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What use are chip factories in the United States when you cannot sell them to the largest market of chips that only will become even more larger as Chinese midd

What use are chip factories in the United States when you cannot sell them to the largest market of chips that only will become even more larger as Chinese middle class and their consumption grows?

algem 3y ago
The point is to have a domestic supply chain independent of other nations. It’s becoming vital for security purposes.
- pi-e-sigma 3y ago
  By this way of thinking everything is vital for "security purposes" and you end up with a full autarchy. Food is vital because you can't rely on others to feed your population. And so is energy. And so on. What is really going on though is that the US started a trade war with China and it's just another salvo in this war. Soon the US will declare electric cars from China as a "threat" and ban them, too. Probably the Chinese will retaliate with banning Teslas. On the same grounds, too.
  - zeroCalories 3y ago
    ? Yes, food and energy are vital to national security, that's why we have stuff like farming subsides. But that's not the only thing that goes into an economy. No one cares that China dominated in polyester production. It makes total sense to guard certain key industries.
  - arandomusername 3y ago
    Are you suggesting a country should be reliant on other countries for food?
  - qvrjuec 3y ago
    ...What? There is a spectrum of importance to national security, food and energy are very much on the side of more important, so not sure why you chose those as an example. It's extremely reductive to say any country that imposes limits on trade for its own strategic benefit is an autocracy.
    - vundercind 3y ago
      Autarky, not autocracy. It’s an economic goal of having an economy that can continue to operate fairly well even if foreign trade is restricted. It’s associated (perhaps not exclusively) with fascist movements, which emphasized national independence from the broader world. (I don’t agree that hedging against potential action by a single major strategic adversary is a strong move toward autarky, however—if, say, Canada had tons of fabs instead of the precariously-perched Taiwan, I bet we’d not be spending so much money on them)
      - lupusreal 3y ago
        Not having your country days away from starving if international shipping were disrupted isn't fascism, it's just common sense. Every country that can practically manage to have sufficient domestic food production will do so.
        vundercind 3y ago
        Yeah, of course. I was just correcting the autocracy/autarky mix-up.
    - hackerlight 3y ago
      Japan and Germany both ran out of energy in WW2. Energy sovereignty is a good reason Europe needs to be getting off fossil fuels ASAP.
  - philipov 3y ago
    Banning Teslas sounds like a good idea. Maybe the US should consider leading on that one.
  - Kim_Bruning 3y ago
    You have some points re trade war, that is definitely a thing that is going on. However, the on-shoring of chip production is especially for military strategic purposes. Right now a majority of chip fabs are all in Taiwan, and within striking range of a country that likes to rattle its sabers. Losing Taiwan's fabs would be a problem wrt military supply.
  - bobthepanda 3y ago
    Onshoring is mostly happening because the disruption due to factory/port COVID lockdowns in China, and then all the issues with ports and canals domestically, made it quite clear that the long distance transpacific supply chain cannot be the only option. At least with Mexico and Canada there are dozens of land crossings that can be diverted to. And if you cannot sell for six months due to supply issues but your competitor can you may as well be a sitting duck.
