pull it off though.
    - BobbyJo 6y ago
      Neither of those two companies have any of the needed expertise. If all you have is money, it will take you decades to catch up.
    - flyinglizard 6y ago
      Neither have any fab operations, what makes you think they could make a dent? Mind you don’t have to just make chips. You can’t make inferior chips and brand them a certain way. You need to be an actual market leader at the cutting edge of fab technology, otherwise Apple devices will not be competitive.
- ktta 6y ago
  There is a reason TSMC is the only fab working on <='7nm' class lithography. It is hard. It also requires massive amounts of capital expenditure. And that's the case when the critical equipment is bought from a different company that's again, in a league of its own. So even if the 'only' problem is putting the pieces together, that doesn't mean it is even possible. Look at it another way-- same thing can be said about Nuclear Fusion :D
the-dude 6y ago
> why would ASML, a Dutch company, align itself with US? Are you kidding me? Why do you think we ( the Dutch ) are in Iraq and Afghanistan? If the US asks, we ask : how high?
- NicoJuicy 6y ago
  The sentiment is changing somewhat though. The US used to be a leader in the Western world. Currently: not so much. The value of the US with shared 'western' values is greatly declining, since they are retreating from almost every partnership.
  - avmich 6y ago
    This effect wasn't visible during previous White House administration and perhaps will be reversed within the next one. Current isolationist politics, with explicit mantra "America first" looks more like an aberration rather than a long term reality.
    - close04 6y ago
      Trust is easier lost than gained. In international diplomacy "losing trust" simply means you get a wake-up call: what happens next time the White House decides to squeeze their allies? With populism on the rise the next president might go for the jugular for next to nothing because that's what voters with no understanding of international diplomacy and politics want and expect. Right now the US "pays" for the support of other western countries by footing the bill for everything military. When this is outweighed by the abuse of soft power it may just start pushing allies towards other soft power projecting countries.
      - avmich 6y ago
        > Trust is easier lost than gained. Completely agree. America has a lot to do to gain it back; it's a long process. "Squeezing allies" sounds interesting. Maybe they shouldn't be "squeezed" in the first place, so it's good that they can't? On the other hand, if, for example, Europe sees the benefits in countering some specific China expansion issue, USA won't need to ask too much for a concerted response. And frankly, Western alliance has no alternative today; maybe only going alone - or as a European Union, but USA (and Canada to a degree) are still the best partners. That doesn't mean, of course, that USA doesn't make bad mistakes lately.
rapsey 6y ago
> why would ASML, a Dutch company, align itself with US? Netherlands is a founding NATO member. It boggles my mind how this is even a question to anyone.
- temac 6y ago
  Not really a strong criteria: so is France but we are kind of tired of US bullshit.
  - rapsey 6y ago
    Tired of US or not France is firmly in the western world.
    - temac 6y ago
      But that's so vague that so what? Tons of high profile people have been talking about how it is not tolerable that the US is unilaterally forcing embargoes using the $US and tech as a weapon. Development of alternatives take time, but this has already started. The goal is not to replace the US with China. Not only things are not reducible to a single dimension, but even if they were, it does not make the need to enforce our own sovereignty disappear.
      - 082349872349872 6y ago
        Et que nos champions songeaient à se défendre / Arrive un troisième Larron / Qui saisit Maître Aliboron ?
  - rumanator 6y ago
    > so is France but France has always been kind of contrarian. For example, they are NATO members but unbelievably they were also selling Russia a couple of Mistral landing platform docks.
  - ardit33 6y ago
    No one in NATO trusts France (especially former communist countries). France left once, and came back. They used to pander to communist regime during the Cold War. During the NATO bombing during the Yugoslavian dissolution, a French General was caught giving out the bombing plans to the enemy. No wonder nobody likes their foreign policy, and Macron is puzzled why the other EU countries don’t follow France in creating a Common EU military force. The other countries know when push comes to shove, the US is a reliable partner, while France is not.
markus_zhang 6y ago
Because if you don't align itself with US there is going to be extended trouble from all angles.
devy 6y ago
Because ASML uses lots of technologies and IPs originated from the U.S., consequently is subject to export control & entity list restrictions. Semiconductor industries has been growing into a very tightly coupled and globalized eco-systems these days. No one country can own or domesticate the entire ecosystem or supply chains, albeit companies headquarters in the U.S. still own a significant portion of the technologies and intellectual properties.
- DiogenesKynikos 6y ago
  This tight global integration is why US sanctions policy is so disruptive. The US is asserting the right to tell European, Japanese, Korean and Taiwanese companies who they can do business with, based on those companies' connection to the US economy. Use of American-designed software, interactions with a US bank, engagement in dollar-denominated transactions, etc. can all put a company under American jurisdiction. It will be interesting to see if European countries begin to try to push back against this policy. Imposition of American sanctions against Iran on European companies have already caused a good deal of consternation in Europe. But so far, the EU has been too fractured to do anything serious about it.
