Economy Industrial High Tech (Redux)

Deorum

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TL;DR: Protect Your Ass & National Assets. This thread is for all things industrial sector, integrated circuits and their intersection with geopolitics. The title is in reference to a bill that was introduced in the 116th U.S. Congress (2019-2020), also known as the Creating Helpful Incentives to Produce Semiconductors (CHIPS) For America Act. A bipartisan, bicameral piece of legislation aimed to establish incentives and investments that support U.S. semiconductor research and development, manufacturing and supply chain security. They're as incompetent and late as they've ever been. Why do these tech components matter so damn much? You don't have to take my word for it.

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In 1945, the U.S. manufacturing sector accounted for over 40% of the entire American workforce; by 2020, that had dwindled down to less than 10%. Despite the heavy losses, elimination and offshoring of factory work in consumer goods and light manufacturing, the US has never lost heavy industry or the production of capital goods. In fact, the sector as whole has only continued to expand in terms of real output and is still responsible for driving 35% of productivity growth, 60% of exports, and 70% of private sector R&D. Every dollar spent in manufacturing contributes $1.89 in growth for industries such business services, retailing and transportation. Along with surplus natural resources, a skilled labor force and penchant for entreprenuership, capital goods are one of the backbones of America's advanced economy.

As we know, integrated circuits are the brains of modern electronics and fundamental to enabling advances in computing, communications, defense, energy, health care, medical devices and transportation, in addition to next generation artificial intelligence, quantum computing and wireless networks. The US spawned this industry into existence following World War II and heading into the 2020s, maintains a roughly 50% global market share. It directly employs over 250,000+ Americans and supports an additional one million US jobs, is one of the country's top three global net exports (aircraft and refined oil) and America's number one contributor to labor productivity growth. None of this should be taken for granted.

In a country that values profit over patriotism, it's great to have multinationals who decide to plant their own corporate flag firmly on U.S. soil. The American semiconductor industry doesn't base a majority of its production in the United States necessarily out of loyalty, but more pragmatic reasons of IP protection and legit concern over industrial espionage (they do not base production in the People's Republic of China). The result and benefit to the country is the same, and for what it's worth they're also far from being the most egregious beneficiaries of government subsidies and tax breaks. In fact, they probably deserve more of them if remaining on the cutting edge of technology is a national priority. It's doubly beneficial when companies based in nations of geopolitical allies make foreign direct capital investments in American manufacturing and stateside job creation.




Of course, there's other well known global players wanting into this high technology game but as they've found out the hard way over decades in embarrassing failed efforts, the know-how to both engineer and manufacture semiconductors at the scale of being competitive in the global market truly is that complex and difficult. The barrier to entry really is that high. Smug @NoDak was right, other Sherdoggers were wrong and he forgives them. It's made all the more seemingly impossible when the kingpin progenitor constantly slams the door on the foreign acquisition of tech assets and implements export controls to choke off access to the materials, machinery, equipment, software and services required to raise their own domestic industry. It's an overtly hostile tool of economic warfare, and the result of being full fledged blacklisted is invariably an inevitable collapse of that corporation.



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As far as the aforementioned "CHIPS For America Act", it's an obvious no-brainer for automatic acceptance and chump change given the spending of the federal government these days. It probably doesn't go far enough in some respects given how capital intensive and difficult it is to set up a modern semiconductor fabrication manufacturing plant: An investment tax credit of 40% for semiconductor equipment or facility costs through 2024; $12 billion towards R&D in a variety of subindustries, related fields, and training programs; $10 billion in federal matching to local and state funding in support of advanced manufacturing; $750 million in support of transparency, policy negotiations with foreign powers, and consistency in the semiconductor industry; new programs to boost the nationwide STEM workforce, 5G leadership, and advanced assembly; DoD funding for related projects including the Defense Production Act tie-ins to support rapid production as needed.

Global Industry Snapshot.

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SMIC?



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It will be interesting where the Chips would fall now that the US is under a new leadership.
 
It will be interesting where the Chips would fall now that the US is under a new leadership.

You mean "Beijing Biden"? If his Admin is just an extension of the Obama era then I'm not too concerned. It was actually the Obama White House that started the policy of (inorganic) FDI restrictions and export controls on the CCP; Trump just continued and accelerated them. The Deep Tech State is also a thing - namely CFIUS - and it simply won't allow U.S. tech assets to be sold off and out to the highest bidder.
 
I find your commentary on integrated circuits to be rather shallow and pedantic.
 
I find your commentary on integrated circuits to be rather shallow and pedantic.

