Microelectronics and Rare Earth Elements Sectors
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One Reason the U.S. Can’t Quit China? Chips.
In May, Micron Technologies, the Idaho chipmaker, suffered a serious blow as part of the U.S.-China technology war. The Chinese government barred companies that handle crucial information from buying Micron’s chips, saying the company had failed a cybersecurity review.
Micron said the change could destroy roughly an eighth of its global revenue. Yet in June, the chipmaker announced that it would increase its investments in China — adding $600 million to expand a chip packaging facility in the Chinese city of Xian.
“This investment project demonstrates Micron’s unwavering commitment to its China business and team,” an announcement posted on the company’s Chinese social media account said.
Global semiconductor companies are finding themselves in an extremely tricky position as they try to straddle a growing rift between the United States and China. The semiconductor industry has become ground zero for the technology rivalry between Washington and Beijing, with new restrictions and punitive measures imposed by both sides.
U.S. officials say American products have fed into Chinese military and surveillance programs that run counter to the national security interest of the United States. They have imposed increasingly tough restrictions on the kind of chips and chip-making equipment that can be sent to China, and are offering new incentives, including grants and tax credits, for chipmakers who choose to build new operations in the United States.
But factories can take years to construct, and corporate ties between the countries remain strong. China is a major market for chips, since it is home to many factories that make chip-rich products, including smartphones, dishwashers, cars and computers, that are both exported around the world and purchased by consumers in China.
Overall, China accounts for roughly a third of global semiconductor sales. But for some chipmakers, the country accounts for 60 percent or 70 percent of their revenue. Even when chips are manufactured in the United States, they are often sent to China for assembly and testing.
“We can’t just flip a switch and say all of sudden you have to take everything out of China,” said Emily S. Weinstein, a research fellow at Georgetown’s Center for Security and Emerging Technology.
The industry’s reliance on China highlights how a close — but extremely contentious — economic relationship between Washington and Beijing is posing challenges for both sides.
Those tensions were reflected during Treasury Secretary Janet L. Yellen’s visit to Beijing this week, where she tried to walk a fine line by faulting some of China’s practices while insisting the United States was not looking to sever ties with the country.
Ms. Yellen criticized punitive measures China has recently taken against foreign firms, including limiting the export of some minerals used in chip making, and suggested that such actions were why the Biden administration was trying to make U.S. manufacturers less reliant on China. But she also affirmed the U.S.-China relationship as strategic and important.
“I have made clear that the United States does not seek a wholesale separation of our economies,” Ms. Yellen said during a roundtable with U.S. companies operating in China. “We seek to diversify, not to decouple. A decoupling of the world’s two largest economies would be destabilizing for the global economy, and it would be virtually impossible to undertake.”
The Biden administration is poised to begin investing heavily in American semiconductor manufacturing to lure factories out of China. Later this year, the Commerce Department is expected to begin handing out funds to help companies build U.S. chip facilities. That money will come with strings: Firms that take funding must refrain from expanding high-tech manufacturing facilities in China.
The administration is also weighing further curbs on the chips that can be sent to China, as part of a push to expand and finalize sweeping restrictions it issued last October.
These measures could include potential limits on sales to China of advanced chips used for artificial intelligence, new restrictions for Chinese companies’ access to U.S. cloud computing services, and restrictions on U.S. venture capital investments in the Chinese chip sector, according to people familiar with the plans.
The administration has also been considering halting the licenses it has extended to some U.S. chipmakers that have allowed them to continue selling products to Huawei, the Chinese telecom firm.
Japan and the Netherlands, which are home to companies that make advanced chip manufacturing equipment, have also put new restrictions on their sales to China, in part because of urging from the United States.
China has issued restrictions of its own, including new export controls on minerals used in chip manufacturing.
Amid tighter regulations and new incentive programs from the United States and Europe, global chip companies are increasingly looking outside China as they choose the locations for their next major investments. But these facilities will likely take years to construct, meaning any changes to the global semiconductor market will unfold gradually.
John Neuffer, the president of the Semiconductor Industry Association, which represents the chip industry, said in a statement that the ongoing escalation of controls posed a significant risk to the global competitiveness of the U.S. industry.
