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I wonder if these actions will have the opposite effect. China will only more invest into producing their own. And I think we should not underestimate them. Cou

I wonder if these actions will have the opposite effect. China will only more invest into producing their own. And I think we should not underestimate them. Could be good for competition though.

The_Colonel 3y ago
Russia is benefitting from the sanctions, China as well. If these are so beneficial, why didn't China / Russia institute this kind of import/export restrictions on their own? It sounds like cheap propaganda ...
ahoka 3y ago
It still spreads your opponents resources thinner, from a strictly game theory perspective.
- HPsquared 3y ago
  From a first-order perspective, perhaps.
- cjfd 3y ago
  Meh, from a strict game theory perspective restricting trade makes both sides poorer. You know, both parties in a trading contract only sign on the dotted line if both are advantaged by it.
  - The_Colonel 3y ago
    Not to the same degree. The world economy is hurt by sanctions on North Korea, but not that much. The other way round though ... China is on a different scale, but still the losses are asymmetrical, at least relatively speaking.
  - pasc1878 3y ago
    It depends what the costs and benefits are - if in pure money then yes both sides poorer. But if you take into account social and other freedoms boosting China (and Russia) does not help the average Westerner as their freedoms would tend to reduce to mach China.
DaedPsyker 3y ago
While I'd say so, I don't think in the medium future it would have made much difference. China wants ensure control over strategic elements anyway. I suspect that the west has started betting on China intending to primarily rely on domestic production. Possibly to preempt the future, avoid companies getting entangled further, and slow China down even if just marginally, the west has settled this policy. I say west but this is more a US thing, Europe was more reluctant to follow it.
- Jensson 3y ago
  This will make the capitalist market in China invest into chipmaking, not just the government. That is a very different beast.
  - itsoktocry 3y ago
    >capitalist market in China invest into chipmaking, not just the government Where is the line between the "capitalist market" and the government in China?
- bostik 3y ago
  No need to bet on the intent. At least for software in financial services, starting from 2027 all Chinese companies are supposed to use 100% homegrown software. Any use of foreign-supplied software must be explicitly approved by the respective government body. The mandated fraction of Chinese software vs. other software is already supposed to be >65%, and the floor is being raised every year.
yorwba 3y ago
On the other hand, the very clear deadline on the now-revoked license caused Chinese chipmakers to panic-buy record levels of Dutch equipment and ASML's Chinese competitors now have the problem that their potential customers have smaller budgets left for them after those purchases...
rough-sea 3y ago
Don’t underestimate the difficulty of semiconductor manufacturing. It’s not that they’re trying to implement a fixed target - the technology has been exponentially advancing for the last 50 years.
LegitShady 3y ago
they're already doing that. This wouldn't change that either way.
itsoktocry 3y ago
>China will only more invest into producing their own This is already happening. It doesn't take a brilliant mind to see the global supply chain isn't dependable (case in point, this license revocation). But don't underestimate the difficulty in building these machines.
spdy 3y ago
This is not a new problem, as they have been starved of high-end semiconductors for years already. However, catching up to the knowledge that ASML and Zeiss have regarding lithography machines is not an easy task to overcome.
adamsb6 3y ago
Steve Hsu has had guests on his podcasts saying exactly this. There was already a domestic semiconductor industry but big players almost never used them since the big semiconductor companies were such a safe bet. Well, now they’re forced to use them, and they’re growing. With the fabs available to them they can’t produce latest gen very few nanometer dies, but for a lot of use cases that doesn’t matter. And of course, I’m sure they’ve got too people working on catching up. China graduates more engineers in a year than the United States has total. Imagine if you banned Western countries from exporting cars to Japan in 1950.
- secfirstmd 3y ago