I kinda like that. Maybe they would be less shallow if the conversations ever got out of first gear, but there's topics like Kamala Kwanzagate and the House destroying the nuclear family to worry about. Do you ever think posters on this forum are little more than hyperpartisan hacks masquerading as "patriots"?
 
Is interesting it see the Europe has such a small amount of the semis. that said basically the USA needs to get with Taiwan which should be way, Japan a bit harder and Korea the hardest and make some exclusion laws related to China. Write up some human rights noise for the liberals to gobble up and exclude China from high end chips. I think this will force China to go on an R&D kick that won’t bear fruit for a decade. Meanwhile a lot of higher tech industry will leave or find some alt to using China in their supply chains
 
I kinda like that. Maybe they would be less shallow if the conversations ever got out of first gear, but there's topics like Kamala Kwanzagate and the House destroying the nuclear family to worry about. Do you ever think posters on this forum are little more than hyperpartisan hacks masquerading as "patriots"?

Yeah, I think that's an accurate description of most Americans who speak about politics. But putting China in the conversation will really attract the ignorant takes.

To be clear, though, my post was a pop cultural reference. I was torn between it and the "I know some of these words" gif from Goodburger. I have no knowledge about or insights on this topic, and I suspect few posters do.
 
Is interesting it see the Europe has such a small amount of the semis. that said basically the USA needs to get with Taiwan which should be way, Japan a bit harder and Korea the hardest and make some exclusion laws related to China. Write up some human rights noise for the liberals to gobble up and exclude China from high end chips. I think this will force China to go on an R&D kick that won’t bear fruit for a decade. Meanwhile a lot of higher tech industry will leave or find some alt to using China in their supply chains

You certainly love to see this. TSMC's Arizona investment is enormous and hopefully just the beginning of further moves towards more US based production because their manufacturing and process technology is second to none. A solid portion of Qualcomm and Nvidia chips will soon be "outsourced" within the United States.

 
You mean "Beijing Biden"? If his Admin is just an extension of the Obama era then I'm not too concerned. It was actually the Obama White House that started the policy of (inorganic) FDI restrictions and export controls on the CCP; Trump just continued and accelerated them. The Deep Tech State is also a thing - namely CFIUS - and it simply won't allow U.S. tech assets to be sold off and out to the highest bidder.


Yeah I mean Biden they say he is a China shill bill more than Obama, but that may have change or what not.

China in 2020 had the largest GDP growth in 15 years some analysts have said.

At this point they are poise to dominate the rest of Asia they dont even need to surpass the USA to do that the only thing that is lacking is a more general cultural acceptance of Chinese soft power culture.

Western based pop Culture still dominates at this point but that could change.


But I am not sure if they can replace the west more so the USA.

There are still more people from Asia who wants imigrate to America than Beijing.


All roads lead to Rome as they say.
 
TL;DR: Protect Your Ass & National Assets. This thread is for all things industrial sector, integrated circuits and their intersection with geopolitics. The title is in reference to a bill that was introduced in the 116th U.S. Congress (2019-2020), also known as the Creating Helpful Incentives to Produce Semiconductors (CHIPS) For America Act. A bipartisan, bicameral piece of legislation aimed to establish incentives and investments that support U.S. semiconductor research and development, manufacturing and supply chain security. They're as incompetent and late as they've ever been. Why do these tech components matter so damn much? You don't have to take my word for it.

R1.png

R2.png


In 1945, the U.S. manufacturing sector accounted for over 40% of the entire American workforce; by 2020, that had dwindled down to less than 10%. Despite the heavy losses, elimination and offshoring of factory work in consumer goods and light manufacturing, the US has never lost heavy industry or the production of capital goods. In fact, the sector as whole has only continued to expand in terms of real output and is still responsible for driving 35% of productivity growth, 60% of exports, and 70% of private sector R&D. Every dollar spent in manufacturing contributes $1.89 in growth for industries such business services, retailing and transportation. Along with surplus natural resources, a skilled labor force and penchant for entreprenuership, capital goods are one of the backbones of America's advanced economy.

As we know, integrated circuits are the brains of modern electronics and fundamental to enabling advances in computing, communications, defense, energy, health care, medical devices and transportation, in addition to next generation artificial intelligence, quantum computing and wireless networks. The US spawned this industry into existence following World War II and heading into the 2020s, maintains a roughly 50% global market share. It directly employs over 250,000+ Americans and supports an additional one million US jobs, is one of the country's top three global net exports (aircraft and refined oil) and America's number one contributor to labor productivity growth. None of this should be taken for granted.

