
The Coming Chip Wars - chmaynard
https://steveblank.com/2020/06/18/the-coming-chip-wars-of-the-21st-century/
======
euix
The real problem is that success or failure, the real damage is poisoning 1/6
of the world's population against you for a generation or more. What kind of
world will that be? If every Chinese kid is taught from birth the U.S. is
hellbent on keeping them in second place (which is exactly what looks like
now, regardless of what previous administrations thought or how much CCP spin
is put on it - the propaganda writes itself these days).

This is exactly the narrative that is held in the mind of every Chinese about
the Opium War and the downfall of the late Qing and the Japanese. These things
have long historical memories and human grudges really can span generations
and generations (look at Hungry for instance).

From there it's very slippery slope to a race war, i.e. Chinese vs Anglos, I
can easily imagine confiscating ethnic Chinese property in the U.S. and
putting them internment camps in the next twenty years and attacks against the
"whites" in China.

Ultimately this is about how to co-exist and share resources on this planet so
we can solve problems on the planetary scale. Otherwise we will just become
one of those species in this universe that failed to launch because they
destroyed themselves on their own planet before inventing starflight.

~~~
throw51319
The CCP is leveraging this historical narrative to harness the power of 1.4
billion people. They are creating a nationalistic fusion to grab power.

Up until the past 2-3 years, most Americans did not care about China as a
whole. Just another country we do business with.

------
ardy42
> The United States just did this to China by limiting Huawei’s ability to
> outsource its in-house chip designs for manufacture by Taiwan Semiconductor
> Manufacturing Company (TSMC), a Taiwanese chip foundry. If negotiations
> fail, China may respond and escalate, via one of many agile strategic
> responses short of war, perhaps succeeding in coercing the foundry to stop
> making chips for American companies – turning the tables on the United
> States.

How would the PRC succeed in convincing TSMC to stop producing chips for the
US, short of military action? The PRC is Taiwan's primary military adversary,
and the US is Taiwan's primary military supplier and ally. IIRC, TSMC even
recently agreed to build a foundry on US soil (which is kinda surprising,
since that reduces the incentive of the US to defend Taiwan in a military
conflict with the PRC).

~~~
Aperocky
If China were go to war with Taiwan, US would be involved in a civil war in
China de jure if it wants to intervene.

Because US recognize both mainland China and Taiwan as one 'China', without
specifying which. The internet would like to tell you that China and Taiwan
are totally different country but US policy doesn't recognize that.

And changing that policy one week into the conflict does not look good on the
optics.

~~~
ardy42
> Because US recognize both mainland China and Taiwan as one 'China', without
> specifying which. The internet would like to tell you that China and Taiwan
> are totally different country but US policy doesn't recognize that.

US policy does _de facto_ recognizes Taiwan. For instance, it has an embassy
there, it just doesn't call it one; and it sells Taiwan weapons over PRC
objections.

The only reason the US doesn't recognize Taiwan de jure is a Cold War era
compromise with _PRC_ diplomatic policy, and the fact that the current
ambiguity works reasonably well for all parties right now. IIRC, some US
political factions advocate for formally recognizing Taiwan (for example:
[https://twitter.com/ambjohnbolton/status/1250501579070980099](https://twitter.com/ambjohnbolton/status/1250501579070980099)).

~~~
Aperocky
You're absolutely correct, but de facto is not de jure.

There's nothing easier to do than for China to point to this policy and say
America is sending troops to an internal conflict in China.

~~~
JumpCrisscross
> _de facto is not de jure_

It is an executive communiqué [1]. There is no treaty. "One China" is based on
a statement of convenience. It could literally be reversed with a tweet.

What _isn 't_ just buttered-up memos are the Taiwan Relations Act [2] and
Taiwan Travel Act [3]. Unlike the joint communiqué, these are U.S. law.

Lots of Americans live in Taiwan. Taiwan hosts scores of American-made
military assets defending it from Beijing. And high-ranking Americans are
almost constantly in Taiwan. If Beijing attacked Taiwan, these would be among
the collateral damage.

> _say America is sending troops to an internal conflict in China_

Everyone says everything when war breaks out. If Beijing blew up a bunch of
Taiwanese assets, taking out a handful of Americans in the process, I see no
obstacle to strong political support in America to intervene.

[1]
[https://en.wikipedia.org/wiki/Shanghai_Communiqué](https://en.wikipedia.org/wiki/Shanghai_Communiqué)

[2]
[https://en.wikipedia.org/wiki/Taiwan_Relations_Act](https://en.wikipedia.org/wiki/Taiwan_Relations_Act)

[3]
[https://en.wikipedia.org/wiki/Taiwan_Travel_Act](https://en.wikipedia.org/wiki/Taiwan_Travel_Act)

~~~
Aperocky
From [2]:

