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Comment by hollerith | Hacker News Reader

I'm no expert, but I would've guessed that denying ZTE access to US consumers would've been a more effective punishment than denying it access to US component suppliers.

ADDED. Maybe the former would've gone against WTO rules or GATT rules.

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Nah, this is the worst possible outcome for ZTE. They are going to be severely crippled in the international market without being able to use SoCs from Qualcomm (particularly since they haven't invested in creating their own chips like Huawei and Samsung have)

>(particularly since they haven't invested in creating their own chips like Huawei and Samsung have)

They can't really 'invest' in creating their own chips. Currently, all the countries that have semiconductor technology have put them on their export control and won't hand it over to china at any cost. IIRC China overbid for the tech (Was it Micron?) and the government blocked them.

Isn't Huawei Chinese though?

https://www.datenna.com/editorial/china-imports-more-integra...

The best I could come up with is that Huawei (PRC) uses TSMC (RoC) for production, which is to say China could easily invest in domestic production.

SoC aren't being manufactured in China?

Aren't Chinese companies also engaging in rampant Cyber theft of IP?

They are, but like I mentioned in my other comment, their current tech (AFAIK) was cutting edge (Intel) in the year 2000. They're still quite behind. The government is investing gobs of cash to reduce that gap. All the governments with cutting edge semiconductor tech (US/Japan/EU/Korea) are doing anything they can to prevent China from getting it.

>Aren't Chinese companies also engaging in rampant Cyber theft of IP?

I suppose the Chinese don't consider themselves subject to US laws. Not sure if they've signed any treaties..

Less about the legality of it all, and more a question as to why they are so far behind. If Chinese companies are stealing IP, how come their Semiconductor tech lags so much?

I'll also temper my comment by saying the West (US in particular) also engages in same behavior, but with less direct benefit.

> If Chinese companies are stealing IP, how come their Semiconductor tech lags so much?

Shit's hard, yo. :)

Because you can give someone your entire IP portfolio, and they still don't have the institutional knowledge to put it all together.

Digital Equipment Corporation literally had almost 100 Korean engineers on site in Boston in an attempt to teach Samsung how to make Alpha microprocessors. They were only marginally successful, and both parties wanted each other to succeed.

Apple, for example, only knows how to build chips because they bought SiByte who were a bunch of ex-Digital Equipment Corporation microprocessor designers--who learned from people who had something like 3 decades of institutional knowledge upon which to draw.

There aren't that many chip designers in the world. And a lot of them got out because making and selling chips is such a horrifically bad business (long timelines, high capital cost, high risk).

Do you by any chance have a link for the DEC story?

Not easily. You might be able to find something in the Boston Globe archives circa 1993-1995 for the Samsung stuff.

It seems unlikely that all these countries would refuse to make chips for ZTE, though?

Huawei's Kirin SoCs are developed through their HiSilicon subsidiary and are highly competitive with flagship SoCs from Qualcomm and Samsung. MediaTek are a major player in the budget and mid-range smartphone segments.

China lacks mainland fabrication capacity, but Chinese fabless IC companies have very good working relationships with TSMC. Tsinghua Unigroup's bids to buy Micron failed, but they're building a $30bn 3D NAND fab which is due to go online this year. The Chinese government are very serious about building up modern fab capacity.

ARM are British, so there's nothing stopping ZTE from licensing the technology they need to develop a flagship SoC. TSMC will happily fab it for them on a modern process node. Huawei have done it, ZTE are undoubtedly doing feasibility studies as we speak and I wouldn't be at all surprised if Xiaomi and Oppo are thinking about it. In the long term, this sanction could massively backfire by pushing Chinese manufacturers to reduce their dependence on American suppliers.

Doesn't MediaTek provide complete SoC alternatives to everything that Qualcomm offers? It seems like all the low-end Chinese Android brands are already using MediaTek chips.

That's true. But if ZTE puts MediaTek in all their phones, they will become known as a low-end phone manufacturer with poor performance, selective lte band support, and non-existent updates.

That could change. They can invest into kernel engineers as well.

MediaTek have some highly competitive entry-level and mid-range SoC options, but their high-end offerings are much weaker. Huawei-owned HiSilicon do have some very good high-end SoCs. It's plausible that ZTE could partner with a Chinese semi company to produce a competitive high-end SoC.

I'm not so sure. ZTE are quite weak internationally and don't ship a significant number of high-end devices. America is the primary market for ZTE thanks to long-running carrier partnerships.

Losing US-made components will be painful for ZTE, but it's survivable. They can re-spin existing designs around MediaTek SoCs and keep most of their existing market share. Losing the US consumer market would have been a massive blow, undoing years of work that other Chinese smartphone manufacturers have failed to replicate.

https://www.forbes.com/sites/bensin/2017/10/23/how-zte-did-w...

Exactly. That would have at least achieved the stated goal, if this doesn't kill ZTE it will only make them stronger.

Losing the US consumer market is presumably still on the table. "Here's one punishment. Do you want more?"

You deny them one thing now, and if they continue to flout the rules you deny them a second thing later. You need continued leverage.

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