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The Coming Chip Wars

484 points by chmaynard 6y ago

082349872349872 6y ago
Coming chip wars? I remember stories of vax boxen filled with concrete in previous export restriction wars, not to mention japan losing chip production to south korea. 20th century: https://micro.magnet.fsu.edu/creatures/pages/russians.html https://micro.magnet.fsu.edu/creatures/pages/russians.html (my russian is atrocious, but it's good enough to know the story given has obviously been elaborated in the telling before it hit this web page) 21st century: 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... (much of Blank's "secret history" of SV is an outline that chips have been strategic since before they existed https://steveblank.com/secret-history/ https://steveblank.com/secret-history/ )
latrare 6y ago
China is keeping things surprisingly civil considering they could just limit the supply of or manipulate the cost of rare earth minerals. Many Western companies would soon find themselves in Huawei's shoes, counting down the days until the stockpiles run out.
- MHordecki 6y ago
  The moment they start doing this, other countries will restart their mines and the Chinese leverage (and profits) will evaporate. Rare earth minerals aren't that rare.
  - latrare 6y ago
    China has been maintaining a majority share of production for at least a decade at this point. I would wager that while that your proposed response is short as a phrase, actually getting production to match the currently relied-upon volume without China would take years, and I don't think stockpiles would last that long.
    - onepointsixC 6y ago
      The US accounts for a small part of the global REM consumption. Even with their majority share, unless China is willing to burn the rest of the world, the US would be able to make do. And that's not even getting into transhipping which was used to circumvent previous REM export bans.
  - benologist 6y ago
    I saw it explained like this. Rare minerals are everywhere but they're spread out, and China's advantage is they will destroy a lot of environment to extract them while other countries are regulating protections for the environment. If that is true it would be very difficult for other countries to fill the demand?
    - iguy 6y ago
      I thought lots of existing mines had ore containing them, but can't make a profit extracting them, so they don't. How quickly such extraction/refining steps could be added, I don't know. (Am far from an expert though!)
  - chrisjc 6y ago
    From what I understand, it's not the mines that are the problem. In fact, China imports most of its rare earth materials. What they control is the refinement of these materials turning them from a raw form to something useable. I believe the US is finally starting to do something about this imbalance, but I'm unsure if its scale is great enough to have an effect. A refinement plant just came online in Colorado (or is it Texas?) in the last few months. I believe there might be more in the pipeline including Mountain Pass (in addition to the mine itself) in California. From what I understand, traditionally refinement is an extremely dirty process and as a result extremely costly to run especially with all the environmental restrictions and potential fines. edit: latrare brings up another very important point. The patents surrounding the processes to refine RE materials. Take a look at who owns most of them...
    - blackrock 6y ago
      I recall that China owns most of the latest patents on rare earth refinements. This should be obvious considering they are the most active in its refinement process. Now, the irony is that if American companies want to start rare earth refining, then they must pay China for the use of those refinement patents. Oh the irony. Unless some American senator want to invalidate all of China’s patents on grounds of National Security. Oh the hypocrisy.
  - latrare 6y ago
    Found the estimate in the report the Pentagon gave to Congress on this issue in 2013. Your proposed action would take the US, alone, 15 years (https://imgur.com/olWM3Xi https://imgur.com/olWM3Xi). Report: https://fas.org/sgp/crs/natsec/R41744.pdf https://fas.org/sgp/crs/natsec/R41744.pdf
    - marcus_holmes 6y ago
      I believe there's a few Australian mining companies with plans ready to go if China ever does this. The prices will go up, a lot, but the spice will flow.
- onepointsixC 6y ago
  The REM myth is just that. The CCP previously tried to weaponize REM exports to hurt Japan and that both failed and revitalized REM production outside of China. That would also further hurt their own ability to export as no one will want anything important be it infrastructure or supply chains to be reliant on the whims of wolf diplomacy.
- newacct583 6y ago
  That's a MAD scenario though. I mean, trade wars can escalate, but deliberately crippling global industries is a shade too far (probably). In fact the Huawei chip regulation was attractive precisely because it doesn't impact much in the way of actual products right now. The overwhelming bulk of Huawei's revenue is derived from simple manufactured products using semiconductors from non-PRC sources. Their domestic chip design was a fledgling industry still.
blueblisters 6y ago
The CCP is getting ever more ambitious (perhaps reckless) in the wake of the pandemic. I am not sure if it's overconfidence or calculated tactical moves. The timing of the border conflict with India is no mere coincidence -- it seems like an attempt to secure assets (CPEC) on the Western theatre in anticipation to any action on the Eastern front.
- magicsmoke 6y ago
  The flareup is over 60km2 of territory on the other side of Kashmir and the CPEC highways, it's not going to have any impact on them. More likely that local forces got rowdy as infantrymen tend to do and now the higher ups are scrambling to defuse the situation. If this was an actual calculated move to take significant amounts of territory the big guns would be firing by now.
  - sbmthakur 6y ago
    Previous agreements prohibit the use of firearms on the Indo-China border even if troops are carrying them. Have a look at the weapon used by the Chinese troops to figure if the attack was premeditated. https://www.bbc.com/news/world-asia-india-53089037 https://www.bbc.com/news/world-asia-india-53089037
  - screye 6y ago
    I've been reading a ton of geopolitical and military experts over the last few weeks, and there is a unanimous consensus that China never makes moves on the border without explicit instructions from the top. Their reaction here has been paired with new movement in the South China Sea, changed messaging through proxy Government (Oli in Nepal and Pakistan at large) and claims over new land that has never been claimed by them before. Xi is using the fallout from Corona as a way to impose China on countries that are distracted by the pandemic as of this time. > If this was an actual calculated move to take significant amounts of territory the big guns would be firing by now. That isn't how China works. They are well know for their salami slicing (https://foreignpolicy.com/2012/08/03/salami-slicing-in-the-south-china-sea/ https://foreignpolicy.com/2012/08/03/salami-slicing-in-the-s...) approach to expansionism. Their current actions are perfectly in line with previous attempts at expanding borders and signaling intent for armed invasion.
bonestamp2 6y ago
Even though it's far from over, I'm sick of talking about coronavirus. But we can't stop until we've learned everything we can from it. Obviously, it's human impact is awful. It has been a brutal stress test for so many of our health and economic systems: healthcare, food, ppe, school, etc. So, if there's one good thing that comes out of this, and I'm sure there will be many, it has to be that manufacturing returns to all advanced countries. No longer should we outsource nearly all of our manufacturing to various parts of Asia. Nothing against Asia, but we've known for a long time that it is high risk to put all of your "eggs", of any kind, in one basket -- it's very risky for everyone if we concentrate all of those abilities into a handful of countries in one part of the world. In might be cheaper in the short term, but it could be devastating for all of us in the long run. This time it was a pandemic, but next time it could be something that destroys those countries and the timeline to rebuild is years. The survival of the planet may depend on our ability to manufacture. It already does in some ways, but the timeline is rather long at this point. What if the danger is imminent? Do we really want most high (and low) tech manufacturing concentrated in one part of the world? No, we need to spread it globally for the potential benefit of everyone. The same way you balance your investment portfolio between different types of assets, we need to balance our investment in the future of the planet across the globe as well. Sure, some assets aren't as profitable, but you still hang on to them for security, stability and risk reduction.
totalZero 6y ago
Meanwhile, American semiconductor and technology hardware companies spend exorbitantly on stock buybacks. Set up factories outside of Asia Pacific with that money.
- staycoolboy 6y ago
  Publicly traded US companies are beholden to investor returns. This is going to make them less able to respond to international competition. Think about the Fair Trade laws that aim to prevent large companies from dropping their prices to below cost to drive small plantations out of business. There's no reason china needs to make 1,000% profit on their latest CPU when they can sell at a very low price, and put US manufacturers out of business. And FTA: https://www.bloomberg.com/news/articles/2020-06-10/u-s-lawmakers-propose-25-billion-to-aid-semiconductor-industry https://www.bloomberg.com/news/articles/2020-06-10/u-s-lawma... I just barfed a little in my mouth. This is what is so eff'd up about the US. Semicon stock prices drove the creation of millions of millionaires over the last 2 decades, and now they need a handout.
  - justicezyx 6y ago
    > Publicly traded US companies are beholden to investor returns Long- or short-term investor return? Given the situation and prospect, anyone who still sticks to this principle of short-term investor return is at good the capitalism in the worst form, or at worst plain irrationality.
  - gpanders 6y ago
    It doesn't strike me so much as a handout as an investment in domestic infrastructure and chip manufacturing. It's pretty clear from the present situation that international supply chain risk is huge and this is an attempt to incentivize domestic production.
  - bedhead 6y ago
    Tell that to Amazon. It's all just company/leadership culture.
  - jariel 6y ago
