Hacker News new | past | comments | ask | show | jobs | submit login
Chip wars: China, America and silicon supremacy (economist.com)
246 points by sbuccini 3 months ago | hide | past | web | favorite | 205 comments

Full disclosure, I work for Intel.

We have a fabrication plant in Chengdu, it's public knowledge that this fab is helping to manufacture products built on the latest process technology. As I've come to learn more about China's tactics when dealing with foreign companies it's become of great concern to me what this plant means for our future. I don't think it would be far-fetched to assume that some very protected and valuable IP has leeched through our doors and into China's hands. In all honestly I really can't fathom how the American government let this deal occur.

EDIT: To add more information [which is all public knowledge so if you're reading this Intel folks don't track me down! :)] its a packaging / assembly plant working on CoffeLake, which is 14nm++, CPUs are NOT fabbed there as Congress forbids it. My concern is more about the ability for the Chinese to potentially reverse engineer these products at assembly and derive IP. Also.. our packaging technology is pretty advanced so I'm concerned with even having an assembly plant there as well.

From people I've talked to who do manufacturing in China...if you aren't literally watching every single employee, every single moment, your IP is being stolen.

I’ve considered leveraging this in electronic manufacturing. Send design off to be cheaply fabricated, wait for it to appear on aliexpress as a clone with all BOM cost optimisation done free. Buy bulk lots and resell in local country. Bingo!

I agree. Doing this now for 5G "mesh" based BTLE devices which I hope will drop dramatically in price. Working out low-cost PMIC, crystal and passive component compatibilities for US based chipsets is a bit of a regulatory issue, but the "clones" iterate so fast I expect them to have complete designs available by mid-2019 and hope to make the money on the software / data.

Interesting. I suppose your value add could be EMC, packaging, support and infrastructure on that.

That works even better if your product has no electronics at all: https://news.ycombinator.com/item?id=18210950

Then hire another factory to clone that BOM optimized part for v2 :p

Just wait :)

If you look at the really cheap multimeters based on the DT830 design root they were originally derived from early Fluke DMMs circa 1985. Fluke hired Intersil to make the ASIC, Intersil second sourced it, the Chinese cloned it and cost optimised it, and then more Chinese guys cloned the target devices (panel meters and DMMs) and built mass production lines. Optimally they even optimised out the DIP packages as they were expensive and bonded the die straight to the PCB.

Down from $500 a pop to $2.

From my personal experience, they seed foreign factories with Military Hackers. It happen to us back in 2004 and we ended up closing the factory since it became a huge headache. They were constantly trying to get into our financials, HR and R&D network. It was comical when we would send a team to confront the employee. They would basically stand up and walk out without saying a word. There was nothing we could do. I still don't know how a company thinks it can remain secure having operations in China.

Samsung announced today that the Chinese stole their new bendable screen technology.


I also expect the productive work output of a foreign spy to be pretty low.

Also I think people are focusing too much on the problem just being IN China. I guarantee you there’s at least one Chinese national working at Intel IN THE US that’s a spy. That goes for just about any large company.

The US government? Isn't it Intel's problem in the first place? Don't the leaders of Intel care if their latest processor technology is copied and then used by competitors?

Yes absolutely, and look -- this is not to say that Intel does not have strict guidelines and processes that protect information. Certain things are definitely need to know around here. However, Intel is a business and if they've calculated that the cost of doing business is worth the risk they will take the risk. The government has put restrictions on semiconductors doing certain types of manufacturing in China but I wonder if these regulations are sufficient enough.

For instance, you can only manufacture CPUs in certain countries if the process is a couple of generations old. As Moore's law slow down the improvement from generation to generation will become less, are our current regulations sufficient enough to address this coming future? That's my concern.

Dont forget it's often as simple as executives bonuses could be easily gained by offshoring (motive), everyone was doing (opportunity), and they did it purely for selfish gain in short term. What happens in long term is next executives' problem, something to hand off to PR folks, and so on.

Happens all the time.

How exactly can one calculate such risk? At best somebody put an Exel file with a model that was wrong but that looked impressive in a presentation. But I doubt that even that was done. Somebody just put vague words that everybody was doing that.

There are things that one should not do no matter how tempting it looks. Rusdian roulette can be very attractive as 5 out 6 persons who tried claimed that it was a harmless.

Your whole premise is that China can't do it on their own, which is proved false by the supercomputer chip ban. Now Intel not only lost their market, China actually gained the capability and revenue to support future R&D. Your leaders at Intel appear to know more about business than you do: that it is higher risk over the long term to lose market share, because that gives your competitors revenue to support R&D and opportunities to work with and leverage a customer base to develop a better product. China has no problem making a CPU on their own. They just can't make a commercially competitive CPU, yet.

I've read through your argument multiple times and it still doesn't make sense to me.

> Your leaders at Intel appear to know more about business than you do: that it is higher risk over the long term to lose market share, because that gives your competitors revenue to support R&D and opportunities to work with and leverage a customer base to develop a better product.

Why would Intel be losing market share by not manufacturing chips in China? They may still manufacture the same number of chips but with less profit.

> China has no problem making a CPU on their own. They just can't make a commercially competitive CPU, yet.

Pretty sure parent comments meant processor fab tech in addition to processor tech. That is, tech that makes it possible to manufacture a competitive CPU at competitive costs.

Fabs are so fabulously expensive nowadays that you need serious volume to make them viable, and the volume today comes from mobile phones, IoT and telecoms equipment.

That's why TSMC and Samsung are spanking Intel in fab technology, which was originally Intel's competitive advantage, because Intel dropped the ball on ARM architecture chips due to its inwards-looking obsession with profitable x86. Intel is now boxed into the same low-volume corner as, say IBM PowerPC and ultimately condemned to irrelevance.

The last thing you want is for the Chinese to start investing in their own fabs and have a captive source of demand for those fabs' output, e.g. x86/x64 chips licensed from AMD. Quite frankly, they're going to steal the technology from TSMC and Samsung, not a has-been like Intel that's been incapable of moving to 10nm.

I'd argue a company like Huawei is probably able to make that kind of fab investment (they also design their own ARM chips), and they've shown in the past they are willing to take the long view by out-investing in R&D their Western competitors managed by the typical short-termist bean counter MBAs. That's why Huawei's CFO (and daughter of the founder) was arrested in Canada, to pressure them not to cooperate with the Chinese government's "Made in China 2025" plan to wean itself off dependence on US-controlled microelectronics. The fact John Bolton admitted he was aware of the move shows it was made on geopolitical grounds.

As I said earlier it is not just about profit at the margin to put a plant in China, it is about showing good faith with the government. Intel's technology lead is relative. It faces competitors like Loongson (MIPS), ARM licensees, AMD licensee and even Alpha licensees. It can't afford to take an antagonistic stance against a very large customer as any lost sales would go to supporting a competitor, and more importantly give the competition a customer base to sustain a positive feedback cycle of product improvements.

You say Intel decided the risk is worth the reward. Are you suggesting that the trade-off they chose is not the right choice for the US as a country? Why? Wouldn't Intel be the one hurt the most by any IP theft?