  - HenryBemis 6y ago
    "We" give them the right, USA cannot stop a bank transacting with X or X company in Iran, Cuba, etc. but since USA owns the USD they can block these banks from using/clearing USD which is a lethal blow for a bank. But if USA gets on the wrong side of this and countries start phasing out $ and start favouring € (this is a 50 year process btw) then USA will have an empty threat in its hands. And I do know that there many connecting points/sanctions that can be imposed, not just the currency.
  - thejynxed 6y ago
    It's supposed to cause consternation because even the UN has declared Iran a state sponsor of terrorism for the last fifty years and nobody in the EU should even be considering doing business with them.
jmknoll 6y ago
Because the US and the Netherlands are long-term strategic allies and partners in NATO, share a broadly similar vision of a world governed by international institutions and the rule of law (if the current US decline into authoritarianism can be reversed), and largely share a common culture and history? The Netherlands has benefited greatly from 400 years of the dominance of western civilization, and I assume they would want to see that continue?
- Udik 6y ago
  Much more simply, because the US is a rich customer and military giant with a population of 330 million, and has the means to hurt the Netherlands, a country of only 17 million people. This is not moral suasion, this is pure and simple bullying.
  - fastball 6y ago
    Pretty sure China has a handful more than 330 million people.
    - Udik 6y ago
      Sure, but the Netherlands is not as interdependent with China as it is with the US. The point is that the US is not convincing the Netherlands that blocking China is a smart move (because it isn't), it's forcing it with threats.
  - HenryBemis 6y ago
    USA can bully many countries, but NL is part of the EU so sit back, shut up, and play nice. To make this even more political, UK is (finally) leaving the EU, and as they have been USA's little bitch/snitch for the past few decades that makes many Europeans happy. EU is not the enemy of USA. If anything we are trying to create a peaceful union based on collaboration and respect. And we want to form a unified culture of respect and peace with freedom and progress. And on the EU side we are making it happen slow and steady. "You Americans" go and clean up the shitshows you have caused in your backyard and then come talk to us. And with that said, I have really enjoyed every of my visits to the USA, vast majority of the people are friendly and open hearted. It is the stupid politics and the lobbying politicians I can't stand. I strongly believe that once USA stops the race to "global domination" (that MAGA stuff) and starts on global unification we will succeed to have a better life all over the planet. And even those who disagree with our way of life will sooner or later join us or wither and die (and I don't mean we bomb them).
skrebbel 6y ago
Yes it is foolish. I know quite some people at ASML and I worked a bit in lithography in the past. Yes, it's extremely hard to make a machine that can compete with ASML's. But given enough smart people, I'm convinced that it's totally possible. Making a machine that can compete with what ASML could do, say, 20 years ago is a matter of 10 people and 2 years (I did some contracting at a company that did just that). If you start there and then just keep adding the right kind of talent, then I bet in 10-15 years you can get impressively close. Don't underestimate the enormous amount of technical and engineering debt ASML has accumulated through decades of mad deadline pushing. Nobody has time to invest in eg automated tests or anything that lets you guard code quality because all the good engineers are needed on the critical path to make the next deadline, and there's always a next deadline and it's always 3 months sooner than in any way reasonable. This is how they became a world monopoly, effectively. It's been a good strategy. They ship so early that the machines they sell simply don't work yet, so they put two engineers inside the box with it who (together with 50 more engineers back home) make the thing actually work while the customer sets it up in their fab. As a result, their codebase is a steaming pile of shit. Copy & paste galore. An example: the code is so bad that you can't just fix bugs. If you find an off-by-one error in the code and you want to fix it, you first write a "risk assessment document" where you describe what the bug does and whether any code could potentially rely on the presence of the bug. Then multiple layers of risk assessment officers assess whether you get a go. Then, if you get a go, you can go and fix your off-by-one error in similar-but-not-the-same C files across 7 product families. To be honest I don't know if the same holds for ASMLs mechanical engineering, physics, electro etc departments, but their software dept (a large percentage of their entire R&D) is easily 10x less productive than similarly sized and skilled software teams elsewhere. It's really mind boggling. I'm convinced that a good startup with a good mindset, plus sufficiently good funding, can totally build a competitor. China just has to fund 20 litho startups so that 19 can mess it up and 1 makes it big.
- andy_ppp 6y ago
  I think you should write out that YC application... oh and just start believing you’re the one who’s actually going to do it because you are ;-)