> treating Taiwan as a sub-sovereign foreign state equivalent

Also nothing from [2] or [3] guarantees American military intervention.
Essentially, [2] and [3] solidified the status of Taiwan as 'not a full
sovereign'.

~~~
JumpCrisscross
> _nothing from [2] or [3] guarantees American military intervention_

This was never the goalpost. The original comment contrasted the legal
flimsiness of the joint communiqué with the Acts underlying the U.S.-Taiwan
relationship.

> _solidified the status of Taiwan as 'not a full sovereign'_

Not really. The Acts give deference to the executive branch.

Usually, the U.S. can't sell fighter jets to non-sovereign customers. The Acts
created exceptions for Taiwan, so the President could continue paying lip
service to Beijing while treating Taiwan like a sovereign nation.

------
bonestamp2
Even though it's far from over, I'm sick of talking about coronavirus. But we
can't stop until we've learned everything we can from it. Obviously, it's
human impact is awful. It has been a brutal stress test for so many of our
health and economic systems: healthcare, food, ppe, school, etc.

So, if there's one good thing that comes out of this, and I'm sure there will
be many, it has to be that manufacturing returns to all advanced countries. No
longer should we outsource nearly all of our manufacturing to various parts of
Asia. Nothing against Asia, but we've known for a long time that it is high
risk to put all of your "eggs", of any kind, in one basket -- it's very risky
for everyone if we concentrate all of those abilities into a handful of
countries in one part of the world. In might be cheaper in the short term, but
it could be devastating for all of us in the long run.

This time it was a pandemic, but next time it could be something that destroys
those countries and the timeline to rebuild is years. The survival of the
planet may depend on our ability to manufacture. It already does in some ways,
but the timeline is rather long at this point. What if the danger is imminent?
Do we really want most high (and low) tech manufacturing concentrated in one
part of the world? No, we need to spread it globally for the potential benefit
of everyone.

The same way you balance your investment portfolio between different types of
assets, we need to balance our investment in the future of the planet across
the globe as well. Sure, some assets aren't as profitable, but you still hang
on to them for security, stability and risk reduction.

------
RandomWorker
Huge gap in this article is ASML. The guys that make the machines that make
the chips that are designed by intel and the like. They have about 80% market
share. They could supply/deploy those Machines anywhere in the world.

~~~
the_duke
Recent article about US pressure on the Netherlands to prevent ASML exports to
China: [https://www.reuters.com/article/us-asml-holding-usa-china-
in...](https://www.reuters.com/article/us-asml-holding-usa-china-
insight/trump-administration-pressed-dutch-hard-to-cancel-china-chip-
equipment-sale-sources-idUSKBN1Z50HN)

------
monocasa
One very important piece that doesn't get enough time in the article is
China's in country fab, SMIC.

They've got 14nm in risk production, and are making good progress on something
equivalent to 10nm TSMC (that they're calling 7nm, but feature sizes are made
up anyway). And perhaps most importantly China is making good progress on in
country EUV litho steppers to cut ASML out of the picture too.

------
bob1029
It is pretty obvious that we will not be able to maintain leadership with
arbitrary hardware process technology advantages for much longer.

The next generation of strategic advantage is in the software that runs on
this hardware. We really need to start thinking harder about how we protect
highly-complex and strategically-important software IP from theft, because
theft of software is pretty much immediate and absolute. I have personally
started to pull some of my experimental projects I would otherwise keep public
into private repositories because of these sorts of concerns. I do not want to
enable the CCP in any way whatsoever.

Hypothetically, if your 7nm chip supply was constrained because of war, but
you were able to optimize the software that runs on that hardware by 15-30%,
you could theoretically run it on a 14-22nm chip with a similar performance
envelope. The larger process tech is easier to manufacture and you will more
likely have domestic facilities which can accommodate. Anything that does not
require EUV is instantly 100x easier to produce. Additionally, the more
advanced process tech is arguably less advantageous in a military setting, as
these chips are highly vulnerable to electromagnetic warfare relative to older
process technology.

~~~
aidenn0
99% of the software in the US is currently available to the CCP if they care
enough. Pretty much all private companies could have their IP exposed by a
nation-state level actor at this point.

It's typical for read-only source-code access to be available to everyone
inside the corporate network, so if any device used by anyone with such access
is compromised (or if the person is themselves compromised), so is the source-
code.

------
totalZero
Meanwhile, American semiconductor and technology hardware companies spend
exorbitantly on stock buybacks.

Set up factories outside of Asia Pacific with that money.

~~~
staycoolboy
Publicly traded US companies are beholden to investor returns. This is going
to make them less able to respond to international competition.

Think about the Fair Trade laws that aim to prevent large companies from
dropping their prices to below cost to drive small plantations out of
business. There's no reason china needs to make 1,000% profit on their latest
CPU when they can sell at a very low price, and put US manufacturers out of
business.