vsareto 6y ago
I don't understand the military implications. The US has had long range missiles and defenses that are effective with stuff from the 80's and 90's. If China somehow got complete control over TSMC to the point they no longer supplied the US, it doesn't take much to sabotage the factories. If not missiles, then using spies, or attacking the systems that run the factories. This seems like a fragile advantage. Advanced chips don't even give you advantages in cyberwar. Even if this triggered a longer conflict, the US could just buy through other countries that can buy from TSMC. Or just start using consumer off-the-shelf stuff. I'm fairly certain my gaming PC could guide a missile. There's lots of data centers in the US to pull from too. If we lose all access to buying chips tomorrow, how does that affect our weapons?
- sneak 6y ago
  > If China somehow got complete control over TSMC to the point they no longer supplied the US, it doesn't take much to sabotage the factories. I am told that TSMC has a poison pill setup for their fab(s) for the case where the PLA takes Taiwan by force, which makes sense in the same way that a "driver carries less than $20 in cash" window sticker does.
  - Aperocky 6y ago
    That's the point though? Now firms in China can't get it because of arbitrary sanctions from the US. How about nobody gets it, say bye bye to your supply AMD/Apple. That's the stake China is putting on the table.
- throwawaygh 6y ago
  The USSR lost a war and collapsed. War is about more than just hard power.
  - vsareto 6y ago
    Right but the author is saying the world just got a lot more dangerous and I'm wondering how with respect to the military.
- 6y ago
staycoolboy 6y ago
Alibaba is making huge investment in AI, 5G and IoT chips. They are totally bypassing the Intel<>Arm general purpose CPU battle because that isn't the future. The new fabs in Pingtouge are just the beginning. China has the skill, the money, and the motiviation. There's no reason why they need to be dependent on chips from Intel and Arm licensees. Ever since the mid-1990s the US has tried to use laws to prevent exports and hinder China (P6 export laws anyone?), 5G laws are nothing new. This will end up with China exceeding US fab capacity and supplying chips to all non US & European countries in 10 years. I'm not making a value judgement, I'm saying that if a country is going to try to hold you back by limiting your access to technology, you just develop your own.
- magicsmoke 6y ago
  It's interesting how all the actions the author thinks China will take involves military coercion of Taiwan in some form. When all you know how to use is a hammer, every problem looks like a nail. The idea that China could build an alternative to TSMC instead of trying to take it apparently doesn't compute.
  - dathinab 6y ago
    The author did mention that China is trying to do so since a while but is not quite there yet.
  - Teever 6y ago
    > When all you know how to use is a hammer, every problem looks like a nail. you're implying that the author has violent predispositions?
    - joshuaissac 6y ago
      I think the commenter is suggesting that the author's understanding of China's military/retaliatory capability against Taiwan is his "hammer", so his predictions of Chinese actions may be biased accordingly.
  - blackrock 6y ago
ardy42 6y ago
> The United States just did this to China by limiting Huawei’s ability to outsource its in-house chip designs for manufacture by Taiwan Semiconductor Manufacturing Company (TSMC), a Taiwanese chip foundry. If negotiations fail, China may respond and escalate, via one of many agile strategic responses short of war, perhaps succeeding in coercing the foundry to stop making chips for American companies – turning the tables on the United States. How would the PRC succeed in convincing TSMC to stop producing chips for the US, short of military action? The PRC is Taiwan's primary military adversary, and the US is Taiwan's primary military supplier and ally. IIRC, TSMC even recently agreed to build a foundry on US soil (which is kinda surprising, since that reduces the incentive of the US to defend Taiwan in a military conflict with the PRC).
- Aperocky 6y ago
  If China were go to war with Taiwan, US would be involved in a civil war in China de jure if it wants to intervene. Because US recognize both mainland China and Taiwan as one 'China', without specifying which. The internet would like to tell you that China and Taiwan are totally different country but US policy doesn't recognize that. And changing that policy one week into the conflict does not look good on the optics.
  - throwanem 6y ago
    Policy optics are secondary here. Even were the US to attempt some military intervention, which I think quite unlikely, it would not be a war we could win.
  - knodi 6y ago
    I doubt the current occupants of the whitehouse care about optics at this point.
  - JumpCrisscross 6y ago
    > US recognize both mainland China and Taiwan as one 'China’ This is a 70s era policy that is increasingly paid just lip service to.
  - 6y ago
RandomWorker 6y ago
Huge gap in this article is ASML. The guys that make the machines that make the chips that are designed by intel and the like. They have about 80% market share. They could supply/deploy those Machines anywhere in the world.
- the_duke 6y ago
  Recent article about US pressure on the Netherlands to prevent ASML exports to China: 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...
- tda 6y ago
  Yep, and the US gov is pressuring the Dutch gov to not export any of the next level chip manufacturing machines to China, so this chip war has already hit ASML pretty hard
- monocasa 6y ago
  China is making huge progress at being able to replace ASML in their chip supply chain. https://www.chinadaily.com.cn/a/201811/30/WS5c006df2a310eff30328be90.html https://www.chinadaily.com.cn/a/201811/30/WS5c006df2a310eff3...
monocasa 6y ago
One very important piece that doesn't get enough time in the article is China's in country fab, SMIC. They've got 14nm in risk production, and are making good progress on something equivalent to 10nm TSMC (that they're calling 7nm, but feature sizes are made up anyway). And perhaps most importantly China is making good progress on in country EUV litho steppers to cut ASML out of the picture too.
hangonhn 6y ago
Tangential to this discussion, what was AMD's original reasoning for getting rid of its own fabs and spinning them out into Global Foundries? It seems these days that fabs are so strategic. Did they realize they can't compete in that space? Thanks!
- Klinky 6y ago
  Maintaining fabs is expensive. AMD got to push debt onto Globalfoundries with the deal, and Globalfoundries could focus on other opportunities, not just AMD. Globalfoundries has since fallen behind in process node, with TSMC and Intel leading the way. Given the struggles Intel has had, it is hard to say that AMD would have been in a better position to get to 10nm or 7nm had they kept their fab facilities.
- m4rtink 6y ago
  IIRC sharing the fab capacity with other companies - with NVIDIA, Apple, Samsung and many others there is a lot more money in the pot. Compare with Intel strugling on their latest fab process, which they traditionally did not share with anyone else.
Synaesthesia 6y ago
Interesting that the article chides the US military for not preventing China from militarising their own neighbourhood (South China Sea). However there’s nothing wrong apparently with the US militarising the Caribbean, or the South China Sea for that matter. The same could be said for access to manufacturing for Huawei vs US companies.
- blackrock 6y ago
  Some senator should propose a bill renaming the Caribbean to the South American Sea. That’ll show everyone that America means business when it comes to territorial possessions! He might even win a Nobel Peace Prize for doing so. LOL.
- jariel 6y ago
  There is no equivalence between the two actions. China is claiming vast regions which are currently regarded as 'international waters', or worse 'sovereign waters of other nations' as it's own, sovereign territory. The US is not declaring the Bahamas to be 'US Territory', for example. Not only that, the US Navy ensures that everyone - including China, Russia, Iran etc. can have 'safe passage' in international waters, and especially Panama Canal, Suez, Gulf etc. - which is quite literally the opposite of China's intentions in the S. China sea.
  - sbmthakur 6y ago
    Simultaneously, they are trying to squeeze as much land as possible from their neighbors. Recently, Chinese soldiers killed 20 Indian soldiers who foiled their land-grabbing attempt.
    - jariel 6y ago
      To be fair, this was a quibble among unarmed soldiers, literally fist-fighting on a bridge, in the middle of the night. I'm not sure if it counts for anything, and I don't think that on the whole, India's sovereignty is threatened. The issue will be in areas wherein China can claim supremacy without much resistance, for example, off the coast of weaker neighbours in the region. It's a pretty bold ploy - at the same time, I actually believe that the 'chip wars' will be more important!
honkycat 6y ago
It's almost as if our beloved corporations dismantled our labor movements and sold us all out for short sighted profits. I hope you enjoy your billions when the bottom drops out of the United States economy, Bezos. Keep up those stock buybacks, Intel! You are REALLY contributing the the American project with all of that wealth you are hoarding!
tmaly 6y ago
TSMC having all its fabs in one place is a big risk if there is an earthquake. It makes sense to diversify
- cltsang 6y ago
  Definitely. That happened not too long ago: http://www.taipeitimes.com/News/taiwan/archives/2016/02/07/2003639025 http://www.taipeitimes.com/News/taiwan/archives/2016/02/07/2...
0x8BADF00D 6y ago
Not to mention, the next war will be the last one ever. It would be an extinction level event. That choice wouldn't be rational.
- davrosthedalek 6y ago
  Well, world war yes, but we just saw Russia annex a part of a different country by force. So China could say: Taiwan is Chinese, we belong together. And would the rest of the world not say: Well, we can't start a world war, because it's an extinction level event, so let's just condemn China in a very strongly worded letter?
  - fuoqi 6y ago
    >by force It was so forceful, that it was effectively bloodless and an overwhelming portion of the "annexed" populace has actively supported it. Meanwhile situation in Taiwan is drastically different. Pro-mainland faction is really weak and can not be used to provide sufficient support for quiet absorption. And since Taiwan has deep military connections with USA for many decades, any military intervention will inevitably escalate into a major military conflict. The only scenario in which something like that can happen is civil-war-level turmoil in USA. Probability of which, worryingly, is noticeably bigger than zero.