  Also China is pretty good at espionage these days...
- biotopia 3y ago
  That's what every Chinese fanboys on this forum keeps repeating: so many Chinese graduates! However, with unofficial 40% youth unemployment rate and 10k chip companies shutting down in 2023 https://www.tomshardware.com/tech-industry/manufacturing/chinese-chip-related-companies-shutting-down-with-record-speed-10900-or-around-30-per-day-shut-down-in-2023 https://www.tomshardware.com/tech-industry/manufacturing/chi..., where would these graduates actually work? realistic answer is that they're right now delivering food or driving didi. or laying flat doing nothing.
  - deleted 3y ago
    [deleted]
ArchD 3y ago
Maybe they can develop their own high-tech fabrication technology to catch up, but I wonder how they will manage and accelerate the progress. The West has IP laws to incentivise R&D by the free market. In China, IP law enforcement is hit-and-miss. Small entities risk having their research getting used by others for free so it would be up to big entities that are well-connected to the centers of power to do the R&D. Research done by a few big entities in a centralized manner may not foster much innovation. So maybe it boils down to how well they can spy or poach talent or knowledgeable people from Western companies, or maybe reverse-engineer Western products.
- FooBarWidget 3y ago
  This is less and less the case. IP protection in China has been improving for years.
  - andsoitis 3y ago
    > This is less and less the case. IP protection in China has been improving for years. Not only are there persistent allegations of state-organized economic espionage and theft of intellectual property in violation of international trade agreements, it is not just limited to business. Academia and government also. Chinese firms have been able to spend more on production, undercutting competitors, by skipping costly R&D because of IP theft. Source: https://en.wikipedia.org/wiki/Allegations_of_intellectual_property_theft_by_China https://en.wikipedia.org/wiki/Allegations_of_intellectual_pr... In July, the OECD halted publication of China's science statistics citing "anomalies". Source: https://sciencebusiness.net/news/international-news/puzzle-stumps-statisticians-how-much-does-china-actually-spend-rd https://sciencebusiness.net/news/international-news/puzzle-s... These anomalous statistics give us a small and partial peek into how much China claims to be spending on R&D vs. actual. There could be multiple interpretations of the anomalous R&D statistics, but it would be consistent with the allegations that China's explicit strategy is to steal IP to bolster local companies so that they can compete on the global scale.
Kaotique 3y ago
It is just a delaying tactic. ASML is 5-10 years ahead in their technology so it will take a while for China to catch up. Which will grant the USA some extra time to build its own chip industry and not be dependent on two or three other countries.
- gizmo 3y ago
  China doesn’t need to replicate EUV in order to make competitive chips. China can already produce very advanced chips today and is maybe 2 years behind in the ways that actually matter.
- deleted 3y ago
  [deleted]
- FooBarWidget 3y ago
  It's not -just- a delaying tactic. It's a trade. Without these sanctions, China will likely soon develop chip design talent that's at the cutting edge, but they'll fab with TSMC (and thus use the entire Western-dependant supply chain). This means that China's chip manufacturing ecosystem will remain poor, unpopular and underdeveloped. With these sanctions, China's chip design talent can't fab cutting edge chips. But China's manufacturing ecosystem suddenly gets the market incentive to develop. I don't think they will reach EUV any time soon, and that hurts. But dominating the mature chip manufacturing sector in the mid term is an achievable goal, and mature chips are still absolutely essential even if they're not "sexy". Whereas before sanctions, there was no way they could dominate in chip manufacturing (nobody wanted to fab with Chinese manufacturers or wanted to buy Chinese chip manufacturing equipment), only in chip design. What these sanctions did was trading one thing (cutting-edge chip design) for the other (mature chip manufacturing). The short-term blow to China sounds sexy, but they've created a long-term problem. Is this trade worth it? I wonder whether policymakers even realize they're making this trade.
  - biotopia 3y ago
    [flagged]
- 3y ago
ksec 3y ago
