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China imports more chips as a country than it imports oil. Chips are what the future struggle between USA and West vs China is going to be. Amazing book about t

China imports more chips as a country than it imports oil. Chips are what the future struggle between USA and West vs China is going to be. Amazing book about this is Chip Wars by Chris Miller. Chips rule the modern warfare. Why is Russia attacking so many civilian buildings? Part of it might be terrorism, but I think bigger story is that they got starved of chips and precision rockets. Javelins that helped Ukrainians stop the war at the beginning, each have 200 modern chips inside. The struggle of having modern chips is only going to increase, with more and more weapons becoming full of AI systems. Will China be able to survive chip choke? It's high on their list to improve their capabilities in production, and I believe one of the major goals before they can afford to invade Taiwan

amelius 4y ago
Isn't it easy for Russia to order US chips with e.g. China as the middleman?
- hef19898 4y ago
  No, because those at least dual chips are not sold to China. Export Control exists for this very reason.
- throwaway4good 4y ago
  If you look at say an Iranian drone it is full with US commodity chips. Possible sold directly or indirectly through maybe Turkey, Pakistan, China.
  - amelius 4y ago
    Suddenly a backdoor in US chips sounds like an attractive option.
    - throwaway4good 4y ago
      These chips are too simple and too cheap for that. We are talking about controller chips that are sold for a few dollars, 20 years old designs and produced in the millions. On the other hand, the Qualcomm special order soc mentioned in the article, I wouldn’t be surprised if there was a back door in that.
      - amelius 4y ago
        > too cheap for that Maybe subsidized then?
    - m000 4y ago
      An attractive option, or a reasonable certainty?
- scott_w 4y ago
  No because exporters of these types of things are very wary of getting sanctioned for doing so if they’re caught.
  - amelius 4y ago
    But Russia could just (via intermediaries) start a bunch of companies abroad, and let them order the chips. Don't forget that exporters still have a strong incentive to sell stuff.
    - scott_w 4y ago
      The word “just” is doing a lot of heavy lifting here. If “random internet guy” thought of this, I’m sure the fucking US government thought of it, too and works on preventing it going undetected.
      - amelius 4y ago
        Perhaps "just" sounds too easy, but we're talking about a nation here with endless resources. Anyway, perhaps these chips can be watermarked, so if they are found in some Russian tech we know which middlemen to blame.
        scott_w 4y ago
        You don’t need to get that complicated. Just demand a list of who they sold to, then who they sold to and so on until the trail goes cold. If you can’t get an answer, sanction everyone involved and you’ll find they’ll stop selling to unknown customers very quickly. It’s similar to banks and KYC rules. That was one solution off the top of my head. I’m sure the government has something more sophisticated in place that could be more effective.
Oxidation 4y ago
Most weapons do not use <10nm nodes, or can plausibly not use them. In a military context, these devices are more likely to be in research phases (like supercomputer simulations and machine learning) than built into the weapons themselves.
mytailorisrich 4y ago
The difference is that a country cannot produce the oil that it does not have. But a large country with a strong economy will end up being able to produce the chips it needs. It will take some time, but they will. The US's policy here is to impede and slow down China's growth in order to maintain their dominance for as long as possible. That's it. And it will achieve that to a degree but will also push China to develop their own industry.
- wkat4242 4y ago
  I have to agree with them that China being the #1 superpower would be a disaster for the western world though, and we should try to prevent it. I'm sure the US are doing this just for economical reasons. But the leading superpower always exports their culture as well. See how much we align with the US here in Europe, culturally. And China with its confucianism where the state is more important than the individual and its tendencies to limit free speech and use extensive surveillance... These things would go down very badly in our culture and we'd tear ourselves apart fighting over it. Some people will be pragmatic and accept it because that's where the money is and others will fight to protect their freedoms. We're barely able to keep the peace with the levels of polarisation as they are. In my opinion breaking the ties and reverting to the cold war status (with 2 superpowers and their own spheres of influence) would be much preferable to accepting Chinese (CCP) influence over the western world. The question though is how realistic that still is at this point.