    - justinclift 6y ago
      > It was so forceful, that it was effectively bloodless and an overwhelming portion of the "annexed" populace has actively supported it. That seems like an unusual perspective. If by "bloodless" you mean "lots of people died, but nowhere near as many as a world war" though, then sure. For the "actively supported", where are you getting that information? My impression (from friends in Kiev) is that it's universally condemned.
      - fuoqi 6y ago
        By it I mean that only total 6 people have died from both sides, of which only 2 can be attributed to direct actions of Russian armed forces (well, if you trust Ukrainian version of events, which should be taken with a lot of salt, same as with the Russian one). Now compare it with number of deaths in Kiev, Odessa or Donbas. (note that majority of deaths in the latter case are Ukrainian citizens killed directly by Ukrainian army, so much for "war with Russia") >For the "actively supported", where are you getting that information? Directly from Crimeans. I have visited Crimea last year as a tourist and talked with them personally (in Massandra and Alushta, btw the wine is really great, recommend trying it). Try watching 2014 videos, for example this one is before Russian forces have became active: https://www.youtube.com/watch?v=atm0W5wA2y4 https://www.youtube.com/watch?v=atm0W5wA2y4 If you don't trust my anecdotal experience, then how about "The Crimea conundrum: legitimacy and public opinion after annexation" published in the Eurasian Geography and Economics journal? Or how about "To Russia With Love" article published in Foreign Affairs? They both confirm strong local support in favor of the transfer. >My impression (from friends in Kiev) is that it's universally condemned. I hope you understand that your friend quite probably is really biased regarding this issue, right? Always try looking outside of the media narrative (one may call it soft propaganda), usually world issues are far more complex than the version painted by media.
jackcosgrove 6y ago
Did Taiwan become a leader in microchip fabrication out of a strategic or economic interest? Because it surely has strategic value.
jszymborski 6y ago
This is maybe a dumb question, but how much would it cost for a e.g. NATO-country led initiative to create a foundry like TSMC in X years. Surely this can't be harder than building the LHC, and the diversity would clearly reduce conflicts.
- xxpor 6y ago
  TSMC's Fab15 300mm wafer fab cost about $2 billion more than the LHC. Not that money == difficulty, but still. It's not a completely trivial amount of money.
  - koheripbal 6y ago
    You can't really compare a cost which returns zero profit versus one that turns a profit. There is nearly an unlimited supply of money for projects that are guaranteed to return a profit - especially today with the bond market desperately searching for yields. ...so the moment asian chip factories become untenable - we will have fabe here in the US overnight. As an example, Israel built its own Intel fabs in under 3 years.
    - cinquemb 6y ago
      > There is nearly an unlimited supply of money for projects that are guaranteed to return a profit - especially today with the bond market desperately searching for yields. There is nearly an unlimited supply of money for projects that are guaranteed to have positive cash flow - especially today with the bond market desperately searching for yields. Plenty of companies are loaded up with debt with negative eps with positive cashflow. I believe this distorts the gymnastics of "You can't really compare a cost which returns zero profit versus one that turns a profit" when many companies haven't turned a net profit since their existence.
ausjke 6y ago
Once China masters all the chip capabilities, the competition will be over, the era of USA will fade out quickly in history. China is working its ass off while we're looting on the street because BLM, or we're fighting for LGBTQ to make sure it is something you should take PRIDE in. If you're silent these days then you're as aweful as Trump. Nowadays fair treatment for all is the same as discrimination. If you're a conservative you're more than evil. USA is hijacked by the left and socialism and is on its way to hell, with China is catching up, our days are numbered.
- 29_29 6y ago
  > China is working its ass off while we're looting on the street because BLM, or we're fighting for LGBTQ This is not popular, but thats how I feel. As soon as we work out our social problems, we will realize the world as completely past us by. I'd rather focus on improving our standard of living.
- dragonwriter 6y ago
  > China is working its ass off while we're looting on the street because BLM, or we're fighting for LGBTQ to make sure it is something you should take PRIDE in. Yeah, the march of orderly progress in China isn't ever obstructed by internal social problems. (And if you disagree, you will be reeducated if you aren't first crushed under the tank treads of orderly progress.) But it's interesting how the defenders of the American Right are so ready to lavish irrational praise on (even nominally “Communist”) authoritarian regimes, including those they paint (often accurately) as dangerous competitors abroad, just like their Dear Leader is. > USA is hijacked by the left and socialism Much as I'd like that to be the case, at least if it was democratic socialism, it is really just that it was taken over by the far right, but the way they've been running the show has managed to alienate much of even the solid-but-not-far-right, leaving the far-right isolated without it's less extreme erstwhile allies; calling everyone who doesn't support them “left” and “socialist” is reflexive, but not accurate.
- non-entity 6y ago
  > USA is hijacked by the left and socialism and is on its way to hell, with China is catching up, our days are numbered. Lmaoooooo. Socialism isn't even remotely a thing in america as decades after the cold war, propaganda of the red scare is effective amongst large swaths of the population. Then again you probably think socialism is the the government does stuff. But ha you're right, Americans should just suck it up, and accept extrajudicial educations and power abuses because american exceptionalism means we always need to be #1.
stephc_int13 6y ago
I hope that US and Europe politicians are looking at this seriously and are able to think long-term. I completely agree with the author about the vital importance of this technology, it should be considered as a resource. The long-term solution is not military, but industrial.
29_29 6y ago
How did we get in this situation? How did both parties - Democrat and Republican fail us so bad? It's a total institutional failure.
- knowaveragejoe 6y ago
  The propaganda that demonized the TPP at every turn and led to Trump leaving the table day 1 of taking office seems to have worked.
  - 29_29 6y ago
    I do not believe this is all Trumps fault. That's too easy an explanation
  - RockIslandLine 6y ago
    TPP was a terrible response to the opportunity. Write better treaty text and you get a better result. Killing TPP was the correct result.
- Synaesthesia 6y ago
  You mean trying to create conflict with China? It’s been ongoing for some time. The US has been threatening China and surrounding it militarily. See John Pilger, “The Coming War on China” https://www.youtube.com/watch?v=GDl9ecICIYg https://www.youtube.com/watch?v=GDl9ecICIYg
  - 082349872349872 6y ago
    For some time, meaning since 1949 or so. How does one get in the situation? Kennedy suggested working towards a world where it wouldn't matter who had the largest economy, all countries could compete peacefully, etc. but at least one person in 1963 didn't think that a worthwhile project.
phkahler 6y ago
This neglects one critical piece of the foundry business. The equipment for EUV lithography and prior generations comes from ASML in Europe and another company I cant remember. If eastern fabs are damaged in a conflict they will be blocked from rebuilding. That is, until China manages to copy that stuff which is something they are likely already trying to do.
jonplackett 6y ago
If you imagine this as a board game along the lines of Risk, you’d have to much prefer being in China’s position. They have so many options and can also just bide their time.
bob1029 6y ago
It is pretty obvious that we will not be able to maintain leadership with arbitrary hardware process technology advantages for much longer. The next generation of strategic advantage is in the software that runs on this hardware. We really need to start thinking harder about how we protect highly-complex and strategically-important software IP from theft, because theft of software is pretty much immediate and absolute. I have personally started to pull some of my experimental projects I would otherwise keep public into private repositories because of these sorts of concerns. I do not want to enable the CCP in any way whatsoever. Hypothetically, if your 7nm chip supply was constrained because of war, but you were able to optimize the software that runs on that hardware by 15-30%, you could theoretically run it on a 14-22nm chip with a similar performance envelope. The larger process tech is easier to manufacture and you will more likely have domestic facilities which can accommodate. Anything that does not require EUV is instantly 100x easier to produce. Additionally, the more advanced process tech is arguably less advantageous in a military setting, as these chips are highly vulnerable to electromagnetic warfare relative to older process technology.
- aidenn0 6y ago
  99% of the software in the US is currently available to the CCP if they care enough. Pretty much all private companies could have their IP exposed by a nation-state level actor at this point. It's typical for read-only source-code access to be available to everyone inside the corporate network, so if any device used by anyone with such access is compromised (or if the person is themselves compromised), so is the source-code.
- deleted 6y ago
  [deleted]
wwarner 6y ago
Europe and NA lead the world in solid state physics, and this is where real computing power for the future comes from. Europe and North America should continue to invest heavily in basic research and create incentives for science that can be applied to computing.
- koheripbal 6y ago
  I agree. ...but in a crunch, during a global political crisis, you don't just setup a chip fab overnight. It'll take 3 years, minimum to get the first batch out.
stock_toaster 6y ago
All that government driven industrial espionage is paying off, apparently.