I think it's not unusual for companies to be forced to accept such risks if their competitors have already done so and that's enabling the competitors to win.

Governments can intervene to keep the playing field level, while protecting the national interests.

If it's true that the US has a dominant position in this space, then it's true that the US government has an opportunity to prevent the US companies from shifting manufacturing to where it's likely to result in IP theft in the process of competing with eachother in the manufacturing costs deparment.

If all the companies in the space are forced to ignore the cheaper manufacturing option, that self-destructive avenue of competition is off the table on equal terms. However there's still the threat of foreign competition undercutting on manufacturing, if they catch up in the IP department (which IP theft certainly accelerates).

This makes sense... So IIUC, it's not clear whether government restrictions are a net positive or negative for the US economy: it helps against one source of IP theft, but hurts in the sense of lower global competitiveness due to higher manufacturing costs.

A very difficult trade-off I guess.

IANAL but I believe the US government considers access to superior Silicon a matter of national security and regulates it as such.

It made a crucial difference in the 1980s but now? Who cares if your CPU is a couple of generations old?

It's more expensive to manufacture the same amount of compute power using older processes. That makes old silicon not competitive. From the viewpoint of the consumer, indeed, price per compute power is relatively constant, but from the viewpoint of a silicon manufacturer, newer processes are cheaper per compute power.

This doesn’t answer the parent point. Compute is more expensive with older tech, so what? They’ll just pay more. Consider North Korea. Their ICBM technology is pretty bad compared to the state of an art, however it is still great security concern.

They won't sell, and not enough to fund competing research. I'm pretty sure the security concern isn't directly related to defense, but to the security of US industries and economy.

That is assuming that a manager at Intel cares more today about another company stealing his companies technology and using it in future as opposed to getting the lowest cost for a new plant today. If the answer isn't obvious, here is a hint: which thing do you think the manager gets a bonus for?

You could say the same about outsourcing in general. It was a giant trend that everyone hopped on, and now it's affecting the entire US economy and transferring know-how to locals in other countries that are now starting their own competitors with government backing. The markets and businesses can be very short-sided.

The CEO of Intel is 58 years old. What does he care if China steals all of Intel's IP? He'll be retired by then.

Not knowing anything about the CEO of Intel, there are certainly many other driving motives for folks besides money and retirement. There's legacy, loyalty to family, country, environmentalism, pride, general ethics, etc. Certainly some business managers are driven by pure greed, but you'd certainly have to make a case more than point out someone's age to indicate that.

That's the wonder of the stocks insane liquidity. People just want the maximum possible return this quarter, so they can sell it and buy some other stock next quarter. Who cares how long the company survives?

And the best part is, if you force all the companies to act this way, and get some odd government protection for the large ones, the companies won't even go out of business. It's just society that gets poorer.

GP observes that Intel is behaving in a way that indicates it does not value future cash flows. I reply with one hypothesis for why Intel is discounting future earnings. (Very high discount rate on future cash flows, perhaps) You respond with reasons its discount rate could be lower.

Yes, I agree it would be nice for the United States if Intel's discount rate was lower, but where's the evidence? Does opening a chip packaging plant in China show "legacy, loyalty to family, country, environmentalism, pride, general ethics, etc"?

Although I think it's unfair to call out the CEO for his age, the notion of people behaving according to the laws of the system they live in, despite trying (and occasionally succeeding) in raising themselves above them, was noticed as far back as Ricardo and and only really put into perspective by Marx in the 1867 preface to the German edition of Capital:

>To prevent possible misunderstanding, a word. I paint the capitalist and the landlord in no sense couleur de rose [i.e., seen through rose-tinted glasses]. But here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class-relations and class-interests. My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them.

The preface ends on a wonderful little note that hopefully everyone can agree on:

>Every opinion based on scientific criticism I welcome. As to prejudices of so-called public opinion, to which I have never made concessions, now as aforetime the maxim of the great Florentine is mine: “Segui il tuo corso, e lascia dir le genti.” [Follow your own course, and let people talk – paraphrased from Dante] Karl Marx, London. July 25, 1867.

I need to read Marx.

He is famously (or infamously) rhetorical in most of his work, but even his harshest critics (at least, those in academic circles) praise the fecundity and depth of his work. This possibility for interpretation was criticized by Pareto ("words are like bats - you are never sure if you are looking at a mouse or a bird" OWTTA) but has also provided the ability to use Marx's critical analysis on himself, and not only in the most narrow philological senses as one might imagine philosophers and political economists quibble over newly discovered German manuscripts.

One could spend their whole life studying Marx and not get through half of the work in Marxology (and two lifetimes if we include mathematical Marxism), value theory and classical economics - but to me that makes it all the better.

You seem well read in him, and philosophy/philology also. Can you recommend works in each you found worthwhile?

Most basically I'd recommend Marx, but maybe not without some guide to what it is exactly you're reading, why things are peculiar and the tradition which Marx inherited, which as his collaborator Engels admitted, was moribund even by the time Marx published Capital[0]. Although you can't avoid overlaying some interpretation, I'd recommend reading Capital alongside something like Johan Fornas' "Capitalism" (Routledge, 2014) who tries to mention various interpretative traditions, and for something more opinionated, Michael Heinrich's "An Introduction to the Three Volumes of Karl Marx's Capital". Value is a big topic in Marx, and while neoclassical economics dismisses it (what I believe to be out of hand) I.I. Rubin, who was persecuted by the USSR under false accusations, wrote a fantastic set of essays on his theory of value, named just as a collection of I.I. Rubin's essays.

Were you asking about philosophy in general? In that case, I admit I'm not very well read at all, even on Marx's Hegelian background - but there is a rather famous 4chan /lit/ board guide to philosophy from the start, though in my experience, it need not be read sequentially.

By philology I was referring to the study of the interpretation of Marx specifically - in my opinion it has produced some fascinating results (see Heinrich above, and importantly The Mismeasure of Wealth, which is a a set of essays by contemporary Marxian philosopher Patrick Murray[0]).

Also of interest is the discussion on Marx's more qualitative points besides his theory of value, specifically his theory of history, alienation, technology etc. for which Gerry Cohen and Sean Sayers have plenty, and Peter Hudis[2] claims from a philological point of view, it is easy to see how the USSR's style of socialism would probably come under fire from Marx himself.

On the whole, I'd just like to conclude with the fact that Marxism is very much not a unified school of thought, and in my modest and relatively uninformed opinion, it has only increased fracturing and has been marred by unfortunate internal hostilities after the 70s in which various philosophers tried to salvage what remained, reinvent, reinterpret or deny the grounds on which famous economists like Paul Samuelson and Piero Sraffa dismissed him. Marxism is so fractured that specifically regional schools have emerged, for instance the Uno School in Japan, AM in the Anglo-Saxon world, the Frankfurt School in 20th c. America, Neue Marx-Lektur in the German world etc.