And FTA:

[https://www.bloomberg.com/news/articles/2020-06-10/u-s-
lawma...](https://www.bloomberg.com/news/articles/2020-06-10/u-s-lawmakers-
propose-25-billion-to-aid-semiconductor-industry)

I just barfed a little in my mouth. This is what is so eff'd up about the US.
Semicon stock prices drove the creation of millions of millionaires over the
last 2 decades, and now they need a handout.

~~~
jariel
? US strategic investment in semiconductors is probably the only way to fight
Large State Actors dumping on world markets, by your very own logic.

$25B is about the right number as well, the challenge will be related to how
efficiently it is spent.

~~~
staycoolboy
I know, my comments sure do sound like a contradiction if viewed this way.

There just seems to be something fundamentally wrong here.

Semicon companies have been massive wealth generators for almost 4 decades,
and how all of that wealth was genreated by clearly dubious means (Intel's
lawsuits are legendary, as is there attempts at shuffling money out of the US
buy building fabs in other countries to avoid tarrifs). But now they need
taxpayer dollars to be competitive? Sure, the state of the US economy _might_
be at risk, but that doesn't square with the industry leaders' malign actions
in the past 20 years.

It's like if you were getting beat up by a bully every day on your way to
school, and he took your lunch money. Then one day a bigger bully from another
town shows up, and the school starts paying your bully your lunch money, plus
additional money from your allowance, to beat up the other one to protect the
school (a bigger risk), when they didn't care about protecting you as an
individual (a non-important risk).

~~~
robertlagrant
It's more like if a big bully were taking your money, so to make sure he got
less, you built off-shore fabs.

------
Synaesthesia
Interesting that the article chides the US military for not preventing China
from militarising their own neighbourhood (South China Sea). However there’s
nothing wrong apparently with the US militarising the Caribbean, or the South
China Sea for that matter.

The same could be said for access to manufacturing for Huawei vs US companies.

~~~
jariel
There is no equivalence between the two actions.

China is claiming vast regions which are currently regarded as 'international
waters', or worse 'sovereign waters of other nations' as it's own, sovereign
territory.

The US is not declaring the Bahamas to be 'US Territory', for example.

Not only that, the US Navy ensures that _everyone_ \- including China, Russia,
Iran etc. can have 'safe passage' in international waters, and especially
Panama Canal, Suez, Gulf etc. - which is quite literally the opposite of
China's intentions in the S. China sea.

~~~
michaelyoshika
People can't even trust US police, not to mention US military.

~~~
plandis
You don’t have to, the US navy’s role in securing free trade on the seas
speaks for itself.

~~~
trasz
As in, enforcing US sanctions against their competitors?

~~~
jariel
The US Navy does not enforce sanctions against economic competitors. It may be
involved in enforcing sanctions against military threats, like North Korea and
Iran, but even then, not really.

The US Navy defends the interests of the US largely by defending allies and
promoting rules-based order. This is constantly the norm, day in day out,
around the world. You see it in Panama Canal, Suez, especially the Gulf.

------
sovietmudkipz
I feel pangs of sadness reading articles like this. I’m just about 30 and when
I look around at my peer group I see themes of learned helplessness.

I see children in adult bodies who whine to compel others to fix their own
problems. I see people unwilling to entertain conversation that may challenge
their point of view. And parents, well into their old age, seem to be content
in keeping this status quo. They acquiesce to the complaining, they solve
their children’s problems. And the tools of being self sufficient and goal
oriented seem to suffer.

If I buy into one of the points of the article- that there are people in China
who are in positions of power who are unified, know what they want, know where
they are, and thus will figure out to get there- and I think about how my peer
group would respond, I get worried. The panacea would be for my generation to
become just as tenacious in seeking our own goals. But I just don’t see what
transformations would have to happen to make this a reality.

P.S. I will continue improving the community of people within arm’s reach. I
think that’s all us motivated people can do.

~~~
red_trumpet
> If I buy into one of the points of the article- that there are people in
> China who are in positions of power who are unified, know what they want,
> know where they are, and thus will figure out to get there- and I think
> about how my peer group would respond, I get worried.

That sounds like you are comparing your (probably average) peer group to an
imagined group of people in positions of power. Doesn't seem like a fair
comparison.

------
stephc_int13
I hope that US and Europe politicians are looking at this seriously and are
able to think long-term.

I completely agree with the author about the vital importance of this
technology, it should be considered as a resource.

The long-term solution is not military, but industrial.

------
hangonhn
Tangential to this discussion, what was AMD's original reasoning for getting
rid of its own fabs and spinning them out into Global Foundries? It seems
these days that fabs are so strategic. Did they realize they can't compete in
that space? Thanks!

~~~
Klinky
Maintaining fabs is expensive. AMD got to push debt onto Globalfoundries with
the deal, and Globalfoundries could focus on other opportunities, not just
AMD. Globalfoundries has since fallen behind in process node, with TSMC and
Intel leading the way. Given the struggles Intel has had, it is hard to say
that AMD would have been in a better position to get to 10nm or 7nm had they
kept their fab facilities.