blackrock 6y ago
And to add to this, the new wrinkle in this TechWar, is how the USA just banned a Chinese university from buying Matlab. Yes, Matlab. They banned a university with a bunch of students from using a fancy calculator. This is like banning the sales of Microsoft Excel to China. The next interesting play, is what China will do to countermeasure this. They will likely have to make their own Matlab program, thus eliminating all future profits for Matlab in China. And then, Matlab might even now have a new international competitor in this area. Then, will China also ban Microsoft products in the future, in retaliation, after they make their own version of Excel. If I were them, I would think that the American side is also next planning on banning the sales of Excel to China.
- darwingr 6y ago
  I guess that's good news for the Octave project. Unless we're fully heading towards 2 internets from the American side as well, I don't know how you would stop that from being downloaded in China. I would say they'll just go around the fire-wall...that kind of argument has not been persuasive as of late.
- unishark 6y ago
  The software isn't banned in all of China yet though. Just organizations on the sanction list. So to retaliate in that way China would effectively be increasing the sanctions on themselves. There's multiple competitors to matlab already that even some US schools use. It isn't as lopsided as Excel versus, uh... google sheets?
  - blackrock 6y ago
    Well, the problem is that, China has likely invested and spent, hundreds of billions of dollars, and millions of man years, on American technology products. They have built their own applications and business processes, on top of American technology systems. American companies have benefited handsomely from this engagement with China. Their stock prices reflect that, in how much they earned from China, and how much future potential they will earn from China. What the USA government is doing here, is saying that America is no longer reliable. Essentially, that they can take away their products on a whim. This puts the onus of the risk on China. Why should they continue to spend and invest in American technology, when it can all be taken away, and their applications on top of it will be useless. Imagine if a Chinese company spent 5 years, and millions of dollars, to build an application on top of the Microsoft Windows framework. Then one day, the American government says: Hey, we will no longer allow you to use Windows. Now, your expensive program, is wasted, and is now worth less than a paperweight. Even a paperweight is more useful than your program. Will this happen? Who knows. But it is clearly a risk. And it must be a violation of some WTO trading rules somewhere. Because something like this, is clearly a monopolistic and predatory action, akin to an all-out economic war, designed to force the Chinese to their knees, and which would force the Chinese side to counter-react to.
dnprock 6y ago
It's good to see people in the tech circle thinking about China. China's rise to dominance is unquestionable now. The current US administration has failed miserably. In the past 4 years, China has made gains on all fronts. I don't think they suffered any setback. The US does not seem to have a coherent strategy to counter this trend. The trade war was lauded as an achievement. But it has failed. The US is now going back to something similar to TPP, a policy championed by the previous administration. One step forward, 2 steps backward. This pandemic started in China. But they somehow turned the table back to the US. The virus has done more damage to the US than China. The US leadership is incompetent. The government and the Fed are fixated on keeping the S&P 500 index. Tech investors make calls to build. Then, they invest in the next app trend. People seem to lose their moral compass. I think in the near future, the US won't be able to print money to fix its problems. China seems to play a war of attrition. It engages the US in small conflicts and tends to drag them out. The US is the top dog. So it wants to win all of its battles. These conflicts distract the US from the big picture. The US is fighting fires on all fronts. Then China slowly makes gains.
- colinmhayes 6y ago
  It all comes back to https://www.youtube.com/watch?v=Vpdt7omPoa0 https://www.youtube.com/watch?v=Vpdt7omPoa0. It's easy to blame our leaders, but we choose our leaders. The real problem is our culture of entitlement and bigotry which celebrates naivety. Yes, Trump's corona response was terrible, but in the end the problem is the huge number of people who not only refuse to wear a mask/quarantine but put considerable effort into mocking those who do.
- free_rms 6y ago
  The last time China "engaged" the US in a conflict was Vietnam, I think? What do you mean by "engage"?
  - albntomat0 6y ago
    "Engage in a conflict" does not strictly mean a military conflict. The parent poster most likely means political and economic ones.
ilaksh 6y ago
It seems like they should stop trying to block China's access to TSMC until we have the factories in the US. And we should be investing billions in the US factories. Either that, or do a complete 180 and go back to the globalization mode where we play nice with China. I mean, if there could somehow be a non-violent cultural and political integration that would be ideal. It seems like we are going to get one of two extremes though. Either people who think that China is ultimately irredeemably evil will stay in power or people who don't care what China does as long as they can make money there come back into power. Neither one of those extremes really seems like a good approach though. Both seem to kind of be making things worse. I believe the only safe outcome will involve very difficult cultural,political and technological integration. The economic integration to the degree it exists might be a stepping stone to that stuff but it seems we have seen it's limitations. I don't have faith that people will recognize the depth of the problems, understand it and address it is a sane way. Most likely outcome still seems to be a horrific war. This type of thing is why I have recently been thinking that actually it may be best if we just go full speed ahead with the AGI development. Because if we could have a safe world, then I would say the opposite, that we should avoid creating a new species that makes us obsolete. But now it may be a race to create this new species before our own poor organization destroys us or sends us back to the iron age.
euix 6y ago
The real problem is that success or failure, the real damage is poisoning 1/6 of the world's population against you for a generation or more. What kind of world will that be? If every Chinese kid is taught from birth the U.S. is hellbent on keeping them in second place (which is exactly what looks like now, regardless of what previous administrations thought or how much CCP spin is put on it - the propaganda writes itself these days). This is exactly the narrative that is held in the mind of every Chinese about the Opium War and the downfall of the late Qing and the Japanese. These things have long historical memories and human grudges really can span generations and generations (look at Hungry for instance). From there it's very slippery slope to a race war, i.e. Chinese vs Anglos, I can easily imagine confiscating ethnic Chinese property in the U.S. and putting them internment camps in the next twenty years and attacks against the "whites" in China. Ultimately this is about how to co-exist and share resources on this planet so we can solve problems on the planetary scale. Otherwise we will just become one of those species in this universe that failed to launch because they destroyed themselves on their own planet before inventing starflight.
- throw51319 6y ago
  The CCP is leveraging this historical narrative to harness the power of 1.4 billion people. They are creating a nationalistic fusion to grab power. Up until the past 2-3 years, most Americans did not care about China as a whole. Just another country we do business with.
- AtlasBarfed 6y ago
  "co-exist and share resources on this planet" Someone tell US leadership this. It is sad that China is rapidly addressing their GHG emissions via unprecendented EV and alternative energy programs.
liquidify 6y ago
What a cool article.
garmaine 6y ago
> China may respond and escalate, via one of many agile strategic responses short of war, perhaps succeeding in coercing the foundry [TSMC] to stop making chips for American companies ...how? Taiwan is even more of an adversary to the PRC than the USA.
amaajemyfren 6y ago
Predicting what is next is hard. Turning what is next to be successful is even harder. China may be able to push into AI and microprocessors, but it will need to have the culture of trial and honest admission of failure if it is to actually deliver on the next big thing. I think it is still unclear (despite the great results they have with 5G) that China knows how to do that.
sovietmudkipz 6y ago
I feel pangs of sadness reading articles like this. I’m just about 30 and when I look around at my peer group I see themes of learned helplessness. I see children in adult bodies who whine to compel others to fix their own problems. I see people unwilling to entertain conversation that may challenge their point of view. And parents, well into their old age, seem to be content in keeping this status quo. They acquiesce to the complaining, they solve their children’s problems. And the tools of being self sufficient and goal oriented seem to suffer. If I buy into one of the points of the article- that there are people in China who are in positions of power who are unified, know what they want, know where they are, and thus will figure out to get there- and I think about how my peer group would respond, I get worried. The panacea would be for my generation to become just as tenacious in seeking our own goals. But I just don’t see what transformations would have to happen to make this a reality. P.S. I will continue improving the community of people within arm’s reach. I think that’s all us motivated people can do.
- red_trumpet 6y ago
  > If I buy into one of the points of the article- that there are people in China who are in positions of power who are unified, know what they want, know where they are, and thus will figure out to get there- and I think about how my peer group would respond, I get worried. That sounds like you are comparing your (probably average) peer group to an imagined group of people in positions of power. Doesn't seem like a fair comparison.
valuearb 6y ago
China will likely be dealing with massive internal dissent and eventually revolution. The history of authoritarian regimes always ends there.