Despite what it may seem, you asked for what I found worthwhile, but I've replied by citing almost all the authors who I've read at least one work of - I've read so little that I literally can't select what's worthwhile and what's not. This means I'm providing a limited picture, so take what I've said with a Capital-sized grain of salt!

[0] The "dialectical presentation" has come under fire from some Marxists as being insufficiently rigorous, outdated etc. - this is the Analytical Marxist school, which Roberto Veneziani (who you might also refer to on the matter of mathematical Marxism, along with Kliman's easy (but thick) "Reclaiming Marx's Capital") has written about: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2125671

[1] "Probing Marx's dialectical accounts of the commodity, value, money, surplus value, wage labour and capital, The Mismeasure of Wealth establishes Marx's singular relevance for critical social theory today."

[2] Peter Hudis - Marx's concept of the Alternative to Capitalism

Setting aside the questionable question of the CEO's motivations (they would happen in a young person as well, who would probably be in another company by then), the design of corporate governance is supposed to stop CEOs from making exactly that kind of terrible, self-interested decision. There is a board for a reason.

Likely he has Intel stocks. His children can have some too. Isn't it in his interest to preserve the value of Intel then?

Does intel even have a CEO now?

The American government is not a single entity as much as the Chinese government is. Also, if you are a CEO in the US and your tech gets stolen by China what is the repercussion? Nothing really. If you are one of the critical companies in China and the government finds you are letting info leak out I would think there would be major problems for everyone involved.

I mean, your business might go down the tubes if you let trade secrets out in the wild, while Chinese manufacturers undercut you on cost.

Any adverse effects would be felt many quarters in the future.

If this is a widespread issue, I wonder why do companies insist in building/keeping fabrication facilities in China?

I would guess the cost structure of chip manufacturing is heavy towards things other than personnel costs... but is that really so?

Is the waste management more "flexible"? Is it the price of electricity that is cheaper? Or what is it?

Because you can't access the market without giving in / setting something up in China.

Which is the whole Trade War argument about Free market, access and IP. I am not sure how long before the West learn they can expect whatever International "Standard" and "Values" to ever work in China.

A packaging facility is not a fab. It doesn't really give them any advantage in reverse engineering the silicon over someone that buys the end product and de-packages the die.

Nope. When you de-package the chip you damage it, especially on small features. They have access to the die bank, which means they have perfect die. Probably, with test pads still exposed. A microscope, etcher, etester, and patience is all you need to reverse engineer.

I always wondered about the latency on a successful reverse engineering of something like a modern CPU.

I'd expect there's a huge validation stage involved-- flaws in the extraction process could give you a plausible looking but ultimately faulty design to work with, and you have to check and clean that up.

Moreover, if you don't have exactly Intel's fab technology and oral-tradition knowledge, you probably have to retool the design to be more suited to the process you have.

It might still be a boost over whatever they have to offer now, but by the time it hits the market, it would be a generation or two old.

Intel would do well to be wary. AMD already gave away all their IP to their new CPUs to the Chinese government with the Dhyana cpus.

AMD gave away the farm but the money (I think 300 million) saved the company. All of this new innovation from AMD certainly arises from that money. Now however China has easier access to CPU's to build new supercomputer's find find ways to nuke the USA in new novel ways.

> All of this new innovation from AMD certainly arises from that money.

Just to be clear:

Zen microarch design work started circa-2012. The USD$300m deal was circa-4/2016.

It's accurate to say the capital from the deal likely helped AMD finalize, produce, and distribute Zen / Epyc.

But the microarchitecture design innovation predated the cash infusion.

>It's accurate to say the capital from the deal likely helped AMD finalize, produce, and distribute Zen / Epyc.

It didn't, it just gave a pass / access to Alibaba and Tencent as well as other Government related project to use AMD CPU.

We're not talking about the same thing. You're talking about the deal, I'm talking about what AMD did with the cash from the deal.

Look at their balance sheet, and note that without the $300M infusion, the market would have been spooked by their debt levels.


Amd also gave away the GPU farm when it made a similar deal with Intel. Both are shortsighted.

AMD delivered completed physical GPU components to Intel, which Intel then stuck next to their CPUs. They didn't give Intel anything Intel couldn't get by walking over to MicroCenter.

(So far as I know anyway)

Yes, what AMD did was basically give intel a dedicated GPU die with HBM which was then glued on the same package as the CPU.

I believe only for local use, not export outside China.

I think the whole point is that the Chinese government will buy (if allowed) or steal the IP (if not allowed) without compunction or care about agreements.

They weren't allowed the Intel/AMD64 ISA in all the previous years; but didn't steal it - some IP is much harder to get away with stealing than other IP.

For now.

At all, according to the contract. If you're predicting a change, I'd love to have more supporting detail.

This should be a management problem - why is it a government problem? Basically you are saying that your capital structure incentivizes managers to value short term gain over long term costs and so you would like to short circuit that with government intervention. However, when a government intervenes, it will never really leave you alone :-)

I'm concerned that a company like Intel, makers of some of the most valuable IP in the world, decided to invest in a foreign country instead of it's own when a company like Amazon -- which has great IP but don't get me wrong the Chinese have an equivalent (Alibaba) was able to scoop up prime real estate in NYC and DC.

Now Intel has a lot manufacturing based in the US, like I said Congress passed a law to make that happen. But have we looked into why we're allowing Foxconn to get tax breaks to build in "heartland" America but not Intel? An iconic American name?

So you think Intel should've setup shop in NYC or DC?

I'm sure Intel could/does get tax subsidies for land/building. But I don't think that's major the driver of cost for what we're talking about here. It's cost of skilled & specialized labor, and externality costs of supply chain availability.

> I really can't fathom how the American government let this deal occur.

greed and cheap labor. the exploited become the exploiter.

The hype of China has been done by the different investment bankers who were going on an on about China in the 2000-2005 time frame. The governments are lobbied by these investment bankers.

Why did Intel decide to build a fab in Chengdu?

I guess nearly all laptops are made in China so it makes sense to make the CPUs nearby. Esp if cheap labor, cheap land, and low environmental standards.

Rules of Origin & tariffs at a guess? Sometimes you can be creative with attributing value to each subassembly such that the place where you finally package something can make it "Made in China" (which in this case might be an advantage).

I can wholeheartedly believe to state of affairs as a nature of economics. Nobody bothers to quantify the risk of corporate espionage

For that same reason, Intel's chips should not be trusted by other countries. It is highly likely that Intel has planted backdoor into their chips. Thus, China and other nations should foster and develop their own chip industry and abandon Intel altogether. India, Canada, Japan, Europe, Russia should all ban Intel chips.

>>so if you're reading this Intel folks don't track me down

Should have changed your name for this post that doesn't put Intel in a good light: Just by your posting history they can probably track you down. Black activist--start from there and see if you made any complaints or suggestions to intel. Plus our style of writing is more or less unique.

But I agree with others, Intel management (at a certain point) may have interests that might be against the long term interests of Intel. Say, bonuses. That's the worst, but they may also make mistakes in deciding pro-cons.