  - pjmlp 4y ago
    Thanks to the globalization that solution is long gone. How many anti-China folks in western world are living by it, by not buying anything "Made in China"? Looking at how those 1 euro shops are filled with customers, not many. And that is only one way how western and asian cultures are tied together in the globalization age.
dirtyid 4y ago
Modern weapons mostly use mature / old nodes that are easy to harden, but RU is simply that behind on indigenous microelectronics. PRC with indigenous 14/28nm (well on way) will be fine for weapons, even AI based capabilities, they can short/medium term DUV to 7nm for bespoke batches. PRC inidgenizing complete 14/28nm chain can afford to disrupt TW who will still provide 80-90% of advanced nodes to west. Question then is can western industry survive loss of huge % of advanced nodes that basically brings them down to PRC level of access, if not worst off since almost no country is planning to completely indigenize semi supply chain like PRC. E: @paisawalla, over comment limit TLDR is US has leverage during peacetime over sanctions, especially US origin tech. But PRC has leverage during war because most of East Asian semi is within striking range - and wholely indefensible. And current western chip strategy still relies on access to east asian semi. CHIPS act hopes to recapture 5-10% leading edge production in 10 years if all goes well, but even then dependant on East Asian inputs. Incidentally East Asian semi players on territories that US needs base access in TW scenario. TW semi chain maybe write off (which itself maybe existential to western semi), but if JP/SKR assists in US in TW scenario, expect Samsung, Tokyo Electron and other suppliers to be craters too. Really only safe bet for major powers is to complete domestic supply chain and ensure sufficient deterrence from homeland strikes. Without it, probably expect PRC to have only working 14/28nm supply chain, while everyone else scrambles. Regional TW war in medium/long 5/10+ year timeline is actually likely to CLOSE semi gap because only way for PRC to deny west advanced nodes that's already denied to her via sanctions/export controls/lawfare is through war. Also keep in mind US/western industries have disproportionate value capture from semi production and hence more exposed to actual loss of production. Which makes entire PRC invading TW for TSMC that depends on western inputs a bad meme, if anything PRC will want to invade/bomb TW simply to deny semi access to west if she has sufficient semi capability herself. Which doesn't mean leading edge, but enough for most commercial/consumer purposes, while killing leading edge for western high tech. Which is not to say semi is reason PRC will move on TW, but in event of TW war, denying west advanced nodes is going to be high up on incidental strategic goals.
- paisawalla 4y ago
  This is an interesting, if terse, analysis. Can you spend a few more words elaborating your thoughts please?
uoaei 4y ago
Does China have de facto control over chip production in Taiwan? If they do, why ever actually invade? If not, why haven't they invaded already?
- justinclift 4y ago
  > If not, why haven't they invaded already? Taiwan's defence plan is basically to make invasion so costly, it's not worth the effort.
- ajb 4y ago
  Their strategy has been to set up their own foundries, which they have. SMIC is a Chinese-owned fab company with sites on the mainland. Because Taiwan is close and shares a language, they have been able to recruit and train staff who know how to operate a fab. SMIC didn't have a good reputation for quality when I last heard (which was ages ago), but that's just a yield/cost issue so I don't think they would have difficulty scaling it up if they are cut off from the west.
  - hypertele-Xii 4y ago
    SMIC needs photolithography machines from Dutch company ASML. Sale of further machines has already been blocked by US. When their current machines fail for lack of maintenance and spare parts, they can't make chips anymore.
- philwelch 4y ago
  > If not, why haven't they invaded already? China has historically lacked the capability to land a sufficient number of troops on Taiwanese shores.
- cturner 4y ago
