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I think this answer is correct: ‘The US government is run by idiots who don’t understand the industry,” one of the founding fathers of America’s semiconduc

I think this answer is correct: ‘The US government is run by idiots who don’t understand the industry,” one of the founding fathers of America’s semiconductor industry told me after the Biden administration announced sweeping curbs on Chinese purchases of US high-end chips, fabrication equipment, and design tools. The Biden measures also forbid American citizens or residents from working in China’s chip industry. https://compactmag.com/article/fighting-a-chip-war-on-the-cheap https://compactmag.com/article/fighting-a-chip-war-on-the-ch...

simonblack 4y ago
the Biden administration announced sweeping curbs on Chinese purchases of US high-end chips It was the old 'manager's dilemma' - do we 'buy-built' because it's faster, cheaper and less difficult; or do we 'roll our own' - which is more expensive, slower to get results, and more difficult? The Chinese were perfectly happy to spend a couple of hundred billion on US semiconductors every year. It was 'win-win'. The US got sales to offset their trade deficit, and China didn't need to build a whole new expensive industry from scratch. Enter the idiots. Stop the semiconductor sales to China. Force the Chinese to 'roll their own' and in the process set up a competitive new industry that will eventually out-compete and destroy their previous suppliers. US semiconductor manufacturers will soon be going down the same path to follow the US paper manufacturers, the US steel manufacturers, the US auto manufacturers, the US textile manufacturers, the US home appliance manufacturers, etc, etc, etc.
- yogthos 4y ago
  Pretty much, and one really key thing is that chip development has incredibly high input costs. It costs hundreds of billions to build foundries for a particular chip design, and then you have to build whole new ones when the process changes. This is only sustainable if you're able to sell huge volumes of chips. Cutting China, which roughly half the world market, means that companies don't have incentive to invest in new chips. And we're already seeing the effects of these policies. NVIDIA decided to invest into building chips that pass export controls instead of building more advanced ones that wouldn't https://www.fool.com/investing/2022/11/11/nvidia-new-chip-china-passes-export-control/ https://www.fool.com/investing/2022/11/11/nvidia-new-chip-ch... Meanwhile, China is addressing the problem by just pouring unlimited resources into building up its own industry https://www.scmp.com/tech/tech-war/article/3212249/tech-war-china-doubles-down-whole-nation-approach-chip-self-sufficiency-us-tightens-export-controls https://www.scmp.com/tech/tech-war/article/3212249/tech-war-... I predict that China is going to be far ahead of any western firm within a decade.

simonblack 4y ago

the Biden administration announced sweeping curbs on Chinese purchases of US high-end chips It was the old 'manager's dilemma' - do we 'buy-built' because it's faster, cheaper and less difficult; or do we 'roll our own' - which is more expensive, slower to get results, and more difficult? The Chinese were perfectly happy to spend a couple of hundred billion on US semiconductors every year. It was 'win-win'. The US got sales to offset their trade deficit, and China didn't need to build a whole new expensive industry from scratch. Enter the idiots. Stop the semiconductor sales to China. Force the Chinese to 'roll their own' and in the process set up a competitive new industry that will eventually out-compete and destroy their previous suppliers. US semiconductor manufacturers will soon be going down the same path to follow the US paper manufacturers, the US steel manufacturers, the US auto manufacturers, the US textile manufacturers, the US home appliance manufacturers, etc, etc, etc.

yogthos 4y ago
Pretty much, and one really key thing is that chip development has incredibly high input costs. It costs hundreds of billions to build foundries for a particular chip design, and then you have to build whole new ones when the process changes. This is only sustainable if you're able to sell huge volumes of chips. Cutting China, which roughly half the world market, means that companies don't have incentive to invest in new chips. And we're already seeing the effects of these policies. NVIDIA decided to invest into building chips that pass export controls instead of building more advanced ones that wouldn't https://www.fool.com/investing/2022/11/11/nvidia-new-chip-china-passes-export-control/ https://www.fool.com/investing/2022/11/11/nvidia-new-chip-ch... Meanwhile, China is addressing the problem by just pouring unlimited resources into building up its own industry https://www.scmp.com/tech/tech-war/article/3212249/tech-war-china-doubles-down-whole-nation-approach-chip-self-sufficiency-us-tightens-export-controls https://www.scmp.com/tech/tech-war/article/3212249/tech-war-... I predict that China is going to be far ahead of any western firm within a decade.