484 points by chmaynard 6y ago

Coming chip wars? I remember stories of vax boxen filled with concrete in previous export restriction wars, not to mention japan losing chip production to south korea. 20th century: https://micro.magnet.fsu.edu/creatures/pages/russians.html https://micro.magnet.fsu.edu/creatures/pages/russians.html (my russian is atrocious, but it's good enough to know the story given has obviously been elaborated in the telling before it hit this web page) 21st century: 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... (much of Blank's "secret history" of SV is an outline that chips have been strategic since before they existed https://steveblank.com/secret-history/ https://steveblank.com/secret-history/ )

latrare 6y ago

China is keeping things surprisingly civil considering they could just limit the supply of or manipulate the cost of rare earth minerals. Many Western companies would soon find themselves in Huawei's shoes, counting down the days until the stockpiles run out.

MHordecki 6y ago
The moment they start doing this, other countries will restart their mines and the Chinese leverage (and profits) will evaporate. Rare earth minerals aren't that rare.
- latrare 6y ago
  China has been maintaining a majority share of production for at least a decade at this point. I would wager that while that your proposed response is short as a phrase, actually getting production to match the currently relied-upon volume without China would take years, and I don't think stockpiles would last that long.
  - onepointsixC 6y ago
    The US accounts for a small part of the global REM consumption. Even with their majority share, unless China is willing to burn the rest of the world, the US would be able to make do. And that's not even getting into transhipping which was used to circumvent previous REM export bans.
- benologist 6y ago
  I saw it explained like this. Rare minerals are everywhere but they're spread out, and China's advantage is they will destroy a lot of environment to extract them while other countries are regulating protections for the environment. If that is true it would be very difficult for other countries to fill the demand?
  - iguy 6y ago
    I thought lots of existing mines had ore containing them, but can't make a profit extracting them, so they don't. How quickly such extraction/refining steps could be added, I don't know. (Am far from an expert though!)
- chrisjc 6y ago
  From what I understand, it's not the mines that are the problem. In fact, China imports most of its rare earth materials. What they control is the refinement of these materials turning them from a raw form to something useable. I believe the US is finally starting to do something about this imbalance, but I'm unsure if its scale is great enough to have an effect. A refinement plant just came online in Colorado (or is it Texas?) in the last few months. I believe there might be more in the pipeline including Mountain Pass (in addition to the mine itself) in California. From what I understand, traditionally refinement is an extremely dirty process and as a result extremely costly to run especially with all the environmental restrictions and potential fines. edit: latrare brings up another very important point. The patents surrounding the processes to refine RE materials. Take a look at who owns most of them...
  - blackrock 6y ago
    I recall that China owns most of the latest patents on rare earth refinements. This should be obvious considering they are the most active in its refinement process. Now, the irony is that if American companies want to start rare earth refining, then they must pay China for the use of those refinement patents. Oh the irony. Unless some American senator want to invalidate all of China’s patents on grounds of National Security. Oh the hypocrisy.
- latrare 6y ago
  Found the estimate in the report the Pentagon gave to Congress on this issue in 2013. Your proposed action would take the US, alone, 15 years (https://imgur.com/olWM3Xi https://imgur.com/olWM3Xi). Report: https://fas.org/sgp/crs/natsec/R41744.pdf https://fas.org/sgp/crs/natsec/R41744.pdf
  - marcus_holmes 6y ago
    I believe there's a few Australian mining companies with plans ready to go if China ever does this. The prices will go up, a lot, but the spice will flow.
onepointsixC 6y ago
The REM myth is just that. The CCP previously tried to weaponize REM exports to hurt Japan and that both failed and revitalized REM production outside of China. That would also further hurt their own ability to export as no one will want anything important be it infrastructure or supply chains to be reliant on the whims of wolf diplomacy.
newacct583 6y ago
That's a MAD scenario though. I mean, trade wars can escalate, but deliberately crippling global industries is a shade too far (probably). In fact the Huawei chip regulation was attractive precisely because it doesn't impact much in the way of actual products right now. The overwhelming bulk of Huawei's revenue is derived from simple manufactured products using semiconductors from non-PRC sources. Their domestic chip design was a fledgling industry still.

blueblisters 6y ago

The CCP is getting ever more ambitious (perhaps reckless) in the wake of the pandemic. I am not sure if it's overconfidence or calculated tactical moves. The timing of the border conflict with India is no mere coincidence -- it seems like an attempt to secure assets (CPEC) on the Western theatre in anticipation to any action on the Eastern front.

magicsmoke 6y ago
The flareup is over 60km2 of territory on the other side of Kashmir and the CPEC highways, it's not going to have any impact on them. More likely that local forces got rowdy as infantrymen tend to do and now the higher ups are scrambling to defuse the situation. If this was an actual calculated move to take significant amounts of territory the big guns would be firing by now.
- sbmthakur 6y ago
  Previous agreements prohibit the use of firearms on the Indo-China border even if troops are carrying them. Have a look at the weapon used by the Chinese troops to figure if the attack was premeditated. https://www.bbc.com/news/world-asia-india-53089037 https://www.bbc.com/news/world-asia-india-53089037
- screye 6y ago
  I've been reading a ton of geopolitical and military experts over the last few weeks, and there is a unanimous consensus that China never makes moves on the border without explicit instructions from the top. Their reaction here has been paired with new movement in the South China Sea, changed messaging through proxy Government (Oli in Nepal and Pakistan at large) and claims over new land that has never been claimed by them before. Xi is using the fallout from Corona as a way to impose China on countries that are distracted by the pandemic as of this time. > If this was an actual calculated move to take significant amounts of territory the big guns would be firing by now. That isn't how China works. They are well know for their salami slicing (https://foreignpolicy.com/2012/08/03/salami-slicing-in-the-south-china-sea/ https://foreignpolicy.com/2012/08/03/salami-slicing-in-the-s...) approach to expansionism. Their current actions are perfectly in line with previous attempts at expanding borders and signaling intent for armed invasion.

bonestamp2 6y ago

Even though it's far from over, I'm sick of talking about coronavirus. But we can't stop until we've learned everything we can from it. Obviously, it's human impact is awful. It has been a brutal stress test for so many of our health and economic systems: healthcare, food, ppe, school, etc. So, if there's one good thing that comes out of this, and I'm sure there will be many, it has to be that manufacturing returns to all advanced countries. No longer should we outsource nearly all of our manufacturing to various parts of Asia. Nothing against Asia, but we've known for a long time that it is high risk to put all of your "eggs", of any kind, in one basket -- it's very risky for everyone if we concentrate all of those abilities into a handful of countries in one part of the world. In might be cheaper in the short term, but it could be devastating for all of us in the long run. This time it was a pandemic, but next time it could be something that destroys those countries and the timeline to rebuild is years. The survival of the planet may depend on our ability to manufacture. It already does in some ways, but the timeline is rather long at this point. What if the danger is imminent? Do we really want most high (and low) tech manufacturing concentrated in one part of the world? No, we need to spread it globally for the potential benefit of everyone. The same way you balance your investment portfolio between different types of assets, we need to balance our investment in the future of the planet across the globe as well. Sure, some assets aren't as profitable, but you still hang on to them for security, stability and risk reduction.

totalZero 6y ago

Meanwhile, American semiconductor and technology hardware companies spend exorbitantly on stock buybacks. Set up factories outside of Asia Pacific with that money.

staycoolboy 6y ago
Publicly traded US companies are beholden to investor returns. This is going to make them less able to respond to international competition. Think about the Fair Trade laws that aim to prevent large companies from dropping their prices to below cost to drive small plantations out of business. There's no reason china needs to make 1,000% profit on their latest CPU when they can sell at a very low price, and put US manufacturers out of business. And FTA: https://www.bloomberg.com/news/articles/2020-06-10/u-s-lawmakers-propose-25-billion-to-aid-semiconductor-industry https://www.bloomberg.com/news/articles/2020-06-10/u-s-lawma... I just barfed a little in my mouth. This is what is so eff'd up about the US. Semicon stock prices drove the creation of millions of millionaires over the last 2 decades, and now they need a handout.
- justicezyx 6y ago
  > Publicly traded US companies are beholden to investor returns Long- or short-term investor return? Given the situation and prospect, anyone who still sticks to this principle of short-term investor return is at good the capitalism in the worst form, or at worst plain irrationality.
- gpanders 6y ago
  It doesn't strike me so much as a handout as an investment in domestic infrastructure and chip manufacturing. It's pretty clear from the present situation that international supply chain risk is huge and this is an attempt to incentivize domestic production.
- bedhead 6y ago
  Tell that to Amazon. It's all just company/leadership culture.
- jariel 6y ago

vsareto 6y ago

I don't understand the military implications. The US has had long range missiles and defenses that are effective with stuff from the 80's and 90's. If China somehow got complete control over TSMC to the point they no longer supplied the US, it doesn't take much to sabotage the factories. If not missiles, then using spies, or attacking the systems that run the factories. This seems like a fragile advantage. Advanced chips don't even give you advantages in cyberwar. Even if this triggered a longer conflict, the US could just buy through other countries that can buy from TSMC. Or just start using consumer off-the-shelf stuff. I'm fairly certain my gaming PC could guide a missile. There's lots of data centers in the US to pull from too. If we lose all access to buying chips tomorrow, how does that affect our weapons?

