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The steelman of the argument is that, due to legacy in technology and comparative advantage, unless they expect a serious supply chain tech, many core technolog

The steelman of the argument is that, due to legacy in technology and comparative advantage, unless they expect a serious supply chain tech, many core technologies will be too expensive to duplicate for China and so there will be areas where they will not advance. There is some amount of evidence that was true for lithography, they did not seem to be making much progress until they were forced to, and there didn't seem to be enough capital available in China to catch up. Of course, the extent to which they was true and for how long it would be true is up for debate, but it's not a prima facie foregone conclusion

SanjayMehta 2mo ago
They have the entire resources of their state available for funding. They will catch up and pass the West. Take nuclear weapons: even Pakistan and North Korea were able to catch up.
- defrost 2mo ago
  Poor examples. Pakistan with a lot of Saudi backing, NK with a lot of Chinese backing. That aside, China will master chip making at bleeding edge global scale, just as it did with EVs and rare earth processing, etc.
  - SanjayMehta 2mo ago
    How is it a poor example? State level resources - even from decrepit countries like Pakistan and NK - will ALWAYS beat VC funding or whatever.
    - defrost 2mo ago
      Because internal state level resources in Pakistan and NK didn't get them nuclear weapons, both countries required external assistance. The point being made about China is that China secured a production monopoly on rare earth processing entirely on its own. As it did for EV's and will do for dense chip fabrication.
      - SanjayMehta 2mo ago
        External assistance for sure, from state actors who would never assist a VC funded startup. Your point about China is exactly the same as mine. A state determined to build something will eventually succeed, especially if it's a country as single minded as China.
LIMEVINCE 2mo ago
I'm not an expert at all so I have to wonder which core technologies were/are too expensive to duplicate for China? Afaik semiconductors represent the cutting edge of manufacturing technology; if China is able to duplicate (or even innovate, as demonstrated by "3d Logic folding") in this industry, I can't imagine how any other sectors would be too expensive to duplicate. Who knows how far they progressed in lithography once it became clear that withholding technology would be the official state policy-- I heard the Chinese state got involved in developing EUV in a way comparable to the Manhattan project in scale and secrecy.
- sudosysgen 2mo ago
  The cost is not just pure development. There are very high switching costs, and downstream opportunity costs affecting the entire ecosystem. As an example, Nikon was competitive with ASML in DUV for a while, but no one was willing to switch because the cost/risk was way too high. For lithography, that was essentially the issue - no serious foundry was willing to take the massive risk to move away from ASML - and, worse, to skip EUV. A second reason is that Chinese foundries still had to compete with foreign foundries. The cost of doing lithography with new Chinese DUV machines will be significantly higher than with ASML DUV and then significantly higher than with ASML EUV. So to build an ecosystem that can one day truly compete with ASML, you'd need the entire Chinese semi industry to take significant losses to get to the point where they can compete with ASML and pose a threat in the market. There is still many sectors like this where China has some kind of parity, but at a total cost of ownership so much higher than western competitors than they are not a serious market threat in the near future. In fact, the US, EU, etc... are in similar positions. Unless the Chinese economy becomes much stronger than the US/EU across the board, one would expect it to be case due to comparative advantage - the cost of directing industry to ignore superior alternatives will slow them down in other fields, unless the Chinese economy is just that much more effective. So without sanctions, it's difficult for the Chinese state to force enough cooperation to solve the issue without spending amounts of money that are a significant drag even to China.
coderenegade 2mo ago
What comparative advantage exists for high technology? I get it for things like agriculture and resources, but what intrinsic barriers are there to computer chips and cars? Especially when we're talking about the heart of the global supply chain, where there really is a comparative advantage in that standing up a logistical competitor would take decades of focused investment. Anyone who understands China knows that they want to be the master of their own destiny, and China understands that this means self sufficiency when it comes to technology. This is one of the many lessons they learned from the "century of shame". Anyone who thinks they don't want to eventually dominate all technologies in the name of security hasn't really been paying attention.
- sudosysgen 2mo ago
  There is definitely comparative advantage in certain technologies which depend on a niche supply chain with deep materials science experience, simply due to experience and network economies. China has many such advantages too. Lithography is very hard to dominate because if you want to do so, you have to convince your ecosystems to switch to domestic suppliers. But in the short term, they don't want to as that will hurt their competitiveness. That's why, for many sectors still and for lithography until the bans, there was no domestic program with realistic prospects to ever truly outcompete.
  - coderenegade 2mo ago
    None of that is inherent. You could have said the same thing a decade ago about vehicle production, or microelectronics a decade before that, and yet here we are. The lesson we should learn from Comac is that China is quite happy to use its local market as a testbed until the technology is mature, and in the same way that it's only a matter of time before Comac has an internationally certified airframe and comes after the aerospace incumbents, it's also only a matter of time before they catch up in chip fabrication. This isn't about money for them.
    - sudosysgen 2mo ago
      Sure, none of that is inherent. But do note that China never caught up in internal combustion engines. They had to wait for a fundamental paradigm change to catch up, and were not able to copy ICE technology to a satisfactory level. Similarly, China has been able to make serviceable airframes for decades, it's just until now that they're getting close to price competition - and likely Comac will be more expensive for decades to come. My point is moreso that they can succeed in many domains, but it's mechanically unlikely they'll succeed on some domains unless we force their hand. Semis were one of them.

