The USA is now in the process of finalising rules to
prevent China benefiting from the US$52 billion chip subsidies given to
chip manufacturers building facilities in Arizona. USA companies and
other foreign manufacturers benefiting from the subsidies are not to be
allowed to expand their foothold in China or export products to China.
Note that the narrative now is just to 'slow down' China's advance in
technology sector, realising that the prevention of China's rise is now
an exercise in futility. Good for China's domestic chip industry, good
for SMIC and perhaps TSMC and Samsung as well.
TSMC already
discarded acceptance of those subsidies because of unreasonable terms
designed to hijack their high end chip expertise, on top of having to
give the USA Government client's information and having to share profits
with the USA Government as well, for a miserable US$15 billion subsidy.
The accusation that China is stealing Western technology under the
terms of its agreements with foreign entities is never more high handed
than what the USA tried to steal from TSMC. TSMC already invested US$40
billion in Arizona, with benefits still uncertain, and is between a rock
and a hard place.
Looking at it, TSMC is now in no way being
tied down by the USA's new rules, due to non acceptance of the
subsidies, and needed to expand its operations in mainland China to
restore its bottom line. Unless the USA makes use of further high handed
measures to stifle TSMC and Samsung, which might even collapse these
two chip giants, the failure of the new rules is apparent. Perhaps the
intention was to engineer a collapse of TSMC and Samsung, in order for
USA chip makers to corner the market.
The indication is that this
new ruling will also meet with failure, because Chinese chipmakers are
now on the verge of taking a more substantial slice of the market, both
in chips production and share of the domestic market demand, decreasing
its dependence on foreign chip makers. China will emerge stronger by its
determination to overcome the odds. What China is capable of is clear
for all to see, in space technology, AI, EVs, infrastructures, Jet
propulsion, and catching up on chip expertise which it had a belated
start.
The new rules are centred on the chips business right, and
the subsidies were given on the condition that chip manufacturers do
not expand chip production in China or sell to China. Where can Chinese
domestic chip producers have such opportunities to make hay while the
sun shines in the absence of foreign firms competing in the Chinese
market. It will be a blessing in disguise. The USA can continue to find
more ropes to hang itself, not to mention hanging to dry its own chip
manufacturers.
Just like the war in Ukraine, the USA is still
advocating for more ropes to hang itself and Nato. Now about to send
longer range ATACMS to Ukraine, touted as another game changer.
Developed in the 1980's, these are probably obsolete missile system
destined for the scrapyard. Dumping these to Ukraine is logical and good
business for the Military Industrial Complex.
USA's rope is
also hanging around the necks of its European Allies. Germany is now in
recession, de-industrialisation crippling its manufacturing in the face
of expensive energy cost. When Germany suffers, countries like the PIGS
are not going to find others to continue to bail them out in case of
difficulty. As the war is now expected to be a long haul, these
tottering economies in the EU are not going to enjoy good days ahead.
Anonymous
5 comments:
China already makng small batches of 3nm chips:
https://www.youtube.com/watch?v=GTFWcgsissc
https://www.youtube.com/watch?v=hjEzSKaAEaI
Sooner or later mass production of these 3nm chips will hit the US chip makers badly.
BTW most likely Chinese researchers are working on smaller than 3nm chips.
Production of 2nm chips would start in 2024.
When China can produce all the chips it needs, it would not import anything from the West. Not only that, it would sell China Made chips to the world at lower prices.
Goodbye to all the western chip makers. ASML is the first victim. Next will be Qualcomm, TSMC, Samsung, Intel, Apple and the rest. They would all be buried under a mountain of Chinese chips.
Huawei is going to make many earth shaking announcements today. Watch Out!
All Chinese mobile phone makers would be using China Made chips. No need to talk about the EVs. They would all use indigenous China Made chips and parts.
While the Chinese market is slowly being weaned away from foreign chip makers and their products, the bigger whammy must be the realisation that as Chinese chip manufacturers expand their footprints outside of China, selling chips much cheaper than the USA chip manufacturers, that is going to be the real game changer. That has already been shown to have happened in most other Chinese products out competing the competition in terms of pricing.
The USA may yet designed obstacles to stifle Chinese chips, calling on allies to ban them, but Global South countries are not going to heed those calls. As the Chinese use to say, where it is cooler in the shade, that is where we will sit. In other words, what is cheaper is what they will go for. That is what competition is all about.
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