Lastly, say that tech is worth $25Billion to Intel, and after x years is essentially worthless. Intel gets $15Billion from China in tax breaks, and sells more than $10B to others meanwhile. So economically it's worth to Intel and China gets the tech. But it is worth to our NatSec?

Question, out of all places, why did Intel put plant in the middle of nowhere Chengdu?

packaging and assembly is kinda low on the value chain, where china has already developed the know how. That's probably why there's a fab there.

My concern is more about the ability for the Chinese to potentially reverse engineer these products at assembly and derive IP.

The Chinese are, along with the Russians, probably at the top of the world's best reverse-engineers. You can bet they'll have already reverse-engineered it even if it wasn't made in their country.

Is it really any cheaper to build things in China? There are enough broke-ass places in the US where you could open a plant and offer $9 an hour and get the cream of the crop

$9 / hour, the cream of what crop? What in the world are you talking about?

Nationally Walmart is at $11, Target is at $12 and Amazon is at $15. Outside of convenience stores and fast food, increasingly that's your floor now.

Your $9 would actually be $30 / hour, at the absolute minimum. And you'd never get enough employees.

$9 an hour gets you better than average wages in a lot of places.

I was getting 12 as a qualified heavy equipment operator not not long ago.

Can you get ~1000 9$ an hour employees with engineering degrees though?

In China and most of Asia, you easily can. While these people won't be MIT grads, you can expect significantly higher scientific temperament compared to $MiddleOfNowhere, Utah.

You have hit the nail on the head.

The reason that Silicon Valley has so many of the Chinese/Indian/Other nationalities is simply because of the volume of available "Good Enough" Engineering talent. In most of these cultures a Master's degree is almost the norm. With this in hand, the practical aspects can often be learnt in training/on-the-job. Given that much of Modern Engineering has been systematically streamlined and commoditized, you really don't need very much "Creative" and "Out-of-the-Box" thinking as much as people who can manage and contribute within the existing framework and systems.

I assume you can, because holy fuck, are these supposedly engineering grads that I deal with from tata and cognizent and att and others of these gawdawful out sourcing outfitz, fucking terrible. I wouldn't hire for them to mow my lawn.

I can't express my distaste such companies any more without entering explicit territory.

> I wouldn't hire for them to mow my lawn

You wouldn't but enough people are, apparently, hiring them to do quite a lot of IT work nobody else would touch. Otherwise their business model wouldn't work at all.

It's sad, but apparently that is the case. I feel badly for those companies

> My concern is more about the ability for the Chinese to potentially reverse engineer these products at assembly

Would that be substantially more difficult with the finished product?

In order to push the performance on high end chips, you have to improve thermal conduction between the wafers and the chip package. This usually requires some sort of material (sort of like thermal paste) that doesn't interfere with the electronics but still provides excellent thermal conductivity. You can't use metallic compounds because it would short the wafer so in practice the material usually has strong bonding properties like a glue.

The smaller your feature sizes, the higher the probability that opening the chip to reverse engineer the wafer will rip up part of the silicon you're trying to see. The most interesting pieces of an integrated circuit also tend to be thermal hotspots (i.e. the Intel CPU instruction pipeline vs the cache) which are more likely to be destroyed because they use a stronger bonding material.

I see the same comments every time a china topic is posted on HN. I wonder why?

> I don't think it would be far-fetched to assume that some very protected and valuable IP has leeched through our doors and into China's hands.

China has a "technology transfer policy" for foreign companies doing business in china. So if intel has a fab in china, they agreed to the technology transfer.

> In all honestly I really can't fathom how the American government let this deal occur.

Probably because it benefited US companies and the wealthy.

If china is stealing anything, it's here in the US, not from intel who agreed to trade technology for chinese market access.

When American companies cannot operate freely (in the economic sense) in China and, more recently, when Chinese companies cannot sell their products freely in America, does it really matter? They are basically isolated markets at some point.

This is hardly the reality, plus the world is bigger than just China and the US.

"America has legitimate concerns about the national-security implications of being dependent on Chinese chips and vulnerable to Chinese hacking."

I've lately been having this fantasy, or day dream perhaps, where China or the US declares war on the other. The world cowers in fear at the impending catastrophic conflict, yet as the hours drag on, it becomes clear that nothing is happening. It turns out that the only net effect of the declaration of war is that 10 minutes later, every piece of military equipment either country has was bricked by the other's hackers and both militaries are now more-or-less sitting on their butts, twiddling their thumbs.

In which case the victory goes to Russia, I suppose.

Cixin Liu (of Three Body Problem fame) has a new novel called Ball Lightning that talks about this exactly. Not a great book in terms of character development or plot, but is chock full of intriguing military + technology scenarios. Worth a read.

newly translated. He wrote it 3 years before TBP

Fantastic read. The scale of the problem escalates so suddenly, I always love how ambitious the scope of his stories are.

He makes me not care about character development, the science is so titillating on its own.

I know what I'm reading tonight.

it's on Audible, thank you!

Both sides would be trying to leverage their influence over other nations to adjust the balance so it could be a stalemate if neither side amassed enough support.

And, arguably, the cold war was similar and it seemed to have a net positive impact on research and development for both nations... It was just a matter of who could run the longest.

I've long thought that if I were the Chinese strategists, I'd be putting backdoors into infrastructure products shipped to the US like cable modems and routers. The moment conflict breaks out, China would brick a large percentage of the US internet. Good luck downloading clean firmware during that shitshow.

The DOD said in the past a lot of fake chips from China were getting into American systems. It's an inspiration for things like Trusted Foundry Program.

It's a fantasy.

Enough gear isn't networked or has fallbacks. C2 on the other hand, I'm less sure of. The French were so disturbed that they hacked the computers used by very senior people in the American military that they told the Americans so they would secure it better.

Far more likely is that both sides (other than Trump himself, maybe) know to default to standing down and absorbing the first blow then retaliate, if needed.

"It's a fantasy."

Oh, absolutely, total collapse is a fantasy.

How serious would the degradation be, now, that's an interesting question that probably literally nobody can answer.

But it's an amusing fantasy, and just connected enough to reality to not be in same nonsense realm as an alien eliminating all weapons or something.

This. Non-embedded software folks are far too quick to assume everything is consumer-grade crap.

Is there military crap? Sure. But part of the reason for double-price contracts is hardening and properly securing software.

Folks don't just sit at the Naval War College twiddling their fingers.

Imagine conflict breaking out and China disrupting most of the US's consumer network infrastructure. (read: everyone's DSL/cable modem and some amount of data center equipment.) The chaos and mayhem would be enormous.

Feasible. But let's not pretend it would stop nuclear ICBMs from launching.

Which is, paradoxically, why massive numbers of traceable nuclear weapons + early warning actually make the world a safer place. (At least for major-power, global conflicts)

I could easily be wrong, but it's hard for me to imagine that waging war is the Chinese objective here. Wars are costly, and destructive, and unpredictable.

