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Around 2004 I visited the chipmaking industry in Dresden on a university field trip. We went to AMD and to AMTC (Advanced Mask Technology Center). It looked lik

Around 2004 I visited the chipmaking industry in Dresden on a university field trip. We went to AMD and to AMTC (Advanced Mask Technology Center). It looked like they were doing pretty well, they were increasing production capacity and also doing research, and AMD and others were investing a lot of money. I think now the whole campus belongs to Globalfoundaries. It is really sad how the domestic/western production became irrelevant. We lost it just like we lost our lead in solar energy (which was also based in the Dresden area by the way). And (at least solar) in my opinion for completely stupid reasons. The supposedly business-friendly German government went yolo, free trade and slashed the subsidies. And now they are turning around and trying to create industries from nothing? For solar, the ship has sailed, and for chips I think it is also way too late. Why didn't we support the industry we had? China is steamrolling us, because 1) they think and act strategic, 2) size-wise, they are not one country but many countries and city-states working as one and 3) they are beating us at our own game because we have a slavish devotion to WTO principles while they will use protectionism if it benefits them. The thing is: Europe could have done most of this, too.

tasubotadas 6y ago
Germany lost its edge not because of missing subsidies but because there are too many of them. Germany is taxing companies and people too much (40-50%) so capital is leaving the country. Actually, the same can be said about most of the western Europe.
- kyriee 6y ago
  The capital might be the problem.
- mattmanser 6y ago
  They tried cutting taxes like crazy since Reagan and it's been a complete and utter bust.
  - rsj_hn 6y ago
    This is when people get all confused by the difference between "necessary" and "sufficient". You need a lot more than lower taxes to make a business-friendly environment, and in some sense these are fungible. Businesses can pay more taxes in order to get other advantages, like more flexible labor policy, more skilled workers, or more stable regulations. People don't realize that stability of regulations is much more important than the specific content. You don't want some demagogue adding huge costs to you because you don't payoff some politically connected group, and the moment any business gets successful, lots of politically connected groups appear at their door demanding payoffs. The specific problem with chip manufacturing is that this is a dirty business requiring lots of chemicals and lots of water. There is simply no way anything like that can happen in Western Europe now. You will have millions of sanctimonious kids with nothing more meaningful in their lives than marching with signs about saving the ground, etc, and then angry politicians will get on soapboxes and denounce the greedy-ground-polluters in order to win elections, and so Europe will continue to buy their chips from factories located in East Asia or America, where there are jurisdictions in which people have other things to give their life meaning. Manufacturing has been pouring into East Asia not because asians are better at manufacturing, but because they value it enough to make systematic efforts to attract and promote it. It's about values and worldviews much more than a simple thing like tax rates (although East Asia has reasonable business tax rates, they have phenomenally cheap credit for manufacturers, good infrastructure, and very stable regulations.)
    - obscoth 6y ago
      Yeah, why aren’t we destroying the environment in Europe more? This is a great question. Kids these days have it too easy. They barely get any lead in their water.
      - rsj_hn 6y ago
        lol, "destroying the environment". News flash: shifting the environmental costs to China is not "saving the environment", it is just outsourcing the environmental damage to somewhere else, where more likely than not worse damage will occur than if the factory was located in Europe. If there was a general call to not use chips, it would be a different matter. But this is about personal sanctimony, not environmental impact. Moreover the environment is not some fragile thing that is "destroyed" by a chip plant. So here, too, there is a lack of understanding about what is happening so that people can make claims of personal righteousness (and the "environment" is just a place-holder that can and is swapped out for other concerns that yield more self-righteousness credits per unit effort at the drop of a hat).
- chmod775 6y ago
  With capital leaving the country you clearly can't be speaking of Germany's current account balance, something like low foreign investment or any other metric I can think of. What are you thinking of?
runawaybottle 6y ago
Europe could have done most of this, too. Let’s just zoom out for a second and admit Europe has done this for centuries already, with just about everything.
Dah00n 6y ago
I'm not disagreeing but you comment could be rewritten and still be true: >The US is steamrolling us, because 1) they think and act strategic, 2) size-wise, they are not one country but many countries and city-states working as one and 3) they are beating us at our own game because we have a slavish devotion to WTO principles while they will use protectionism if it benefits them. This is as true overall IMO. I'm not going anywhere special with this comment (and not bashing neither the US or PRC) but I though it worthwhile to keep in mind that China isn't doing anything others aren't too in similar ways. I don't think it will change though but we got a perfectly good litmus test of how it is now in the sale of ARM (though UK isn't in the EU of course). If it's sold we (as in Europeans) clearly haven't learnt yet.
- azinman2 6y ago
  But China is doing things no one else is doing. Requiring a local partner, giving up your IP to them and/or “security reviews”, not letting through many companies to give their own home grown a chance (eg Facebook, Google, etc), currency controls, currency manipulation, exploiting the global postal system to facilitate being export-oriented, inaccessible courts that never punish IP theft and abuse, the list is quite extensive and very asymmetric. You can knock the US however you want, but you can’t claim that it doesn’t allow it’s existing infrastructure (eg laws, courts, currency, etc) to be equally open to foreign companies. Unlike in China, foreign companies can sue US companies and win if they’re in the right, and no one doubts that ability based on nationalistic favor.
  - pydry 6y ago
    I wouldn't count on the fairness of US courts for strategic industries. They're unlikely to rule in favor of Huawei or against Boeing.
    - azinman2 6y ago
      First, Lion Air successfully sued Boeing and that’s just from recent high profile memory. I seriously doubt that legitimate lawsuits wouldn’t go through. And regardless, you’re naming two very specific entities. Good luck with any lawsuit for IP theft in China… they’ve pretty much all lost [1], and often the theft is either explicit policy for the gov or the gov itself providing the hacking and supplying their industries for the data. Further keep in mind China is a place where the conviction rate was 99.965% in 2019 and 99.969% in 2018. This is not exactly where you ever want to end up in court. [1] https://www.chicagotribune.com/business/ct-biz-us-china-trade-war-ip-theft-20190221-story.html https://www.chicagotribune.com/business/ct-biz-us-china-trad...
totalZero 6y ago
> It is really sad how the domestic/western production became irrelevant. Has it though? The West is up against governments. TSMC is part owned by their government. SMIC is part owned by their government. Samsung's share of South Korean GDP is so large that it might as well be the government. In the face of such organized and concentrated competition, what's so sad about some private businesses falling short?
- tablespoon 6y ago
  > In the face of such organized and concentrated competition, what's so sad about some private businesses falling short? I think the sad thing they were talking about is those businesses not getting the support they needed, because of an incompetent lack of strategic vision on the part of their governments'. It's like sending your army to a gunfight only armed with knives.
  - totalZero 6y ago
    I understand that point, but I'm saying the West is not irrelevant ("Has it though" as in, "has it become irrelevant though"). The 'woe is me' is strong in this thread, but the solution is at worst 10 years away if Western governments put their backs into beginning the long process today.
jollybean 6y ago
There are 1 billion people working for a pittance in China. There's hardly any way for anyone to compete with China on low-cost manufacturing at scale. Chips are something that smaller, smarter teams can do, it's a different kind of industry.
- vmception 6y ago
  I think people are overdue for a more pragmatic view on China Their GDP should be 3 times larger than EU of US, and they are doing things to make that true We should never be a factor to them but our egos require us to imagine they are thinking about us at all The only time they acknowledge us is to placate our egos. Reassure us that it isn't a big deal that their economy is about to be larger, and reassure us that they wont do the same things we all did with the rest of the world (and hope we ignore what they do internally, they aren't sending drones for our domestic rights abuses either).
rurban 6y ago
I live in Dresden. We do 70nm chips, whilst Taiwan and China are doing 7nm already. We can only do special chips nobody else wants to do. AMD already left, there's only Global Foundries and Infineon, plus some smaller local ASIC and FPGA makers. Dresden is big in embedded, kernels and automotive. But chip making is helpless. Kernels, on the other hand, is something we have a huge advantage over everybody else. Amazon with its FreeRTOS and L4 based companies are here. Xen is from here. And tons of embedded. With chinese chips and sensors and german kernels.