“China is the world’s largest market for semiconductors, and our companies simply need to do business there to continue to grow, innovate and stay ahead of global competitors,” he said. “We urge solutions that protect national security, avoid inadvertent and lasting damage to the chip industry, and avert future escalations.”
One Reason the U.S. Can’t Quit China? Chips. (Published 2023)
Chipmakers are finding it increasingly hard to operate in China but say doing business in the country is still key to their survival.
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They prefer to go separate ways, which is fair enough as the issue was always what the 3rd party IP transfer was going to involve (say from STM) since neither had that and there was really not much point for both to be involved together in unwieldy way....as Vedanta isnt even electronics company to begin with. This made a dispute between them in ownership in the end and govt also announced that the 10 billion is only if it was 28nm and larger than that (say 40 nm) would be scaled to something like 5 billion incentive etc (and so they have to re-file)....and it looks like this (40 nm foxconn was able to get interest from STM or someone for) made the whole pie too small to share for two.
Important thing is that the incentive program continues and there is positive response and growth soon from it, however it happens....in more distributed way.
i.e Foxconn is better off getting what IP it can and filing by itself so it can get things running as it particularly wants.
Foxconn to pursue India plan without Vedanta, to apply for chip unit separately
Electronics giant Foxconn plans to apply separately to set up a semiconductor manufacturing unit in India after exiting a joint venture with Vedanta. The move is aimed at taking advantage of incentives offered by the Indian government under its semiconductor manufacturing policy
www.livemint.com
Biden Is Beating China on Chips. It May Not Be Enough.
The White House is intent on outcompeting China on technology. The ground on which this competition is taking place is chip making. But the Biden administration shouldn’t sit back and savor this accomplishment for one reason: What if its core belief — that advanced semiconductors are one of the critical fronts in the contest — is wrong?
Over the past six years, the U.S. government has relentlessly targeted China’s semiconductor industry. The Biden administration extended a Trump-era practice of placing Chinese tech companies on trade blacklists. The White House then declared supercomputing chips all but off limits to Chinese companies, saying that they advance China’s military modernization and human rights abuses. It diplomatically engaged with the Netherlands and Japan to jointly deny advanced chip-making equipment to China.
Then advanced artificial intelligence tools like ChatGPT, which require state-of-the-art chips, appeared on the scene. Now the White House is considering creating an investment screening mechanism that could block American investments in China’s semiconductor companies that could advance A.I. Most recently, the Biden administration is reportedly considering a further tightening of A.I. chip sales to China. Powerful chips are at the heart of A.I. development. And the U.S. government is vigilant about closing off China’s means of acquiring them
These efforts have certainly bruised some of China’s largest tech companies. China’s semiconductor prowess — shaky even at the best of times — is now dealing with major stresses as chip makers start to lose access to leading production tools. Most strikingly, more than half a year after Americans have begun to play with A.I. chatbots and image generation tools, Chinese consumers are still waiting for broadly available homegrown alternatives.
America’s actions are driven by the assumption, articulated by the national security adviser, Jake Sullivan, that computing chips are a force multiplier technology, staking it as critical to continued U.S. leadership. But what if the U.S. government is too focused on the most novel technologies rather than the most important ones? I believe America is in a great power contest with China, one that will be multidimensional and protracted, making it unlikely that success hinges solely on who can stay ahead in a few advanced technologies.
And while there’s no denying the potential significance of large language models, it remains far from obvious that America’s mastery of A.I. would really be a decisive advantage over China. In fact, it’s not even clear that Beijing views the present applications of A.I. as being of great importance. China’s leadership, which recently issued regulations demanding that A.I. chatbots must promote “socialist core values” and not challenge the doctrines of the ruling Communist Party, appears to be in no rush to allow this technology to proliferate among its people.
An excessive focus by the United States on A.I. — and on the advanced chip-making capabilities it requires — may represent a failure to appreciate China’s broad technology strengths. While China has suffered serious setbacks in chip production, its companies are vaulting ahead in other sectors. Last year China overtook Germany in automobile exports, and it is on track to overtake Japan as the global leader this year. While most of these exports consist of foreign brands produced in China, the numbers reflect the deep expertise that Chinese companies have built in the next era of automotive technologies, particularly in car batteries.