But tech espionage would fit nicely into a different, long-term game. There is (of course) a lot of work left to do spread the modern economy to the rest of their country. But if they can do that, they will have a huge population advantage and be the largest market in the world. Meanwhile they are already competitive (if not dominant) in manufacturing. So what's left? Tech.

If they can become competitive with (or even leap-frog) the West technologically, they'll really be the de-facto leader of the world in every economic dimension.

That's why our nuclear weapons run on floppy disks...

A US-China "war" is going to be mostly economic rather than military.

Let's hope so, but why are you so confident?

MAD is still in effect?

Read also "Ghost Fleet" by P.W. Singer and August Cole.

I've personally observed this 'war' from a couple of angles. First is in the process equipment required to fabricate the chips. China has endeavored to create its own chip equipment industry, the way that Japan did in the 80s and Korea did in the 90s. I was personally involved in development of 3 product lines by a Chinese capital equipment firm, that have been in development for 10 years. They were a customer for our system component. To kick start the effort, they paid expert, targeted process consultants from the US. To date, none of the 3 have cracked into volume shipments to the fabricators. Ten years in, both Japan and Korea had built equipment that could at least compete domestically. In Japan's case, internationally. The Chinese progress was stifled by ineffective engineering management that ultimately drove our program manager to resign.

Recently, I visited Korea and was told that Chinese semiconductor companies are recruiting semiconductor process engineers from Korea, paying them 3-5x their Korean salary under 5 year contracts, effectively buying out their career. This could be an effective approach to garner the technical expertise needed, but I wonder whether it will simply repeat the outcome of the equipment effort: Experts were brought in and paid well for their knowledge, but it could not be realized due to business cultural or management style constraints.

This is my personal and obviously limited experience, but in the end, fabricating semiconductors is a multidisciplinary endeavor of great complexity. Success depends equally on commitment, pragmatism and effective collaboration, as it does on technical excellence. That is the price of entry to leading edge technical achievement and I'm not sure the Chinese industrial firms are there yet.

You need customers who use your equipment to close the product improvement cycle. Both Japan and South Korea have (or had) competitive chip manufacturers who could help their domestic suppliers improve. Chinese equipment makers don't have such luxury. Their potential fab customers are hobbled by US export control and are surviving on thin margins. So they couldn't or at least haven't been able to get into the positive feedback loop.

I'll repeat it again, my solution would be: Support for Made in India 2025.

Greed won't disappear, but you can shift the balance to a more western friendly country.

They are already destroying a lot of countries. They borrow money to them, so the Chinese can build their infrastructure. But there are almost no locals involved, so all the artificial inflation goes to China. The belt is just an excuse for colonizing the world ( or at least the harbors, strategic airports that they themselves have built, see Sri Lanka, they are the first to comply).

I think a lot of those countries that built a dam with Chinese money forget that maintenance costs a lot also. Reference: FIFA football stadiums

Ps. Feel free to share your concern

They are adopting the USA's playbook.

See https://en.wikipedia.org/wiki/Confessions_of_an_Economic_Hit...

According to Perkins, his role at Main was to convince leaders of underdeveloped countries to accept substantial development loans for large construction and engineering projects that would primarily help the richest families and local elites, rather than the poor, while making sure that these projects were contracted to U.S. companies. Later these loans would give the U.S. political influence and access to natural resources for U.S. companies

India would do the same if it had the capital resources.

The USA playbook is only 30% of China's, they are literally bankrupting them off everything.

+ There is a difference, companies can have PR issues now without just paying off some key figures ( internet). Not saying that it's not possible, but it should be ( and is) harder than the pre & internet age.

China hasn't got that problem, because they control their internet. And trying to control yours ( free internet through satellites)

Africa will have a permanent debt holiday when Wakanda IPOs itself on Ethereum

I think it is easy to imagine several countries, India among them, that are both worse than China from a skills/supplychain perspective but better from a normative/geopolitical perspective.

When choosing between India/Taiwan/Malaysia/Costa Rica/etc, you then need to consider the track record of these various second choices. India's record of disregard for IP [1], political unrest [2], and playing the US and China off one another [3] don't really do it many favors.

That said, I definitely agree that we should begin making major investments of equal magnitude to what was done in 90s/00s PRC in countries aligned with Western technology norms (whatever those are).

[1] https://www.reuters.com/article/us-usa-trade-ip-idUSKCN0XO1I... [2] https://www.bloomberg.com/news/articles/2018-11-30/modi-s-po... [3] https://nationalinterest.org/feature/can-india-balance-betwe...

Citation no 2 -

Farmers protest = political unrest for you? Are you even serious?

India has gone through harsher political climate and emerged unscathed.

it's not farmers protest, it's a bunch of communists. of course Western media is very biased when it comes to India politics.

everything is fine here.

If India is doing hardware as good as it is doing software, God have a mercy on our poor souls.

That, can somehow relate. But hardware is easier than software ( drop company, find workers, rinse and repeat).

Software is unique every project, it's hard to outsource quality. The best ones aren't looking for work, because they have plenty

The funny thing is, I see more and more high quality and innovative software from the Chinese.

A very popular JS framework, Vue.JS, is Chinese made. These things used to be US made.

Also, Facebook is said to target TikTok by releasing apps and features to compete with them. It used to be the other way around.

The word is that Chinese are on the cutting edge of AI research too.

Nore and more it feels like the state of the art of Software is no longer tied to the Silicon Valley. Interesting times.

Is Vue.JS actually "Chinese made"? I checked out their team section and it seems very international, I couldn't see how you'd claim the team is based in any particular country.

How do you define what make of the software is? If Zuckerberg writes a loop when on a trip to France, can we say that Facebook is now partly France made?

Yea, it’s a bit ambiguous, especially in Sillicon Valley where the whole place is built on immigrants. At the places I’ve worked easily over two thirds of my teammates were immigrants born in other countries.

I do see that apparently the creator of Vue.JS was born in China, and then worked at Google in America. Beyond that I’m not clear on the details.

I had my doubts about that too, thanks for checking.

The war on messaging is partially won for now.

TikTok's audience is too young and SnapChat wasn't really competition for Facebook ( WhatsApp was)

I do recognise I was surprised to see TikTok by my neece. It's not a threat yet ( the audience is too young), but they are upping their skills considerately lately

>> the art of Software is no longer tied to the Silicon Valley

It never been. Just look for example how many software were/is created in Europe, especially open source.

Facebook hasn't been innovative for a long time, though. Not since they copied Snapchat stories on Instagram.

Slightly different Point of view: HW needs infrastructure.

It needs Packages, materials, PCB houses etc ideally all near by, with good transportation networks, etc. That was what ShenZhen was good at. It took very low cost labors and supported government and a lot time to build up.

Take a look at this video https://www.youtube.com/watch?v=leFuF-zoVzA on how to build IPhone from parts bought in ShenZhen public market to see the supported systems needed for HW. You can imagine how much easier and faster to prototype/build HW (drone, robots, etc) in ShenZhen as compare to anywhere else in the world (for now).

As the labor cost goes up in ShenZhen / China, the significant advantages are gone. That's why China is trying to move up via Tech/IP, etc.