------
jszymborski
This is maybe a dumb question, but how much would it cost for a e.g. NATO-
country led initiative to create a foundry like TSMC in X years. Surely this
can't be harder than building the LHC, and the diversity would clearly reduce
conflicts.

~~~
xxpor
TSMC's Fab15 300mm wafer fab cost about $2 billion more than the LHC. Not that
money == difficulty, but still. It's not a completely trivial amount of money.

~~~
koheripbal
You can't really compare a cost which returns zero profit versus one that
turns a profit.

There is nearly an unlimited supply of money for projects that are guaranteed
to return a profit - especially today with the bond market desperately
searching for yields.

...so the moment asian chip factories become untenable - we will have fabe
here in the US overnight. As an example, Israel built its own Intel fabs in
under 3 years.

~~~
cinquemb
> There is nearly an unlimited supply of money for projects that are
> guaranteed to return a profit - especially today with the bond market
> desperately searching for yields.

There is nearly an unlimited supply of money for projects that are guaranteed
to have _positive cash flow_ \- especially today with the bond market
desperately searching for yields.

Plenty of companies are loaded up with debt with negative eps with positive
cashflow.

I believe this distorts the gymnastics of "You can't really compare a cost
which returns zero profit versus one that turns a profit" when many companies
haven't turned a net profit since their existence.

------
blackrock
And to add to this, the new wrinkle in this TechWar, is how the USA just
banned a Chinese university from buying Matlab.

Yes, Matlab.

They banned a university with a bunch of students from using a fancy
calculator.

This is like banning the sales of Microsoft Excel to China.

The next interesting play, is what China will do to countermeasure this.

They will likely have to make their own Matlab program, thus eliminating all
future profits for Matlab in China. And then, Matlab might even now have a new
international competitor in this area.

Then, will China also ban Microsoft products in the future, in retaliation,
after they make their own version of Excel.

If I were them, I would think that the American side is also next planning on
banning the sales of Excel to China.

~~~
unishark
The software isn't banned in all of China yet though. Just organizations on
the sanction list. So to retaliate in that way China would effectively be
increasing the sanctions on themselves.

There's multiple competitors to matlab already that even some US schools use.
It isn't as lopsided as Excel versus, uh... google sheets?

~~~
blackrock
Well, the problem is that, China has likely invested and spent, hundreds of
billions of dollars, and millions of man years, on American technology
products.

They have built their own applications and business processes, on top of
American technology systems.

American companies have benefited handsomely from this engagement with China.
Their stock prices reflect that, in how much they earned from China, and how
much future potential they will earn from China.

What the USA government is doing here, is saying that America is no longer
reliable. Essentially, that they can take away their products on a whim.

This puts the onus of the risk on China. Why should they continue to spend and
invest in American technology, when it can all be taken away, and their
applications on top of it will be useless.

Imagine if a Chinese company spent 5 years, and millions of dollars, to build
an application on top of the Microsoft Windows framework. Then one day, the
American government says: Hey, we will no longer allow you to use Windows.

Now, your expensive program, is wasted, and is now worth less than a
paperweight. Even a paperweight is more useful than your program.

Will this happen? Who knows. But it is clearly a risk. And it must be a
violation of some WTO trading rules somewhere. Because something like this, is
clearly a monopolistic and predatory action, akin to an all-out economic war,
designed to force the Chinese to their knees, and which would force the
Chinese side to counter-react to.

~~~
unishark
> Imagine if a Chinese company spent 5 years, and millions of dollars, to
> build an application on top of the Microsoft Windows framework. Then one
> day, the American government says: Hey, we will no longer allow you to use
> Windows.

> Now, your expensive program, is wasted, and is now worth less than a
> paperweight. Even a paperweight is more useful than your program.

Didn't this essentially happen with Android? I'm not as familiar with that
market but it seems there's no need for imaginary scenarios.

And private firms do this kind of thing to each other all the time. Google is
notorious for suddenly dumping things people depend on. And in hardware it is
a big headache as you can unexpectedly lose the source to components of your
product.

------
wwarner
Europe and NA lead the world in solid state physics, and this is where real
computing power for the future comes from. Europe and North America should
continue to invest heavily in basic research and create incentives for science
that can be applied to computing.

~~~
koheripbal
I agree. ...but in a crunch, during a global political crisis, you don't just
setup a chip fab overnight. It'll take 3 years, minimum to get the first batch
out.

------
vsareto
I don't understand the military implications. The US has had long range
missiles and defenses that are effective with stuff from the 80's and 90's. If
China somehow got complete control over TSMC to the point they no longer
supplied the US, it doesn't take much to sabotage the factories. If not
missiles, then using spies, or attacking the systems that run the factories.
This seems like a fragile advantage. Advanced chips don't even give you
advantages in cyberwar.

Even if this triggered a longer conflict, the US could just buy through other
countries that can buy from TSMC. Or just start using consumer off-the-shelf
stuff. I'm fairly certain my gaming PC could guide a missile. There's lots of
data centers in the US to pull from too.

If we lose all access to buying chips tomorrow, how does that affect our
weapons?