sneak 6y ago
> If China somehow got complete control over TSMC to the point they no longer supplied the US, it doesn't take much to sabotage the factories. I am told that TSMC has a poison pill setup for their fab(s) for the case where the PLA takes Taiwan by force, which makes sense in the same way that a "driver carries less than $20 in cash" window sticker does.
- Aperocky 6y ago
  That's the point though? Now firms in China can't get it because of arbitrary sanctions from the US. How about nobody gets it, say bye bye to your supply AMD/Apple. That's the stake China is putting on the table.
throwawaygh 6y ago
The USSR lost a war and collapsed. War is about more than just hard power.
- vsareto 6y ago
  Right but the author is saying the world just got a lot more dangerous and I'm wondering how with respect to the military.
6y ago

staycoolboy 6y ago

Alibaba is making huge investment in AI, 5G and IoT chips. They are totally bypassing the Intel<>Arm general purpose CPU battle because that isn't the future. The new fabs in Pingtouge are just the beginning. China has the skill, the money, and the motiviation. There's no reason why they need to be dependent on chips from Intel and Arm licensees. Ever since the mid-1990s the US has tried to use laws to prevent exports and hinder China (P6 export laws anyone?), 5G laws are nothing new. This will end up with China exceeding US fab capacity and supplying chips to all non US & European countries in 10 years. I'm not making a value judgement, I'm saying that if a country is going to try to hold you back by limiting your access to technology, you just develop your own.

magicsmoke 6y ago
It's interesting how all the actions the author thinks China will take involves military coercion of Taiwan in some form. When all you know how to use is a hammer, every problem looks like a nail. The idea that China could build an alternative to TSMC instead of trying to take it apparently doesn't compute.
- dathinab 6y ago
  The author did mention that China is trying to do so since a while but is not quite there yet.
- Teever 6y ago
  > When all you know how to use is a hammer, every problem looks like a nail. you're implying that the author has violent predispositions?
  - joshuaissac 6y ago
    I think the commenter is suggesting that the author's understanding of China's military/retaliatory capability against Taiwan is his "hammer", so his predictions of Chinese actions may be biased accordingly.
- blackrock 6y ago

ardy42 6y ago

> The United States just did this to China by limiting Huawei’s ability to outsource its in-house chip designs for manufacture by Taiwan Semiconductor Manufacturing Company (TSMC), a Taiwanese chip foundry. If negotiations fail, China may respond and escalate, via one of many agile strategic responses short of war, perhaps succeeding in coercing the foundry to stop making chips for American companies – turning the tables on the United States. How would the PRC succeed in convincing TSMC to stop producing chips for the US, short of military action? The PRC is Taiwan's primary military adversary, and the US is Taiwan's primary military supplier and ally. IIRC, TSMC even recently agreed to build a foundry on US soil (which is kinda surprising, since that reduces the incentive of the US to defend Taiwan in a military conflict with the PRC).

Aperocky 6y ago
If China were go to war with Taiwan, US would be involved in a civil war in China de jure if it wants to intervene. Because US recognize both mainland China and Taiwan as one 'China', without specifying which. The internet would like to tell you that China and Taiwan are totally different country but US policy doesn't recognize that. And changing that policy one week into the conflict does not look good on the optics.
- throwanem 6y ago
  Policy optics are secondary here. Even were the US to attempt some military intervention, which I think quite unlikely, it would not be a war we could win.
- knodi 6y ago
  I doubt the current occupants of the whitehouse care about optics at this point.
- JumpCrisscross 6y ago
  > US recognize both mainland China and Taiwan as one 'China’ This is a 70s era policy that is increasingly paid just lip service to.
- 6y ago

RandomWorker 6y ago

Huge gap in this article is ASML. The guys that make the machines that make the chips that are designed by intel and the like. They have about 80% market share. They could supply/deploy those Machines anywhere in the world.

the_duke 6y ago
Recent article about US pressure on the Netherlands to prevent ASML exports to China: 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...
tda 6y ago
Yep, and the US gov is pressuring the Dutch gov to not export any of the next level chip manufacturing machines to China, so this chip war has already hit ASML pretty hard
monocasa 6y ago
China is making huge progress at being able to replace ASML in their chip supply chain. https://www.chinadaily.com.cn/a/201811/30/WS5c006df2a310eff30328be90.html https://www.chinadaily.com.cn/a/201811/30/WS5c006df2a310eff3...

monocasa 6y ago

One very important piece that doesn't get enough time in the article is China's in country fab, SMIC. They've got 14nm in risk production, and are making good progress on something equivalent to 10nm TSMC (that they're calling 7nm, but feature sizes are made up anyway). And perhaps most importantly China is making good progress on in country EUV litho steppers to cut ASML out of the picture too.

hangonhn 6y ago

Tangential to this discussion, what was AMD's original reasoning for getting rid of its own fabs and spinning them out into Global Foundries? It seems these days that fabs are so strategic. Did they realize they can't compete in that space? Thanks!

Klinky 6y ago
Maintaining fabs is expensive. AMD got to push debt onto Globalfoundries with the deal, and Globalfoundries could focus on other opportunities, not just AMD. Globalfoundries has since fallen behind in process node, with TSMC and Intel leading the way. Given the struggles Intel has had, it is hard to say that AMD would have been in a better position to get to 10nm or 7nm had they kept their fab facilities.
m4rtink 6y ago
IIRC sharing the fab capacity with other companies - with NVIDIA, Apple, Samsung and many others there is a lot more money in the pot. Compare with Intel strugling on their latest fab process, which they traditionally did not share with anyone else.

Synaesthesia 6y ago

Interesting that the article chides the US military for not preventing China from militarising their own neighbourhood (South China Sea). However there’s nothing wrong apparently with the US militarising the Caribbean, or the South China Sea for that matter. The same could be said for access to manufacturing for Huawei vs US companies.

blackrock 6y ago
Some senator should propose a bill renaming the Caribbean to the South American Sea. That’ll show everyone that America means business when it comes to territorial possessions! He might even win a Nobel Peace Prize for doing so. LOL.
jariel 6y ago
There is no equivalence between the two actions. China is claiming vast regions which are currently regarded as 'international waters', or worse 'sovereign waters of other nations' as it's own, sovereign territory. The US is not declaring the Bahamas to be 'US Territory', for example. Not only that, the US Navy ensures that everyone - including China, Russia, Iran etc. can have 'safe passage' in international waters, and especially Panama Canal, Suez, Gulf etc. - which is quite literally the opposite of China's intentions in the S. China sea.
- sbmthakur 6y ago
  Simultaneously, they are trying to squeeze as much land as possible from their neighbors. Recently, Chinese soldiers killed 20 Indian soldiers who foiled their land-grabbing attempt.
  - jariel 6y ago
    To be fair, this was a quibble among unarmed soldiers, literally fist-fighting on a bridge, in the middle of the night. I'm not sure if it counts for anything, and I don't think that on the whole, India's sovereignty is threatened. The issue will be in areas wherein China can claim supremacy without much resistance, for example, off the coast of weaker neighbours in the region. It's a pretty bold ploy - at the same time, I actually believe that the 'chip wars' will be more important!

honkycat 6y ago

It's almost as if our beloved corporations dismantled our labor movements and sold us all out for short sighted profits. I hope you enjoy your billions when the bottom drops out of the United States economy, Bezos. Keep up those stock buybacks, Intel! You are REALLY contributing the the American project with all of that wealth you are hoarding!

tmaly 6y ago

TSMC having all its fabs in one place is a big risk if there is an earthquake. It makes sense to diversify

cltsang 6y ago
Definitely. That happened not too long ago: http://www.taipeitimes.com/News/taiwan/archives/2016/02/07/2003639025 http://www.taipeitimes.com/News/taiwan/archives/2016/02/07/2...

