
Inside a Heist of American Chip Designs, as China Bids for Tech Power - f3f3_
https://www.nytimes.com/2018/06/22/technology/china-micron-chips-theft.html
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wishart_washy
Notes from the ground here. My undergrad was in EE at an "elite" school - I
can say definitively that ~50% of the MS/Ph.d. students in EE were from China
(with the other 50% largely from India). They TA'd many of the graduate level
courses and were the majority of the students taking high level semiconductor
design courses that centered on fabrication and nanotechnology.

China's short term goal is clearly to reach parity so these students can enter
a mature semiconductor industry. Give these students ~5-15 years to gain
expertise from the American academic system and industrial research base and I
think we'll start seeing China innovate.

American expertise will naturally decline because we don't have students
studying EE. To many good full-stack jobs that pay ~40% more.

~~~
addicted
Well the vast majority of these kids would prefer to stay in the US.

Clearly the solution to prevent them from taking their knowledge back to their
home countries is to denigrate them politically and make it harder and more
inconvenient for them to live and work here.

~~~
exelius
I would not agree with this. I went to an elite business school and my Chinese
classmates all felt there was far more opportunity for them in China with an
American education.

They’re not stupid, they look at China and see an economy growing at 6-9% a
year while the US is stuck at 1-2% and they know where the growth is for the
medium-term. They also see a mature American economy that can be tough to
crack even for native white citizens, so its not hard to see how their chances
of long-term success are much higher in China than in the US.

~~~
seanmcdirmid
Business school and liberal arts kids will mostly go back to China, STEM is
very different.

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intrasight
My Chinese STEP colleagues have or plan to go back. Too many cultural and
political impediments to progress here now.

~~~
seanmcdirmid
Is that new? Because the trend has been very stabke for the past 10 years:
fuerdai kids (with rich parents) who come to america to study major in liberal
arts and business but will almost always go back because that is where their
connections are. These are relatively new foreign students in the USA and
constitute much of the recent boom.

The more tradition Chinese students who have been coming here since the 1980s
(and don’t have very rich parents) mostly pick STEM majors. On graduating,
they would rather work for Google in Mountain View than Tencent in Shenzhen.

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fermienrico
Having worked in China in the semiconductor industry, it really saddens me
what the Chinese are trying to do. You simply cannot out innovate 4 decades of
work in a few years no matter how much money you throw at it.

Also, China has a branding problem and it is only going to get worse. They can
make short term progress but it takes a long time to build a great brand.

~~~
RamshackleJ
Stealing IP mostly helps manufacturing, It doesn't really help innovation. If
they want to build up their semiconductor industry they need to steal the
people who are creating IP, which is kinda the opposite of what is happening.

the culture that creates new tech is something that china can't steal and it
can't replicate it without giving up authoritarian rule.

~~~
krapht
People write this glibly without understanding history. Soviet Russia made
great leaps in science and technology where it was a national priority. You
can have academic freedom in most scientific disciplines without the political
freedom to criticize the government.

~~~
tryptophan
Have any examples? As far as I am aware, the USSR only beat USA at getting
into space first.

~~~
tormeh
The NK-33 engines from 1960s and 70s Soviet Union were used by American space
companies as late as 2014. These were just stuck and forgotten in a Russian
warehouse. Doubtlessly other Soviet technology has also been lost and awaits
rediscovery.

[https://en.wikipedia.org/wiki/NK-33](https://en.wikipedia.org/wiki/NK-33)

~~~
jonhendry18
Not sure if that's a testament to innovation, or to the American tendency to
throw things away.

American engines of the same vintage probably would have been used if they
were available for a similar price.

~~~
blattimwind
It's not just about the price; these engines are still highly competitive
fifty years after they were designed. That's quite a feat. They're also based
around unique technology.

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nimish
History rhymes. American industrialists famously begged, borrowed and stole
machine designs from Europe -- Slater the traitor kickstarted the American
cotton industry.

Of course, the lack of foresight of Wall St is legendary! Many companies have
traded long term loss for short term gain.

~~~
andygrovetheman
IP and knowledge was much less valuable in the 19th C industrial economy than
it is today. Back then execution and raw materials and access to semiskilled
labor was most important.

The Chinese (NK, Iranian, Russian) corporate hacks we have seen recently could
have a MUCH larger economic effect.

~~~
nimish
Not really. Britain banned textile technicians from leaving the country
because textile machinery knowledge was overwhelmingly valuable. Semiconductor
IP is not nearly that important.