  China does not have such control. But to your question - > If they do, why ever actually invade? The power of the CCP surfs on top of a mythology. When ethnic Chinese people run successful, free, democratic countries it undermines that mythology. Consider how the CCP have trashed Hong Kong, which had limited democratic freedoms only. In the west, economic considerations are high on our motives. For the CCP, the central viewpoint is about pursuit and consolidation of political power. Economic considerations are all considered in the light of power priorities. There is a trap that westerners fall into of regarding live-and-let-live as the natural order of things. It is not, it is a set of values. The CCP come at the world from a different mindset.
wkat4242 4y ago
> China imports more chips as a country than it imports oil. By what metric I wonder? Barrels vs chips? Kilograms? Or dollars? Not doubting the validity of your statement but it was just a question that came to mind as they are such very different commodities.
- dirtyid 4y ago
  I want to bushels. But dollars.
  - wkat4242 4y ago
    Ahh I see, that makes the most sense indeed. Of course China does have significant oil reserves itself which might offset this a bit. But on the other hand they also have significant production capability of lower-grade silicon.
t344344 4y ago
> Javelins ... each have 200 modern chips inside. Javelins are based on 1980ties technology, hardly "modern" chips. That is projection! Only NATO puts "AI" and similar "features" into weapons. Partly to make them more expensive. Russia and other countries use cheap and reliable components (you know joke about washing machines). It is well visible with air defense. Patriot missiles are so expensive, because there is a single missile type. It suppose to be universal, for all types of targets. It is loaded with all sort of chips to handle all possible causes. Russian air defense have several types of cheap simple missiles, each specialized for narrow type of target. They do not have to fire multi million $ rocket to destroy cheap drone!
- cpursley 4y ago
  You’re getting downvoted but the Javelins have been pretty underwhelming. The domestic Kamikaze drones Russia is using have proven cheaper, safer and more effective.
  - t344344 4y ago
    Javelins themselves were effective, problem was in logistics and delivery of first batches. Many had defective battery after siting in warehouse for decades. And Ukrainian manual was unreadable, like google translated.
  - jack_riminton 4y ago
    They've been pretty overwhelming to the Russians. In this report it states 300 fired, 280 tanks destroyed https://www.ndtv.com/world-news/how-small-ukraine-force-is-killing-russian-tanks-with-us-javelin-missiles-2803289 https://www.ndtv.com/world-news/how-small-ukraine-force-is-k...
cpursley 4y ago
Russia has been doing weekly salvos of precision missiles yet we were told they’d run out last Spring. The reality is we don’t know exactly how many they have or are capable of producing but it’s probably a lot. And those civilian buildings getting hit are often unfortunately the result missile interception (as was the one which hit the farmers in Poland). In fact, Ukraine recently fired a guy for publicly stating this. Anyways, Chip Wars is a great book. The trends here are definitely interesting.
cabirum 4y ago
Are you saying China does not produce chips? Like, ignore the existence of Espressiv, Loongson, SMIC, 10s other companies? What is your definition of modern chip for a weapon made in late 1990x? How can China invade itself?
- hypertele-Xii 4y ago
  There is no company named Espressiv. If you meant Espressif, they outsource their manufacturing to TSMC. TSMC is in Taiwan, not China. Loongson is also fabless, they outsource their manufacturing to STMicroelectronics, a Dutch company. SMIC is the only company you listed in China with actual manufacturing capacity for chips. Problem is, they need Dutch machines from ASML to operate, and such sales were already blocked by US. Unless they can somehow reverse-engineer and start producing photolithography machines, they are living on borrowed time until their current machines fail for lack of maintenance and spare parts.
  - cabirum 4y ago
    If I read correctly, ASML is the only major company that China still depends on? With the right amount of investment, China will shortly have an alternative, you know. Its not irreplaceable, nor does it require reverse eng.
    - fomine3 4y ago
      Who said "only"?
  - ClapperHeid 4y ago
    >Problem is, they [Chinese] need Dutch machines from ASML to operate, and such sales were already blocked by US... Gotta love the free market! US decides who a Dutch comapny can sell to.
rurban 4y ago
If you look at the list of fabs https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat... you'll see that of all the modern fabs, about half of them are in China already. You still got the top 2 in Taiwan and Korea, so they won't be able to produce iPhones or Macbooks. But the rest is there already. Even Samsung has a few fabs in China.
- fomine3 4y ago
  How do you count?