SanjayMehta 2mo ago

They have the entire resources of their state available for funding. They will catch up and pass the West. Take nuclear weapons: even Pakistan and North Korea were able to catch up.

defrost 2mo ago
Poor examples. Pakistan with a lot of Saudi backing, NK with a lot of Chinese backing. That aside, China will master chip making at bleeding edge global scale, just as it did with EVs and rare earth processing, etc.
- SanjayMehta 2mo ago
  How is it a poor example? State level resources - even from decrepit countries like Pakistan and NK - will ALWAYS beat VC funding or whatever.
  - defrost 2mo ago
    Because internal state level resources in Pakistan and NK didn't get them nuclear weapons, both countries required external assistance. The point being made about China is that China secured a production monopoly on rare earth processing entirely on its own. As it did for EV's and will do for dense chip fabrication.
    - SanjayMehta 2mo ago
      External assistance for sure, from state actors who would never assist a VC funded startup. Your point about China is exactly the same as mine. A state determined to build something will eventually succeed, especially if it's a country as single minded as China.

LIMEVINCE 2mo ago

I'm not an expert at all so I have to wonder which core technologies were/are too expensive to duplicate for China? Afaik semiconductors represent the cutting edge of manufacturing technology; if China is able to duplicate (or even innovate, as demonstrated by "3d Logic folding") in this industry, I can't imagine how any other sectors would be too expensive to duplicate. Who knows how far they progressed in lithography once it became clear that withholding technology would be the official state policy-- I heard the Chinese state got involved in developing EUV in a way comparable to the Manhattan project in scale and secrecy.

sudosysgen 2mo ago
The cost is not just pure development. There are very high switching costs, and downstream opportunity costs affecting the entire ecosystem. As an example, Nikon was competitive with ASML in DUV for a while, but no one was willing to switch because the cost/risk was way too high. For lithography, that was essentially the issue - no serious foundry was willing to take the massive risk to move away from ASML - and, worse, to skip EUV. A second reason is that Chinese foundries still had to compete with foreign foundries. The cost of doing lithography with new Chinese DUV machines will be significantly higher than with ASML DUV and then significantly higher than with ASML EUV. So to build an ecosystem that can one day truly compete with ASML, you'd need the entire Chinese semi industry to take significant losses to get to the point where they can compete with ASML and pose a threat in the market. There is still many sectors like this where China has some kind of parity, but at a total cost of ownership so much higher than western competitors than they are not a serious market threat in the near future. In fact, the US, EU, etc... are in similar positions. Unless the Chinese economy becomes much stronger than the US/EU across the board, one would expect it to be case due to comparative advantage - the cost of directing industry to ignore superior alternatives will slow them down in other fields, unless the Chinese economy is just that much more effective. So without sanctions, it's difficult for the Chinese state to force enough cooperation to solve the issue without spending amounts of money that are a significant drag even to China.

coderenegade 2mo ago

What comparative advantage exists for high technology? I get it for things like agriculture and resources, but what intrinsic barriers are there to computer chips and cars? Especially when we're talking about the heart of the global supply chain, where there really is a comparative advantage in that standing up a logistical competitor would take decades of focused investment. Anyone who understands China knows that they want to be the master of their own destiny, and China understands that this means self sufficiency when it comes to technology. This is one of the many lessons they learned from the "century of shame". Anyone who thinks they don't want to eventually dominate all technologies in the name of security hasn't really been paying attention.

sudosysgen 2mo ago
There is definitely comparative advantage in certain technologies which depend on a niche supply chain with deep materials science experience, simply due to experience and network economies. China has many such advantages too. Lithography is very hard to dominate because if you want to do so, you have to convince your ecosystems to switch to domestic suppliers. But in the short term, they don't want to as that will hurt their competitiveness. That's why, for many sectors still and for lithography until the bans, there was no domestic program with realistic prospects to ever truly outcompete.
- coderenegade 2mo ago
  None of that is inherent. You could have said the same thing a decade ago about vehicle production, or microelectronics a decade before that, and yet here we are. The lesson we should learn from Comac is that China is quite happy to use its local market as a testbed until the technology is mature, and in the same way that it's only a matter of time before Comac has an internationally certified airframe and comes after the aerospace incumbents, it's also only a matter of time before they catch up in chip fabrication. This isn't about money for them.
  - sudosysgen 2mo ago
    Sure, none of that is inherent. But do note that China never caught up in internal combustion engines. They had to wait for a fundamental paradigm change to catch up, and were not able to copy ICE technology to a satisfactory level. Similarly, China has been able to make serviceable airframes for decades, it's just until now that they're getting close to price competition - and likely Comac will be more expensive for decades to come. My point is moreso that they can succeed in many domains, but it's mechanically unlikely they'll succeed on some domains unless we force their hand. Semis were one of them.