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This is long - sorry. I've read about this, and chip manufacturing is not like other manufacturing. It's like when other places try to duplicate Silicon Valley

This is long - sorry. I've read about this, and chip manufacturing is not like other manufacturing. It's like when other places try to duplicate Silicon Valley, or Hollywood. I've read about this for 40 years, yet no one has made any significant inroads. Why? The infrastructure. In Hollywood, for example, it isn't just about the physical act of making the movie - get a camera, some lights, bank you are done. There's a whole infrastructure - accountants that only work in the film industry, caterers that specialize in it, mobile dressing room companies, prop companies, movie animal companies, lawyers specializing only in movies. Advertisors, product placement specialists, casting companies, photographers for headshots, agents - the list is truly endless but it all works together in a symphony because everyone knows everyone and how the machine works. I've lived in Silicon Valley for a long time, and it is out of the world how the entire SF Bay area - and especially San Jose to Palo Alto is geared to tech. Two world-class universities - Stanford and UC Berkeley, and other schools - San Jose State, SF State, East Bay, University of Santa Clara, University of San Francisco - and more - all contribute talent to Silicon Valley. It's literally everywhere, it is almost inescapable. Hollywood's been there for more than 100 years, Silicon Valley for a long time. Or like Delaware and corporations - I've read in depth about them and it's the same - their infrastructure and ecosystem is the geared towards corporations. Too long to go into. . The same is true for Taiwan's chip industry. It is impossible to duplicate, even in the USA. They have the same infrastructure that I've read about. Anyone can go down to xyz nanometers, but go farther than that, and no. For example, the Dutch company ASML, a $350 billion 37-year-old company with 31,000 highly specialized staff, is the ONLY firm in the world that can make the most advanced chips and Taiwan semiconductor companies buy their machinery to make chips. USA could put incredible pressure on that company not to sell to China, and that would be yet another completely different technology that China would have to develop, but by then, if they could even do that, technology would have improved and China would always be behind the curve. Here's the thing - they make $350 billion by selling to VERY fewe clients - TSMC, Samsung, Intel. Each machine has over 100,000 specialized components. It takes 40 fright containers or four jumbo jets to ship one. In 2020, it sold 31 of them. Trump did stop sales of them to China, and Biden is continuing this policy. ASML has 4,000 suppliers, and those suppliers have suppliers. Their mirrors, for example, are made by German firm Zeiss in partnership with ASML and they’re the flattest structures humans have ever made. In the 1960s and 1970s, they used a regular lightbulb to create wafers. Now they have carbon dioxide lasaers that is 400,000 degrees F in temperature. The process to make it took 30 years. It’s an insane process to ship them and there’s a big learning process to get them up and running because the machines are so complicated. They’re not like an off the shelf, plug it in, turn it on and go. You need to be able to train the staff that are operating them. ASML staff is at every site that there is a machine. ASML is planning to release a next generation machine called High-NA, which stands for high numerical aperture, around 2025. ASML’s headquarters is in Veldhoven, Netherlands - home to around 45,000 people and thousands of ASML employees, for full assembly. And all those people there and in the surrounding area, who don't work directly at ASML, work for companies that work for ASML, and all part of the ecosystem that supports ASML.