It’s not just cars. Industry estimates put Chinese companies at owning around 80 percent of the supply chain for solar manufacturing. Chinese electronics makers have produced a rising share of the components in Apple’s iPhone. And increasingly in less glamorous products — such as industrial machinery and basic household equipment — Chinese brands are joining European and Japanese competitors in the world’s top league tables.
The passage of the Inflation Reduction Act will help build up domestic production capacity in solar and in car batteries. Likewise, Congress and the White House would do better to boost other sectors like biotech manufacturing. China produces much of the supply of active pharmaceutical ingredients, and American manufacturers had trouble making masks and cotton swabs early in the pandemic.
The U.S. government is right to withhold technologies that aid China’s military modernization. Only a small percentage of advanced chips, however, go to military uses. And although Commerce Department officials have severely limited China’s access to the most sophisticated chips, they have taken pains to say that Chinese manufacturers can continue making less-sophisticated chips. One of the revelations of the pandemic was the necessity of having a wide range of chips, both cutting edge and basic. Power management chips, for example, are simpler to produce than the graphics-processing units that power A.I. Yet without them, production lines for everything from automobiles to medical devices could come to a halt.
With one hand, the U.S. government is blocking China’s progress on A.I. and supercomputing, but with the other, it is ushering Chinese companies toward concentrating their efforts on chips for products of daily use. And a world in which Chinese companies dominate the production of mature chips — driven directly by American policy — hardly looks like a victorious outcome for the United States.
In spite of so much talk of economic decoupling with a strategic competitor, America is still enormously dependent on Chinese goods, with a goods trade deficit with China in 2022 that was the second-highest on record. If there is ever a serious disruption to trade, it’s far from obvious that American prowess in A.I. will overcome China’s strength of a large and adaptive manufacturing base.
The problem with trying to regulate fast-moving technologies is that there will always be new loopholes to close. That’s especially the case since American chip makers are constantly dreaming up clever ways to maintain their access to the enormous Chinese market. Administrative agencies risk being bogged down in games of Whac-A-Mole while losing sight of strategic objectives.
We need to spend less time making ever more marginal refinements to restricting an emerging technology. Rather, we should take a more holistic view of a long-term contest with a peer competitor. That means broadening the strategic focus to a wider range of sectors and following through on plans to build unglamorous technologies, too.
Opinion | Biden Is Beating China on Chips. It May Not Be Enough. (Published 2023)
The Biden administration, in its zeal to keep advanced chips away from China, is failing to miss the risks in many other sectors.
TSMC Is Becoming the Global Chipmaker It Didn’t Aspire to Be
A little over three years ago, Taiwan Semiconductor Manufacturing Co. was among the world’s most geographically concentrated technology giants with almost the entirety of its capacity within a 300-mile radius. Now, it is on the verge of becoming one of the most globally diversified chipmakers. This wasn’t the plan.A new facility near Dresden, Germany, is set to begin operations in 2027, the Hsinchu-based company said Tuesday. Coupled with current plans, TSMC will have factories in five countries spread over three continents, rivaling the sprawl of rivals Intel Corp. and Samsung Electronics Co. These overseas plants add to the significant operations it has in Taiwan and the two existing sites in China. (For more than 25 years it has also owned a fab near Portland, which though profitable is small and not seen as a company success story.)
Having all its manufacturing close to home has always been an advantage for the made-to-order chip foundry. The tight relationship between research and development, and factory operations, where engineers can easily shuffle between production lines, helped TSMC become a fast-moving supplier in a high-stakes industry. Dotting the world with fabs risked diluting this advantage.
But then TSMC’s true global expansion kicked off in May 2020 with the announcement of a new facility in Arizona, a project which was enhanced two years later to include a second plant at the site, taking total investment in the Southwestern state to $40 billion.
A venture with Japan’s Sony Group Corp., unveiled in 2021, took TSMC in a new direction. Instead of owning a factory outright, Sony Semiconductor Solutions Corp. will take a 20% stake in a factory being built in Kumamoto. Automotive components supplier Denso Corp. later signed on to take a stake of over 10%. (Fun fact: that plant is closer to Shanghai than Tokyo).