~~~
openasocket
> The US has had long range missiles and defenses that are effective with
> stuff from the 80's and 90's

All of our weapons systems have undergone significant modifications and
upgrades since then, which make heavy use of modern computing. Missile seekers
can take advantage of this increased computing power to better track targets,
especially when being jammed. We could probably develop replacements for these
that used less high-end chips, but that will take time and would probably
still result in worse performance, and there will likely be certain features
that would have to be dropped.

> If China somehow got complete control over TSMC to the point they no longer
> supplied the US, it doesn't take much to sabotage the factories

This is true, but it isn't guaranteed, and the PLA could stockpile a whole
bunch of chips pre-war to satisfy their wartime production ordnance needs for
a least a little while. While this is viable, it becomes a race to the bottom
where neither side has access to advanced chips, and is stuck with whatever
the advanced weapons they had stockpiled.

> I'm fairly certain my gaming PC could guide a missile

They need some custom chips, for a couple regions. First is they need to do
some digital signal processing stuff that is implemented in hardware. Second
is that the chip needs to be rugged:
[https://en.wikipedia.org/wiki/Military_computers#MIL_standar...](https://en.wikipedia.org/wiki/Military_computers#MIL_standards_and_specifications)

~~~
mywittyname
I thought the military sourced chips domestically for such applications.

~~~
openasocket
Not always. TSMC, for example, is one of the only sources of chips for parts
of the F-35. [https://www.nytimes.com/2019/10/25/technology/pentagon-
taiwa...](https://www.nytimes.com/2019/10/25/technology/pentagon-taiwan-tsmc-
chipmaker.html)

------
ilaksh
It seems like they should stop trying to block China's access to TSMC until we
have the factories in the US.

And we should be investing billions in the US factories.

Either that, or do a complete 180 and go back to the globalization mode where
we play nice with China. I mean, if there could somehow be a non-violent
cultural and political integration that would be ideal.

It seems like we are going to get one of two extremes though. Either people
who think that China is ultimately irredeemably evil will stay in power or
people who don't care what China does as long as they can make money there
come back into power.

Neither one of those extremes really seems like a good approach though. Both
seem to kind of be making things worse.

I believe the only safe outcome will involve very difficult cultural,political
and technological integration. The economic integration to the degree it
exists might be a stepping stone to that stuff but it seems we have seen it's
limitations.

I don't have faith that people will recognize the depth of the problems,
understand it and address it is a sane way. Most likely outcome still seems to
be a horrific war.

This type of thing is why I have recently been thinking that actually it may
be best if we just go full speed ahead with the AGI development. Because if we
could have a safe world, then I would say the opposite, that we should avoid
creating a new species that makes us obsolete. But now it may be a race to
create this new species before our own poor organization destroys us or sends
us back to the iron age.

------
amaajemyfren
Predicting what is next is hard. Turning what is next to be successful is even
harder. China may be able to push into AI and microprocessors, but it will
need to have the culture of trial and honest admission of failure if it is to
actually deliver on the next big thing. I think it is still unclear (despite
the great results they have with 5G) that China knows how to do that.

------
082349872349872
Coming chip wars? I remember stories of vax boxen filled with concrete in
previous export restriction wars, not to mention japan losing chip production
to south korea.

20th century:
[https://micro.magnet.fsu.edu/creatures/pages/russians.html](https://micro.magnet.fsu.edu/creatures/pages/russians.html)
(my russian is atrocious, but it's good enough to know the story given has
obviously been elaborated in the telling before it hit this web page)

21st century: [https://www.brookings.edu/wp-
content/uploads/2020/04/FP_2020...](https://www.brookings.edu/wp-
content/uploads/2020/04/FP_20200427_computer_chips_khan_flynn.pdf)

(much of Blank's "secret history" of SV is an outline that chips have been
strategic since before they existed [https://steveblank.com/secret-
history/](https://steveblank.com/secret-history/) )

------
phkahler
This neglects one critical piece of the foundry business. The equipment for
EUV lithography and prior generations comes from ASML in Europe and another
company I cant remember. If eastern fabs are damaged in a conflict they will
be blocked from rebuilding. That is, until China manages to copy that stuff
which is something they are likely already trying to do.

------
tmaly
TSMC having all its fabs in one place is a big risk if there is an earthquake.
It makes sense to diversify

~~~
cltsang
Definitely. That happened not too long ago:

[http://www.taipeitimes.com/News/taiwan/archives/2016/02/07/2...](http://www.taipeitimes.com/News/taiwan/archives/2016/02/07/2003639025)

------
jonplackett
If you imagine this as a board game along the lines of Risk, you’d have to
much prefer being in China’s position. They have so many options and can also
just bide their time.

------
valuearb
China will likely be dealing with massive internal dissent and eventually
revolution. The history of authoritarian regimes always ends there.

------
jackcosgrove
Did Taiwan become a leader in microchip fabrication out of a strategic or
economic interest?

Because it surely has strategic value.

------
latrare
China is keeping things surprisingly civil considering they could just limit
the supply of or manipulate the cost of rare earth minerals. Many Western
companies would soon find themselves in Huawei's shoes, counting down the days
until the stockpiles run out.