dirtyid 4y ago
> not like other manufacturing And PRC is not like any other country. At the end of the day semi is just a niche industry iterated by combined talent from US/TW/SKR/JP/NE (maybe DE). PRC now produce more STEM talent than all these countries combined. I think too many people drink the semi conductor is thinking sand indistinguishable from magic juice. Same was said about aerospace and other precision manufacturing sectors that many predicted PRC wouldn't surmount but now have indigenous solutions and rapidly closing high-end/value gap on. Yes, semi has very high walls / barriers, but PRC's advantage is being able pile enough bodies against a high wall until they climb over, freqently quicker than anticipated. What group of countries need to collaborate on, PRC has talent and resources to do indigenously. After elevating semi to first-level dicipline in 2018, PRC is spitting out 30k IC graduates per year. They're still about 200k short, ~520k/720k out of what IC talent white paper estimates PRC needed for competitive semi industry. I wadger that's comparable to total _direct_ semi industry talent globally. Consider PRC is graduating 11m STEM talent a year, and the amount of resources they can spam into strategic industries is enormous. The reality is, PRC can duplicate what others do, and do so at larger scale. Or that industrially, PRC is TW on steroids, nearly every sector TW has outsource onto mainland, PRC has been able to replicate, scale and then inject extra does of performance, unlike TW semi expansion in west running into culture (read: work ethic) issues. Ultimately it's about talent and time and these bans are about denying talent and buying (US) time. Consider ASML CEO last year thought PRC was 15 years from tech soverignty. IMO PRC could likely do it sooner, otherwise US would not have unilaterally place these export restrictions when last year US strategist thought it was merely enough for US to "sprint" and stay a few generations ahead. Now it's as big of a lead as possible, which either insinuates greater lead than before or more likely, the race is closer than we thought.
- FrontierPsych 4y ago
  OK, thanks - all great points. This is a lot more info, not directly related to the conversation, but directly affects what is happening in tech and the rest of China's economy, and why their tech may still fail. One thing I'm reading about, which is related, is that China's population is about to crash, and crash big time. It is all over the world, but particularly going to hit China hard because of the one child policy and they are still not a first world country. In 2018, birth rates dropped 12% to 15.2 million, with some provinces droping by 35%. Yi Fuxian, a professor at the University of Wisconsin-Madison, has written that China’s government has obscured the actual fertility rate to disguise the disastrous ramifications of the “one child” policy. According to his calculations, the fertility rate averaged 1.18 between 2010 and 2018. Replacement is 2.1 child per couple. Fewer children were born, and because of cultural preferences for male offspring, fewer of them were girls. There are 122 boys for every 100 girls born, so this is an issue - not all men will find a mate and competition for women will be intense. 1 in 5 men won't find a mate, at all. 34 million frustrated men. I've read before that this is one of the main contributors that nations go to war - for single men to get women, if there is a great inbalance. It would certainly make the wifeless men very angry and ready for war, and motivated. The male/female birth imbalance has already fueled human trafficing and child kidnapping. Chinese women born during the years following the “one child” policy are now reaching or have already passed their peak fertility age. There are simply not enough of them to sustain the country’s population level. The declining population will create an even greater burden on China’s economy and its labor force. With fewer workers in the future, the government could struggle to pay for a population that is growing older and living longer. Additionally, much of China's population have put their wealth into property based on the greater fool principle. This has resulted in entire ghost cities being built, with nobody living in them, and the apartment buildings are half-done (no one can live there even if they wanted to), and with the population collapsing, property value will precipitously drop, and soon. The value of chinese real estate is $52 trillion, twice the USA's, and greater than the USA's entire bond market. This reminds me when an acre in Tokyo in 1980 was worth more than the entire state of California's real estate - it's just crazy on principle. In China, 78% of wealth is in property, compared to 35% in the USA. 44% of homes are 2nd homes, 25 are 3rd homes. 30% of home sales are for people to actually live in. China's upcoming crash will make USA's 2008 crash look like a fender bender. A study published in The Lancet forecasts after hitting a maximum population of 1.4 billion, China will lose nearly half its population by the end of the century, no matter what they do. It's too late. The People’s Bank of China warned China had only about a decade left to enjoy the benefits of its large working-age population, which has helped propel growth over the past four decades,” All retirement in China is unfunded. The children might support 2 sets of parents - his and hers, and 8 grandparents in their home, and can't split up between kids - 1 child policy. The working population is getting very resentful. The goverment wants this generation to work the 996 schedule [9 a.m. to 9 p.m., six days a week]. This is why the "Lie flat" movement is spreading in China, and leadership is upset by it. Adding to this, desertion (not desertification) of rural areas are so severe that agriculture is not happening and Xi Jinping as admitted that China can't feed itself anymore. Scarier: the full effects of climate change are yet to be felt in full force. With the war talk, and everything else, companies are pouring out of China, so China's income is going to take a hit. And rising employee wages means that China is pricing itself out of the market against new low cost suppliers. While you say that they can do it inhouse, they still need to have buyers. And the buyers are the first world, who has all the money. With China being belligerent, is the West going to purchase from them, or will we comletely boycot them to starve their incipient industry? Or will they be good only with internal customers? I don't know. Will China be able to create an advanced semiconductor industry? Who knows. Only the future will eventually tell the tale.