Dresden is a continuation down that path of working with clients to jointly own facilities, largely to supply the growing demand for components used in automobiles. TSMC will invest up to €3.5 billion ($3.8 billion) for a 70% share of newly formed European Semiconductor Manufacturing Co. Robert Bosch GmbH, Infineon Technologies AG and NXP Semiconductors NV each take 10%, and total capex is expected to be around $11 billion, with the money coming from equity, debt and German and EU funding.
Since its founding by Morris Chang more than three decades ago, TSMC eschewed equity partnerships in favor of maintaining full control over its operations, and thus its destiny. But the global winds have changed, and its new leaders, Chairman Mark Liu and Chief Executive Officer CC Wei, have had little choice but to adapt. TSMC’s balance sheet is solid, its cash flow is stable, and its credit rating is high. It doesn’t need clients nor governments to hand it money in order to pay for these new facilities.
What it does need, though, is buy-in. These remote factories at locations many time zones from home require firm orders as well as a solid commitment from third parties motivated to ensure the company’s success. Having the likes of Sony, Infineon and NXP on the ownership list ensures they have skin in the game, while government involvement should help secure political and economic support.
Suddenly, TSMC goes from being an under-the-radar Taiwanese supplier solely focused on a coterie of semiconductor clients, to a global entity with multiple stakeholders across numerous national and local jurisdictions. It’s already proving to be a difficult adjustment.
Liu last month announced the delay of its Arizona opening by about a year. Time spent navigating local regulations and a struggle for talent, including among vendors, means TSMC won’t kick off operations there until 2025. Last week, the company signed an agreement with Arizona Governor Katie Hobbs to follow a worker safety program that’s stricter than federal rules, a sign that TSMC needs to keep adjusting to a changing regulatory landscape. Continued concerns about pay and conditions among local workers means a labor dispute could flare up at anytime, a situation uncommon at home in Taiwan.
Also of surprise is the escalating scale of divergence between costs in the US and Taiwan, which will likely force the chipmaker to charge clients like Apple Inc. and Nvidia Corp. significantly more for products made in Arizona. The Japan plan appears to remain on track for production late next year, with a high chance a second fab will be added to the project.
Yet despite the $60 billion to be spent in total by all parties, the new facilities will account for no more than 10% of global capacity. And not all fabs are created equal; the best stuff will remain in Taiwan for the foreseeable future, with Dresden and Kumamoto both deploying much older production technology — which is fine because automotive chips don’t need anything more modern.
Still, these foreign partners have no reason to complain. Clients are getting a stake in, and access to, precisely the factories and know-how they need. Governments, meanwhile, can tell their constituents that they’ve been successful in luring the world’s most important technology company to their shores.
TSMC is also a winner. Just five years ago, the company warned investors that the European Commission was looking into concerns about “alleged anti-competitive practices” in relation to semiconductor sales. The US Fair Trade Commission was also showing interest, it was reported at the time. Nothing came of these probes, but it would be particularly awkward for regulators in either jurisdiction to now accuse TSMC of being a predatory tech giant when its management has bent over backwards (and spent billions of dollars) to set up shop on their turf.
These overseas plants also dampen the constant drumbeat among rivals that TSMC is overly concentrated in one place, and that governments and chip customers need to look elsewhere. Now, the company is giving them that “elsewhere.” Half the world gets a piece of TSMC, and in return all the chipmaker had to do was lean into globalization.
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I really wish that our own chip production would spend more time promoting and looking for export markets.
Even if the nm isn't competitive it would be really awesome to be able to export in order to improve the R&D.
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China AI & Semiconductors Rise: US Sanctions Have Failed
Huawei, SMIC, 7nm, H800, Domestic AI Capabilities, ASML, MediaTek, Qualcomm, Apple, RF Capabilities, Potential Sanctions
www.semianalysis.com
Every time Westerners talk about how the Chinese cannot "innovate", I have to conclude that they think the Chinese as a "race" have physiological hurdles stopping them from doing this, because otherwise I cannot wrap my head around how they might think this applies when there's no material basis that would stop them from doing so.
Now you'd think this to be a very imbecilic attitude from the lowest rungs of western society, but as I have gleaned time and again from reading historical texts regarding specific dominating zeitgeists, idiotic temporal ideological blind spots and biases have almost a universal radiation in the populations of different cultures and these biases tend to influence policy in a somewhat surreptitious manner in the decisions of unsuspecting rational actors.