In a country that values profit over patriotism, it's great to have multinationals who decide to plant their own corporate flag firmly on U.S. soil. The American semiconductor industry doesn't base a majority of its production in the United States necessarily out of loyalty, but more pragmatic reasons of IP protection and legit concern over industrial espionage (they do not base production in the People's Republic of China). The result and benefit to the country is the same, and for what it's worth they're also far from being the most egregious beneficiaries of government subsidies and tax breaks. In fact, they probably deserve more of them if remaining on the cutting edge of technology is a national priority. It's doubly beneficial when companies based in nations of geopolitical allies make foreign direct capital investments in American manufacturing and stateside job creation.




Of course, there's other well known global players wanting into this high technology game but as they've found out the hard way over decades in embarrassing failed efforts, the know-how to both engineer and manufacture semiconductors at the scale of being competitive in the global market truly is that complex and difficult. The barrier to entry really is that high. Smug @NoDak was right, other Sherdoggers were wrong and he forgives them. It's made all the more seemingly impossible when the kingpin progenitor constantly slams the door on the foreign acquisition of tech assets and implements export controls to choke off access to the materials, machinery, equipment, software and services required to raise their own domestic industry. It's an overtly hostile tool of economic warfare, and the result of being full fledged blacklisted is invariably an inevitable collapse of that corporation.



rzs1.jpg


As far as the aforementioned "CHIPS For America Act", it's an obvious no-brainer for automatic acceptance and chump change given the spending of the federal government these days. It probably doesn't go far enough in some respects given how capital intensive and difficult it is to set up a modern semiconductor fabrication manufacturing plant: An investment tax credit of 40% for semiconductor equipment or facility costs through 2024; $12 billion towards R&D in a variety of subindustries, related fields, and training programs; $10 billion in federal matching to local and state funding in support of advanced manufacturing; $750 million in support of transparency, policy negotiations with foreign powers, and consistency in the semiconductor industry; new programs to boost the nationwide STEM workforce, 5G leadership, and advanced assembly; DoD funding for related projects including the Defense Production Act tie-ins to support rapid production as needed.

Global Industry Snapshot.

rzs2.jpg

rzs3.jpg


SMIC?



cgb.gif



Do you feel the current administrations hard line against US companies selling products to Huawei hurt those companies as well as forcing the Chinese government’s hand at accelerating their aspirations for cutting edge semiconductor production?
 
Do you feel the current administrations hard line against US companies selling products to Huawei hurt those companies as well as forcing the Chinese government’s hand at accelerating their aspirations for cutting edge semiconductor production?

Yes, and @John Black alluded to this in another thread as well. I'm entirely opposed to suggestions that the US stop selling China IC's and would sell them as many chips as they can possibly consume. If the US stopped selling chips to China, it would cut revenue by at least 50% and cost tens of thousands of high skill, high wage jobs stateside.

I'm far less against choking off the means to produce them and keeping the CCP in a perpetual state of dependence though. The semiconductor materials and machinery firms don't represent remotely the same level of collateral damage the chipmakers do because a majority of their client base are the chipmakers. China has been chasing a domestic industry of their own for quite a while regardless though.

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You mean "Beijing Biden"? If his Admin is just an extension of the Obama era then I'm not too concerned. It was actually the Obama White House that started the policy of (inorganic) FDI restrictions and export controls on the CCP; Trump just continued and accelerated them. The Deep Tech State is also a thing - namely CFIUS - and it simply won't allow U.S. tech assets to be sold off and out to the highest bidder.
Zhou Biden you mean
 
Yeah I mean Biden they say he is a China shill bill more than Obama, but that may have change or what not.

China in 2020 had the largest GDP growth in 15 years some analysts have said.

At this point they are poise to dominate the rest of Asia they dont even need to surpass the USA to do that the only thing that is lacking is a more general cultural acceptance of Chinese soft power culture.

Western based pop Culture still dominates at this point but that could change.


But I am not sure if they can replace the west more so the USA.

There are still more people from Asia who wants imigrate to America than Beijing.


All roads lead to Rome as they say.
Yeah 2020 was a great year for China. It would be pretty hard for Biden to be any better for China than Trump was. From leaving the TPP entirely for China to control, to the steel and aluminum tariffs, to the section 301 tariffs (lmao these never work, Reagan famously called them stupid), to siding with China over Hong Kong... I mean it’s laughable to think Trump did well in curbing China in any way.
 
What I am wondering is what exactly is so difficult :rolleyes:

Note I am not an engineer. But I have long found it impressive that sometimes 50+ years old knowledge (how to build long-range missiles/rockets) is still somewhat successfully protected. (I am well aware of what is and has been done to ensure it, just still find it impressive.)

