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I wonder what the deeper thinking is here. So right now China consumes most of the world's semiconductors but only produces a modest fraction of them. China is

I wonder what the deeper thinking is here. So right now China consumes most of the world's semiconductors but only produces a modest fraction of them. China is going through a whole of society effort to expand its semiconductor sector in order to not be dependent on anything the US can cut off via sanctions. China will expand its semiconductor sector, regardless whether it is economical feasible, because it is a matter of national security. The countries that are going to be hurt by these US semiconductor subsidies are going be Taiwan, South Korea, Japan ... not China.

shkkmo 5y ago
In an actual military conflict with China, all those countries are more vulnerable to infrastructure damage than the US. I believe the thinking is to shore up the supply chain so that the US is in a stronger negotiating situation if relations with china deteriorate to the point where the threats are less implicit. There is also a significant "America First" mentality that wants to boost our economy, no matter what it costs our allies.
- throwaway4good 5y ago
  The major military conflict scenarios sounds unlikely to me, whereas the cost allies South Korea and Taiwan seems quite real.
  - shkkmo 5y ago
    I think it is less about the likelihood of a major conflict and more about the position of strength in negotiations to prevent a major conflict. Edit: Any major military conflict would come at a large economic cost to both sides (which is why I agree it is pretty unlikely.) However there is an element of negotiating strength that comes when the economic costs to your side is relatively lower than the economic costs to the opposing side.
pretendscholar 5y ago
>China will expand its semiconductor sector, regardless whether it is economical feasible, because it is a matter of national security. Isn't that the same justification for U.S. re-shoring of semiconductor manufacturing? Tighter control over security and not being vulnerable to some conflict in the pacific endangering everything from automobiles to cloud services. Today, everything relies on some chip so domestic production reduces vulnerability to fragile global supply chains. Covid-19 highlighted that vulnerability so I think both the private and public sectors in the US are looking to do more of all sorts of production at home.
- throwaway4good 5y ago
  It is the same words, but not the same reality: The US's killing of Huawei was a quite real thing compared to some speculations about a future major conflict involving Taiwan or South Korea.
cartoonworld 5y ago
>The countries that are going to be hurt by these US semiconductor subsidies are going be Taiwan, South Korea, Japan ... not China. I think I may agree here, and it gets complicated -- fast. I suspect you might be referring to larger parts like CPUs, but you should take this excellent opportunity to investigate china's semi industry a bit. China has a very interesting local manufacturing economy of parts and suppliers that is mostly invisible to outside observers. It's fascinating that in China, there is a totally divergent supply chain to support the cheap consumer electronics industry. Granted, it isn't CPUs. However, they sure are cranking out semis, its just that they never leave China but for inside of another product. The datasheets are all in Chinese, they aren't exported, they serve to support China's unique manufacturing culture. Here's a previous submission that delves into this: The “terrible” 3 cent MCU – a short survey of sub $0.10 microcontrollers https://news.ycombinator.com/item?id=20686727 https://news.ycombinator.com/item?id=20686727 You can also check out Dave from EEVblog's 3-cent microcontroller[0] video about the same series of dirt cheap micros. [0] https://www.youtube.com/watch?v=VYhAGnsnO7w https://www.youtube.com/watch?v=VYhAGnsnO7w
- throwaway4good 5y ago
  This stuff (the 10 cents MCUs) is fantastic but probably an example of something that will never again be produced in the US or Europe. I was refering to the various statistics you can find on this, and I think they count by monetary value. Because the US, Taiwan, and South Korea sits on the expensive high-value add stuff, they weigh the most. China has been entering the industry from the lower end, but now after the tech war, they are forced into the higher end, even if it is not economical viable. So together with this made-in-america policy, traditional allies like South Korea and Taiwan are being squeezed. I personally believe that the tech war will deescalate drastically at some point, but if this continues we are going to end up with a complete parallel world of semiconductors all in Chinese.
  - cartoonworld 5y ago
    Maybe, but the kind of fabs we have left in the USA are running older process nodes and I don't really see why they can't crank out lower performance MCUs and integrated parts indefinitely. There's probably going to be a kind of sweet spot that develops for fab performance, it may very well be the case that most things don't need a 75nm node process, and it will be possible to squeeze a ton of value out between 100-500. The 10-cent mcu surely doesn't need great RF and thermal performance. In my mind, the largest problem is where the integrators and product manufacturers are and not whether we can churn out silicon in the US.
audunw 5y ago
I don't agree that China won't be hurt by this. China has had some spectacular semiconductor bankruptcies. They've poured billions into companies, giving extravagant salaries to engineers from Taiwan etc., only for the whole thing to go belly up, while the engineers from Taiwan go home to retire on a fat stack of cash. Sure, they've got SMIC, and they have some decent semiconductor processes, but they're pretty far behind the state of the art. With US ramping up competition, and continuing the pressure that prevents China from gaining access to cutting edge lithography machines, it's really hurting them. If TSMC can finally start to build some fabs in the US, I don't think it will hurt Taiwan much. There's not much space for more than 3 cutting edge foundry companies, but there's definitely space for TSMC/Taiwan to have some of their fabs outside Taiwan, and doesn't hurt them more than it hurts Intel/US to have some outside the US. Some Global Foundries foundries wouldn't hurt them much either, since Global Foundries is specialising on low power, and is a bit orthogonal to TSMC/Samsung.
- dzonga 5y ago
  don't know why people keep making the mistake that you need to be on the latest node. Most critical components could be 5 generations older and they would still do fine. It's better to be on a older node, than to be not having any stock at all due an embargo. or lack of internal knowledge.
  - imtringued 5y ago
    Becaus
tooltalk 5y ago
struggling to understand your logic there, or how the US subsidies would hurt the named countries. South Korea's semi industry evolves largely around the heavily-commodified memory chip production and two SK companies, Samsung/SK Hynix combined, supply about 75% of global memory chip needs. Samsung is South Korea's only foundry business there and their global market share is only about at 15% -- while it's a "growth" business for Samsung, the memory business is still their bread-and-butter. The company also has a $15-B plant in Austin, TX and it looks like they are going to expand that plant by throwing another $17B. Further, in addition to Samsung's announcement to invest $110 in logic chip business (which includes their foundry plant in Austin, TX) last year, the South Korean gov't unveiled $450B investment plan to boost the country's high-tech competitiveness. So it doesn't seem like this particular proposal in the US is going to necessarily divert resources or investment from SK (again, the foundries business is a "growing" business), or "hurt" South Korea. Trump/Biden's chip war on China has been a boon to SK's semiconductur industry otherwise -- it eliminated potential threat from China's "Made-In-China-2025," (announced in 2015) and scared off US companies such as Apple from throwing more money at Chinese companies, though Apple is still fighting hard to protect their supply-chain in China and maintain the quo. All in all, this is reminscient of Reagan's war on Japan in the 80's -- and it's likely to enhance South Korea's chance of further gaining more significant share of the global logic chip manufacturing business. Likewise for TSMC. Sure, Trump's arm-twisting eventually forced TMSC to open foundries in the US, but the Taiwanese gov't has always had heavy handed, direct approach to managing their domestic chip business, from the founding of TSMC in the late 80's to what it is today (ie, direct investment and tax subsidies). Both Samsung and TSMC routinely spends $10B-$30B in capex every year and I don't think that 25% tax credit is going to significantly change the current state of semi-manufacturing for either countries. Japan is no longer the semi manufacturing giant it once was. While they still maintain presence in manufacturing equipment and electro chemical business, they are nowhere as significant as Taiwan and SK counterparts.