Same development processes happened in Japan, Korea, Taiwan for the past 40-50 years. All of them start with unskilled Textile -> toy assembly -> Electonic PCB assembly -> PCB Design -> Simple Asic / Systems-> Complex ASIC / Complex Systems.

As they move up the food chain, they all "clone / steal / borrow / learn" ip from more developed nations.

It is also repeating the process 150 years ago where UK invented the Train/Rail system and US just scaled/improved to much bigger system.

History just keep repeating.

Self employed = easier to start software company, yes.

But in the context of outsourcing, dropping a company ( which I summarized infrastructure with: "drop company"), hardware is a lot easier.

You do have a lot to do initially, but big companies have their "procedure". Follow the procedure and everything could be almost right initially.

Software projects can't expand like that "by the book".

Every extra ( new) employee on a project could even move the finish of it 6 months further.

Not everyone can be ultraviolet

This is a big deal. The US already lost its consumer electronics industry. China's plan for 2025 is to have no dependence on foreign sources in certain technology areas, including semiconductors. Who will buy from Intel then?

Someday Foxconn will figure out how to do without Apple in phones.

> This is a big deal. The US already lost its consumer electronics industry.

The US didn't "lose" that, it gave it away for the low wage manufacturing and thus increased profit margins. Putting the blame for this on China, like the US would act any differently if the roles were reversed, is imho quite hypocrite.

Just like the US also ain't above using its global military and intelligence dominance for some good old industrial espionage. [0]

I'm also pretty sure plenty of Chinese have figured out how to do without Apple [1].

[0] https://en.wikipedia.org/wiki/ECHELON#Examples_of_industrial...

[1] https://www.youtube.com/watch?v=SGJ5cZnoodY

I'm always fascinated by all the economists who write articles detailing the cost of protectionism to the American economy but I've never seen an article discussing how much Chinese economic policy costs them. Maybe I'm reading the wrong journals.

Protectionism is only bad when you have the upper hand.

The way to develop a powerful industry is protectionism. When you have achieved it, the way to avoid others develop powerful industries is free trade.

It was not by way of free trade that the USA, Germany or Japan developed.

The costs of protectionism are typically diffuse and difficult to pinpoint. They take the form of higher prices and reduced choice.

Here's one example. Chinese consumers use Alibaba, not Amazon. They use QQ, not Twitter. They use Baidu, not Google. In all of those cases, the foreign brands are higher quality products.

This is an interesting point. I wonder if there's enough public data to figure that out.

I have heard that some forms of Chinese protectionism are a little more subtle: apparently, the government requires foreign companies manufacturing in China to buy batteries from the domestic Chinese battery industry. Only Chinese companies can buy from the (better, cheaper) foreign companies. I don't remember where I read this though.

Foxconn is Taiwanese, not Chinese. It is an important distinction, since Taiwan already has fairly good fab tech.

China could take over Taiwan in a month or less if they really wanted to though, so I wouldn't count on that being an obstacle if China and the USA get into a real war

They cant, because that is exactly what US is waiting for. A proper excuses to start the fight with China.

Or China can sign a treaty with USA for none-intervention during a "peaceful" partial take-over of Taiwan while letting USA to have the free trade she wants. (Or best, an integration with the Taiwanese governments on blockchain over governance of Taiwan.) I believe it is in everyone's interest not to have a full-fledge war in this day and age.

I am not entirely sure how it would be peaceful considering the state of Taiwan against China.

Does Intel have a lead in manufacturing? Surely that was lost to TSMC or Samsung a while back.

They each lead in different Semiconductor sub-markets:

- Intel: CPUs

- Samsung: Memory

- TSMC: Foundry (make chips that others design)

TSMC makes Apple CPUs.

... and Zen 2, i.e. next generation EPYC, Ryzen, and Threadripper.

The waters are muddy because there is no standard to identify what exactly a nano-meter process entails. My personal belief is that feature size will not contribute to the absolute performance of a chip as it has in the past. Packaging technology and other features are gaining share in influence.

While Apple's chips are not direct competitors to Intel's, many people think that they are very comparable now. TSMC manufactures 7nm chips and Intel struggles to manufacture 10nm. It seems that they have similar characteristics, so currently Intel does not have clear lead. We just need to wait for AMD to fully leverage 7nm chips, they are direct competitors to Intel and it will be obvious if Intel have any lead.

While I don't like Intel, I really fear that they'll decide to stop progressing and will continue to use 14nm while they still can squeeze any profits. Those tiny processes require tremendous investments and it's unlikely that new players will appear there, at least old ones should survive and compete.

When it comes to vertical integration in the semiconductor space, Intel comes second to none.

Samsung is the closest match.

Story that all chinese technology is stolen is not true. They have lot of talent and hardworking folks in cutting edge technology. Vast majority of employees in US chip companies doing cutting edge technology are also Chinese. Most of US engineers chase easy money in web technology etc. Same concern was raised by Peter Theil about VC investing not in hard tech. Ycombinator is also classic example of investing tons of money in only short term tech. Most of silicon tech needs 5-7 years or even more.

> Most of US engineers chase easy money in web technology etc. Same concern was raised by Peter Theil about VC investing not in hard tech. Ycombinator is also classic example of investing tons of money in only short term tech. Most of silicon tech needs 5-7 years or even more.

So true! It's tempting, I'm a hardware engineer, but I know I can make more as a software engineer working in web tech. I think the issue for VCs and such is that competitive VLSI design is so much work that it's really limited to big companies who have large budgets to afford the engineering costs.

Personally, I wish there existed more high level HDLs for (at the very least) programming FPGAs and creating chip designs. I am also excited for RISC-V. I hope that as we start to run into limitations in lithography, we get more creative with our chip designs, and as a result, we see more players in the space.

You are quite right though i fear most Americans will find this truth unpalatable.

My prediction: If and When the demise of American Tech. supremacy happens, the main culprits will be the American "Management" and "Finance" industry folks. Hubris and Complacency have been legitimized and are ruling the roost.

Honestly, I don't know who to believe.

You are Chinese? Raw guess.

But the entire setup of China is made for stealing tech from companies who invest there, this doesn't mean anyone isn't hardworking or hasn't got any talent. I know Chinese are hardworking.

Also, hardware needs a lot of capital in Western countries, workers are expensive.

Starting for yourselve ( with software) and gradually growing is a lot "easier" if you aren't rich.

> You are Chinese?

Do not go down that road, please.

The reason I added it was conflict of interest originally. It's quite irrelevant now since I misread it ( I am Chinese was from a different author named BlackjackCF, and was a reply somewhere in his comment history).

So yeah, this wasn't what I had in mind. Human error.

Oh please. The Chinese always sprout up to defend and pretend, that the unsavory aspect of Chinese industrial espionage is American/western propaganda. Happens all over the place on the Internet.