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DyslexicAtheist
I worked for Nokia when we outsourced part of our R&D to Huang Shu. 2 years
later many of the sites employees moved on to work for Chinese gov backed tech
firm, and the source code of what I wrote for Nokia and that of several
colleagues popping up on github. It wasn't critical in terms of copyright or
deep secrets about the product. But it contained info that allows an outsider
get a very accurate picture of the software supply-chain and a potential gold-
mine for further social engineering and/or attacks against the firms supply
chain security.

So if you have the habit of adding your name in the /* comment stanza */ in
all your source code, I urge you to "vanity search" your name in github/gitlab
repos.

Also if you are serious about supply-chain security, and go to great lengths
of buying in China but assembling your IP in Malaysia, Vietnam, etc, ...
remember to compartmentalize. If you're a person of interest (any engineer in
a larger tech-company is), then use a dedicated phone for communicating with
China where you install WeChat and be careful how you move information across
the 2 domains.

edit: WeChat Security concerns:
[https://en.wikipedia.org/wiki/WeChat#Security_concerns](https://en.wikipedia.org/wiki/WeChat#Security_concerns)

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genericone
I mentioned this in a previous comment I made:

"It's a very secret industry, and getting even tighter now since China has
been blocked from acquiring the latest semiconductor technology. China has so
far invested over $40 billion in boosting their chip-making abilities, to
acquire capital, IP, and knowledge-workers. Given their history of borrowing
technology from other countries without attribution, if I were at the head of
a semiconductor related company, I would clamp down on the secrets ahead of
the danger."

Looks like the clamp-down didn't happen soon enough...

~~~
baybal2
>China has so far invested over $40 billion in boosting their chip-making
abilities, to acquire capital, IP, and knowledge-workers.

There is a rumour going that the ministry of commerce has been given a war
chest of ~$140B+ to establish self sufficient semiconductor industry in China.
I can guess that those $40B is just a part of it that was spent on direct
funding of their chipmakers. Another big part probably goes to "one day funds"
like Canyon Bridge Capital that appear out of nowhere with few billion bucks
just to disappear a year later when they are done buying a target company.

------
lsiq
Considering the two sticks of Micron RAM I purchased in mid 2016 have
appreciated 2-3x value, I don't have much sympathy for the big three DRAM
producers. There's a reason the Chinese are looking so longingly at their
lunch.

~~~
tooltalk
Micron and other DRAM producers were losing money due to DRAM gluts two years
ago. That discouraged capacity investment and, as many insiders had predicted,
it led to eventually higher price today.

Sure, you got bargain at their expense two years ago and now everyone is
complaining about the higher cost of DRAM today. But that still doesn't
justify IP theft.

~~~
baybal2
DRAM makers make $10k per platter. A single fab pops 20k - 30k complete wafers
a month, and each top tier maker has 4 to 6 of them. Thought, all makers are
working at only 60 to 70 percent capacity now.

You can guess, they are plump with money, and MOFCOM officials naturally want
to communize some part of this money pile.

~~~
chollida1
Is your math really right?

> DRAM makers make $10k per platter. A single line pops out 40k a month, a
> single fab has 20+ lines, a fab complex has up to 8 fabs. Each DRAM maker
> has few fab complexes.

If I do this I get 10,000 * 40,000 * 20 * 8 which is $64 Billion.... per
month.

Are you suggesting that the average DRAM maker should have revenue of $64
Billion a month or $768 Billion a year?

It sounds like you know the industry and I'm looking for some additional
colour here.

~~~
baybal2
my bad, my bad. Corrected my digits. We are looking at around 20 to 30k
complete DRAM waffers per fab. For god knows what reason, digits for a line
and a whole fab swapped places in my head.

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groupthinking
Worth reading this blog; they tend to cover related issues:
[https://www.chinalawblog.com/2018/03/how-to-give-away-
your-i...](https://www.chinalawblog.com/2018/03/how-to-give-away-your-ip-in-
china-without-realizing-it.html)

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crb002
DOD would have way more cost effective spending ditching the F-35 flying
turkey and buying the IP for TSMC, and moving US fab to Virginia/Austin.