    - toasterlovin 3y ago
      IMO onshoring is mostly happening at this point because of tariffs. The supply chain crisis is over and has been for a while at this point, but everything coming from China is still 25% more expensive than it used to be.
      - bobthepanda 3y ago
        over =/= could never happen again. and it doesn't even have to be the exact same scenario. right now the panama is at lower capacity due to droughts and the red sea leading to the suez is a conflict zone.
        toasterlovin 3y ago
        Yeah, but the problem is that your competitors dictate what you have to do. If they keep their supply chain in Asia because it gives them a significant price advantage, then you're overpriced. For on-shoring to work, you need to be able to survive such a structural disadvantage in the short-term AND the advantage you realize when outlier events happen has to outweigh the structural disadvantage.
- hackerlight 3y ago
  Or at least within your sphere of influence, e.g Mexico.
huytersd 3y ago
The other 7 billion people in the world
echelon 3y ago
The theory is that the Chinese middle class has already peaked given the population decline, economic woes, and shrinking growth of exports to the West. As but one signal, the recent dumping of Chinese EVs has less to do with industrial superiority and more to do with their own shrinking domestic demand. The Chinese market is saturated and consumer demand has slowed. India's growth is predicted to top China's before 2030, and manufacturing is moving on to cheaper cost of labor economies. Mexico, India, Vietnam. Africa won't be far behind. There are plenty of other markets for American tech.
- zeroCalories 3y ago
  China is in a weird place that is hard to predict. They have some troubling economic and demographic problems as you said, but also have built up strong tech and manufacturing capabilities. We could easily see China continue to grow in power, even if the middle class continues to be poor.
  - hylaride 3y ago
    China also has large swaths of it's population still in a lower income bracket, especially the further you get from the coasts (though the demographics there are not much better). It's going to be very interesting to see what happens over the next few decades (and by interesting I hope in not a terrible way). One of the theories of China's recent, intense sabre rattling is that demographically they'll be in no position to militarily take Taiwan in 20 years. So it's now/soon or never.
    - riffic 3y ago
      *its population
    - The_Colonel 3y ago
      China will be able to easily field ten million soldiers in 20 years. Their military keeps strenghtening. Their demography woes will cause economic and social problems first, not military ones. I believe this supposed rush to take Taiwan is more about Xi's personal ambitions rather than strategic pressure.
Kim_Bruning 3y ago
Making money is not the primary object. Currently chips for civilian and military applications often come out of Taiwan. The strategic and political situation of Taiwan is -fluid. Losing these fabs would be a heavy blow to the west both economically and more importantly qua military defense. Thus extra fabs in other (western) countries are pro-indicated for this reason alone. It's insurance.
- The_Colonel 3y ago
  Losing Taiwan fabs would have only minimal military impact. Military hardware uses older computing tech, built on larger nodes (its development takes many years / decades). It's also relatively low volume and military can outbid almost any other customer. I believe the importance of Taiwanese fabs is very overstated. Taiwan is mainly a (geo) political matter.
throwv666 3y ago
thats how chinese monster has been created
ravenstine 3y ago
What's the point of making anything if you can't sell it in China???

