Chip making in China canceled

[Caballoflaco]

@mizer67 you seem to be pretty up to speed on this stuff. Any thoughts on how the loss of the Chinese market may affect overall profits and the R&D budgets of American companies? It was a possible side effect mentioned in a Podcast I listened to at work today where they were talking to a compliance lawyer about the new regulations. IE: we may end up accidentally slowing new product developments if US companies loose too much money.



Here’s a link if anyone is interested. It was good, but a bit dense for someone like me with limited knowledge about both microchips and trade laws.

https://geopolitics-decanted.simplec...s-chips-sector

[feudist]

What really pisses me off about that is the damage has already been done. US Federal Agencies as well as the US Govt are out of control.
How we got to the point of empowering a Communist Nation to become a powerhouse is maddening.

Crony Capitalism
Bean counting short term stock valuation driven decisions
Regulatory hypocrisy, it's okay for China asshoe to destroy the environment making our shit, as long as we can get that Green cred.
Simple greed.
24/7/365 election cycle eroding all principles and creating vast lobbying opportunities that are corrupting on a scale unheard of in history.
A legacy of the Cold War and Globalization that hoped a rising tide would float all boats
A cherished and sadly mistaken notion that non-Western countries can develop and internalize Western ideals, business practices and political restraints.

An unholy mix of everything from the last 50 years...

[Bart Carter]

What really pisses me off about that is the damage has already been done. US Federal Agencies as well as the US Govt are out of control.
How we got to the point of empowering a Communist Nation to become a powerhouse is maddening.

How far back does the Biden Crime Family go?

[mizer67]

@mizer67 Any thoughts on how the loss of the Chinese market may affect overall profits and the R&D budgets of American companies?

I'd say it's a given. Any reduction in revenue will, I suspect, mean a corresponding reduction in R&D expenditures to maintain margins.

It also creates the incentives to cheat around the margins, or for foreign companies and governments not to play nice w/the US on this. The business is hugely capital intensive and also R&D intensive. There's the potential that long term, in the absence of continued public investment in the industry that we don't achieve the results we're after and reduce our innovation, so the export controls are less effective than they otherwise would be.

SE Asia is a huge market, both now and the not too distant future. If I look at the future, in the next 30 years SE Asia may be 50% of world GDP. Ceding even China alone potentially removes ~16-17% of total demand today, potentially 22-25% in the future. It's a huge incentive to be there, even if the growth doesn't totally pan out as planned.

[medmo]

@mizer67 IE: we may end up accidentally slowing new product developments if US companies loose too much money.

Here’s a link if anyone is interested. It was good, but a bit dense for someone like me with limited knowledge about both microchips and trade laws.

https://geopolitics-decanted.simplec...s-chips-sector

No knock intended towards you. It was that kind of thinking that caused the move of US vital technology offshore from the US and into unfriendly hands. International companies are investing huge dollars to build giant chip manufacturing facilities in the US for a reason. Samsung and TSMC already broke ground in Arizona and Texas way before this developed.

[Caballoflaco]

No knock intended towards you. It was that kind of thinking that caused the move of US vital technology offshore from the US and into unfriendly hands. International companies are investing huge dollars to build giant chip manufacturing facilities in the US for a reason. Samsung and TSMC already broke ground in Arizona and Texas way before this developed.

I’m not saying this isn’t something that we shouldn’t be doing, because I think it was a good call. But, I do think that we need to be open and realistic about decoupling/onshoring etc. and what the costs are going to be. And there is going to be a cost.

I’m also waiting to see what actions the CCP decides to take in response. I don’t even have a starting place to make a prediction on what that might be other than it’s coming.

[medmo]

I’m not saying this isn’t something that we shouldn’t be doing, because I think it was a good call. But, I do think that we need to be open and realistic about decoupling/onshoring etc. and what the costs are going to be. And there is going to be a cost.

I’m also waiting to see what actions the CCP decides to take in response. I don’t even have a starting place to make a prediction on what that might be other than it’s coming.

All seriousness aside, kind of, it looks like General MacArthur was completely correct in 1950 and the general was unjustly fired by Truman. We should have crossed the Yalu river then and solved the CCP problem because just like MacArthur said the problem would be harder to solve later.