As other have said this is already happening with Huawei and SMIC. And this is DUV, not EUV. China has already poured billions into it, and will continue to do so until it is somewhat cost neutral. 98% of smartphone outside of Apple and Samsung are Chinese brand. Their domestic market will be the first to use some of these chips, to use the term HN may have heard of it, To eat its own dog food. It isn't just Foundry or ASML either, it is across every single component sub sector. From NAND, DRAM, LCD Panel to OLED etc. And Apple is behind it, "lifting" ( as they would like to call it ) every single one of these manufacture. Something no one likes to mention or continue to be ignored.
- DrDroop 3y ago
  What does lifting mean here?
  - jacooper 3y ago
    I think being the first big buyer from these companies, thus lifting them to the upper market.
- biotopia 3y ago
  Apple is not behind it. if anything apple and its taiwan subcontractors are actively moving away from Chinese suppliers. https://www.ft.com/content/1eee7956-a5be-4df0-a9a9-139c573c4f8f https://www.ft.com/content/1eee7956-a5be-4df0-a9a9-139c573c4.... https://asia.nikkei.com/Spotlight/Supply-Chain/Apple-s-Taiwan-suppliers-lead-renewed-pivot-from-China https://asia.nikkei.com/Spotlight/Supply-Chain/Apple-s-Taiwa...
  - ksec 3y ago
    Apple has been behind it since 2016. ( Arguably even before then but that is another topic ) They only started to move away in 2023.
mensetmanusman 3y ago
[flagged]
- andy_ppp 3y ago
  If you think about how difficult invading Ukraine has been for Russia, add in 100 miles of water for the most inexperienced navy in the world and it would likely be a blood bath. I've always wondered if sinking a super carrier (group?) off your coastline is a great idea. They all carry a massive nuclear reactor onboard, I'm assuming the US has some pretty good technologies to mitigate these new Chinese carrier destroyer missiles, but all in all it seems like a disaster for everyone, especially the Chinese.
  - The_Colonel 3y ago
    It doesn't make much sense to compare Ukraine and Taiwan. Those are very different wars, with Taiwan / US having also huge challenges. > I've always wondered if sinking a super carrier (group?) off your coastline is a great idea. There are 9 sunken nuclear submarines lying on the sea floor. I have doubts about this being a big deterrent. The carrier group is also unlikely to be close to the coastline.
andy_ppp 3y ago
Unfortunately for the Chinese it's extremely tricky for even private capital to pick the winners in these spaces. I'd guess there is almost zero chance the Chinese government giving out free cash beat the market and even build the right stuff. Can they even build the light sources or optics for these devices. Don't Zeiss make the flattest mirrors ever made for this? There's probably hundreds of technologies that are as close to magic as you can get in the ASML lithography systems, I'm skeptical of even companies in the US being able to copy this for a long time. By the time the Chinese catch up (if ever) the next generation of chip development will be coming online such as High NA and we are even starting to experiment with XRay lithography.
- epolanski 3y ago
  They have already proved time and time again to be able to make gigantic leaps, some of those, completely on their own in the sector. Pouring billions in the sector highly increases the chances of breakthrough technologies. I personally think more competition in the space is good for everyone, albeit I'm not a fan of those trade wars, they accomplish little at the end of the day and they are funded with a lot of our taxes, we talking hundreds of euros/dollars per citizen for many years to subsidize this trade war we have little to gain from. China will still get ASML equipment eventually if they will really want to by buying it from intermediate sources that may hide the operation for the right amount of $. China will be further motivated to reverse engineer the solutions and not share their own advancements in the sector if accomplished.
  - andy_ppp 3y ago
    Okay only time will tell. Which technologies has Chinese capital (rather than American capital) been successful at funding, I think display technology and solar panels they are ahead on, anything else?
    - epolanski 3y ago
      SMIC achieved a competitive 7nm node on their own. 5nm has also been achieved on their own, albeit the yields are not enough for mass production till 2024 and it doesn't uses EUV litography.
insane_dreamer 3y ago
> China will only more invest into producing their own they will anyway but at least they'll have less opportunity to "obtain" technology from ASML to aid them in their efforts