0x8BADF00D 6y ago

Not to mention, the next war will be the last one ever. It would be an extinction level event. That choice wouldn't be rational.

davrosthedalek 6y ago
Well, world war yes, but we just saw Russia annex a part of a different country by force. So China could say: Taiwan is Chinese, we belong together. And would the rest of the world not say: Well, we can't start a world war, because it's an extinction level event, so let's just condemn China in a very strongly worded letter?
- fuoqi 6y ago
  >by force It was so forceful, that it was effectively bloodless and an overwhelming portion of the "annexed" populace has actively supported it. Meanwhile situation in Taiwan is drastically different. Pro-mainland faction is really weak and can not be used to provide sufficient support for quiet absorption. And since Taiwan has deep military connections with USA for many decades, any military intervention will inevitably escalate into a major military conflict. The only scenario in which something like that can happen is civil-war-level turmoil in USA. Probability of which, worryingly, is noticeably bigger than zero.
  - justinclift 6y ago
    > It was so forceful, that it was effectively bloodless and an overwhelming portion of the "annexed" populace has actively supported it. That seems like an unusual perspective. If by "bloodless" you mean "lots of people died, but nowhere near as many as a world war" though, then sure. For the "actively supported", where are you getting that information? My impression (from friends in Kiev) is that it's universally condemned.
    - fuoqi 6y ago
      By it I mean that only total 6 people have died from both sides, of which only 2 can be attributed to direct actions of Russian armed forces (well, if you trust Ukrainian version of events, which should be taken with a lot of salt, same as with the Russian one). Now compare it with number of deaths in Kiev, Odessa or Donbas. (note that majority of deaths in the latter case are Ukrainian citizens killed directly by Ukrainian army, so much for "war with Russia") >For the "actively supported", where are you getting that information? Directly from Crimeans. I have visited Crimea last year as a tourist and talked with them personally (in Massandra and Alushta, btw the wine is really great, recommend trying it). Try watching 2014 videos, for example this one is before Russian forces have became active: https://www.youtube.com/watch?v=atm0W5wA2y4 https://www.youtube.com/watch?v=atm0W5wA2y4 If you don't trust my anecdotal experience, then how about "The Crimea conundrum: legitimacy and public opinion after annexation" published in the Eurasian Geography and Economics journal? Or how about "To Russia With Love" article published in Foreign Affairs? They both confirm strong local support in favor of the transfer. >My impression (from friends in Kiev) is that it's universally condemned. I hope you understand that your friend quite probably is really biased regarding this issue, right? Always try looking outside of the media narrative (one may call it soft propaganda), usually world issues are far more complex than the version painted by media.

jackcosgrove 6y ago

Did Taiwan become a leader in microchip fabrication out of a strategic or economic interest? Because it surely has strategic value.

jszymborski 6y ago

This is maybe a dumb question, but how much would it cost for a e.g. NATO-country led initiative to create a foundry like TSMC in X years. Surely this can't be harder than building the LHC, and the diversity would clearly reduce conflicts.

xxpor 6y ago
TSMC's Fab15 300mm wafer fab cost about $2 billion more than the LHC. Not that money == difficulty, but still. It's not a completely trivial amount of money.
- koheripbal 6y ago
  You can't really compare a cost which returns zero profit versus one that turns a profit. There is nearly an unlimited supply of money for projects that are guaranteed to return a profit - especially today with the bond market desperately searching for yields. ...so the moment asian chip factories become untenable - we will have fabe here in the US overnight. As an example, Israel built its own Intel fabs in under 3 years.
  - cinquemb 6y ago
    > There is nearly an unlimited supply of money for projects that are guaranteed to return a profit - especially today with the bond market desperately searching for yields. There is nearly an unlimited supply of money for projects that are guaranteed to have positive cash flow - especially today with the bond market desperately searching for yields. Plenty of companies are loaded up with debt with negative eps with positive cashflow. I believe this distorts the gymnastics of "You can't really compare a cost which returns zero profit versus one that turns a profit" when many companies haven't turned a net profit since their existence.

ausjke 6y ago

Once China masters all the chip capabilities, the competition will be over, the era of USA will fade out quickly in history. China is working its ass off while we're looting on the street because BLM, or we're fighting for LGBTQ to make sure it is something you should take PRIDE in. If you're silent these days then you're as aweful as Trump. Nowadays fair treatment for all is the same as discrimination. If you're a conservative you're more than evil. USA is hijacked by the left and socialism and is on its way to hell, with China is catching up, our days are numbered.

29_29 6y ago
> China is working its ass off while we're looting on the street because BLM, or we're fighting for LGBTQ This is not popular, but thats how I feel. As soon as we work out our social problems, we will realize the world as completely past us by. I'd rather focus on improving our standard of living.
dragonwriter 6y ago
> China is working its ass off while we're looting on the street because BLM, or we're fighting for LGBTQ to make sure it is something you should take PRIDE in. Yeah, the march of orderly progress in China isn't ever obstructed by internal social problems. (And if you disagree, you will be reeducated if you aren't first crushed under the tank treads of orderly progress.) But it's interesting how the defenders of the American Right are so ready to lavish irrational praise on (even nominally “Communist”) authoritarian regimes, including those they paint (often accurately) as dangerous competitors abroad, just like their Dear Leader is. > USA is hijacked by the left and socialism Much as I'd like that to be the case, at least if it was democratic socialism, it is really just that it was taken over by the far right, but the way they've been running the show has managed to alienate much of even the solid-but-not-far-right, leaving the far-right isolated without it's less extreme erstwhile allies; calling everyone who doesn't support them “left” and “socialist” is reflexive, but not accurate.
non-entity 6y ago
> USA is hijacked by the left and socialism and is on its way to hell, with China is catching up, our days are numbered. Lmaoooooo. Socialism isn't even remotely a thing in america as decades after the cold war, propaganda of the red scare is effective amongst large swaths of the population. Then again you probably think socialism is the the government does stuff. But ha you're right, Americans should just suck it up, and accept extrajudicial educations and power abuses because american exceptionalism means we always need to be #1.

stephc_int13 6y ago

I hope that US and Europe politicians are looking at this seriously and are able to think long-term. I completely agree with the author about the vital importance of this technology, it should be considered as a resource. The long-term solution is not military, but industrial.

29_29 6y ago

How did we get in this situation? How did both parties - Democrat and Republican fail us so bad? It's a total institutional failure.

knowaveragejoe 6y ago
The propaganda that demonized the TPP at every turn and led to Trump leaving the table day 1 of taking office seems to have worked.
- 29_29 6y ago
  I do not believe this is all Trumps fault. That's too easy an explanation
- RockIslandLine 6y ago
  TPP was a terrible response to the opportunity. Write better treaty text and you get a better result. Killing TPP was the correct result.
Synaesthesia 6y ago
You mean trying to create conflict with China? It’s been ongoing for some time. The US has been threatening China and surrounding it militarily. See John Pilger, “The Coming War on China” https://www.youtube.com/watch?v=GDl9ecICIYg https://www.youtube.com/watch?v=GDl9ecICIYg
- 082349872349872 6y ago
  For some time, meaning since 1949 or so. How does one get in the situation? Kennedy suggested working towards a world where it wouldn't matter who had the largest economy, all countries could compete peacefully, etc. but at least one person in 1963 didn't think that a worthwhile project.

phkahler 6y ago

This neglects one critical piece of the foundry business. The equipment for EUV lithography and prior generations comes from ASML in Europe and another company I cant remember. If eastern fabs are damaged in a conflict they will be blocked from rebuilding. That is, until China manages to copy that stuff which is something they are likely already trying to do.

jonplackett 6y ago

If you imagine this as a board game along the lines of Risk, you’d have to much prefer being in China’s position. They have so many options and can also just bide their time.

bob1029 6y ago

It is pretty obvious that we will not be able to maintain leadership with arbitrary hardware process technology advantages for much longer. The next generation of strategic advantage is in the software that runs on this hardware. We really need to start thinking harder about how we protect highly-complex and strategically-important software IP from theft, because theft of software is pretty much immediate and absolute. I have personally started to pull some of my experimental projects I would otherwise keep public into private repositories because of these sorts of concerns. I do not want to enable the CCP in any way whatsoever. Hypothetically, if your 7nm chip supply was constrained because of war, but you were able to optimize the software that runs on that hardware by 15-30%, you could theoretically run it on a 14-22nm chip with a similar performance envelope. The larger process tech is easier to manufacture and you will more likely have domestic facilities which can accommodate. Anything that does not require EUV is instantly 100x easier to produce. Additionally, the more advanced process tech is arguably less advantageous in a military setting, as these chips are highly vulnerable to electromagnetic warfare relative to older process technology.

aidenn0 6y ago
99% of the software in the US is currently available to the CCP if they care enough. Pretty much all private companies could have their IP exposed by a nation-state level actor at this point. It's typical for read-only source-code access to be available to everyone inside the corporate network, so if any device used by anyone with such access is compromised (or if the person is themselves compromised), so is the source-code.
deleted 6y ago
[deleted]

wwarner 6y ago

Europe and NA lead the world in solid state physics, and this is where real computing power for the future comes from. Europe and North America should continue to invest heavily in basic research and create incentives for science that can be applied to computing.

