5 ms·

Semiconductors and Modern Industrial Policy

61 points by hunglee2 2y ago

chvid 2y ago
It is part industrial policy and it is part economic war. The US hurts Chinese companies, whether it be Huawei or some crane manufacturer, with their export controls and national security "concerns". At the end of this, decades from now. Will it have been worth it? Will the US have created a bigger economic loss in China than the value of their own lost business (whether directly or indirectly by the local alternatives these policies foster)? So far, the US has done massive damage, that is for sure, but ultimately, I am not sure how the tally will be.
- quonn 2y ago
  What you like to call an economic "war" is simply policy. Whether the policy is "There should be no barriers when trading with China" or it is "There should be many barriers when trading with China" - either way, decades from now. Will it have been worth it?
  - bilbo0s 2y ago
    This. People are calling this war and it isn’t. It’s competition in markets and strategy to facilitate gaining marketshare in different markets. And lo and behold, everyone wants to protect their own access to their own market. Not everything is a war. I can tell you right now, with the new administration will come new policies that will have a segment of people in the EU and UK saying “economic war”. But it’s no more war than immigration quotas are “war”. Let’s reserve that word for REAL war.
    - chvid 2y ago
      I am surely not the only one calling it a "war". I mean there is very popular and influential book out there called "Chip War" for starters ...
      - chvid 2y ago
        Keeping in the war theme; you see "war rhetorics" from US policy makers - in particular on the republican side (for extreme examples see Tom Cotton or Peter Navarro) but also in key figures from the Biden admin - for example Jake Sullivan: https://www.wired.com/story/jake-sullivan-china-tech-profile/ https://www.wired.com/story/jake-sullivan-china-tech-profile... The American Who Waged a Tech War on China China is racing to unseat the United States as the world’s technological superpower. Not if Jake Sullivan can help it.
- wumeow 2y ago
  Putting scare quotes around "concerns" is hilarious given all our major telecoms were recently pwned so hard by Chinese hackers that they still have access months after they were detected.
singlewind 2y ago
This is economic war. China now is taking over the car economy from Japan, Europe and USA. And I believe they have ambitious on semiconductor as well. The world has demand on high end chips also require cheap chips which does the job.
- bilbo0s 2y ago
  Don’t mean to sound like a broken record, but again, not everything is a war. With the new US administration, for example, will come new policies that will have a segment of people in the EU and UK saying “economic war”. But it’s no more war than immigration quotas are “war”. Again, we should reserve that word for REAL war.
- undersuit 2y ago
  If it's war why are we hobbling ourselves? We know exactly how China is winning. You don't see SMIC begging the PRC for more money from their equivalent of the Chips Act.
  - sudosysgen 2y ago
    SMIC is partly state owned, so funding them doesn't have the same issues with misaligned incentives as shoveling money into private corporations who may just pocket it through a loophole (remember the Broadband Act?). This makes the funding issue much easier, but it introduces other issues and requires very significant technical expertise from the state which can take a long time to build.
    - alephnerd 2y ago
      > so funding them doesn't have the same issues with misaligned incentives Not exactly. China is federal, and funding comes from both local government and central government. This can lead to local governments burning money on less successful ventures because of the close nexus between leadership and local politicians. China still has a severe problem with Access Corruption for this reason. Also, at the Central Government level, ministries and SOEs will have their own funds and competing interests which leads to the occasional backstabbing The collapse of Tsinghua Unigroup and much of the investments from Big Fund 1 are a good example. Big Fund 2 is only just closed recently, so it will take a couple years to judge the results of that batch. After the 2015-16 market crash, China basically migrated towards a State Capitalism model with SOEs and Governments (local and central) acting as fund managers. This has pros in the sense that you can act quickly on political directives, but this has massive cons in that your incentives are aligned with keeping your direct managers who are political/party appointees happy. Political Incentives (local or federal) might not always align with what's best for a product or company. EVs are a notable example of that, with private BYD and Tesla out-competing every other state funded EV and car manufacturer in China.
glitchc 2y ago
Barring niche areas, US companies generally treat ICs as a commodity across vast swaths of commercial/industrial activities. In a sense, it's not very different from apparel, which is almost entirely outsourced. We would be in the same boat with automobile manufacturing were it not for unions. This is not going to change overnight. The costs of outsourcing would have to become prohibitively higher for domestic production to return in any appreciable amount. Until then, we should expect the torch to be carried by private industry (ex. Apple) who have other incentives to safeguard their IC production and supply chain.
- amtc80 2y ago
  Eh, Apple is like the company that moved their supply chain overseas. And essentially made industries, and Tim Cook CEO, because of it.
  - lotsofpulp 2y ago
    Apple is one of many companies that chose to source their components overseas. If they didn't, no one would be buying their products because they would be priced so much higher than competitors.
mikewarot 2y ago
Even if by magic we had all of the worlds fabs moved exclusively to the US and working at 100% capacity... we'd still need the rest of the infrastructure to actually make them useful, plastics and ceramics for packaging, discrete components, solder, connectors, pcb boards, assembly, etc... the Fab lines are only a tiny part of the big picture. Who in the US makes surface mount resistors, capacitors, inductors, etc. in volume sufficient to meet all of our demand? (I'd love to be proved wrong here)
- minetest2048 2y ago
  > Who in the US makes surface mount resistors, capacitors, inductors Adding to this point, don't underestimate passive components! For some applications, such as RF, you can't just change inductors with another inductor that have the same inductance value. Because they will have different parasitic capacitance and resistance, which will affect RF performance. Passive components are surprisingly involved, they even have their own news site: https://passive-components.eu/ https://passive-components.eu/ EDIT: Its not just RF, capacitor selection matters for power converters too. Do you know that multilayer ceramic capacitors (MLCC) can lose 70% of their rated capacitance at high DC bias voltage? This is what happened if someone doesn't realize that: https://www.reddit.com/r/embedded/comments/1cs2c5l/todays_reminder_that_mlccs_lose_capacitance_with/ https://www.reddit.com/r/embedded/comments/1cs2c5l/todays_re... If I specced an inductor or MLCCs, I can't just change it. This means if any country wants to have electronics supply chain in house, they need to bring all of the passive components back, or they can't manufacture things. Electronics is not just 5nm chips, those chips that always in the news need support components
  - sevensor 2y ago
    Adding to your addition, let’s not forget the “raw” materials, which are a constant headache to keep supplied and qualified. Consider a not entirely hypothetical example where your regular supplier of sulfuric acid is late. Your iso tank runs out and you have to tap a drum. The drum is from a qualified source, but it’s been sitting around for a while. The drum may have started degrading; is the sulfuric still pure enough to use? If it’s not, you have to idle your billion dollar fab until you can source another iso. Anyway, multiply this headache by nitric acid, hydrofluoric, bare wafers, several kinds of photoresist, arsine, phosphene, diborane, silane, cmp slurry, and dozens of other ingredients, plus oem spares for ten thousand different consumables for your equipment. Supply chain for semiconductors is no joke.