~~~
MHordecki
The moment they start doing this, other countries will restart their mines and
the Chinese leverage (and profits) will evaporate. Rare earth minerals aren't
that rare.

~~~
latrare
Found the estimate in the report the Pentagon gave to Congress on this issue
in 2013. Your proposed action would take the US, alone, 15 years
([https://imgur.com/olWM3Xi](https://imgur.com/olWM3Xi)).

Report:
[https://fas.org/sgp/crs/natsec/R41744.pdf](https://fas.org/sgp/crs/natsec/R41744.pdf)

~~~
marcus_holmes
I believe there's a few Australian mining companies with plans ready to go if
China ever does this. The prices will go up, a lot, but the spice will flow.

------
garmaine
> China may respond and escalate, via one of many agile strategic responses
> short of war, perhaps succeeding in coercing the foundry [TSMC] to stop
> making chips for American companies

...how? Taiwan is even more of an adversary to the PRC than the USA.

------
stock_toaster
All that government driven industrial espionage is paying off, apparently.

------
liquidify
What a cool article.

------
staycoolboy
Alibaba is making huge investment in AI, 5G and IoT chips. They are totally
bypassing the Intel<>Arm general purpose CPU battle because that isn't the
future. The new fabs in Pingtouge are just the beginning. China has the skill,
the money, and the motiviation. There's no reason why they need to be
dependent on chips from Intel and Arm licensees. Ever since the mid-1990s the
US has tried to use laws to prevent exports and hinder China (P6 export laws
anyone?), 5G laws are nothing new.

This will end up with China exceeding US fab capacity and supplying chips to
all non US & European countries in 10 years.

I'm not making a value judgement, I'm saying that if a country is going to try
to hold you back by limiting your access to technology, you just develop your
own.

~~~
magicsmoke
It's interesting how all the actions the author thinks China will take
involves military coercion of Taiwan in some form. When all you know how to
use is a hammer, every problem looks like a nail. The idea that China could
build an alternative to TSMC instead of trying to take it apparently doesn't
compute.

~~~
blackrock
Exactly. Taiwan is really useless in regards to CPU manufacturing for China.

Why? Assuming people thinks that China will invade Taiwan just to take over
TSMC, then what?

1) TSMC doesn’t build the tools that builds the microchips. In fact, they
probably don’t even know how to build it, or even know the optical science to
research and develop it. That dubious honor goes to ASML, and some other
Japanese companies. But ASML, the euro company is currently in the lead for
5nm. TSMC just knows how to use their machine, and to get better at it. And to
be clear, ASML doesn’t know how to manufacture the chips like TSMC can, so
both companies need each other, in a symbiotic type of relationship.

2) In the event of war, then the losing side can just bomb TSMC factories.
Then everyone is screwed. No more advanced microchips for anyone.

3) If China succeeds in invading Taiwan, then the USA will just force ASML to
stop selling their equipment to China, like they already do now. So, China is
back at square one. They might have the current technology, but no ability to
advance to newer technologies.

The only viable solution for China, is to build their own chip making tools,
and fabrication factories. Thus removing ASML and TSMC from the equation
completely. Also, they will gain independent Intellectual Property rights and
patents to their own indigenous R&D.

The American government is apparently thinking that China doesn’t have the
skills to do this.

~~~
jbay808
Can the US actually prevent ASML from selling equipment to China? ASML is not
American.

Also, given how obscenely expensive a war would be, couldn't China save money
by just hiring the entirety of TSMC's and ASML's technical staff at 10x the
market rate for ten years?

Paying a premium to headhunt technical experts is a tried-and-true method of
catching up to a front-runner. In fact, both Taiwan and South Korea did this,
poaching underpaid Japanese talent.

~~~
chongli
_just hiring the entirety of TSMC 's and ASML's technical staff at 10x the
market rate for ten years_

That's assuming those folks would want to move to China and work there. If
strategic tensions are increasing to the point where war is feared and China
uses this as an alternative, who would want to move there and risk becoming a
hostage?

~~~
iorrus
You can hire them in Europe, Huawei has R&D sites in Europe.

~~~
pinkfoot
SMIC also has a fab in Italy.

------
blueblisters
The CCP is getting ever more ambitious (perhaps reckless) in the wake of the
pandemic. I am not sure if it's overconfidence or calculated tactical moves.
The timing of the border conflict with India is no mere coincidence -- it
seems like an attempt to secure assets (CPEC) on the Western theatre in
anticipation to any action on the Eastern front.

~~~
magicsmoke
The flareup is over 60km2 of territory on the other side of Kashmir and the
CPEC highways, it's not going to have any impact on them. More likely that
local forces got rowdy as infantrymen tend to do and now the higher ups are
scrambling to defuse the situation. If this was an actual calculated move to
take significant amounts of territory the big guns would be firing by now.