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On a further noteChina AI & Semiconductors Rise: US Sanctions Have Failed
Huawei, SMIC, 7nm, H800, Domestic AI Capabilities, ASML, MediaTek, Qualcomm, Apple, RF Capabilities, Potential Sanctions
Every time Westerners talk about how the Chinese cannot "innovate", I have to conclude that they think the Chinese as a "race" have physiological hurdles stopping them from doing this, because otherwise I cannot wrap my head around how they might think this applies when there's no material basis that would stop them from doing so.
Now you'd think this to be a very imbecilic attitude from the lowest rungs of western society, but as I have gleaned time and again from reading historical texts regarding specific dominating zeitgeists, idiotic temporal ideological blind spots and biases have almost a universal radiation in the populations of different cultures and these biases tend to influence policy in a somewhat surreptitious manner in the decisions of unsuspecting rational actors.
Said Jordan Schneider, the China specialist fellow at Center for a New American Security, which is basically an arm of Dem admins, last year when U.S. admin unveiled their sanctions; meaning that even if this wasn't their prediction for the outcome of their strategy regarding China's semiconductor industry, it definitely was not the opposite either. Fair to say their expectations were closer to this:
US sanctions on Chinese semiconductors ‘decapitate’ industry, experts say
Mass resignations of US staff are ‘paralyzing’ Chinese chip industry
www.independent.co.uk
B_A
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He s right.
But we should not forget Taiwanese (another branch of Chinese) had 2 nm chip....
According to MoFreedomFoundation Peter Zeihan mostly tells the US government whatever the US government wants to hear.
You right.
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The article I posted is written by either semiconductor analysts or former ASML employees and condensed matter physicists or based on their data and they know the architecture and have tested it extensively and they think it's legit and good and on par with the best Qualcomm had to offer two years ago. If we consider bias, they might be even a bit biased towards the west, but they try to be as objective as possible. What the fuck does Peter Zeihan know about semiconductors?
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Full of shit. It is a big breakthrough which is why the US opened a probe to find out how the Chinese succeeded.
China is producing its own DUV scanners which will be available in 2024 for commercial production and it has now its own 7nm process(it might be still worse than TSMC 7nm but no doubt will improve) and stacking technology. China also plans to unveil a prototype EUV scanner in 2026.
The US still buys ASML scanners and has no national alternative. Currently intels best node is comparable to TSMC 7nm.
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Wait for @Nilgiri until he comes and say how it is all propaganda and there is no way PRC could pull this off etc, etc.
Edit- this was a joke, I would also like to hear other esteemed members opinion on this. @Merzifonlu
Edit- this was a joke, I would also like to hear other esteemed members opinion on this. @Merzifonlu
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B_A
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Semiconductor Manufacturing International Corporation (SMIC) is a partially state-ownedpublicly listed Chinese pure-play semiconductor foundry company. It is the largest contract chip maker in mainland China.
en.m.wikipedia.org
Their tech and staff are from Taiwan
Mong-Song Liang (English: Mong-Song Liang , 1952- ), a Taiwanese electronic engineer , is an academician of the Institute of Electrical and Electronics Engineers , and served as a professor in the Department of Electrical Engineering and Institute of Electronics , National Tsing Hua University [1] , and a visiting professor at Sungkyunkwan University . In the industry, he has served as a super micro engineer, senior R&D director of TSMC , deputy general manager of R&D of Samsung Electronics , and served as co-chief executive officer (CEO) and executive director of SMIC .
Their team and CEO are from TSMC which had 2nm tech
Why everyone wonder that smic success in 7nm?
Zhang Rujing - Wikipedia
Their tech and staff are from Taiwan
Mong-Song Liang (English: Mong-Song Liang , 1952- ), a Taiwanese electronic engineer , is an academician of the Institute of Electrical and Electronics Engineers , and served as a professor in the Department of Electrical Engineering and Institute of Electronics , National Tsing Hua University [1] , and a visiting professor at Sungkyunkwan University . In the industry, he has served as a super micro engineer, senior R&D director of TSMC , deputy general manager of R&D of Samsung Electronics , and served as co-chief executive officer (CEO) and executive director of SMIC .
Their team and CEO are from TSMC which had 2nm tech
Why everyone wonder that smic success in 7nm?
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