amelius 4y ago

Isn't it easy for Russia to order US chips with e.g. China as the middleman?

hef19898 4y ago
No, because those at least dual chips are not sold to China. Export Control exists for this very reason.
throwaway4good 4y ago
If you look at say an Iranian drone it is full with US commodity chips. Possible sold directly or indirectly through maybe Turkey, Pakistan, China.
- amelius 4y ago
  Suddenly a backdoor in US chips sounds like an attractive option.
  - throwaway4good 4y ago
    These chips are too simple and too cheap for that. We are talking about controller chips that are sold for a few dollars, 20 years old designs and produced in the millions. On the other hand, the Qualcomm special order soc mentioned in the article, I wouldn’t be surprised if there was a back door in that.
    - amelius 4y ago
      > too cheap for that Maybe subsidized then?
  - m000 4y ago
    An attractive option, or a reasonable certainty?
scott_w 4y ago
No because exporters of these types of things are very wary of getting sanctioned for doing so if they’re caught.
- amelius 4y ago
  But Russia could just (via intermediaries) start a bunch of companies abroad, and let them order the chips. Don't forget that exporters still have a strong incentive to sell stuff.
  - scott_w 4y ago
    The word “just” is doing a lot of heavy lifting here. If “random internet guy” thought of this, I’m sure the fucking US government thought of it, too and works on preventing it going undetected.
    - amelius 4y ago
      Perhaps "just" sounds too easy, but we're talking about a nation here with endless resources. Anyway, perhaps these chips can be watermarked, so if they are found in some Russian tech we know which middlemen to blame.
      - scott_w 4y ago
        You don’t need to get that complicated. Just demand a list of who they sold to, then who they sold to and so on until the trail goes cold. If you can’t get an answer, sanction everyone involved and you’ll find they’ll stop selling to unknown customers very quickly. It’s similar to banks and KYC rules. That was one solution off the top of my head. I’m sure the government has something more sophisticated in place that could be more effective.

Oxidation 4y ago

Most weapons do not use <10nm nodes, or can plausibly not use them. In a military context, these devices are more likely to be in research phases (like supercomputer simulations and machine learning) than built into the weapons themselves.

mytailorisrich 4y ago

The difference is that a country cannot produce the oil that it does not have. But a large country with a strong economy will end up being able to produce the chips it needs. It will take some time, but they will. The US's policy here is to impede and slow down China's growth in order to maintain their dominance for as long as possible. That's it. And it will achieve that to a degree but will also push China to develop their own industry.

wkat4242 4y ago
I have to agree with them that China being the #1 superpower would be a disaster for the western world though, and we should try to prevent it. I'm sure the US are doing this just for economical reasons. But the leading superpower always exports their culture as well. See how much we align with the US here in Europe, culturally. And China with its confucianism where the state is more important than the individual and its tendencies to limit free speech and use extensive surveillance... These things would go down very badly in our culture and we'd tear ourselves apart fighting over it. Some people will be pragmatic and accept it because that's where the money is and others will fight to protect their freedoms. We're barely able to keep the peace with the levels of polarisation as they are. In my opinion breaking the ties and reverting to the cold war status (with 2 superpowers and their own spheres of influence) would be much preferable to accepting Chinese (CCP) influence over the western world. The question though is how realistic that still is at this point.
- pjmlp 4y ago
  Thanks to the globalization that solution is long gone. How many anti-China folks in western world are living by it, by not buying anything "Made in China"? Looking at how those 1 euro shops are filled with customers, not many. And that is only one way how western and asian cultures are tied together in the globalization age.