I wonder if these actions will have the opposite effect. China will only more invest into producing their own. And I think we should not underestimate them. Could be good for competition though.

The_Colonel 3y ago

Russia is benefitting from the sanctions, China as well. If these are so beneficial, why didn't China / Russia institute this kind of import/export restrictions on their own? It sounds like cheap propaganda ...

ahoka 3y ago

It still spreads your opponents resources thinner, from a strictly game theory perspective.

HPsquared 3y ago
From a first-order perspective, perhaps.
cjfd 3y ago
Meh, from a strict game theory perspective restricting trade makes both sides poorer. You know, both parties in a trading contract only sign on the dotted line if both are advantaged by it.
- The_Colonel 3y ago
  Not to the same degree. The world economy is hurt by sanctions on North Korea, but not that much. The other way round though ... China is on a different scale, but still the losses are asymmetrical, at least relatively speaking.
- pasc1878 3y ago
  It depends what the costs and benefits are - if in pure money then yes both sides poorer. But if you take into account social and other freedoms boosting China (and Russia) does not help the average Westerner as their freedoms would tend to reduce to mach China.

DaedPsyker 3y ago

While I'd say so, I don't think in the medium future it would have made much difference. China wants ensure control over strategic elements anyway. I suspect that the west has started betting on China intending to primarily rely on domestic production. Possibly to preempt the future, avoid companies getting entangled further, and slow China down even if just marginally, the west has settled this policy. I say west but this is more a US thing, Europe was more reluctant to follow it.

Jensson 3y ago
This will make the capitalist market in China invest into chipmaking, not just the government. That is a very different beast.
- itsoktocry 3y ago
  >capitalist market in China invest into chipmaking, not just the government Where is the line between the "capitalist market" and the government in China?
bostik 3y ago
No need to bet on the intent. At least for software in financial services, starting from 2027 all Chinese companies are supposed to use 100% homegrown software. Any use of foreign-supplied software must be explicitly approved by the respective government body. The mandated fraction of Chinese software vs. other software is already supposed to be >65%, and the floor is being raised every year.

yorwba 3y ago

On the other hand, the very clear deadline on the now-revoked license caused Chinese chipmakers to panic-buy record levels of Dutch equipment and ASML's Chinese competitors now have the problem that their potential customers have smaller budgets left for them after those purchases...

rough-sea 3y ago

Don’t underestimate the difficulty of semiconductor manufacturing. It’s not that they’re trying to implement a fixed target - the technology has been exponentially advancing for the last 50 years.

LegitShady 3y ago

they're already doing that. This wouldn't change that either way.

itsoktocry 3y ago

>China will only more invest into producing their own This is already happening. It doesn't take a brilliant mind to see the global supply chain isn't dependable (case in point, this license revocation). But don't underestimate the difficulty in building these machines.

spdy 3y ago

This is not a new problem, as they have been starved of high-end semiconductors for years already. However, catching up to the knowledge that ASML and Zeiss have regarding lithography machines is not an easy task to overcome.

adamsb6 3y ago

Steve Hsu has had guests on his podcasts saying exactly this. There was already a domestic semiconductor industry but big players almost never used them since the big semiconductor companies were such a safe bet. Well, now they’re forced to use them, and they’re growing. With the fabs available to them they can’t produce latest gen very few nanometer dies, but for a lot of use cases that doesn’t matter. And of course, I’m sure they’ve got too people working on catching up. China graduates more engineers in a year than the United States has total. Imagine if you banned Western countries from exporting cars to Japan in 1950.

secfirstmd 3y ago
Also China is pretty good at espionage these days...
biotopia 3y ago
That's what every Chinese fanboys on this forum keeps repeating: so many Chinese graduates! However, with unofficial 40% youth unemployment rate and 10k chip companies shutting down in 2023 https://www.tomshardware.com/tech-industry/manufacturing/chinese-chip-related-companies-shutting-down-with-record-speed-10900-or-around-30-per-day-shut-down-in-2023 https://www.tomshardware.com/tech-industry/manufacturing/chi..., where would these graduates actually work? realistic answer is that they're right now delivering food or driving didi. or laying flat doing nothing.
- deleted 3y ago
  [deleted]

ArchD 3y ago

Maybe they can develop their own high-tech fabrication technology to catch up, but I wonder how they will manage and accelerate the progress. The West has IP laws to incentivise R&D by the free market. In China, IP law enforcement is hit-and-miss. Small entities risk having their research getting used by others for free so it would be up to big entities that are well-connected to the centers of power to do the R&D. Research done by a few big entities in a centralized manner may not foster much innovation. So maybe it boils down to how well they can spy or poach talent or knowledgeable people from Western companies, or maybe reverse-engineer Western products.

FooBarWidget 3y ago
This is less and less the case. IP protection in China has been improving for years.
- andsoitis 3y ago
  > This is less and less the case. IP protection in China has been improving for years. Not only are there persistent allegations of state-organized economic espionage and theft of intellectual property in violation of international trade agreements, it is not just limited to business. Academia and government also. Chinese firms have been able to spend more on production, undercutting competitors, by skipping costly R&D because of IP theft. Source: https://en.wikipedia.org/wiki/Allegations_of_intellectual_property_theft_by_China https://en.wikipedia.org/wiki/Allegations_of_intellectual_pr... In July, the OECD halted publication of China's science statistics citing "anomalies". Source: https://sciencebusiness.net/news/international-news/puzzle-stumps-statisticians-how-much-does-china-actually-spend-rd https://sciencebusiness.net/news/international-news/puzzle-s... These anomalous statistics give us a small and partial peek into how much China claims to be spending on R&D vs. actual. There could be multiple interpretations of the anomalous R&D statistics, but it would be consistent with the allegations that China's explicit strategy is to steal IP to bolster local companies so that they can compete on the global scale.

Kaotique 3y ago

It is just a delaying tactic. ASML is 5-10 years ahead in their technology so it will take a while for China to catch up. Which will grant the USA some extra time to build its own chip industry and not be dependent on two or three other countries.

gizmo 3y ago
China doesn’t need to replicate EUV in order to make competitive chips. China can already produce very advanced chips today and is maybe 2 years behind in the ways that actually matter.
deleted 3y ago
[deleted]
FooBarWidget 3y ago
It's not -just- a delaying tactic. It's a trade. Without these sanctions, China will likely soon develop chip design talent that's at the cutting edge, but they'll fab with TSMC (and thus use the entire Western-dependant supply chain). This means that China's chip manufacturing ecosystem will remain poor, unpopular and underdeveloped. With these sanctions, China's chip design talent can't fab cutting edge chips. But China's manufacturing ecosystem suddenly gets the market incentive to develop. I don't think they will reach EUV any time soon, and that hurts. But dominating the mature chip manufacturing sector in the mid term is an achievable goal, and mature chips are still absolutely essential even if they're not "sexy". Whereas before sanctions, there was no way they could dominate in chip manufacturing (nobody wanted to fab with Chinese manufacturers or wanted to buy Chinese chip manufacturing equipment), only in chip design. What these sanctions did was trading one thing (cutting-edge chip design) for the other (mature chip manufacturing). The short-term blow to China sounds sexy, but they've created a long-term problem. Is this trade worth it? I wonder whether policymakers even realize they're making this trade.
- biotopia 3y ago
  [flagged]
3y ago

ksec 3y ago

As other have said this is already happening with Huawei and SMIC. And this is DUV, not EUV. China has already poured billions into it, and will continue to do so until it is somewhat cost neutral. 98% of smartphone outside of Apple and Samsung are Chinese brand. Their domestic market will be the first to use some of these chips, to use the term HN may have heard of it, To eat its own dog food. It isn't just Foundry or ASML either, it is across every single component sub sector. From NAND, DRAM, LCD Panel to OLED etc. And Apple is behind it, "lifting" ( as they would like to call it ) every single one of these manufacture. Something no one likes to mention or continue to be ignored.