koheripbal 6y ago
I agree. ...but in a crunch, during a global political crisis, you don't just setup a chip fab overnight. It'll take 3 years, minimum to get the first batch out.

stock_toaster 6y ago

All that government driven industrial espionage is paying off, apparently.

blackrock 6y ago

And to add to this, the new wrinkle in this TechWar, is how the USA just banned a Chinese university from buying Matlab. Yes, Matlab. They banned a university with a bunch of students from using a fancy calculator. This is like banning the sales of Microsoft Excel to China. The next interesting play, is what China will do to countermeasure this. They will likely have to make their own Matlab program, thus eliminating all future profits for Matlab in China. And then, Matlab might even now have a new international competitor in this area. Then, will China also ban Microsoft products in the future, in retaliation, after they make their own version of Excel. If I were them, I would think that the American side is also next planning on banning the sales of Excel to China.

darwingr 6y ago
I guess that's good news for the Octave project. Unless we're fully heading towards 2 internets from the American side as well, I don't know how you would stop that from being downloaded in China. I would say they'll just go around the fire-wall...that kind of argument has not been persuasive as of late.
unishark 6y ago
The software isn't banned in all of China yet though. Just organizations on the sanction list. So to retaliate in that way China would effectively be increasing the sanctions on themselves. There's multiple competitors to matlab already that even some US schools use. It isn't as lopsided as Excel versus, uh... google sheets?
- blackrock 6y ago
  Well, the problem is that, China has likely invested and spent, hundreds of billions of dollars, and millions of man years, on American technology products. They have built their own applications and business processes, on top of American technology systems. American companies have benefited handsomely from this engagement with China. Their stock prices reflect that, in how much they earned from China, and how much future potential they will earn from China. What the USA government is doing here, is saying that America is no longer reliable. Essentially, that they can take away their products on a whim. This puts the onus of the risk on China. Why should they continue to spend and invest in American technology, when it can all be taken away, and their applications on top of it will be useless. Imagine if a Chinese company spent 5 years, and millions of dollars, to build an application on top of the Microsoft Windows framework. Then one day, the American government says: Hey, we will no longer allow you to use Windows. Now, your expensive program, is wasted, and is now worth less than a paperweight. Even a paperweight is more useful than your program. Will this happen? Who knows. But it is clearly a risk. And it must be a violation of some WTO trading rules somewhere. Because something like this, is clearly a monopolistic and predatory action, akin to an all-out economic war, designed to force the Chinese to their knees, and which would force the Chinese side to counter-react to.

dnprock 6y ago

It's good to see people in the tech circle thinking about China. China's rise to dominance is unquestionable now. The current US administration has failed miserably. In the past 4 years, China has made gains on all fronts. I don't think they suffered any setback. The US does not seem to have a coherent strategy to counter this trend. The trade war was lauded as an achievement. But it has failed. The US is now going back to something similar to TPP, a policy championed by the previous administration. One step forward, 2 steps backward. This pandemic started in China. But they somehow turned the table back to the US. The virus has done more damage to the US than China. The US leadership is incompetent. The government and the Fed are fixated on keeping the S&P 500 index. Tech investors make calls to build. Then, they invest in the next app trend. People seem to lose their moral compass. I think in the near future, the US won't be able to print money to fix its problems. China seems to play a war of attrition. It engages the US in small conflicts and tends to drag them out. The US is the top dog. So it wants to win all of its battles. These conflicts distract the US from the big picture. The US is fighting fires on all fronts. Then China slowly makes gains.

colinmhayes 6y ago
It all comes back to https://www.youtube.com/watch?v=Vpdt7omPoa0 https://www.youtube.com/watch?v=Vpdt7omPoa0. It's easy to blame our leaders, but we choose our leaders. The real problem is our culture of entitlement and bigotry which celebrates naivety. Yes, Trump's corona response was terrible, but in the end the problem is the huge number of people who not only refuse to wear a mask/quarantine but put considerable effort into mocking those who do.
free_rms 6y ago
The last time China "engaged" the US in a conflict was Vietnam, I think? What do you mean by "engage"?
- albntomat0 6y ago
  "Engage in a conflict" does not strictly mean a military conflict. The parent poster most likely means political and economic ones.

ilaksh 6y ago

It seems like they should stop trying to block China's access to TSMC until we have the factories in the US. And we should be investing billions in the US factories. Either that, or do a complete 180 and go back to the globalization mode where we play nice with China. I mean, if there could somehow be a non-violent cultural and political integration that would be ideal. It seems like we are going to get one of two extremes though. Either people who think that China is ultimately irredeemably evil will stay in power or people who don't care what China does as long as they can make money there come back into power. Neither one of those extremes really seems like a good approach though. Both seem to kind of be making things worse. I believe the only safe outcome will involve very difficult cultural,political and technological integration. The economic integration to the degree it exists might be a stepping stone to that stuff but it seems we have seen it's limitations. I don't have faith that people will recognize the depth of the problems, understand it and address it is a sane way. Most likely outcome still seems to be a horrific war. This type of thing is why I have recently been thinking that actually it may be best if we just go full speed ahead with the AGI development. Because if we could have a safe world, then I would say the opposite, that we should avoid creating a new species that makes us obsolete. But now it may be a race to create this new species before our own poor organization destroys us or sends us back to the iron age.

euix 6y ago

The real problem is that success or failure, the real damage is poisoning 1/6 of the world's population against you for a generation or more. What kind of world will that be? If every Chinese kid is taught from birth the U.S. is hellbent on keeping them in second place (which is exactly what looks like now, regardless of what previous administrations thought or how much CCP spin is put on it - the propaganda writes itself these days). This is exactly the narrative that is held in the mind of every Chinese about the Opium War and the downfall of the late Qing and the Japanese. These things have long historical memories and human grudges really can span generations and generations (look at Hungry for instance). From there it's very slippery slope to a race war, i.e. Chinese vs Anglos, I can easily imagine confiscating ethnic Chinese property in the U.S. and putting them internment camps in the next twenty years and attacks against the "whites" in China. Ultimately this is about how to co-exist and share resources on this planet so we can solve problems on the planetary scale. Otherwise we will just become one of those species in this universe that failed to launch because they destroyed themselves on their own planet before inventing starflight.

throw51319 6y ago
The CCP is leveraging this historical narrative to harness the power of 1.4 billion people. They are creating a nationalistic fusion to grab power. Up until the past 2-3 years, most Americans did not care about China as a whole. Just another country we do business with.
AtlasBarfed 6y ago
"co-exist and share resources on this planet" Someone tell US leadership this. It is sad that China is rapidly addressing their GHG emissions via unprecendented EV and alternative energy programs.

liquidify 6y ago

What a cool article.

garmaine 6y ago

> China may respond and escalate, via one of many agile strategic responses short of war, perhaps succeeding in coercing the foundry [TSMC] to stop making chips for American companies ...how? Taiwan is even more of an adversary to the PRC than the USA.

amaajemyfren 6y ago

Predicting what is next is hard. Turning what is next to be successful is even harder. China may be able to push into AI and microprocessors, but it will need to have the culture of trial and honest admission of failure if it is to actually deliver on the next big thing. I think it is still unclear (despite the great results they have with 5G) that China knows how to do that.

sovietmudkipz 6y ago

I feel pangs of sadness reading articles like this. I’m just about 30 and when I look around at my peer group I see themes of learned helplessness. I see children in adult bodies who whine to compel others to fix their own problems. I see people unwilling to entertain conversation that may challenge their point of view. And parents, well into their old age, seem to be content in keeping this status quo. They acquiesce to the complaining, they solve their children’s problems. And the tools of being self sufficient and goal oriented seem to suffer. If I buy into one of the points of the article- that there are people in China who are in positions of power who are unified, know what they want, know where they are, and thus will figure out to get there- and I think about how my peer group would respond, I get worried. The panacea would be for my generation to become just as tenacious in seeking our own goals. But I just don’t see what transformations would have to happen to make this a reality. P.S. I will continue improving the community of people within arm’s reach. I think that’s all us motivated people can do.

red_trumpet 6y ago
> If I buy into one of the points of the article- that there are people in China who are in positions of power who are unified, know what they want, know where they are, and thus will figure out to get there- and I think about how my peer group would respond, I get worried. That sounds like you are comparing your (probably average) peer group to an imagined group of people in positions of power. Doesn't seem like a fair comparison.

valuearb 6y ago

China will likely be dealing with massive internal dissent and eventually revolution. The history of authoritarian regimes always ends there.