shkkmo 5y ago

In an actual military conflict with China, all those countries are more vulnerable to infrastructure damage than the US. I believe the thinking is to shore up the supply chain so that the US is in a stronger negotiating situation if relations with china deteriorate to the point where the threats are less implicit. There is also a significant "America First" mentality that wants to boost our economy, no matter what it costs our allies.

throwaway4good 5y ago
The major military conflict scenarios sounds unlikely to me, whereas the cost allies South Korea and Taiwan seems quite real.
- shkkmo 5y ago
  I think it is less about the likelihood of a major conflict and more about the position of strength in negotiations to prevent a major conflict. Edit: Any major military conflict would come at a large economic cost to both sides (which is why I agree it is pretty unlikely.) However there is an element of negotiating strength that comes when the economic costs to your side is relatively lower than the economic costs to the opposing side.

pretendscholar 5y ago

>China will expand its semiconductor sector, regardless whether it is economical feasible, because it is a matter of national security. Isn't that the same justification for U.S. re-shoring of semiconductor manufacturing? Tighter control over security and not being vulnerable to some conflict in the pacific endangering everything from automobiles to cloud services. Today, everything relies on some chip so domestic production reduces vulnerability to fragile global supply chains. Covid-19 highlighted that vulnerability so I think both the private and public sectors in the US are looking to do more of all sorts of production at home.

throwaway4good 5y ago
It is the same words, but not the same reality: The US's killing of Huawei was a quite real thing compared to some speculations about a future major conflict involving Taiwan or South Korea.