What use are chip factories in the United States when you cannot sell them to the largest market of chips that only will become even more larger as Chinese middle class and their consumption grows?

algem 3y ago

The point is to have a domestic supply chain independent of other nations. It’s becoming vital for security purposes.

pi-e-sigma 3y ago
By this way of thinking everything is vital for "security purposes" and you end up with a full autarchy. Food is vital because you can't rely on others to feed your population. And so is energy. And so on. What is really going on though is that the US started a trade war with China and it's just another salvo in this war. Soon the US will declare electric cars from China as a "threat" and ban them, too. Probably the Chinese will retaliate with banning Teslas. On the same grounds, too.
- zeroCalories 3y ago
  ? Yes, food and energy are vital to national security, that's why we have stuff like farming subsides. But that's not the only thing that goes into an economy. No one cares that China dominated in polyester production. It makes total sense to guard certain key industries.
- arandomusername 3y ago
  Are you suggesting a country should be reliant on other countries for food?
- qvrjuec 3y ago
  ...What? There is a spectrum of importance to national security, food and energy are very much on the side of more important, so not sure why you chose those as an example. It's extremely reductive to say any country that imposes limits on trade for its own strategic benefit is an autocracy.
  - vundercind 3y ago
    Autarky, not autocracy. It’s an economic goal of having an economy that can continue to operate fairly well even if foreign trade is restricted. It’s associated (perhaps not exclusively) with fascist movements, which emphasized national independence from the broader world. (I don’t agree that hedging against potential action by a single major strategic adversary is a strong move toward autarky, however—if, say, Canada had tons of fabs instead of the precariously-perched Taiwan, I bet we’d not be spending so much money on them)
    - lupusreal 3y ago
      Not having your country days away from starving if international shipping were disrupted isn't fascism, it's just common sense. Every country that can practically manage to have sufficient domestic food production will do so.
      - vundercind 3y ago
        Yeah, of course. I was just correcting the autocracy/autarky mix-up.
  - hackerlight 3y ago
    Japan and Germany both ran out of energy in WW2. Energy sovereignty is a good reason Europe needs to be getting off fossil fuels ASAP.
- philipov 3y ago
  Banning Teslas sounds like a good idea. Maybe the US should consider leading on that one.
- Kim_Bruning 3y ago
  You have some points re trade war, that is definitely a thing that is going on. However, the on-shoring of chip production is especially for military strategic purposes. Right now a majority of chip fabs are all in Taiwan, and within striking range of a country that likes to rattle its sabers. Losing Taiwan's fabs would be a problem wrt military supply.
- bobthepanda 3y ago
  Onshoring is mostly happening because the disruption due to factory/port COVID lockdowns in China, and then all the issues with ports and canals domestically, made it quite clear that the long distance transpacific supply chain cannot be the only option. At least with Mexico and Canada there are dozens of land crossings that can be diverted to. And if you cannot sell for six months due to supply issues but your competitor can you may as well be a sitting duck.
  - toasterlovin 3y ago
    IMO onshoring is mostly happening at this point because of tariffs. The supply chain crisis is over and has been for a while at this point, but everything coming from China is still 25% more expensive than it used to be.
    - bobthepanda 3y ago
      over =/= could never happen again. and it doesn't even have to be the exact same scenario. right now the panama is at lower capacity due to droughts and the red sea leading to the suez is a conflict zone.
      - toasterlovin 3y ago
        Yeah, but the problem is that your competitors dictate what you have to do. If they keep their supply chain in Asia because it gives them a significant price advantage, then you're overpriced. For on-shoring to work, you need to be able to survive such a structural disadvantage in the short-term AND the advantage you realize when outlier events happen has to outweigh the structural disadvantage.
hackerlight 3y ago
Or at least within your sphere of influence, e.g Mexico.

huytersd 3y ago

The other 7 billion people in the world

echelon 3y ago

The theory is that the Chinese middle class has already peaked given the population decline, economic woes, and shrinking growth of exports to the West. As but one signal, the recent dumping of Chinese EVs has less to do with industrial superiority and more to do with their own shrinking domestic demand. The Chinese market is saturated and consumer demand has slowed. India's growth is predicted to top China's before 2030, and manufacturing is moving on to cheaper cost of labor economies. Mexico, India, Vietnam. Africa won't be far behind. There are plenty of other markets for American tech.

zeroCalories 3y ago
China is in a weird place that is hard to predict. They have some troubling economic and demographic problems as you said, but also have built up strong tech and manufacturing capabilities. We could easily see China continue to grow in power, even if the middle class continues to be poor.
- hylaride 3y ago
  China also has large swaths of it's population still in a lower income bracket, especially the further you get from the coasts (though the demographics there are not much better). It's going to be very interesting to see what happens over the next few decades (and by interesting I hope in not a terrible way). One of the theories of China's recent, intense sabre rattling is that demographically they'll be in no position to militarily take Taiwan in 20 years. So it's now/soon or never.
  - riffic 3y ago
    *its population
  - The_Colonel 3y ago
    China will be able to easily field ten million soldiers in 20 years. Their military keeps strenghtening. Their demography woes will cause economic and social problems first, not military ones. I believe this supposed rush to take Taiwan is more about Xi's personal ambitions rather than strategic pressure.

Kim_Bruning 3y ago

Making money is not the primary object. Currently chips for civilian and military applications often come out of Taiwan. The strategic and political situation of Taiwan is -fluid. Losing these fabs would be a heavy blow to the west both economically and more importantly qua military defense. Thus extra fabs in other (western) countries are pro-indicated for this reason alone. It's insurance.

The_Colonel 3y ago
Losing Taiwan fabs would have only minimal military impact. Military hardware uses older computing tech, built on larger nodes (its development takes many years / decades). It's also relatively low volume and military can outbid almost any other customer. I believe the importance of Taiwanese fabs is very overstated. Taiwan is mainly a (geo) political matter.

throwv666 3y ago

thats how chinese monster has been created

ravenstine 3y ago

What's the point of making anything if you can't sell it in China???