tasubotadas 6y ago

Germany lost its edge not because of missing subsidies but because there are too many of them. Germany is taxing companies and people too much (40-50%) so capital is leaving the country. Actually, the same can be said about most of the western Europe.

kyriee 6y ago
The capital might be the problem.
mattmanser 6y ago
They tried cutting taxes like crazy since Reagan and it's been a complete and utter bust.
- rsj_hn 6y ago
  This is when people get all confused by the difference between "necessary" and "sufficient". You need a lot more than lower taxes to make a business-friendly environment, and in some sense these are fungible. Businesses can pay more taxes in order to get other advantages, like more flexible labor policy, more skilled workers, or more stable regulations. People don't realize that stability of regulations is much more important than the specific content. You don't want some demagogue adding huge costs to you because you don't payoff some politically connected group, and the moment any business gets successful, lots of politically connected groups appear at their door demanding payoffs. The specific problem with chip manufacturing is that this is a dirty business requiring lots of chemicals and lots of water. There is simply no way anything like that can happen in Western Europe now. You will have millions of sanctimonious kids with nothing more meaningful in their lives than marching with signs about saving the ground, etc, and then angry politicians will get on soapboxes and denounce the greedy-ground-polluters in order to win elections, and so Europe will continue to buy their chips from factories located in East Asia or America, where there are jurisdictions in which people have other things to give their life meaning. Manufacturing has been pouring into East Asia not because asians are better at manufacturing, but because they value it enough to make systematic efforts to attract and promote it. It's about values and worldviews much more than a simple thing like tax rates (although East Asia has reasonable business tax rates, they have phenomenally cheap credit for manufacturers, good infrastructure, and very stable regulations.)
  - obscoth 6y ago
    Yeah, why aren’t we destroying the environment in Europe more? This is a great question. Kids these days have it too easy. They barely get any lead in their water.
    - rsj_hn 6y ago
      lol, "destroying the environment". News flash: shifting the environmental costs to China is not "saving the environment", it is just outsourcing the environmental damage to somewhere else, where more likely than not worse damage will occur than if the factory was located in Europe. If there was a general call to not use chips, it would be a different matter. But this is about personal sanctimony, not environmental impact. Moreover the environment is not some fragile thing that is "destroyed" by a chip plant. So here, too, there is a lack of understanding about what is happening so that people can make claims of personal righteousness (and the "environment" is just a place-holder that can and is swapped out for other concerns that yield more self-righteousness credits per unit effort at the drop of a hat).
chmod775 6y ago
With capital leaving the country you clearly can't be speaking of Germany's current account balance, something like low foreign investment or any other metric I can think of. What are you thinking of?