61 points by hunglee2 2y ago

It is part industrial policy and it is part economic war. The US hurts Chinese companies, whether it be Huawei or some crane manufacturer, with their export controls and national security "concerns". At the end of this, decades from now. Will it have been worth it? Will the US have created a bigger economic loss in China than the value of their own lost business (whether directly or indirectly by the local alternatives these policies foster)? So far, the US has done massive damage, that is for sure, but ultimately, I am not sure how the tally will be.

quonn 2y ago
What you like to call an economic "war" is simply policy. Whether the policy is "There should be no barriers when trading with China" or it is "There should be many barriers when trading with China" - either way, decades from now. Will it have been worth it?
- bilbo0s 2y ago
  This. People are calling this war and it isn’t. It’s competition in markets and strategy to facilitate gaining marketshare in different markets. And lo and behold, everyone wants to protect their own access to their own market. Not everything is a war. I can tell you right now, with the new administration will come new policies that will have a segment of people in the EU and UK saying “economic war”. But it’s no more war than immigration quotas are “war”. Let’s reserve that word for REAL war.
  - chvid 2y ago
    I am surely not the only one calling it a "war". I mean there is very popular and influential book out there called "Chip War" for starters ...
    - chvid 2y ago
      Keeping in the war theme; you see "war rhetorics" from US policy makers - in particular on the republican side (for extreme examples see Tom Cotton or Peter Navarro) but also in key figures from the Biden admin - for example Jake Sullivan: https://www.wired.com/story/jake-sullivan-china-tech-profile/ https://www.wired.com/story/jake-sullivan-china-tech-profile... The American Who Waged a Tech War on China China is racing to unseat the United States as the world’s technological superpower. Not if Jake Sullivan can help it.
wumeow 2y ago
Putting scare quotes around "concerns" is hilarious given all our major telecoms were recently pwned so hard by Chinese hackers that they still have access months after they were detected.

singlewind 2y ago

This is economic war. China now is taking over the car economy from Japan, Europe and USA. And I believe they have ambitious on semiconductor as well. The world has demand on high end chips also require cheap chips which does the job.