Same thing there. What's really the difficulty the Chinese are facing? Is it building state of the art technology that would be competitive? Or is it even getting a like a status of "state-of-the-art 10-15 years ago"?

Sorry @Deorum if this has been explained before, but eli5.
 
What I am wondering is what exactly is so difficult :rolleyes:

Note I am not an engineer. But I have long found it impressive that sometimes 50+ years old knowledge (how to build long-range missiles/rockets) is still somewhat successfully protected. (I am well aware of what is and has been done to ensure it, just still find it impressive.)

Same thing there. What's really the difficulty the Chinese are facing? Is it building state of the art technology that would be competitive? Or is it even getting a like a status of "state-of-the-art 10-15 years ago"?

Sorry @Deorum if this has been explained before, but eli5.

They are quite far behind in process technology. They are catching up on this rather quickly as they are not opposed to stealing IP. Which is not uncommon in the IC field. They just make no attempt to hide the theft.

The US also makes it difficult for companies to sell them the most advanced lithography equipment needed. Without them you will always be at least several generations behind.
 
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I think this will force China to go on an R&D kick that won’t bear fruit for a decade.
What I am wondering is what exactly is so difficult :rolleyes:

Note I am not an engineer. But I have long found it impressive that sometimes 50+ years old knowledge (how to build long-range missiles/rockets) is still somewhat successfully protected. (I am well aware of what is and has been done to ensure it, just still find it impressive.)

Same thing there. What's really the difficulty the Chinese are facing? Is it building state of the art technology that would be competitive? Or is it even getting a like a status of "state-of-the-art 10-15 years ago"?

Sorry @Deorum if this has been explained before, but eli5.
They are quite far behind in process technology. They are catching up on this rather quickly as they are not opposed to stealing IP. Which is not uncommon in the IC field. They just make no attempt to hide the theft.

The US also makes it difficult for companies to sell them the most advanced lithography equipment needed.

Historically?

Why Can't China Make Semiconductors?

Almost from the start, central planning proved to be a serious impediment. Early government ideas included importing secondhand Japanese semiconductor lines that were outdated before they were even shipped. Expensive efforts to build a domestic industry from scratch in the 1990s faltered due to bureaucracy, delays and a lack of customers for the kind of chips China was making.

Another weakness was a lack of capital. For decades, labor-intensive industries -- such as assembling mobile phones -- were the route to riches in China, attracting investment from entrepreneurs and bureaucrats alike. Making semiconductors, by contrast, requires billions in up-front capital and can take a decade or more to see a return. In 2016, Intel Corp. alone spent $12.7 billion on R&D. Few if any Chinese companies have that capacity or the experience to make such an investment rationally. And central planners typically resist that kind of risky and far-sighted spending.

China seems to recognize this problem. Since 2000, it has shifted away from subsidizing semiconductor research and production, and toward making equity investments, in the hope that market forces could play a larger role. Yet funds continue to be misallocated: Over the past 18 months, there's been a spate of government-juiced overinvestment in semiconductor plants, many of which lack sufficient technology. Those that eventually open will likely contribute to a glut in memory chips, spelling financial trouble for the domestic industry.

But perhaps the biggest long-term challenge for China is technology acquisition. Though the government would like to develop an industry from the ground up, its best efforts are still one or two generations behind the U.S. A logical solution would be to buy technology from American companies or form partnerships with them. That's the route taken by cutting-edge firms in Japan, South Korea and Taiwan.

Yet China can't do the same. Its efforts to purchase American semiconductor companies (often at huge premiums) are regularly blocked for security reasons. Japan, South Korea and Taiwan have put Chinese acquisitions under similar scrutiny. By one accounting, China has made $34 billion in bids for U.S. semiconductor companies alone since 2015, yet completed only $4.4 billion in deals globally in that span.


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As of today, WPEM (lmao, awesome handle) is right and it's really more because they are choked off from these suppliers and there is absolutely no way around it at this juncture. They hold the keys to the kingdom, so to speak.

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You certainly love to see this. TSMC's Arizona investment is enormous and hopefully just the beginning of further moves towards more US based production because their manufacturing and process technology is second to none. A solid portion of Qualcomm and Nvidia chips will soon be "outsourced" within the United States.


That and their factory in Wisconsin is a great step to removing China from fab and being able to glean secrets from the big four.
I guess seeing how Broadcom is Singapore based we need to make sure they know where’d their hum read is buttered.
Would’ve interesting to create joint schooling and technical training to further integrate the country’s and systems. I’m not sure I have a good sneer for better cooperation
 
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