runawaybottle 6y ago

Europe could have done most of this, too. Let’s just zoom out for a second and admit Europe has done this for centuries already, with just about everything.

Dah00n 6y ago

I'm not disagreeing but you comment could be rewritten and still be true: >The US is steamrolling us, because 1) they think and act strategic, 2) size-wise, they are not one country but many countries and city-states working as one and 3) they are beating us at our own game because we have a slavish devotion to WTO principles while they will use protectionism if it benefits them. This is as true overall IMO. I'm not going anywhere special with this comment (and not bashing neither the US or PRC) but I though it worthwhile to keep in mind that China isn't doing anything others aren't too in similar ways. I don't think it will change though but we got a perfectly good litmus test of how it is now in the sale of ARM (though UK isn't in the EU of course). If it's sold we (as in Europeans) clearly haven't learnt yet.

azinman2 6y ago
But China is doing things no one else is doing. Requiring a local partner, giving up your IP to them and/or “security reviews”, not letting through many companies to give their own home grown a chance (eg Facebook, Google, etc), currency controls, currency manipulation, exploiting the global postal system to facilitate being export-oriented, inaccessible courts that never punish IP theft and abuse, the list is quite extensive and very asymmetric. You can knock the US however you want, but you can’t claim that it doesn’t allow it’s existing infrastructure (eg laws, courts, currency, etc) to be equally open to foreign companies. Unlike in China, foreign companies can sue US companies and win if they’re in the right, and no one doubts that ability based on nationalistic favor.
- pydry 6y ago
  I wouldn't count on the fairness of US courts for strategic industries. They're unlikely to rule in favor of Huawei or against Boeing.
  - azinman2 6y ago
    First, Lion Air successfully sued Boeing and that’s just from recent high profile memory. I seriously doubt that legitimate lawsuits wouldn’t go through. And regardless, you’re naming two very specific entities. Good luck with any lawsuit for IP theft in China… they’ve pretty much all lost [1], and often the theft is either explicit policy for the gov or the gov itself providing the hacking and supplying their industries for the data. Further keep in mind China is a place where the conviction rate was 99.965% in 2019 and 99.969% in 2018. This is not exactly where you ever want to end up in court. [1] https://www.chicagotribune.com/business/ct-biz-us-china-trade-war-ip-theft-20190221-story.html https://www.chicagotribune.com/business/ct-biz-us-china-trad...

totalZero 6y ago

> It is really sad how the domestic/western production became irrelevant. Has it though? The West is up against governments. TSMC is part owned by their government. SMIC is part owned by their government. Samsung's share of South Korean GDP is so large that it might as well be the government. In the face of such organized and concentrated competition, what's so sad about some private businesses falling short?

tablespoon 6y ago
> In the face of such organized and concentrated competition, what's so sad about some private businesses falling short? I think the sad thing they were talking about is those businesses not getting the support they needed, because of an incompetent lack of strategic vision on the part of their governments'. It's like sending your army to a gunfight only armed with knives.
- totalZero 6y ago
  I understand that point, but I'm saying the West is not irrelevant ("Has it though" as in, "has it become irrelevant though"). The 'woe is me' is strong in this thread, but the solution is at worst 10 years away if Western governments put their backs into beginning the long process today.

jollybean 6y ago

There are 1 billion people working for a pittance in China. There's hardly any way for anyone to compete with China on low-cost manufacturing at scale. Chips are something that smaller, smarter teams can do, it's a different kind of industry.

vmception 6y ago
I think people are overdue for a more pragmatic view on China Their GDP should be 3 times larger than EU of US, and they are doing things to make that true We should never be a factor to them but our egos require us to imagine they are thinking about us at all The only time they acknowledge us is to placate our egos. Reassure us that it isn't a big deal that their economy is about to be larger, and reassure us that they wont do the same things we all did with the rest of the world (and hope we ignore what they do internally, they aren't sending drones for our domestic rights abuses either).

rurban 6y ago

I live in Dresden. We do 70nm chips, whilst Taiwan and China are doing 7nm already. We can only do special chips nobody else wants to do. AMD already left, there's only Global Foundries and Infineon, plus some smaller local ASIC and FPGA makers. Dresden is big in embedded, kernels and automotive. But chip making is helpless. Kernels, on the other hand, is something we have a huge advantage over everybody else. Amazon with its FreeRTOS and L4 based companies are here. Xen is from here. And tons of embedded. With chinese chips and sensors and german kernels.