bilbo0s 2y ago
Don’t mean to sound like a broken record, but again, not everything is a war. With the new US administration, for example, will come new policies that will have a segment of people in the EU and UK saying “economic war”. But it’s no more war than immigration quotas are “war”. Again, we should reserve that word for REAL war.
undersuit 2y ago
If it's war why are we hobbling ourselves? We know exactly how China is winning. You don't see SMIC begging the PRC for more money from their equivalent of the Chips Act.
- sudosysgen 2y ago
  SMIC is partly state owned, so funding them doesn't have the same issues with misaligned incentives as shoveling money into private corporations who may just pocket it through a loophole (remember the Broadband Act?). This makes the funding issue much easier, but it introduces other issues and requires very significant technical expertise from the state which can take a long time to build.
  - alephnerd 2y ago
    > so funding them doesn't have the same issues with misaligned incentives Not exactly. China is federal, and funding comes from both local government and central government. This can lead to local governments burning money on less successful ventures because of the close nexus between leadership and local politicians. China still has a severe problem with Access Corruption for this reason. Also, at the Central Government level, ministries and SOEs will have their own funds and competing interests which leads to the occasional backstabbing The collapse of Tsinghua Unigroup and much of the investments from Big Fund 1 are a good example. Big Fund 2 is only just closed recently, so it will take a couple years to judge the results of that batch. After the 2015-16 market crash, China basically migrated towards a State Capitalism model with SOEs and Governments (local and central) acting as fund managers. This has pros in the sense that you can act quickly on political directives, but this has massive cons in that your incentives are aligned with keeping your direct managers who are political/party appointees happy. Political Incentives (local or federal) might not always align with what's best for a product or company. EVs are a notable example of that, with private BYD and Tesla out-competing every other state funded EV and car manufacturer in China.

glitchc 2y ago

Barring niche areas, US companies generally treat ICs as a commodity across vast swaths of commercial/industrial activities. In a sense, it's not very different from apparel, which is almost entirely outsourced. We would be in the same boat with automobile manufacturing were it not for unions. This is not going to change overnight. The costs of outsourcing would have to become prohibitively higher for domestic production to return in any appreciable amount. Until then, we should expect the torch to be carried by private industry (ex. Apple) who have other incentives to safeguard their IC production and supply chain.

amtc80 2y ago
Eh, Apple is like the company that moved their supply chain overseas. And essentially made industries, and Tim Cook CEO, because of it.
- lotsofpulp 2y ago
  Apple is one of many companies that chose to source their components overseas. If they didn't, no one would be buying their products because they would be priced so much higher than competitors.

mikewarot 2y ago

Even if by magic we had all of the worlds fabs moved exclusively to the US and working at 100% capacity... we'd still need the rest of the infrastructure to actually make them useful, plastics and ceramics for packaging, discrete components, solder, connectors, pcb boards, assembly, etc... the Fab lines are only a tiny part of the big picture. Who in the US makes surface mount resistors, capacitors, inductors, etc. in volume sufficient to meet all of our demand? (I'd love to be proved wrong here)

minetest2048 2y ago
> Who in the US makes surface mount resistors, capacitors, inductors Adding to this point, don't underestimate passive components! For some applications, such as RF, you can't just change inductors with another inductor that have the same inductance value. Because they will have different parasitic capacitance and resistance, which will affect RF performance. Passive components are surprisingly involved, they even have their own news site: https://passive-components.eu/ https://passive-components.eu/ EDIT: Its not just RF, capacitor selection matters for power converters too. Do you know that multilayer ceramic capacitors (MLCC) can lose 70% of their rated capacitance at high DC bias voltage? This is what happened if someone doesn't realize that: https://www.reddit.com/r/embedded/comments/1cs2c5l/todays_reminder_that_mlccs_lose_capacitance_with/ https://www.reddit.com/r/embedded/comments/1cs2c5l/todays_re... If I specced an inductor or MLCCs, I can't just change it. This means if any country wants to have electronics supply chain in house, they need to bring all of the passive components back, or they can't manufacture things. Electronics is not just 5nm chips, those chips that always in the news need support components
- sevensor 2y ago
  Adding to your addition, let’s not forget the “raw” materials, which are a constant headache to keep supplied and qualified. Consider a not entirely hypothetical example where your regular supplier of sulfuric acid is late. Your iso tank runs out and you have to tap a drum. The drum is from a qualified source, but it’s been sitting around for a while. The drum may have started degrading; is the sulfuric still pure enough to use? If it’s not, you have to idle your billion dollar fab until you can source another iso. Anyway, multiply this headache by nitric acid, hydrofluoric, bare wafers, several kinds of photoresist, arsine, phosphene, diborane, silane, cmp slurry, and dozens of other ingredients, plus oem spares for ten thousand different consumables for your equipment. Supply chain for semiconductors is no joke.