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Huawei is in state of existential crisis. If they (China) don't have a breakthrough in chip manufacturing in 2-5 years, Huawei as the company will be finished a

Huawei is in state of existential crisis. If they (China) don't have a breakthrough in chip manufacturing in 2-5 years, Huawei as the company will be finished and along with China's plan to be independent of Western world. So, think of this as their Manhattan project, not sexy or romantic, but necessary.

vidarh 3y ago
China rarely if ever bets on one horse. This is one of the reasons the west struggles to understand why China isn't collapsing. It's not Soviet style command economy with a single organisational structure in control over one sector. China even has multiple competing state-owned investment banks, and in most fields they have competing both state owned and private companies (note: I'm not assuming there aren't cases where this competition is heavily rigged or biased; the point is not to imply it is a free market, but that it is not the Soviet model). With respect to Huawei, if Huawei goes, Huawei goes, and little else changes other than that the government might need to prop up some of their supply chain. China might find itself struggling to gain full independence on the top end, but they have a range of separately operating foundry companies (SMIC, YMTC, Wingtech, Hua Hong), chip production equipment Manufacturers (Maura, JCET), and a multitude of chip design companies. China can afford a number of these - and Huawei - to fail and still have other bets. I agree with you that the overall "project" is their Manhattan project in a sense, but that does not mean all, or even many, of the companies need to survive - they'll let individual ones fail if they don't feel like they're pulling their weight, and instead fund new/other options. In other words: This might be "necessary" for Huawei, because Huawei wants to survive. But it's not necessary for China for Huawei to survive. Ironically that might be part of the reason for the pressure - they know there's no guarantee they'd be bailed out.

vidarh 3y ago

China rarely if ever bets on one horse. This is one of the reasons the west struggles to understand why China isn't collapsing. It's not Soviet style command economy with a single organisational structure in control over one sector. China even has multiple competing state-owned investment banks, and in most fields they have competing both state owned and private companies (note: I'm not assuming there aren't cases where this competition is heavily rigged or biased; the point is not to imply it is a free market, but that it is not the Soviet model). With respect to Huawei, if Huawei goes, Huawei goes, and little else changes other than that the government might need to prop up some of their supply chain. China might find itself struggling to gain full independence on the top end, but they have a range of separately operating foundry companies (SMIC, YMTC, Wingtech, Hua Hong), chip production equipment Manufacturers (Maura, JCET), and a multitude of chip design companies. China can afford a number of these - and Huawei - to fail and still have other bets. I agree with you that the overall "project" is their Manhattan project in a sense, but that does not mean all, or even many, of the companies need to survive - they'll let individual ones fail if they don't feel like they're pulling their weight, and instead fund new/other options. In other words: This might be "necessary" for Huawei, because Huawei wants to survive. But it's not necessary for China for Huawei to survive. Ironically that might be part of the reason for the pressure - they know there's no guarantee they'd be bailed out.