We have a lot of experience with this, and I can tell you what is far more common: people projecting manipulation and astroturfing onto legit users who in fact are merely expressing an opposing point of view. Hauling out this accusation without evidence is poisonous to discussion. That's why the site guidelines ask you not to post such insinuations. Please read and follow them from now on: https://news.ycombinator.com/newsguidelines.html

Following the site guidelines also means not using flamewar tropes like "Oh please", and refraining from nationalistic flamewar in general. "The Chinese always sprout up" is a pretty gross thing to see here.

I am not Chinese. I work in chip company and vast majority of EE engineers are Chinese. White americans may be 1-2% percentage at the junior level. It may be less than 10% overall. There are some older white americans but they all will retire soon. Like I said before, nobody to blame. Follow the easy money.

I don't know where you work, but this seems like a weirdly racist thing to say.

Based on my experience, it's also complete bullshit.

I work at a chip company in the US. Our (chip engineering) workforce is probably about half White Americans. The other half are predominantly Indian, with significant numbers of other Asians. (It's also almost entirely male, because 2018.)

At my previous employer, also a chip company in the US, the workforce was even more heavily skewed to White Americans. Probably at least 70%.

I can point to a great number of very smart, hard-working, dedicated, and capable co-workers in every one of these racial groups.

it's racist for op to observe racial trends at the workplace? Please stop diluting the term.

Same in the companies I've contracted for, not really that many east Asians, almost all American and Indians

I think we kinda need a new word for Chinese Chinese. Are they ethnic Chinese but actually American, as American Chinese, or are they Chinese Chinese?

No, You SHOULD blame the "Management" who cannot think past lining their own pockets.

> But the entire setup of China is made for stealing tech from companies who invest there

That's a really weird statement. A large part of China has no foreign dependencies. China has a vibrant and closed ecosystem tech industry right now -> Most of the Chinese tech startups nowadays have diverged so much from other countries and they're mostly focusing on Chinese market.

Of course the tech companies focus on Chinese users, but China's growth was/is in production.

Ps. Alibaba and jb.com are 2 of them for mostly outside of China. Tescent is "mostly" Chinese gamers

When your industrial based depends on cheap labor, like in China, it's always possible to compete by legislating wages down. You can solve your economic woes with a stroke of a pen.

But people have to live shittily.

When your industrial base depends on IP, like in the US, it's very challenging to defend secrets, especially in a free society. Competing on IP alone is very risky. You have to spend exorbitant amounts of money on security.

But at least I can live wherever I want, freely vote for who represents me, don't get sent to prison camps to make living space for the ethnic majority, have pretty clean air and water, aspire to treat the downtrodden humanely, treat people who aren't my blood relatives humanely, trust my social systems, travel freely, say whatever I want, and do something with my life other than engineering, making money or achieving subsistence survival. The investment in human capital, that makes American labor so expensive, makes it durably valuable regardless of technology, government or foreign relations.

Wait isn't that supposed to be the tradeoffs part?

Great response dude. I'm so concerned because China is moving up the economic ladder when it comes to production. China is no longer a place where the British own the land and the people make T-shirts. These guys are stepping it up, China is making phones.. cars.. they have their eyes set on aerospace, they are building islands in the sea and infrastructure on other continents. Look at what China is about to do to Africa, seems downright colonial. China has taken blue collar jobs in America. Are they now about to start making microprocessors? We have one of America's greatest sources of IP generating talent (Google) ready to risk it all and re-invest in the country, China is about to become an equal power. We don't seem to be prepared.

What is China doing to Africa? And how is that any different than what US does to any other region in the world. Even though America is a democracy it has not really promoted democracy overseas. Apart from earlier itself being involved in wars now instead many bad foreign leaders are supported by US politicians and leaders. Allies which have been behaving badly for long time.

US greatest talent is (perhaps was) it’s ability to attract the talent of the world and creating great value out of it. This happened primarily during and after the world wars was as many nations were becoming more hostile places and American open culture and values became a refuge for many. US will only truly lose it’s leadership position when it gives up on moral leadership.

"attract the talent"...this is no longer the case. I talk to 50+ (new) senior engineers/month (for the past 6 years) and there has been a serious mind shift in the last couple years. I now hear things like "hasn't immigration become impossible to the US" and with increasing remote work, people are happy/prefer working from their home countries (better tax structures, they actually make more money). While this won't hurt US in the short term, the next generation of top startups might not be in Silicon Valley.

What China is doing in Africa is a little different from what US and Eurapa did: China is less likely to make judgement on the African's own internal affair but more focus on the reward/risk of project success. The consequence is: those countries that benefit most _happen to be_ dictator countries. Example: Rwanda, Ethiopia. That's coincident. China invest more on those countries just because they happened to be more stable so there are less risk, not because China love dictatorship. China also invest in Europa and US. They are stable too.

There's one thing US did that was quite close to China is doing now in Africa: Marshal Plan. It was long time ago.

Western media totally misread the real situation. HNer's seems have less population from Africa but more from US/Europa because of majority of them are form tech industry. But if you go to Youtube which has more average people, you will find a lot more African. The tone is quite different.

The next shock that Silicon Valley and US government will face in the near future is when the next social media monopoly or communication service is from a Chinese owned company. Imagine if wechat had won the messaging war vs whatsapp. This is bound to happen sooner than later - eq Tiktok is coming close to disrupting Youtube/Instagram.

Yes, ever since WW2 the US has has been the global media leader, and with that the cultural influencer. That space is now primarily online/social platforms, so if those shift to the Chinese, so will the power to influence. And everyone who wants to do commerce has to play to the tune of those who control customer attention.

>Competing on IP alone is very risky.

Honestly, I'm waiting for the other shoe to drop in the IP industry. But I'm not sure it's going to be the Chinarmageddon scenario we always hear about.

Plenty of countries are net losers in the IP-based economy... they're paying for foreign-owned patents and copyrights but have little of their own to sell. The balance is probably worse the less developed the country is.

Unlike most third world economic problems, though, this can be resolved by the stroke of a pen-- withdrawing from the legal and treaty frameworks that support the copyright and patent systems. Someone's going to try it, probably with a marketable justification of "if we void the patents on foreign drugs/fertilizers/seeds/infrastructure tech, we can make it cheaply for our own consumption" or "we can't afford to be paying for foreign software."

When it happens, I expect to see it ripple quickly. It's not something you can militarily or economically retaliate for (the optics would be terrible) and the only losers are the countries that staked their economy on convincing everyone to treat infinitely-duplicable knowledge as scarce.

Leaving aside that minimum wage hardly applies to semiconductors - I don't think you can pull this off. Legislate wages down and you're risking a real revolt against your government. Paraphrasing Machiavelli, people would forgive just about anything else, even the death of family members, more easily. Even a democracy couldn't do this, they'd never get re-elected.

There are much easier ways to achieve the same end, like devaluation of your currency.

> Paraphrasing Machiavelli, people would forgive just about anything else, even the death of family members, more easily. Even a democracy couldn't do this, they'd never get re-elected.

Germany did it

Did the party get re-elected? Do you have more info, I'd love to read about it.


> Beginning in 2005, however, unemployment figures began falling and, in May 2007, unemployment was at 3.8 million people, a 5½ year low.