dirtyid 4y ago

Modern weapons mostly use mature / old nodes that are easy to harden, but RU is simply that behind on indigenous microelectronics. PRC with indigenous 14/28nm (well on way) will be fine for weapons, even AI based capabilities, they can short/medium term DUV to 7nm for bespoke batches. PRC inidgenizing complete 14/28nm chain can afford to disrupt TW who will still provide 80-90% of advanced nodes to west. Question then is can western industry survive loss of huge % of advanced nodes that basically brings them down to PRC level of access, if not worst off since almost no country is planning to completely indigenize semi supply chain like PRC. E: @paisawalla, over comment limit TLDR is US has leverage during peacetime over sanctions, especially US origin tech. But PRC has leverage during war because most of East Asian semi is within striking range - and wholely indefensible. And current western chip strategy still relies on access to east asian semi. CHIPS act hopes to recapture 5-10% leading edge production in 10 years if all goes well, but even then dependant on East Asian inputs. Incidentally East Asian semi players on territories that US needs base access in TW scenario. TW semi chain maybe write off (which itself maybe existential to western semi), but if JP/SKR assists in US in TW scenario, expect Samsung, Tokyo Electron and other suppliers to be craters too. Really only safe bet for major powers is to complete domestic supply chain and ensure sufficient deterrence from homeland strikes. Without it, probably expect PRC to have only working 14/28nm supply chain, while everyone else scrambles. Regional TW war in medium/long 5/10+ year timeline is actually likely to CLOSE semi gap because only way for PRC to deny west advanced nodes that's already denied to her via sanctions/export controls/lawfare is through war. Also keep in mind US/western industries have disproportionate value capture from semi production and hence more exposed to actual loss of production. Which makes entire PRC invading TW for TSMC that depends on western inputs a bad meme, if anything PRC will want to invade/bomb TW simply to deny semi access to west if she has sufficient semi capability herself. Which doesn't mean leading edge, but enough for most commercial/consumer purposes, while killing leading edge for western high tech. Which is not to say semi is reason PRC will move on TW, but in event of TW war, denying west advanced nodes is going to be high up on incidental strategic goals.

paisawalla 4y ago
This is an interesting, if terse, analysis. Can you spend a few more words elaborating your thoughts please?

uoaei 4y ago

Does China have de facto control over chip production in Taiwan? If they do, why ever actually invade? If not, why haven't they invaded already?

justinclift 4y ago
> If not, why haven't they invaded already? Taiwan's defence plan is basically to make invasion so costly, it's not worth the effort.
ajb 4y ago
Their strategy has been to set up their own foundries, which they have. SMIC is a Chinese-owned fab company with sites on the mainland. Because Taiwan is close and shares a language, they have been able to recruit and train staff who know how to operate a fab. SMIC didn't have a good reputation for quality when I last heard (which was ages ago), but that's just a yield/cost issue so I don't think they would have difficulty scaling it up if they are cut off from the west.
- hypertele-Xii 4y ago
  SMIC needs photolithography machines from Dutch company ASML. Sale of further machines has already been blocked by US. When their current machines fail for lack of maintenance and spare parts, they can't make chips anymore.
philwelch 4y ago
> If not, why haven't they invaded already? China has historically lacked the capability to land a sufficient number of troops on Taiwanese shores.
cturner 4y ago
China does not have such control. But to your question - > If they do, why ever actually invade? The power of the CCP surfs on top of a mythology. When ethnic Chinese people run successful, free, democratic countries it undermines that mythology. Consider how the CCP have trashed Hong Kong, which had limited democratic freedoms only. In the west, economic considerations are high on our motives. For the CCP, the central viewpoint is about pursuit and consolidation of political power. Economic considerations are all considered in the light of power priorities. There is a trap that westerners fall into of regarding live-and-let-live as the natural order of things. It is not, it is a set of values. The CCP come at the world from a different mindset.