There will definitely be costs but I think it will seamlessly be consumed by the competitive technology market. I don't think a short term 5 or 10% cost increase is going to stymy technology growth or inhibit market expansion. Just my 2 cents. Bonus, the American economy and American friendly economies will benefit. Priceless.

[Totem Polar]

Forgive me if it’s been covered and I missed it, but: what does this do to China’s long-running eyeballing of Taiwan? With
Taiwan making something like 65 percent of computer chips, how does this not increase pressure on China to go ahead and do ChiCom-type stuff to Taiwan?

[jh9]

Forgive me if it’s been covered and I missed it, but: what does this do to China’s long-running eyeballing of Taiwan? With
Taiwan making something like 65 percent of computer chips, how does this not increase pressure on China to go ahead and do ChiCom-type stuff to Taiwan?

I think the broad strokes there is that Putin fucked up hard in Ukraine. It called into question how similar any of their tactics, equipment, philosophy, etc is to Russia and whether or not they actually could pull it off right now. Life is tricky for Pooh bear at the moment. His zero covid strategy not working is suspiciously close to making him look weak which makes him suspiciously close to not being President for Life. Fucking up in Taiwan like Putin fucked up in Ukraine would probably be very bad for him, personally.

Had Putin been successful, especially with a protracted war, they probably would have already blockaded Taiwan with the assumption that The West simply don't have the collective will or ability to hit them with sanctions and provide support to Taiwan like w/ Russia/Ukraine. He may still be thinking about it but if he has anyone that's not a simping yes-man he better have them accurately figuring out what their real capability is right now. Finding out after they've blockaded the island that they've got missing critical components in their aircraft and blocks of wooden c4 would only be slightly worse than inaccurately figuring that The West would be too war fatigued to do anything about it.

[mizer67]

Forgive me if it’s been covered and I missed it, but: what does this do to China’s long-running eyeballing of Taiwan? With
Taiwan making something like 65 percent of computer chips, how does this not increase pressure on China to go ahead and do ChiCom-type stuff to Taiwan?

I think it makes conflict more likely, unfortunately.

A few caveats though. First, China would need to take TSMC intact and second, convince the workers there to continue to produce working chips. The processes are so complex for more advanced nodes that I don't believe they'd have the ability to completely eliminate sabotage and distinguish sabotage from regular manufacturing defects, even if the plants were taken intact. Third, long term, it takes a global village of really smart people to keep these plants running, many of whom are in the west, which China would lose completely, so even if 1 and 2 work out it'd be a somewhat hollow victory. Economically China would lose more than the rest of the world, in my opinion, even in victory. The domestic market can't support their growth, yet. There wouldn't be "common prosperity". They'd be in a massive depression, as would the whole world, but it would be worse in China.

Regarding timing, I'd say the Chinese even when pulling in all domestic ferry capacity and their "fishing" fleet don't currently have the transport capacity to support an invasion logistically for the months it'd take to conquer Taiwan, assuming the Taiwanese resist. They'd need to take a port to offload the ferries from as well, barring something unforseen like the Mulberry's, which wouldn't be something that would survive precision fires. They could transport the troops and much of the hardware, say 66% of what's needed and resupply some by air if they achieve air dominance, but it still would fail if the US intervened, or if enough of the heavy lift transport ships were sunk. Within 5-10 years that changes with all the ships coming online.

It'd be impossible to hide a buildup of forces large enough to conquer Taiwan from satellites, so unless there's a first strike in space that doesn't touch off direct conflict w/the US, the US, US Allies and Taiwan would have a pretty good idea it's coming. But any resupply for Taiwan and the tyranny of distance would make any conflict challenging, regardless of Chinese capabilities. In general area denial is a real problem for our key advantages in short range tactical naval air by keeping the carriers at distance and the ground based air as well, given the Chinese have invested heavily in being able to take out our tankers. They don't need to fight us symmetrically where we're strong.

I personally expect the gray war to heat up to continue to attempt to use soft power to force reunification, given the lack of a clear path to a kinetic victory, unless Taiwan declares independence. A blockade is a real possibility, but also one that's very likely to touch off direct kinetic conflict. Gray war is less costly, the Chinese can afford to wait a and the Chinese hold many of the cards in the next ~10 years. They get stronger while we get weaker (militarily) barring major economic shocks.