5 ms·

I’m really curious if they can turn the investments into competitive process nodes. My understanding is that semiconductor technology has a very wide moat.

hunglee2 3y ago
the moat is wide if the market was free. However, when it becomes a matter of national security, the economic viability becomes a far lower priority. China is obviously going to get there, just a matter of time.
- djtango 3y ago
  Yes - as they say once the possible is known it is always easier to replicate
  - hunglee2 3y ago
    Indeed. Second mover advantage should be well known by now
- The_Colonel 3y ago
  Sure. But sanctions are fundamentally a tool to incur costs. China doesn't have an unlimited budget. If chips becomes a priority, something else will lose some funding, be it military or e. g. other industry subsidies.
  - hunglee2 3y ago
    Sure. Opportunity cost is there, I am sure China would much prefer to freely buy Western equipment. However, in case of escalating export controls, it clearly makes sense to further invest in domestic capacity. The 'opportunity gain' is more jobs for Chinese workers, more inward investment that would otherwise have gone into foreign countries.
    - mrjin 3y ago
      There were intense arguments regarding whether to buy or to research in China. The "buying is better" party won and hence China lost ~30 years on chips R&D. But the embargo snapped right on the faces of the "buying is better" guys and leaving China no choice but to bite the bullet. So what those Chinese pioneers wanted but failed to achieve has now firmly implemented by the embargo...
      - hunglee2 3y ago
        US policy reflexive and unreflective when it comes to China. Export controls on simply redirect investment inward to domestic R&D and subsequent production capacity. Effectively, this is defunding US and US-controlled companies, who otherwise would have hoovered up Chinese money, fed into its own R&D and maintained the lead on Chinese companies. The policy doesn't even succeed on its own terms. But no iteration, no reflection
        The_Colonel 3y ago
        It's again the same opportunity cost, though. China has to invest a lot of money just get access at scale to the same class of chips as the rest of the world. That money could be used for actual innovation instead. > The policy doesn't even succeed on its own terms. The policy doesn't succeed only if you limit your thinking on the chip industry and ignore the overall strategic context. Reducing China's access to latest & greatest is only the proximate reason for the export controls, with the overall strategic competition being the ultimate reason. It's simply a mean to an end. As you said in your previous post, China would likely prefer to continue buying western chips, because being forced to develop their own will not improve their strategic posture, at least in the next years/decades.
        mrjin 3y ago
        Indeed, China preferred buying from external sources as merchants won the debate on whether to buy or to research and it's indeed cheaper in short term. Dependency on critical parts from external could be the only viable solution for smaller countries, but for countries like China is a intolerable risk to national security and has to be addressed at highest priority. The embargo just demonstrated how bad it could be, and it actually can be much worse in different contexts. So, obviously R&D is the only option left on the table. Cost is no longer a problem.
- mrjin 3y ago
  China does not have a choice, does it? The funny thing is that, whatever the west tried to prevent China from acquiring, in the end China managed to crack it and eventually made a better version.
throwaway4good 3y ago
I think it is already competitive. They are selling millions of the Huawei Mate 60 pro.
- deleted 3y ago
  [deleted]
maxglute 3y ago
Feels like somehwere between not paying 4000% nvidia premium, and spamming gigawatts of cheap renewables to power data centres might be a competitive business plan if they get 12nm tools out in time. Strategic bonus of not sending 100s of billions to trillions to US for IP fees.

hunglee2 3y ago

the moat is wide if the market was free. However, when it becomes a matter of national security, the economic viability becomes a far lower priority. China is obviously going to get there, just a matter of time.

djtango 3y ago
Yes - as they say once the possible is known it is always easier to replicate
- hunglee2 3y ago
  Indeed. Second mover advantage should be well known by now
The_Colonel 3y ago
Sure. But sanctions are fundamentally a tool to incur costs. China doesn't have an unlimited budget. If chips becomes a priority, something else will lose some funding, be it military or e. g. other industry subsidies.
- hunglee2 3y ago
  Sure. Opportunity cost is there, I am sure China would much prefer to freely buy Western equipment. However, in case of escalating export controls, it clearly makes sense to further invest in domestic capacity. The 'opportunity gain' is more jobs for Chinese workers, more inward investment that would otherwise have gone into foreign countries.
  - mrjin 3y ago
    There were intense arguments regarding whether to buy or to research in China. The "buying is better" party won and hence China lost ~30 years on chips R&D. But the embargo snapped right on the faces of the "buying is better" guys and leaving China no choice but to bite the bullet. So what those Chinese pioneers wanted but failed to achieve has now firmly implemented by the embargo...
    - hunglee2 3y ago
      US policy reflexive and unreflective when it comes to China. Export controls on simply redirect investment inward to domestic R&D and subsequent production capacity. Effectively, this is defunding US and US-controlled companies, who otherwise would have hoovered up Chinese money, fed into its own R&D and maintained the lead on Chinese companies. The policy doesn't even succeed on its own terms. But no iteration, no reflection
      - The_Colonel 3y ago
        It's again the same opportunity cost, though. China has to invest a lot of money just get access at scale to the same class of chips as the rest of the world. That money could be used for actual innovation instead. > The policy doesn't even succeed on its own terms. The policy doesn't succeed only if you limit your thinking on the chip industry and ignore the overall strategic context. Reducing China's access to latest & greatest is only the proximate reason for the export controls, with the overall strategic competition being the ultimate reason. It's simply a mean to an end. As you said in your previous post, China would likely prefer to continue buying western chips, because being forced to develop their own will not improve their strategic posture, at least in the next years/decades.
        mrjin 3y ago
        Indeed, China preferred buying from external sources as merchants won the debate on whether to buy or to research and it's indeed cheaper in short term. Dependency on critical parts from external could be the only viable solution for smaller countries, but for countries like China is a intolerable risk to national security and has to be addressed at highest priority. The embargo just demonstrated how bad it could be, and it actually can be much worse in different contexts. So, obviously R&D is the only option left on the table. Cost is no longer a problem.
mrjin 3y ago
China does not have a choice, does it? The funny thing is that, whatever the west tried to prevent China from acquiring, in the end China managed to crack it and eventually made a better version.

throwaway4good 3y ago

I think it is already competitive. They are selling millions of the Huawei Mate 60 pro.

deleted 3y ago
[deleted]

maxglute 3y ago

Feels like somehwere between not paying 4000% nvidia premium, and spamming gigawatts of cheap renewables to power data centres might be a competitive business plan if they get 12nm tools out in time. Strategic bonus of not sending 100s of billions to trillions to US for IP fees.