cartoonworld 5y ago

>The countries that are going to be hurt by these US semiconductor subsidies are going be Taiwan, South Korea, Japan ... not China. I think I may agree here, and it gets complicated -- fast. I suspect you might be referring to larger parts like CPUs, but you should take this excellent opportunity to investigate china's semi industry a bit. China has a very interesting local manufacturing economy of parts and suppliers that is mostly invisible to outside observers. It's fascinating that in China, there is a totally divergent supply chain to support the cheap consumer electronics industry. Granted, it isn't CPUs. However, they sure are cranking out semis, its just that they never leave China but for inside of another product. The datasheets are all in Chinese, they aren't exported, they serve to support China's unique manufacturing culture. Here's a previous submission that delves into this: The “terrible” 3 cent MCU – a short survey of sub $0.10 microcontrollers https://news.ycombinator.com/item?id=20686727 https://news.ycombinator.com/item?id=20686727 You can also check out Dave from EEVblog's 3-cent microcontroller[0] video about the same series of dirt cheap micros. [0] https://www.youtube.com/watch?v=VYhAGnsnO7w https://www.youtube.com/watch?v=VYhAGnsnO7w

throwaway4good 5y ago
This stuff (the 10 cents MCUs) is fantastic but probably an example of something that will never again be produced in the US or Europe. I was refering to the various statistics you can find on this, and I think they count by monetary value. Because the US, Taiwan, and South Korea sits on the expensive high-value add stuff, they weigh the most. China has been entering the industry from the lower end, but now after the tech war, they are forced into the higher end, even if it is not economical viable. So together with this made-in-america policy, traditional allies like South Korea and Taiwan are being squeezed. I personally believe that the tech war will deescalate drastically at some point, but if this continues we are going to end up with a complete parallel world of semiconductors all in Chinese.
- cartoonworld 5y ago
  Maybe, but the kind of fabs we have left in the USA are running older process nodes and I don't really see why they can't crank out lower performance MCUs and integrated parts indefinitely. There's probably going to be a kind of sweet spot that develops for fab performance, it may very well be the case that most things don't need a 75nm node process, and it will be possible to squeeze a ton of value out between 100-500. The 10-cent mcu surely doesn't need great RF and thermal performance. In my mind, the largest problem is where the integrators and product manufacturers are and not whether we can churn out silicon in the US.

audunw 5y ago

I don't agree that China won't be hurt by this. China has had some spectacular semiconductor bankruptcies. They've poured billions into companies, giving extravagant salaries to engineers from Taiwan etc., only for the whole thing to go belly up, while the engineers from Taiwan go home to retire on a fat stack of cash. Sure, they've got SMIC, and they have some decent semiconductor processes, but they're pretty far behind the state of the art. With US ramping up competition, and continuing the pressure that prevents China from gaining access to cutting edge lithography machines, it's really hurting them. If TSMC can finally start to build some fabs in the US, I don't think it will hurt Taiwan much. There's not much space for more than 3 cutting edge foundry companies, but there's definitely space for TSMC/Taiwan to have some of their fabs outside Taiwan, and doesn't hurt them more than it hurts Intel/US to have some outside the US. Some Global Foundries foundries wouldn't hurt them much either, since Global Foundries is specialising on low power, and is a bit orthogonal to TSMC/Samsung.

dzonga 5y ago
don't know why people keep making the mistake that you need to be on the latest node. Most critical components could be 5 generations older and they would still do fine. It's better to be on a older node, than to be not having any stock at all due an embargo. or lack of internal knowledge.
- imtringued 5y ago
  Becaus

tooltalk 5y ago

struggling to understand your logic there, or how the US subsidies would hurt the named countries. South Korea's semi industry evolves largely around the heavily-commodified memory chip production and two SK companies, Samsung/SK Hynix combined, supply about 75% of global memory chip needs. Samsung is South Korea's only foundry business there and their global market share is only about at 15% -- while it's a "growth" business for Samsung, the memory business is still their bread-and-butter. The company also has a $15-B plant in Austin, TX and it looks like they are going to expand that plant by throwing another $17B. Further, in addition to Samsung's announcement to invest $110 in logic chip business (which includes their foundry plant in Austin, TX) last year, the South Korean gov't unveiled $450B investment plan to boost the country's high-tech competitiveness. So it doesn't seem like this particular proposal in the US is going to necessarily divert resources or investment from SK (again, the foundries business is a "growing" business), or "hurt" South Korea. Trump/Biden's chip war on China has been a boon to SK's semiconductur industry otherwise -- it eliminated potential threat from China's "Made-In-China-2025," (announced in 2015) and scared off US companies such as Apple from throwing more money at Chinese companies, though Apple is still fighting hard to protect their supply-chain in China and maintain the quo. All in all, this is reminscient of Reagan's war on Japan in the 80's -- and it's likely to enhance South Korea's chance of further gaining more significant share of the global logic chip manufacturing business. Likewise for TSMC. Sure, Trump's arm-twisting eventually forced TMSC to open foundries in the US, but the Taiwanese gov't has always had heavy handed, direct approach to managing their domestic chip business, from the founding of TSMC in the late 80's to what it is today (ie, direct investment and tax subsidies). Both Samsung and TSMC routinely spends $10B-$30B in capex every year and I don't think that 25% tax credit is going to significantly change the current state of semi-manufacturing for either countries. Japan is no longer the semi manufacturing giant it once was. While they still maintain presence in manufacturing equipment and electro chemical business, they are nowhere as significant as Taiwan and SK counterparts.