chvid 6y ago

But will it work? If China simply throws enough money at it. The US maybe is able to prevent a Dutch company selling to China. But what if China goes "Hey mr. Dutch lithography specialist and mr. Taiwanese electrical engineer. Come work for us for couple of years and help us build this. Nice flat here in Shenzhen and plenty of money. Bring your family as well." How can the US prevent that?

sq_ 6y ago
I think the key to the US strategy here is that the lithography tech and hardware, especially for EUV, is insanely complex and difficult to get working correctly. Even if you entice a lot of engineers and researchers from around the world to come work for you, it'll still take a very long time to build up the capability yourself.
- dragandj 6y ago
  Not to mention that these researches might be incentivized by the opposite side to stall your progress from the inside.
chx 6y ago
You can't solve this with an engineer or two. If you look at the next-generation lithography road maps, even in the early 90s EUV was just beyond the horizon, but it was on the road map. By 2014 more than twenty billion dollars were spent by various governments and private research when ASML began to ship these https://web.archive.org/web/20150920221539/http://www.asml.com/asml/show.do?lang=EN&ctx=5869&rid=50281 https://web.archive.org/web/20150920221539/http://www.asml.c... and even so it was another four years before the first actual devices using EUV CPUs shipped. And, let's not forget, the first device was the A12 Bionic for the iPhone XS/XS Max/XR and some iPads. In the fourth quarter of 2018 alone, Apple sold 46.89 million iPhones worldwide. And there were other companies jumping on the bandwagon but that's a lot of preorder money to help bootstrapping this.
- chvid 6y ago
  This article is almost 2 years old: https://www.scmp.com/news/china/politics/article/2162684/taiwanese-engineers-lured-mainland-china-chip-makers-go https://www.scmp.com/news/china/politics/article/2162684/tai... Taiwanese engineers lured to mainland China as chip makers go into overdrive "More than 300 senior engineers from Taiwan have moved to mainland chip makers so far this year, joining nearly 1,000 others who have relocated since Beijing set up a US$22 billion fund to develop the chip industry in 2014" Even with the "chokepoints" it is just a question of time and money, no? In particular now that China essentially is being forced to be self-sufficient.

ahmedalsudani 6y ago

Yup, it’s clear if you pay attention that the US is aiming to stunt China technologically. I have been surprised at the kind of blows they have been able to land-but I don’t see this strategy working out in the medium term. Previous admins all used the carrot much more than the stick with other countries regarding their relationships with China. The current admin is all stick. There’s a point where you overshoot and lose allies.

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gdy 6y ago

I don't think China will forgive or forget this and other American efforts to stifle its technological development. Does the US really want to antagonize 1.5 billion people?