~~~
screye
I've been reading a ton of geopolitical and military experts over the last few
weeks, and there is a unanimous consensus that China never makes moves on the
border without explicit instructions from the top.

Their reaction here has been paired with new movement in the South China Sea,
changed messaging through proxy Government (Oli in Nepal and Pakistan at
large) and claims over new land that has never been claimed by them before.

Xi is using the fallout from Corona as a way to impose China on countries that
are distracted by the pandemic as of this time.

> If this was an actual calculated move to take significant amounts of
> territory the big guns would be firing by now.

That isn't how China works. They are well know for their salami slicing
([https://foreignpolicy.com/2012/08/03/salami-slicing-in-
the-s...](https://foreignpolicy.com/2012/08/03/salami-slicing-in-the-south-
china-sea/)) approach to expansionism. Their current actions are perfectly in
line with previous attempts at expanding borders and signaling intent for
armed invasion.

~~~
selimthegrim
Since when is Nepal Chinese proxy?

~~~
newyankee
since the Maoist Govt took hold. Since Chinese promised to pay for all Nepal
schools to teach Mandarin which was adopted by a lot of schools. They extended
their claims on Mt. Everest. Nepal claimed new territory from India on Chinese
pressure in an area which is open border. Nepal is now almost a part of OBOR.
Connectivity via Tibet and lure of easy Chinese money.

------
dnprock
It's good to see people in the tech circle thinking about China. China's rise
to dominance is unquestionable now. The current US administration has failed
miserably. In the past 4 years, China has made gains on all fronts. I don't
think they suffered any setback. The US does not seem to have a coherent
strategy to counter this trend. The trade war was lauded as an achievement.
But it has failed. The US is now going back to something similar to TPP, a
policy championed by the previous administration. One step forward, 2 steps
backward.

This pandemic started in China. But they somehow turned the table back to the
US. The virus has done more damage to the US than China. The US leadership is
incompetent. The government and the Fed are fixated on keeping the S&P 500
index. Tech investors make calls to build. Then, they invest in the next app
trend. People seem to lose their moral compass. I think in the near future,
the US won't be able to print money to fix its problems.

China seems to play a war of attrition. It engages the US in small conflicts
and tends to drag them out. The US is the top dog. So it wants to win all of
its battles. These conflicts distract the US from the big picture. The US is
fighting fires on all fronts. Then China slowly makes gains.

~~~
kirse
_China 's rise to dominance is unquestionable now. The current US
administration has failed miserably._

Breathe into a bag, dude. You and everyone else fear-mongering in here. China
has a lot of talent, but they also consist of a government that controls its
people and stifles their freedoms on every possible level. And because of that
their innovation will always be constrained. An un-free people is an un-
innovative people.

The US has one great thing that no other country has, and it's why we're still
the only country to put a man on the moon, to land rockets backwards onto a
floating platform, to continue to shift the landscape in transportation, and
why Google and Facebook and Microsoft still dominate the net landscape, while
the best China can do is make their garbage rip-offs and steal the hard-won
intellectual property that we continue to churn out. It's also why Beijing
often has a thick fog of pollution, and why you can protest, speak, and
worship in this country without being thrown into a re-education camp.

Any guesses on what that thing is? That thing that keeps people in the US
innovating and churning out fresh material that China can only steal? It's
because the US is a country unified by a set of ideas, not borders drawn
around a people group. The key governing concept that man is _free_ to pursue
their own happiness and shape their destiny.

Man irresistibly is drawn to freedom, and until the CCP releases its grasp on
its citizens' freedom, their dominance is only an illusion. Stop pushing a
narrative based on fear.

~~~
zaptheimpaler
Its funny to see all the subtle racism come pouring back as soon as the west
feels threatened. "the best China can do is make their garbage rip-offs and
steal the hard-won intellectual property" \- typical western superiority
bullshit. Why don't you go to a country and live there for a year before
regurgitating uninformed cliches like this? I doubt you have any real
understanding at all about what daily life is like in China.

Somehow its inconceivable that any other country besides the mighty and noble
'Murca can innovate lol. Believe me, there are plenty of countries with far
far more innovative public infrastructure like transport. Many countries with
more "innovative" health systems in that you don't die or go bankrupt without
insurance.

When all the xenophobia and fear stops the trickle of immigrants into the US,
they will understand what drove innovation was not some magical freedom that
90% of democracies have, it was talented people from all over the globe.

~~~
aianus
> When all the xenophobia and fear stops the trickle of immigrants into the
> US, they will understand what drove innovation was not some magical freedom
> that 90% of democracies have, it was talented people from all over the
> globe.

How is China going to attract talented people from all over the globe?

Even with 1.5B people, they'll be competing with 6B who can't (and don't want
to) join them and would prefer to join a Western country that will eventually
give them naturalized citizenship and treat them somewhat as equals.

