6 ms·

I was on a panel with one of the study's authors recently, she's very thoughtful, thorough, and precise. I like how she emphasized that there is no simple TL;DR

by bunnie 5y ago

I was on a panel with one of the study's authors recently, she's very thoughtful, thorough, and precise. I like how she emphasized that there is no simple TL;DR to explain the situation, and her paper does a good job of covering a lot of ground without taking short cuts. However, one factor not mentioned in the study is that China, which had announced a plan for foundry independence, had its capacity expansion program disrupted by the trade war, as the US restricted China's ability to acquire key equipment to build out fabs. As a result China could not build the plants it needed to meet its own consumption, forcing them to buy chips from the same vendors that everyone else is also trying to buy chips from. This is an additional shock which is hard to estimate in magnitude but it's probably not small as it represents the missing capacity of entire fabs for many months or years as they struggle to be built. Thus while the US trade policy may have effectively hamstrung China's plans for foundry independence in the short term, it may also have contributed to a global shortage of semiconductors and its own inflation problems as collateral damage. Trade wars are tricky: without careful and long term policy planning there is a high risk of even more collateral damage. Another factor that could also be contributing specifically to the difficulties of the automotive supply chain is that China internally had made electric vehicles a strategic technology focus, which means that domestically China's demand for automotive-grade semiconductors was set to surge. Even before the pandemic I was getting tips from buyers that power semiconductors, particularly those in SiC and GaN, were going to be in short supply, due to that shift. edit - emphasized original paper