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0xFFC 6y ago
As a foreigner this completely makes sense to me. Left and right, us tries very hard to stop other countries development. That is what make us extremely bad actor in the eyes of people.
refurb 6y ago
I don’t think China really cares if it antagonizes the US.

temac 6y ago

State of the art chips are only partly starting to be produced with EUV. You can do 7 nm without. And even then you don't do all chips with 7, specifying all "high-end" as a race to the smallest node is completely insane, the design space permitted by "just" 14 has yet to be fully explored, and I'm not even talking about the other applications where you absolutely don't even want the smallest node. The strategy makes no sense at all IMO. This is a (very time limited) commercial war over gadgets, and this will clearly lead to China eventually developing and owning their whole stack.

ashtonkem 6y ago

They will invest, but it’s unclear if they’ll succeed. China has been trying to catch up with the US in this area for a while, to not much success.

harpratap 6y ago
Have you looked at Kirin 990? It beats Exynos 990, a design team who started working on mobile chips even before Apple. Their 5G chips are undeniably superior to anything on the market and by a huge margin.
- ashtonkem 6y ago
  This is actually an excellent example of what I’m talking about. The Kirin 990 might be great, but it’s actually manufactured by TSMC in Taiwan. China can design chips, but they currently can’t make them.
  - harpratap 6y ago
    True, but that wasn't the point of my argument. The point is you can actually throw money at a problem and get it to work. There are 4 big ARM chip designers in the world right now - Qualcomm & Apple in the West and Samsung & Huawei in the East. Both Samsung and Huawei have reached this stage by being pumped with lot of cash and backing by their government in the past. So this model has proven that it works.
    - shdh 6y ago
      Works for design, not necessarily for lithography

ksec 6y ago

On the business side of things. NAND, DRAM, and CPU / SoC from TSMC are all going to or already need EUV. There is no shortage of sales even if you exclude SMIC. ASML currently only produce ~30 of their TwinScan EUV System per year, which is behind their target in 2019, and behind their original target in 2020. And that is without the pandemic shutting down the production for months. The backlog orders are already going all the way to 2022. And if Intel were to keep up with their promise of 7nm EUV you can expect 2023 and 2024 orders are filled as well. All of these are excluding the use of EUV on DRAM and NAND which Samsung is actively researching and testing. Basically ASML can just say their orders are already filled up to 2025 and tell SMIC to come back later.

devy 6y ago

> The Brookings Institution thinks that the US can shut China out of high-end semiconductor production indefinitely. That seems like a pretty foolish conception to me. U.S. had done that to Japanese Semiconductor industry in the 80s and 90s[1], which was why South Korean semiconductor industries flourished and Samsung became the king of Memory chips (it used to be Toshiba etc.) And today it's Huawei. Who's gonna be the next in the future? [1]: https://www.nber.org/chapters/c8717.pdf https://www.nber.org/chapters/c8717.pdf