dirtyid 4y ago

> not like other manufacturing And PRC is not like any other country. At the end of the day semi is just a niche industry iterated by combined talent from US/TW/SKR/JP/NE (maybe DE). PRC now produce more STEM talent than all these countries combined. I think too many people drink the semi conductor is thinking sand indistinguishable from magic juice. Same was said about aerospace and other precision manufacturing sectors that many predicted PRC wouldn't surmount but now have indigenous solutions and rapidly closing high-end/value gap on. Yes, semi has very high walls / barriers, but PRC's advantage is being able pile enough bodies against a high wall until they climb over, freqently quicker than anticipated. What group of countries need to collaborate on, PRC has talent and resources to do indigenously. After elevating semi to first-level dicipline in 2018, PRC is spitting out 30k IC graduates per year. They're still about 200k short, ~520k/720k out of what IC talent white paper estimates PRC needed for competitive semi industry. I wadger that's comparable to total _direct_ semi industry talent globally. Consider PRC is graduating 11m STEM talent a year, and the amount of resources they can spam into strategic industries is enormous. The reality is, PRC can duplicate what others do, and do so at larger scale. Or that industrially, PRC is TW on steroids, nearly every sector TW has outsource onto mainland, PRC has been able to replicate, scale and then inject extra does of performance, unlike TW semi expansion in west running into culture (read: work ethic) issues. Ultimately it's about talent and time and these bans are about denying talent and buying (US) time. Consider ASML CEO last year thought PRC was 15 years from tech soverignty. IMO PRC could likely do it sooner, otherwise US would not have unilaterally place these export restrictions when last year US strategist thought it was merely enough for US to "sprint" and stay a few generations ahead. Now it's as big of a lead as possible, which either insinuates greater lead than before or more likely, the race is closer than we thought.

FrontierPsych 4y ago
OK, thanks - all great points. This is a lot more info, not directly related to the conversation, but directly affects what is happening in tech and the rest of China's economy, and why their tech may still fail. One thing I'm reading about, which is related, is that China's population is about to crash, and crash big time. It is all over the world, but particularly going to hit China hard because of the one child policy and they are still not a first world country. In 2018, birth rates dropped 12% to 15.2 million, with some provinces droping by 35%. Yi Fuxian, a professor at the University of Wisconsin-Madison, has written that China’s government has obscured the actual fertility rate to disguise the disastrous ramifications of the “one child” policy. According to his calculations, the fertility rate averaged 1.18 between 2010 and 2018. Replacement is 2.1 child per couple. Fewer children were born, and because of cultural preferences for male offspring, fewer of them were girls. There are 122 boys for every 100 girls born, so this is an issue - not all men will find a mate and competition for women will be intense. 1 in 5 men won't find a mate, at all. 34 million frustrated men. I've read before that this is one of the main contributors that nations go to war - for single men to get women, if there is a great inbalance. It would certainly make the wifeless men very angry and ready for war, and motivated. The male/female birth imbalance has already fueled human trafficing and child kidnapping. Chinese women born during the years following the “one child” policy are now reaching or have already passed their peak fertility age. There are simply not enough of them to sustain the country’s population level. The declining population will create an even greater burden on China’s economy and its labor force. With fewer workers in the future, the government could struggle to pay for a population that is growing older and living longer. Additionally, much of China's population have put their wealth into property based on the greater fool principle. This has resulted in entire ghost cities being built, with nobody living in them, and the apartment buildings are half-done (no one can live there even if they wanted to), and with the population collapsing, property value will precipitously drop, and soon. The value of chinese real estate is $52 trillion, twice the USA's, and greater than the USA's entire bond market. This reminds me when an acre in Tokyo in 1980 was worth more than the entire state of California's real estate - it's just crazy on principle. In China, 78% of wealth is in property, compared to 35% in the USA. 44% of homes are 2nd homes, 25 are 3rd homes. 30% of home sales are for people to actually live in. China's upcoming crash will make USA's 2008 crash look like a fender bender. A study published in The Lancet forecasts after hitting a maximum population of 1.4 billion, China will lose nearly half its population by the end of the century, no matter what they do. It's too late. The People’s Bank of China warned China had only about a decade left to enjoy the benefits of its large working-age population, which has helped propel growth over the past four decades,” All retirement in China is unfunded. The children might support 2 sets of parents - his and hers, and 8 grandparents in their home, and can't split up between kids - 1 child policy. The working population is getting very resentful. The goverment wants this generation to work the 996 schedule [9 a.m. to 9 p.m., six days a week]. This is why the "Lie flat" movement is spreading in China, and leadership is upset by it. Adding to this, desertion (not desertification) of rural areas are so severe that agriculture is not happening and Xi Jinping as admitted that China can't feed itself anymore. Scarier: the full effects of climate change are yet to be felt in full force. With the war talk, and everything else, companies are pouring out of China, so China's income is going to take a hit. And rising employee wages means that China is pricing itself out of the market against new low cost suppliers. While you say that they can do it inhouse, they still need to have buyers. And the buyers are the first world, who has all the money. With China being belligerent, is the West going to purchase from them, or will we comletely boycot them to starve their incipient industry? Or will they be good only with internal customers? I don't know. Will China be able to create an advanced semiconductor industry? Who knows. Only the future will eventually tell the tale.