topspin 5y ago
How does your view comport with the fact that the supply shortages did not actually begin with the trade war or the pandemic? The problem worsened, certainly, but global stock of components had been tight for years before any of these supposed causes. If fault must be found with the US it is in the consolidation and outsourcing of manufacturing to a small number of manufacturers, removing competitors and excess capacity from the supply chain. China's part has simply been to grow; creating consumers and thus demand for products that it had previously not consumed.
- CamperBob2 5y ago
  Absolutely none of this was a problem before the Trump sanctions took effect (which we can now call the "Biden sanctions," as he has done nothing to revert them.) There were occasional shortages of things like MLCC capacitors, some of them severe, but nothing as far-reaching as what we've been seeing. It is fairly clear that we'd still be in trouble absent the "easy to win" trade war against China, though. COVID alone would have been enough to upset the proverbial apple cart.
  - OJFord 5y ago
    > before the Trump sanctions took effect (which we can now call the "Biden sanctions," as he has done nothing to revert them.) Surely at this point if not before you can just call them US sanctions, why party-politicise it? Just my 'two pence' as an outsider!
    - the-dude 5y ago
      I disagree. Some of Trumps policies were ridiculed by the same people who now have the power and choose to continue the exact same policies. In some cases even more extreme. Keeping history within view helps to view current events in perspective. Reagan was ridiculed as well. He did a pretty good job at guiding the end of the cold war into a remarkably non-eventful event ( this could be worded better, not a native speaker ).
      - throwaway4good 5y ago
        The problem with the tech sanctions is that the bullet has left the chamber. Even if the Biden administration were to say fine - Huawei, you can produce your chips at TSMC, and SMIC, you can buy an EUVL machine from ASML. China would still persue a completely US influence free semiconductor supply chain, as the US has clearly demonstrated its willingness weaponize its dominance. From a Chinese perspective, the interest of state and its big unruly tech companies are now aligned. Alibaba, Xiaomi, etc. are all making chips now. It is not all given that the escalated tech war is a longterm winning move from a US perspective. But time will tell.
throwaway4good 5y ago
You are right in that had it not been for the US santions, fabrication in China would probably have expanded much more, however it is expanding still: https://www.semiconductors.org/chinas-share-of-global-chip-sales-now-surpasses-taiwan-closing-in-on-europe-and-japan/ https://www.semiconductors.org/chinas-share-of-global-chip-s... China’s Share of Global Chip Sales Now Surpasses Taiwan’s, Closing in on Europe’s and Japan’s
- starfallg 5y ago
  That list includes many fabless players and isn't a good indication of how much the sanctions would play out in the next few years, as we undergo a massive migration to EUV process nodes, which China is effectively barred from.
  - throwaway4good 5y ago
    The numbers are still low (China has about 10% of the global semi sales but +50% of consumption). And true, some are fabless and the Chinese fabs fab for foreign customers as well.
    - starfallg 5y ago
      How much of that 50% is for devices manufactured in China for export? That business is also undergoing a massive shift, especially now we are close to the end of Covid.
  - philpem 5y ago
    To be fair, the majority of bread-and-butter semiconductor manufacturing probably doesn't need EUV process nodes. You only really need that level of technology if you want to make cutting-edge (10nm or so) devices like microprocessors. The majority of semiconductor manufacturing is still in the 200nm range -- better yields, cheaper processes, more resilient chips. Some of it is still in the 1um (1 micron) range.
websg-x 5y ago
Huawei start buying huge amount of chips when there was rumor that US going to imposed sanctions on Huawei, and when the sanction hits, every major chips users in China start buying too, they were afraid that they will be next on sanction lists. They kept buying chips to build up safe inventory level during the early pandemic period when western firms were cutting orders. Of course, when demands returned, Chinese companies were still on buying spree. The shrewd middleman everywhere, not just in China, saw shortage coming, and they stock piling chips too. Yeah, most semi-industry people in Taiwan think that US sanctions and the threat to impose more sanctions definitely contribute to the current shortage.
- adamc 5y ago
  The US probably needs to view chips as a national security issue and proceed accordingly... meaning, move more manufacturing here. It will raise prices and hurt the economy, probably, so I can understand the reluctance. Nothing is easy.
  - csense 5y ago
    Not necessarily. What's better: A $1000 iPhone made in China that Americans can't afford because their jobs were globalized to China, or a $2000 iPhone made in USA that Americans can afford because they work in the iPhone factory or live in communities that are supported by it?
CamperBob2 5y ago
However, one factor not mentioned in the study is that China, which had announced a plan for foundry independence, had its capacity expansion program disrupted by the trade war, as the US restricted China's ability to acquire key equipment to build out fabs. Page 5 alludes to this, but it does seem to be underrepresented in the report. Erratic policymaking on the US's part incentivized China to hoard semiconductors while they could still get them. For all they knew, their whole country was about to end up on the entity list.
naveen99 5y ago
Semiconductor nonproliferation feels as pointless as banning math after school. it’s a sign that the people who run the usa really don’t get along with the people that run China on some issue, and they picked semi conductors as the game of chicken that’s going to settle it.
felipelemos 5y ago
> As a result China could not build the plants it needed to meet its own consumption, forcing them to buy chips from the same vendors that everyone else is also trying to buy chips from. How a fab that didn't exist yet can affect current demand?
deeviant 5y ago
This sounds like the type of thinking that put us here in the first place. US companies sold the US out when they moved our manufacturing base to china and handed them the future. Now we should give up our negotiation leverage so the chip shortage lasts a bit shorter?

by bunnie 5y ago

topspin 5y ago

How does your view comport with the fact that the supply shortages did not actually begin with the trade war or the pandemic? The problem worsened, certainly, but global stock of components had been tight for years before any of these supposed causes. If fault must be found with the US it is in the consolidation and outsourcing of manufacturing to a small number of manufacturers, removing competitors and excess capacity from the supply chain. China's part has simply been to grow; creating consumers and thus demand for products that it had previously not consumed.

CamperBob2 5y ago
Absolutely none of this was a problem before the Trump sanctions took effect (which we can now call the "Biden sanctions," as he has done nothing to revert them.) There were occasional shortages of things like MLCC capacitors, some of them severe, but nothing as far-reaching as what we've been seeing. It is fairly clear that we'd still be in trouble absent the "easy to win" trade war against China, though. COVID alone would have been enough to upset the proverbial apple cart.
- OJFord 5y ago
  > before the Trump sanctions took effect (which we can now call the "Biden sanctions," as he has done nothing to revert them.) Surely at this point if not before you can just call them US sanctions, why party-politicise it? Just my 'two pence' as an outsider!
  - the-dude 5y ago
    I disagree. Some of Trumps policies were ridiculed by the same people who now have the power and choose to continue the exact same policies. In some cases even more extreme. Keeping history within view helps to view current events in perspective. Reagan was ridiculed as well. He did a pretty good job at guiding the end of the cold war into a remarkably non-eventful event ( this could be worded better, not a native speaker ).
    - throwaway4good 5y ago
      The problem with the tech sanctions is that the bullet has left the chamber. Even if the Biden administration were to say fine - Huawei, you can produce your chips at TSMC, and SMIC, you can buy an EUVL machine from ASML. China would still persue a completely US influence free semiconductor supply chain, as the US has clearly demonstrated its willingness weaponize its dominance. From a Chinese perspective, the interest of state and its big unruly tech companies are now aligned. Alibaba, Xiaomi, etc. are all making chips now. It is not all given that the escalated tech war is a longterm winning move from a US perspective. But time will tell.

throwaway4good 5y ago

You are right in that had it not been for the US santions, fabrication in China would probably have expanded much more, however it is expanding still: https://www.semiconductors.org/chinas-share-of-global-chip-sales-now-surpasses-taiwan-closing-in-on-europe-and-japan/ https://www.semiconductors.org/chinas-share-of-global-chip-s... China’s Share of Global Chip Sales Now Surpasses Taiwan’s, Closing in on Europe’s and Japan’s

starfallg 5y ago
That list includes many fabless players and isn't a good indication of how much the sanctions would play out in the next few years, as we undergo a massive migration to EUV process nodes, which China is effectively barred from.
- throwaway4good 5y ago
  The numbers are still low (China has about 10% of the global semi sales but +50% of consumption). And true, some are fabless and the Chinese fabs fab for foreign customers as well.
  - starfallg 5y ago
    How much of that 50% is for devices manufactured in China for export? That business is also undergoing a massive shift, especially now we are close to the end of Covid.
- philpem 5y ago
  To be fair, the majority of bread-and-butter semiconductor manufacturing probably doesn't need EUV process nodes. You only really need that level of technology if you want to make cutting-edge (10nm or so) devices like microprocessors. The majority of semiconductor manufacturing is still in the 200nm range -- better yields, cheaper processes, more resilient chips. Some of it is still in the 1um (1 micron) range.

websg-x 5y ago

Huawei start buying huge amount of chips when there was rumor that US going to imposed sanctions on Huawei, and when the sanction hits, every major chips users in China start buying too, they were afraid that they will be next on sanction lists. They kept buying chips to build up safe inventory level during the early pandemic period when western firms were cutting orders. Of course, when demands returned, Chinese companies were still on buying spree. The shrewd middleman everywhere, not just in China, saw shortage coming, and they stock piling chips too. Yeah, most semi-industry people in Taiwan think that US sanctions and the threat to impose more sanctions definitely contribute to the current shortage.

adamc 5y ago
The US probably needs to view chips as a national security issue and proceed accordingly... meaning, move more manufacturing here. It will raise prices and hurt the economy, probably, so I can understand the reluctance. Nothing is easy.
- csense 5y ago
  Not necessarily. What's better: A $1000 iPhone made in China that Americans can't afford because their jobs were globalized to China, or a $2000 iPhone made in USA that Americans can afford because they work in the iPhone factory or live in communities that are supported by it?

CamperBob2 5y ago

However, one factor not mentioned in the study is that China, which had announced a plan for foundry independence, had its capacity expansion program disrupted by the trade war, as the US restricted China's ability to acquire key equipment to build out fabs. Page 5 alludes to this, but it does seem to be underrepresented in the report. Erratic policymaking on the US's part incentivized China to hoard semiconductors while they could still get them. For all they knew, their whole country was about to end up on the entity list.

naveen99 5y ago

Semiconductor nonproliferation feels as pointless as banning math after school. it’s a sign that the people who run the usa really don’t get along with the people that run China on some issue, and they picked semi conductors as the game of chicken that’s going to settle it.

felipelemos 5y ago

> As a result China could not build the plants it needed to meet its own consumption, forcing them to buy chips from the same vendors that everyone else is also trying to buy chips from. How a fab that didn't exist yet can affect current demand?

deeviant 5y ago

This sounds like the type of thinking that put us here in the first place. US companies sold the US out when they moved our manufacturing base to china and handed them the future. Now we should give up our negotiation leverage so the chip shortage lasts a bit shorter?