wkat4242 4y ago

> China imports more chips as a country than it imports oil. By what metric I wonder? Barrels vs chips? Kilograms? Or dollars? Not doubting the validity of your statement but it was just a question that came to mind as they are such very different commodities.

dirtyid 4y ago
I want to bushels. But dollars.
- wkat4242 4y ago
  Ahh I see, that makes the most sense indeed. Of course China does have significant oil reserves itself which might offset this a bit. But on the other hand they also have significant production capability of lower-grade silicon.

t344344 4y ago

> Javelins ... each have 200 modern chips inside. Javelins are based on 1980ties technology, hardly "modern" chips. That is projection! Only NATO puts "AI" and similar "features" into weapons. Partly to make them more expensive. Russia and other countries use cheap and reliable components (you know joke about washing machines). It is well visible with air defense. Patriot missiles are so expensive, because there is a single missile type. It suppose to be universal, for all types of targets. It is loaded with all sort of chips to handle all possible causes. Russian air defense have several types of cheap simple missiles, each specialized for narrow type of target. They do not have to fire multi million $ rocket to destroy cheap drone!

cpursley 4y ago
You’re getting downvoted but the Javelins have been pretty underwhelming. The domestic Kamikaze drones Russia is using have proven cheaper, safer and more effective.
- t344344 4y ago
  Javelins themselves were effective, problem was in logistics and delivery of first batches. Many had defective battery after siting in warehouse for decades. And Ukrainian manual was unreadable, like google translated.
- jack_riminton 4y ago
  They've been pretty overwhelming to the Russians. In this report it states 300 fired, 280 tanks destroyed https://www.ndtv.com/world-news/how-small-ukraine-force-is-killing-russian-tanks-with-us-javelin-missiles-2803289 https://www.ndtv.com/world-news/how-small-ukraine-force-is-k...

cpursley 4y ago

Russia has been doing weekly salvos of precision missiles yet we were told they’d run out last Spring. The reality is we don’t know exactly how many they have or are capable of producing but it’s probably a lot. And those civilian buildings getting hit are often unfortunately the result missile interception (as was the one which hit the farmers in Poland). In fact, Ukraine recently fired a guy for publicly stating this. Anyways, Chip Wars is a great book. The trends here are definitely interesting.

cabirum 4y ago

Are you saying China does not produce chips? Like, ignore the existence of Espressiv, Loongson, SMIC, 10s other companies? What is your definition of modern chip for a weapon made in late 1990x? How can China invade itself?

hypertele-Xii 4y ago
There is no company named Espressiv. If you meant Espressif, they outsource their manufacturing to TSMC. TSMC is in Taiwan, not China. Loongson is also fabless, they outsource their manufacturing to STMicroelectronics, a Dutch company. SMIC is the only company you listed in China with actual manufacturing capacity for chips. Problem is, they need Dutch machines from ASML to operate, and such sales were already blocked by US. Unless they can somehow reverse-engineer and start producing photolithography machines, they are living on borrowed time until their current machines fail for lack of maintenance and spare parts.
- cabirum 4y ago
  If I read correctly, ASML is the only major company that China still depends on? With the right amount of investment, China will shortly have an alternative, you know. Its not irreplaceable, nor does it require reverse eng.
  - fomine3 4y ago
    Who said "only"?
- ClapperHeid 4y ago
  >Problem is, they [Chinese] need Dutch machines from ASML to operate, and such sales were already blocked by US... Gotta love the free market! US decides who a Dutch comapny can sell to.

rurban 4y ago

If you look at the list of fabs https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat... you'll see that of all the modern fabs, about half of them are in China already. You still got the top 2 in Taiwan and Korea, so they won't be able to produce iPhones or Macbooks. But the rest is there already. Even Samsung has a few fabs in China.

fomine3 4y ago
How do you count?