Chip makers of USA, Taiwan, Japan and South Korea are in
deep trouble with the curb in exports of Gallium and Germanium by China
over 'national security issues'. The term 'national security issue' is
now a very useful concept and very difficult or impossible to prove
argument, coming back to haunt the USA.
This is the reality being
played out: It is always possible to find or create alternatives to
produce more Gallium and Germanium, but setting up facilities to produce
these two elements takes years and very heavy investments needed. Added
to that is the uncertainty of returns, which investors are not likely
to wait stretching over years, even a decade or more. How the industry
will also change with new methods emerging with more R & D, is also a
factor to consider, which could render massive investments turning into
dust.
Realistically, let us assume that the USA and its allies
succeeds in upping production to be self sufficient. The next question
is - how are they going to deal with the Chinese supply side of the
equation, with the massive production capacity of the Chinese ready to
unsettle the market if it is again threatened. China can always flood
the market with much more cheaper to produce Gallium and Germanium to
sabotage those facilities in the West. Selling cheaper is not a crime,
so is selling at exhorbitant prices.
Therefore dealing with the
Gallium and Germanium problem is not as simple as it looks from the
perspective of the USA and its allies. And it is a problem of their own
making by forcing China to retaliate. They thought China would not
retaliate, but it did. Just like Trump's trade war.
As many
people have said, the USA and the West make decisions on the spur of the
moment, never considering the consequences. Now they have seen their
miscalculations in Ukraine, the Chips Act, the Chip4 alliance, the
sanctions and seizure of Russian assets, the oil price cap and the
damage being done to close allies. The irony is that they never learn
from their mistakes.
Anonymous
2 comments:
After the recent meeting between Putin and Xi, Biden is 'revealed' to have 'warned' Xi about Western companies leaving China. In the next breath, Biden is reported to have said that this is not a 'threat'. What is the difference between a warning and a threat?
Why is it necessary for Biden to issue a warning to Xi, just because he meets and talks with old friend Putin? Unless Biden has control of every Western company operating in China, he is talking in 'dementia' mode. EWTN News Director and Anchor, Raymond Aroya, had this to say of Joe Biden - 'He is decomposing right before voters eyes'
Why did Elon Musk and Bill Gates visited China, if not to enhance and look for business opportunities? Why is Micron still making investments in China? Why did Airbus want to expand its production in China after Macron's visit. Biden may be able to force Apple, Google, Intel and force TSMC or Samsung to tow the line with punishment, but the Chinese market is too big to be ignored.
Commerical enterprises answer to shareholders, not Joe Biden who will leave soon, and making profit is the ultimate motive. After the debacle of the Chips subsidies, TSMC and Samsung should have learned their lesson. They are now regreting and licking their wounds, and providing China the blessing in disguise and the impetus of going full steam ahead in chip development priority.
On hindsight, I think Macron's stance on China has some relevance to the rioting situation in France at the moment. Leaders, even Allies, cannot break rank and do business behind the back of the Evil Empire, and contradicts its agenda and get away with it. Macron is tottering with new riots rising, and a regime change in France is being hatched by you know who. That shooting of the 17 year old is just a lame excuse that ignited the pent up pressure cooker and French disdain for Nato. Oh, yes the other slap on the faces of the French was the news that the policeman that shot the youth was rewarded with US$1 million donation. From whom I wonder?
National securities issue is the mother of all bombs. All governments would use it to hide what they don't want you to know, eg : asking how much is the country actual reserve? Citing it is a securities issue. Win liao.
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