> As of 2008, the wage share of national income had been cut to a 50-year low of only 64.5%.


The SPD went from being the senior partner in the governing coalition to being the junior one after the next election. The reforms were not rolled back.

The semiconductor industry isn't really dependent upon cheap labor

Cheap water, lax environmental regulations.

Why does packaging a chip depend on cheap water? No. You put your factory there to show good faith with the Chinese government: that you're in their corner, you can be depended upon and you are willing to share some of the gains.

You would be surprised by how much water and electricity a modern fab consumes.

We were talking about a packaging plant, not a fab. Edit: I understand it may be confusing, as the thread started with Intel doing packaging at Chengdu but moved onto the broader manufacturing question. But the foreign fabs mostly are Asian owned (Taiwan and South Korea) and have little to do Intel.

Ah, guess I missed the edit.

US has plenty of those. I doubt chips requires more water or causing more pollution than fracking.

You outrage is expected. You are about to loose your leading position and you are feeling robbed. But it isn't the first time that this is happening. Remember when Asian countries were robbed of their natural resources, brainwashed away from self-sufficient and sustainable tradition/culture under the pretense of globalization just to create a market that US can sell to? Country that doesn't spend time on facebook or youtube is of no profit to US companies. Several countries' tradition values were replaced with materialism by globalization and caused economical and social suffering.

I'm afraid that you underestimate the quality of life and personal freedom in China and overestimate those in US. It doesn't hurt to travel across different countries a bit rather than simply buying what Fox news says. Or you can check what those American expats staying in China say on Quora.

From a global perspective (rather than US- or China-specific), what exactly is the cost of IP theft? Obviously, the reduced incentives to do R&D (if you cannot monetize it as well, you'll invest less). That by itself could be pretty devastating.

On the other hand, what are the advantages of IP theft? One that I can see is that it creates more competition. I don't know if it helps much in the long run though: if the competitors are just copying the leader, it's probably not adding any value.

Any other pros and cons?

Well copying in itself helps them gain some more skill and 'mutate' the designs with knock-offs if they are doing it with any level of understanding. I've heard accounts of Soviet copying being caught done as very verbatum to the point of leaving in designer signatures in a computer chip's unused circuit mask space, and an extra rivet hole in a wing (although to be fair given the sheer expense it is probably worth adding an unneeded hole than finding out that the hole was a fix for some obscure issue that could cause the plane to crash).

One systemic advantage is an anti-oligarchic one in that it prevents abusing the IP incumbent from abusing their position too greatly - often seen with prescription drugs. If they charge so much that it would be cheaper to just reverse engineer it and start producing it locally (not a cheap or easy task) - well that is what they are going to do, thus encouraging more reasonableness.

The third potential advantage is highly situational and an ironic opposite effect of the reduce R&D incentive. If the market is hot enough to sustain it a constantly changing market is a working strategy to encourage maximized innovation - if anybody can just copy the previous one in say a year but a superior product can be made by then it means that a constant cycle of innovation keeps them on top. As opposed to a protected situation which would allow for innovating only when someone else might catch up on their own or the protection expires. While the later would be better for them it would be worse for the world if say Moore's law behavior applied only every decade.

Actually the last advantage is very convincing, especially in the technology industry.

The equilibrium R&D investment level depends in a very complicated way on the relationship between your market share at any point and the entire history of your investment. I won't be surprised if that equilibrium level goes up as IP protection period shortens.

Of course, there is no objective way to decide what the socially optimal level of R&D investment is in the first place. I guess we can just assume that the higher the better, as long as the economy still produces some food :)

The more general cost is if your country ignores IP while another doesn't you have an immense competitive advantage if the country you are "stealing" from can't in some way punish you economically for it.

I'm personally an IP abolitionist but can recognize that China is abusing its position here. It doesn't hurt the US nearly as much as it does Southeast Asia, India, Japan, Korea etc that by and large obey US IP law. That was in part what the TPP was meant to enshrine in more formalized, consistent, and persistent terms - the Asian nations agree to obey US IP imperialism while the US gives them advantageous trade opportunities over China. A large degree of why it was so heinous was because of how biased it was in favor of the US because of how desperately the countries surrounding China wanted a competitive edge over their ability to ignore US IP.

In many ways Trumps China tariffs are giving a lot of these nations what they wanted without getting anything in return from them.

I agree that IP theft hurts countries that don't partake in it.

However, I was asking about the effect on the world as a whole. Taking some wealth from one country and giving it to another isn't directly changing the amount of wealth in the world. But some second order effects may come into play that do change the global wealth.

The reduced incentive for innovation from US firms hurts global wealth just as much whether the IP copycats are in the US or if they're in China.

Would you abolish copyrights too, or just patents? Trademarks?

If I could only have one of the three I’d keep trademarks.

But I think copyrights are pretty harmless, given the fair use provision and a sensible cutoff. Like 50 years seems like plenty of times to diversify those assets.

I’m an anarchist generally, and I can definitely envision a world where all IP rights are abolished, but I think I’d want to go there slowly, one right at a time. Because the capitalist mechanism will by default harm people so we need syndicalist institutions in place before we open the floodgates to the abuse of the markets.

It's mostly about catching up so that there's an equal playing field.

A bit of unrelated, but since it is important for chips development posting it here. There is an initiative [1] to make FPGA/ASIC design tooling more universal and interconnected with sharing the LLVM-like low level intermediate representation (HDL), which is more powerful than Verilog or VHDL. At this point many people see FIRRTL[2][3] as a viable candidate for this position, with some enhancements.

[1] https://github.com/SymbiFlow/ideas/issues/19

[2] https://bar.eecs.berkeley.edu/projects/firrtl.html

[3] https://github.com/freechipsproject/FIRRTL

HN may be interested in the longer briefing that this editorial is based on - https://www.economist.com/briefing/2018/12/01/the-semiconduc...

For all the comments I see about China stealing IP, just remember, IP can be stolen anywhere, even in America.

We have a couple production plants in China. I haven't seen any concrete evidence that the employees are stealing IP. And if they are, they do a poor job of reproducing it because they're almost never as good as the real thing.

Not to say it doesn't happen, but I just find it humorous that a lot of buzz is around China precisely because most manufacturing is from there and not other nations. There's also a lot of claims in reports, but no hard proof.

There's also no examination of the victims practices or its done very poorly. Not practicing good IP protection like obfuscation in your code, encryption, anti-tamper mechanisms which, from my experience, many American companies don't practice, is just asking for trouble. They may be doing this, but its never mentioned in news articles.

Of course, given enough time and resources, most things can be cracked. However, that's no excuse to make it easy.

The last part sounds like blaming the victims.

Pointing out something a victim can do to secure themselves isn't "blaming the victim".

Reverse engineering may not work always

    When the LS 400 was disassembled for engineering analysis, Cadillac engineers concluded that the vehicle could not be built using existing GM methods

Hardworking, ambitious, and honesty: you can have only two. now pick.

Applications are open for YC Summer 2019

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact