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All the big blocks: EU, US, South Korea, Taiwan, and China assume that their subsidy policies will expand their market share. Obviously they cannot all be righ

All the big blocks: EU, US, South Korea, Taiwan, and China assume that their subsidy policies will expand their market share. Obviously they cannot all be right. The only that I think is given that will expand its global market share is China. Paradoxically because of the US sanctions and the fact that it relies so much on imports presently.

jacquesm 3y ago
Having the largest internal market which is still on the rise probably also helps, but China has enough problems that it may all come to nothing in the end.
- kramerger 3y ago
  But after the trade war with Huawei and zte they don't really have a choice, do they? A multi billion dollar company will not just lay down and die when its shut out from the open market, it will use its muscles to create its own. Hisense is not the market leader, but they have done a significant leap in the last 5 years (Not all of it through legal means thought)
  - jacquesm 3y ago
    Agreed they don't have a choice, I'm just not so sure about the positive outcome. Xi has built a house of cards and has too much of a cult of personality to create a stable environment.
    - throwaway4good 3y ago
      Wrt. this I don't Xi matters a lot. There is consensus in the broader Chinese leadership that China needs to move up the value chain to the point where it has leadership, and potential self-sufficiency, in all key industries and at the same time stimulate internal demand.
      - davedx 3y ago
        He's cemented his position as dictator-for-life, and also shown that he will actively interfere in publicly traded companies. That matters a hell of a lot.
      - jacquesm 3y ago
        Xi isn't going anywhere as long as he's got a pulse.
    - maxglute 3y ago
      This is opposite of reality. House of cards (RE overinvestiment) of past leadership was inherited by Xi, who has been actively dismantling it for years, which he started early - RE square footage stagnated a few years after he started office. Meanwhile, almost every PRC strategic improvement that US is panicking over from PRC military modernization to MIC2025 to PRC moving up science/innovation, capturing higher value supply chains, PRC expanding trade influence was driven by Xi. He also inherited inertia from past efforts still it's been down to his guidance. Which is not to say he did "best" job, but good enough job that PRC strength on trend to grow under his trajectory, which we have 10+ years of data on.
sbierwagen 3y ago
>Obviously they cannot all be right. Sure they can, just ban imports. Each country/trade bloc ends up with their own chip.
- throwaway4good 3y ago
  They don't have to. The US is doing the banning.
- dragonelite 3y ago
  But then you will shrink your global market share. Semi conducting fabrication on a sub 7nm can only work if you have big market share to keep the factories running 24/7..
ChadNauseam 3y ago
> Obviously they cannot all be right. They could all be right that their market share will be higher if they adopt this policy than if they don’t.
- close04 3y ago
  The market share is the percentage of the market, up to 100%. The market might grow due to the different measures adopted but percentage wise it will always be limited to the whole being 100%, split between however many players. Everyone's share increasing means the market going above 100%. What OP means is that it's a mathematical impossibility for everyone's market share to increase. It's a zero sum game, for any player's market share to increase, someone else's must decrease.
  - danaris 3y ago
    I think that what the GP is saying is that they could each be correct, individually, but not all collectively.
    - close04 3y ago
      > they could each be correct, individually In that case "They could all be right that their market share might be higher". Because they never operate individually, in isolation. Two people can predict opposite outcomes that could be correct for a coin flip but only one is correct. More on the point, I think they all invest in the same strategy not because they know they'll win but because they know without it they'll lose. Even so it's guaranteed that some of them will lose.
    - RGamma 3y ago
      The collective case is called https://en.wikipedia.org/wiki/Paradox_of_competition https://en.wikipedia.org/wiki/Paradox_of_competition btw.
onion2k 3y ago
Obviously they cannot all be right. As a percentage of the market, that's true, but if the subsidies grow the whole market then every block's dollar value of market share can all go up. Every startup learns this lesson quite early on. It's a heck of a lot easier to grow a market by 5% than it is to take 5% of the market from a competitor, mostly because competitors do things to try to stop you.
- jdietrich 3y ago
  Sure, but the semiconductor market is mature bordering on stagnant. There's a high-risk/high-reward competition for the leading edge that is currently dominated by TSMC, but there's just not much money to be made from the older nodes that the automotive, aviation and military segments care about. Building out capacity to secure your supply chains is potentially a very sensible strategic decision, but I'll eat my hat if it ever turns a real profit.
  - baybal2 3y ago
    [dead]
  - mejutoco 3y ago
    After, if we assume from Apple sales, everybody got a mobile phone, AI could be what makes it non-stagnant again. Just companies ordering GPUs and servers, plus more and more similar features being shipped to consumer hardware could make a difference. I do not have any data though, just thinking out loud.
    - FrustratedMonky 3y ago
      Yes. Think this is it. Even if some sectors appear stagnant now, everyone is expecting some huge growth spurt with AI. Lots of new data centers, GPUs, etc... and of course, for national defense, to have homegrown supply chains.
    - junipertea 3y ago
      I would assume all those companies want cutting edge (higher performance at lower energy cost), not chips that are 5-10 years behind. Those can barely run current android.
croes 3y ago
But without subsidies they could lose market share
davedx 3y ago
Saying something is a "given", without providing any evidence, is a pretty silly argument
dataking 3y ago
> The only that I think is given that will expand its global market share is China. That doesn't make sense given that all the other big blocks are cooperating across borders while China is subject to stiff export controls in an area with real technological chokepoints.
- maxglute 3y ago
  PRC is entrant, west is incumbant with majority of global shares to lose. PRC building up mature nodes, which is still plurarity of chips, which they can soon with indigenous supply chains. As since they are huge export source, and intermediate good source, they get to inject their own chips into everything on global markets. Of which they now trade more with global south than they do western bloc. West can consolidate within bloc, but they'll start to lose large segements of global share, which is where future growth will be. Loss of global revenue, will in turn impact west ability to R&D without large subsidies, which drives down commercial viability. There was study analysing result of PRC domestic overcapacity turn into exports in various sectors like solar, display etc, and their effects on incumbant leaders (predominantly western firms) operating profits, and the effect was like 50-100% loss. The TLDR is west already has dominant global share, any share PRC gains on global market is share lost by west, and west is going to lose big if they retreat/consolidate around only monopolizing western shares .
throwaway2037 3y ago
Why did you exclude Japan?
- throwaway4good 3y ago
  It would be fair to include Japan on the list of major semiconductor producers.
coryfklein 3y ago
Yes, but most of them could be right. Given that Taiwan has cornered the market for so long, now that other countries are at least trying you could see a shift like this hypothetical market share change: Taiwan 80% -> 50% EU 1% -> 10% US 1% -> 10% South Korea 9% -> 15% China 9% -> 15% And if 4/5 of them ended up "being right" would indicate that subsidy policies are effective, right?

jacquesm 3y ago

Having the largest internal market which is still on the rise probably also helps, but China has enough problems that it may all come to nothing in the end.

kramerger 3y ago
But after the trade war with Huawei and zte they don't really have a choice, do they? A multi billion dollar company will not just lay down and die when its shut out from the open market, it will use its muscles to create its own. Hisense is not the market leader, but they have done a significant leap in the last 5 years (Not all of it through legal means thought)
- jacquesm 3y ago
  Agreed they don't have a choice, I'm just not so sure about the positive outcome. Xi has built a house of cards and has too much of a cult of personality to create a stable environment.
  - throwaway4good 3y ago
    Wrt. this I don't Xi matters a lot. There is consensus in the broader Chinese leadership that China needs to move up the value chain to the point where it has leadership, and potential self-sufficiency, in all key industries and at the same time stimulate internal demand.
    - davedx 3y ago
      He's cemented his position as dictator-for-life, and also shown that he will actively interfere in publicly traded companies. That matters a hell of a lot.
    - jacquesm 3y ago
      Xi isn't going anywhere as long as he's got a pulse.
  - maxglute 3y ago
    This is opposite of reality. House of cards (RE overinvestiment) of past leadership was inherited by Xi, who has been actively dismantling it for years, which he started early - RE square footage stagnated a few years after he started office. Meanwhile, almost every PRC strategic improvement that US is panicking over from PRC military modernization to MIC2025 to PRC moving up science/innovation, capturing higher value supply chains, PRC expanding trade influence was driven by Xi. He also inherited inertia from past efforts still it's been down to his guidance. Which is not to say he did "best" job, but good enough job that PRC strength on trend to grow under his trajectory, which we have 10+ years of data on.

sbierwagen 3y ago

>Obviously they cannot all be right. Sure they can, just ban imports. Each country/trade bloc ends up with their own chip.

throwaway4good 3y ago
They don't have to. The US is doing the banning.
dragonelite 3y ago
But then you will shrink your global market share. Semi conducting fabrication on a sub 7nm can only work if you have big market share to keep the factories running 24/7..