DrDroop 3y ago
What does lifting mean here?
- jacooper 3y ago
  I think being the first big buyer from these companies, thus lifting them to the upper market.
biotopia 3y ago
Apple is not behind it. if anything apple and its taiwan subcontractors are actively moving away from Chinese suppliers. https://www.ft.com/content/1eee7956-a5be-4df0-a9a9-139c573c4f8f https://www.ft.com/content/1eee7956-a5be-4df0-a9a9-139c573c4.... https://asia.nikkei.com/Spotlight/Supply-Chain/Apple-s-Taiwan-suppliers-lead-renewed-pivot-from-China https://asia.nikkei.com/Spotlight/Supply-Chain/Apple-s-Taiwa...
- ksec 3y ago
  Apple has been behind it since 2016. ( Arguably even before then but that is another topic ) They only started to move away in 2023.

mensetmanusman 3y ago

[flagged]

andy_ppp 3y ago
If you think about how difficult invading Ukraine has been for Russia, add in 100 miles of water for the most inexperienced navy in the world and it would likely be a blood bath. I've always wondered if sinking a super carrier (group?) off your coastline is a great idea. They all carry a massive nuclear reactor onboard, I'm assuming the US has some pretty good technologies to mitigate these new Chinese carrier destroyer missiles, but all in all it seems like a disaster for everyone, especially the Chinese.
- The_Colonel 3y ago
  It doesn't make much sense to compare Ukraine and Taiwan. Those are very different wars, with Taiwan / US having also huge challenges. > I've always wondered if sinking a super carrier (group?) off your coastline is a great idea. There are 9 sunken nuclear submarines lying on the sea floor. I have doubts about this being a big deterrent. The carrier group is also unlikely to be close to the coastline.

andy_ppp 3y ago

Unfortunately for the Chinese it's extremely tricky for even private capital to pick the winners in these spaces. I'd guess there is almost zero chance the Chinese government giving out free cash beat the market and even build the right stuff. Can they even build the light sources or optics for these devices. Don't Zeiss make the flattest mirrors ever made for this? There's probably hundreds of technologies that are as close to magic as you can get in the ASML lithography systems, I'm skeptical of even companies in the US being able to copy this for a long time. By the time the Chinese catch up (if ever) the next generation of chip development will be coming online such as High NA and we are even starting to experiment with XRay lithography.

epolanski 3y ago
They have already proved time and time again to be able to make gigantic leaps, some of those, completely on their own in the sector. Pouring billions in the sector highly increases the chances of breakthrough technologies. I personally think more competition in the space is good for everyone, albeit I'm not a fan of those trade wars, they accomplish little at the end of the day and they are funded with a lot of our taxes, we talking hundreds of euros/dollars per citizen for many years to subsidize this trade war we have little to gain from. China will still get ASML equipment eventually if they will really want to by buying it from intermediate sources that may hide the operation for the right amount of $. China will be further motivated to reverse engineer the solutions and not share their own advancements in the sector if accomplished.
- andy_ppp 3y ago
  Okay only time will tell. Which technologies has Chinese capital (rather than American capital) been successful at funding, I think display technology and solar panels they are ahead on, anything else?
  - epolanski 3y ago
    SMIC achieved a competitive 7nm node on their own. 5nm has also been achieved on their own, albeit the yields are not enough for mass production till 2024 and it doesn't uses EUV litography.

insane_dreamer 3y ago

> China will only more invest into producing their own they will anyway but at least they'll have less opportunity to "obtain" technology from ASML to aid them in their efforts