jorblumesea 6y ago
The difference is that Japan and SK were strategic allies. Intelligence sharing agreements were strong, the US provided security guarantees. It's an acceptable loss, to a certain extent, to cede the market to the US, despite it hurting cutting edge domestic industries. China will not accept US market dominance in chip production, or frankly, US dominance in any industry.
- Synaesthesia 6y ago
  I think you mean to say the US won’t accept a challenger to its dominance of the computer technology markets.
  - jorblumesea 6y ago
    No, what I said is exactly what I meant. Some countries will accept the gutting of certain domestic industries because it doesn't threaten national security interests or strategic goals.
- russli1993 6y ago
  I want to bring a point of view from a Chinese person. These are questions Chinese people often ask: why is that a factory worker in China makes 4000rmb(560usd) per month, while a US worker makes 2000usd per month and work for less hours. Why is that pay for software engineers and researchers in China average are much lower than the US and the hours are much longer? The fundamental issue is that US companies can drive much higher margins than Chinese companies, and one of the reasons is they have much better technology. Technology increases the barrier to entry and increases the value add to a product. If we look a IPhone, Chinese companies and its workers only assemble the phone. While all of the high tech components that makes an Iphone what is, like chips, camera senors, display, even the glass panel are made in other countries. I don't remember the exact value, but its safe to say that out of a $1000 iphone, $300 is BOM, and Chinese companies and its workers gets $2 for assembling the phone. The rest all goes to high tech suppliers and Apple itself. This is true across a wide range of industries. If you think about it, in today's global economic system, China actually gets a small share of the value add in the economy chain because it only plays the low end. Industries that can generate high value add also benefit incomes of nearby industries because money flows. This is why restaurant workers in California earns more than the person doing the same job in Nebraska. (Btw, when US counts trade with China, an Iphone is counted for the export price from China to US, for example, $300 for the BOM. But China imported most of the most valuable/high margin components from outside, it only earned $2 for assembling the phone. US thought China made $300 making the phone, but it didn't. Also corporate earnings US companies makes in China are not counted in the US-China trade. So in my opinion, its not true to say China is ripping off the US in the China-US trade relationship because of the trade deficits) If you go to China, or other developing nations, for example, in South America or South Asia, you know that there is huge quality of life difference. Dont look at lives in Shanghai, look at Mid west of China. China is huge, while the median income today is 30,000 yuan/year, about 600million people still have 12,000 yuan/year (1600 usd). And Chinese people all ask "we are humans, why should there be such a massive quality of live difference. And how could we work towards to close the gap?" And given the world's economy system today, which is a free market, capitalist and "best product sells" systems, then the only way to increase qualify of life is to climb to value add chain. But that doesn't mean its a zero sum game, its China or US. Increasing income will increase people's buying power, making the market larger. Think about it, in 1990, GDP per captia in China was 300 USD, if Apple tries to sale a $700 iphone, no one in China will be able to afford it. Apple will not get any revenue. Today with 30,000yuan/year median income, its said that China has about 200million people that can be considered middle class by PPP standards. Apple and a host of US companies can sell to this population, and China contributes a large percentage to Apple's revenue. Also in turns, Apple uses this revenue to continue invest in R&D, increasing the barrier to entry and competitiveness of its product around the world, earn more money in the process. Also, cheap assembly cost in China contributes to Apple's margins too. So its a collaboration, not a zero sum game. For past 20 years of Chinese industries increasingly competed with the outside industries, making more and more similar products, US GDP has continued to grow. Corporate revenue of the s&p500 has continued to increase to record levels. Also, its interesting that GM has not being that competitive in the US market, but is making a lot of sales in China. Also Tesla, if you look at the recent bullish analyst cases, China sales is one of the pillars. China never has a problem with US companies being successful. Its not like government is jealous of the US industries and want them dead. "oh the Americans shouldn't make money". But its "how should our people survive and live, how should their quality of life improve?". From an economic system and social development standpoint, its bound that the Chinese society will go up in the value add ladder. Chinese people want good jobs that pay well and have good work life balance too. But these things don't come from the thin air. In the world of free competition, the best product sells. These things have to be supported by a industry that can compete in the global marketplace. If you look at Chinese government's work during the last 40 years, starting from the reforms in the 80s, one of the primary goal is poverty alleviation, and build sustainable income sources for households under the principles of the market economy. That work is still going on today. Today the work is centered around the villages and poor neighborhoods in remote areas which faces systematic discrimination in the market economy. Solve the blockers that prevent them from joining the market economy, and jump start their place in the market economy. The result of this process is ordinary households have more income that they can earn by themselves, and they can choose to spend that money in a free open market however they want. And many spend their money on American products due to the superiority of the products. Also, if you look at the government's policies from the past and going forward, continue to increase foreign companies access to the Chinese market was and will continue to be a fundamental policy. Look at how quickly Tesla could set up shop in China, and much sales they are getting from Chinese market just after a few months. Also IP protection is getting much stronger as well. You can also look at the situation this way, the government invests in the people by doing things like: building bridges, improve educations and allow them to find work. That investment later becomes personal incomes, which flows to the domestic and the world's economy (including US). In summary: I think that US-China economy is not a zero-sum game. For us to win they have to lose. It could be a win-win situation.

m3kw9 6y ago

China can retaliate with rare earths, again.

shdh 6y ago
Rare Earth metals aren't actually rare. China just extracts them and places them in the market for the lowest price.

totalZero 6y ago

According to ASML, EUV requires an incredible amount of institutional knowledge to pull off, including for the optics involved. And they're not worried about a machine being taken to an unauthorized location because EUV machines are huge and assembled on-site for customers ("bolted to the ground") by ASML itself. Given the pace of chipmaking die shrink, I wouldn't be surprised if they can retard the ability of China to get up to speed on 7nm before the next lithographic generation becomes common.