ChadNauseam 3y ago

> Obviously they cannot all be right. They could all be right that their market share will be higher if they adopt this policy than if they don’t.

close04 3y ago
The market share is the percentage of the market, up to 100%. The market might grow due to the different measures adopted but percentage wise it will always be limited to the whole being 100%, split between however many players. Everyone's share increasing means the market going above 100%. What OP means is that it's a mathematical impossibility for everyone's market share to increase. It's a zero sum game, for any player's market share to increase, someone else's must decrease.
- danaris 3y ago
  I think that what the GP is saying is that they could each be correct, individually, but not all collectively.
  - close04 3y ago
    > they could each be correct, individually In that case "They could all be right that their market share might be higher". Because they never operate individually, in isolation. Two people can predict opposite outcomes that could be correct for a coin flip but only one is correct. More on the point, I think they all invest in the same strategy not because they know they'll win but because they know without it they'll lose. Even so it's guaranteed that some of them will lose.
  - RGamma 3y ago
    The collective case is called https://en.wikipedia.org/wiki/Paradox_of_competition https://en.wikipedia.org/wiki/Paradox_of_competition btw.

onion2k 3y ago

Obviously they cannot all be right. As a percentage of the market, that's true, but if the subsidies grow the whole market then every block's dollar value of market share can all go up. Every startup learns this lesson quite early on. It's a heck of a lot easier to grow a market by 5% than it is to take 5% of the market from a competitor, mostly because competitors do things to try to stop you.

jdietrich 3y ago
Sure, but the semiconductor market is mature bordering on stagnant. There's a high-risk/high-reward competition for the leading edge that is currently dominated by TSMC, but there's just not much money to be made from the older nodes that the automotive, aviation and military segments care about. Building out capacity to secure your supply chains is potentially a very sensible strategic decision, but I'll eat my hat if it ever turns a real profit.
- baybal2 3y ago
  [dead]
- mejutoco 3y ago
  After, if we assume from Apple sales, everybody got a mobile phone, AI could be what makes it non-stagnant again. Just companies ordering GPUs and servers, plus more and more similar features being shipped to consumer hardware could make a difference. I do not have any data though, just thinking out loud.
  - FrustratedMonky 3y ago
    Yes. Think this is it. Even if some sectors appear stagnant now, everyone is expecting some huge growth spurt with AI. Lots of new data centers, GPUs, etc... and of course, for national defense, to have homegrown supply chains.
  - junipertea 3y ago
    I would assume all those companies want cutting edge (higher performance at lower energy cost), not chips that are 5-10 years behind. Those can barely run current android.

croes 3y ago

But without subsidies they could lose market share

davedx 3y ago

Saying something is a "given", without providing any evidence, is a pretty silly argument

dataking 3y ago

> The only that I think is given that will expand its global market share is China. That doesn't make sense given that all the other big blocks are cooperating across borders while China is subject to stiff export controls in an area with real technological chokepoints.

maxglute 3y ago
PRC is entrant, west is incumbant with majority of global shares to lose. PRC building up mature nodes, which is still plurarity of chips, which they can soon with indigenous supply chains. As since they are huge export source, and intermediate good source, they get to inject their own chips into everything on global markets. Of which they now trade more with global south than they do western bloc. West can consolidate within bloc, but they'll start to lose large segements of global share, which is where future growth will be. Loss of global revenue, will in turn impact west ability to R&D without large subsidies, which drives down commercial viability. There was study analysing result of PRC domestic overcapacity turn into exports in various sectors like solar, display etc, and their effects on incumbant leaders (predominantly western firms) operating profits, and the effect was like 50-100% loss. The TLDR is west already has dominant global share, any share PRC gains on global market is share lost by west, and west is going to lose big if they retreat/consolidate around only monopolizing western shares .

throwaway2037 3y ago

Why did you exclude Japan?

throwaway4good 3y ago
It would be fair to include Japan on the list of major semiconductor producers.

coryfklein 3y ago

Yes, but most of them could be right. Given that Taiwan has cornered the market for so long, now that other countries are at least trying you could see a shift like this hypothetical market share change: Taiwan 80% -> 50% EU 1% -> 10% US 1% -> 10% South Korea 9% -> 15% China 9% -> 15% And if 4/5 of them ended up "being right" would indicate that subsidy policies are effective, right?