~~~
dirtyid
Outrageous compensation packages. Last figure I read, they've already poached
20% of Taiwan's semi engineers over the years. That's before recent
initiatives to compensate foreign workers 3x-5x salary. They're flying in
Korean specialists on daytrips to accommodate their desires to still live in
Korea, building churches on campuses etc. Basically what western companies did
in the 90s to entice foreign specialists to work in China, a lot of cash and
allure of royal treatment i.e. specifically because they won't be equals. Work
in a nice tier1 city for 5-10 years and retire or naturalize / work in the
west. Semi engineers are project paperclip tier assets in the coming years,
they're get work and fast-track citizenship considerations regardless of their
past affiliations and most likely, because of it.

~~~
contravert
If the US didn't pay 3-4x the salary for software engineers compared to
Canada, I wouldn't be here either. If China paid me more, I'd move in a
heartbeat.

~~~
remarkEon
This comment encapsulates in a very crisp way why people are skeptical of
immigration free-for-alls. Many feel the same way you do, that it's just a
method of economic extraction and they don't have any skin in the game for the
long term health and viability of the host Country.

~~~
NonEUCitizen
Why should global citizens be tied to an outdated Westphalian concept of a
nation state?

Note that during the time they're in a certain country, these experts are most
likely paying taxes at the top tax bracket.

~~~
remarkEon
Because there is no such thing as a "global citizen", first of all. And just
taking a look around, the death of the nation state must've been greatly
exaggerated in some circles.

>these experts are most likely paying taxes at the top tax bracket.

Who cares. This is a thinly veiled attempt to say that any person's worth in a
given society is approximately equal to how much they pay in taxes - which is
insane, for a great many reasons.

------
0x8BADF00D
Not to mention, the next war will be the last one ever. It would be an
extinction level event. That choice wouldn't be rational.

~~~
davrosthedalek
Well, world war yes, but we just saw Russia annex a part of a different
country by force. So China could say: Taiwan is Chinese, we belong together.
And would the rest of the world not say: Well, we can't start a world war,
because it's an extinction level event, so let's just condemn China in a very
strongly worded letter?

~~~
fuoqi
>by force

It was so forceful, that it was effectively bloodless and an overwhelming
portion of the "annexed" populace has actively supported it.

Meanwhile situation in Taiwan is drastically different. Pro-mainland faction
is really weak and can not be used to provide sufficient support for quiet
absorption. And since Taiwan has deep military connections with USA for many
decades, any military intervention will inevitably escalate into a major
military conflict.

The only scenario in which something like that can happen is civil-war-level
turmoil in USA. Probability of which, worryingly, is noticeably bigger than
zero.

~~~
justinclift
> It was so forceful, that it was effectively bloodless and an overwhelming
> portion of the "annexed" populace has actively supported it.

That seems like an unusual perspective.

If by "bloodless" you mean "lots of people died, but nowhere near as many as a
world war" though, then sure.

For the "actively supported", where are you getting that information? My
impression (from friends in Kiev) is that it's universally condemned.

~~~
fuoqi
By it I mean that only total 6 people have died from both sides, of which only
2 can be attributed to direct actions of Russian armed forces (well, if you
trust Ukrainian version of events, which should be taken with a lot of salt,
same as with the Russian one). Now compare it with number of deaths in Kiev,
Odessa or Donbas. (note that majority of deaths in the latter case are
Ukrainian citizens killed directly by Ukrainian army, so much for "war with
Russia")

>For the "actively supported", where are you getting that information?

Directly from Crimeans. I have visited Crimea last year as a tourist and
talked with them personally (in Massandra and Alushta, btw the wine is really
great, recommend trying it). Try watching 2014 videos, for example this one is
before Russian forces have became active:

[https://www.youtube.com/watch?v=atm0W5wA2y4](https://www.youtube.com/watch?v=atm0W5wA2y4)

If you don't trust my anecdotal experience, then how about "The Crimea
conundrum: legitimacy and public opinion after annexation" published in the
Eurasian Geography and Economics journal? Or how about "To Russia With Love"
article published in Foreign Affairs? They both confirm strong local support
in favor of the transfer.

>My impression (from friends in Kiev) is that it's universally condemned.

I hope you understand that your friend quite probably is really biased
regarding this issue, right? Always try looking outside of the media narrative
(one may call it soft propaganda), usually world issues are far more complex
than the version painted by media.

~~~
yclept
I think you are purposely narrowly referring to 1 action of many in a crisis
that has had >10,000 deaths.

~~~
fuoqi
Wat? We are discussing the "annexation of Crimea", not the larger context. I
just provided examples for comparison to show that the "annexation" itself is
indeed can be called "effectively bloodless".

------
29_29
How did we get in this situation? How did both parties - Democrat and
Republican fail us so bad?

It's a total institutional failure.

~~~
knowaveragejoe
The propaganda that demonized the TPP at every turn and led to Trump leaving
the table day 1 of taking office seems to have worked.

~~~
RockIslandLine
TPP was a terrible response to the opportunity. Write better treaty text and
you get a better result.

Killing TPP was the correct result.