~~~
HillaryBriss
yeah, but ... does the IP for TSMC reside in some easily transferred
tangibles? wouldn't the DOD really need to transfer the whole _community of
engineers and ecosystem of suppliers?_

~~~
woolvalley
Engineers in Taiwan don't make that much money. Just saying you'll pay them
standard US engineer salaries and add instant green cards for their families
as part of the acquisition and you'd probably get most of them to move.

TSMC although is a pretty foundational company of Taiwan. It would be like the
US buying samsung and then moving everyone to the USA. Taiwan might stop you.

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oldandtired
It has been interesting reading the various opinions being expressed here in
this discussion. As a couple of writers have noted, the appropriation of
knowledge (without attribution to the source) has been the mainstay of
technological advancement by the major powers over many decades, if not
centuries.

Even though it is popular to classify such appropriation as "theft", it isn't
theft. The term is used often in a cynical way by those who have appropriated
such knowledge from others before them to provide a justification to maintain
an advantage over those who follow them. Theft requires that the original
party no longer have access to the items in question. For theft of knowledge,
one would have to ensure that the deaths of those who know it have occurred
and that there are no extent records available for that knowledge.

There have been many in the USA, including government organisations (civil and
military), who have appropriated knowledge from others for their own benefit.
One only needs to look at the history since the late 1800's to see many of
these appropriations.

Many countries, organisations and individuals have done this. It has happened
in the past, it happens today and it will happen in the future. In one sense,
the only solution is for the free dissemination of knowledge in every area,
but in many areas that will not happen.

I have a friend who will be prosecuted if he releases any information about a
certain subject matter that he developed and was going to use commercially
because a certain government pushed another government to appropriate that
knowledge. These things happen and happen regularly.

So China appropriating technological know-how to various areas is nothing new
and is just following in the footsteps of those who have gone before. So
getting in a tizzy about it is not helping. If one wants to make a difference
then be better at that area than anyone else. Produce what the consumers want
at a price they are willing to pay and you will get a market share.

If someone copies you, then use that as a marketing strategy. Make sure that
you can do it better than them. There are enough examples of companies and
individuals that produce quality and still make enough to keep going. Look at
your game plan and stop worrying inappropriately about the competition. If you
are being copied then you must be doing something right and you can use that
to your advantage, even if you are a one-man shop.

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baybal2
My comment on the article. Usually I am of higher opinion of NYT, but now this
piece of writing is simply tendencious

The court case covered there is just plainly the case of plaintiff's lawyers
being paranoid about about petty theft case, and having rich imagination.
Think of Aron Schwartz case, except even more absurd here, as the defendant
have called police on himself.

An employee from mainland who previously worked at a competitor company
accidentally put coworker's phone into her bag along with papers on the table.
They guy thought that his phone was stolen and called police, police found his
phone in a locker of a coworker.

During investigation of that theft, they stumbled on some company docs on the
phone, and opened an espionage case based on that. Why a defector would file a
police report on his accomplice?

For it to be an espionage, a less lame way to exfiltrate information would be
employed, and certainly, a spy will not call the police to arrest his
accomplice.

Just thinking that somebody can carry netlists for a chip which take few hard
drives to store in compressed form on a tiny memory of a smartphone does not
pass a BS test.

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newnewpdro
Apparently this is what war between nuclear nations looks like in 2018.

~~~
wetpaws
Thanks god we live in an age of globalized economy

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Invictus0
Corporate and national espionage are as old as time, and senior leadership
needs to wise up to this threat. China is running the most broad and
sophisticated IP espionage campaign in history, and most companies think a 15m
PowerPoint about not responding to phishing emails is sufficient protection
against this. Until we get some strong legislation on corporate data security,
this is just going to keep happening.

~~~
HillaryBriss
US corporations are willing players in this game. in exchange for their IP, US
corporations are promised vast revenue from access to China's markets.

the C-suite benefits. shareholders probably benefit. does the average US
resident benefit?

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oh_sigh
Is there a 'fruit of the poisoned tree' rule in international trade and
tariffs? If the US puts tariffs on Chinese chips because they think they are
derived from knowledge that was stolen from a US company, will they get
chastised by the big international trade organizations?

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prirun
Boo hoo, poor Micron. Seems there are some hidden costs to exporting all
manufacturing to China. This has happened over and over (see because China
often requires American companies "partner" with a Chinese company to setup
shop in China:

[https://www.chinalawblog.com/2011/04/fellowes_brought_to_its...](https://www.chinalawblog.com/2011/04/fellowes_brought_to_its_knees_in_china_blame_the_joint_venture.html)

US companies like cheap foreign labor and manufacturing, but need to realize
there could be a high long-term cost - one that could put them out of
business. We Americans seem to have a hard time focusing on long-term results.
If an action boosts short-term profits or the stock price, we do it.

