China Plans $47B Fund to Boost Its Semiconductor Industry
wsj.com
wsj.com
Even though it seemed expensive at the time, Masayoshi Son was smart to buy ARM.
They did. Beijing handed out massive subsidies, companies started building fabs, and now those fabs are starting to come online in 2018[0]. Fabs take time to build.
[0] https://epsnews.com/2018/04/26/three-chinese-companies-to-st...
CSMC and Huali for example are a ghost towns (i worked few minutes away from both)
They continued to throw tenths of billions at the problem, till they managed to make a minimally well running fabs for few niche markets.
* Late comers to the semiconductor industry can barely follow the trends, let alone lead. But if one cannot lead, it cannot survive in a free market. No one is going to buy a chip 3~5 years behind the latest technology when he/she has better choices.
* Compatibility issues. China cannot grow its chip with x86 instruction set, at least not the latest one, for patent issues. That further reduces the possibility of commercial success of its own chips.
* Semiconductor industry is now past its prime, the profit and salaries lower than the nascent Internet companies. Even in the US, plenty of EE students are jumping ship. In China, EE talents are doubly drained, by both American semiconductor industry, and by the local software industry.
* The Wassenaar Arrangement bans the export of many high end equipments necessary for chip making to China. While all the other countries/regions can specialize in one part of the semiconductor industry, China has to do all of them by itself, since it has no external help.
* The world politics dictate that Chinese firms are never going to buy ARM. They have the cash and the willingness, but western countries simply won't approve such buyout.
Forcing your enemy to invest heavily in such key sectors is pretty stupid. Eventually, one way or another, Chinese will master the state-of-the-art. A few good examples here - LCD industry, weapons.
It also worth pointing out that the existence of the Wassenaar Arrangement relies solely on the fact that the US is the biggest economic and military power in the world. Not sure how long the US can continue to maintain it.
Given other more developed countries have a technology advantage that they're not sharing and they do not face a demographic crunch, its possible China will find themselves perpetually behind in many areas.
No, they don't need to to begin with. They are smart enough to not to parrot late USSR.
Instead, it is seems more evident with each day that they use counterstrategy - sealing West's advancements in what will be the stem of state-of-the-art tech tomorrow, for cheap, instead of fighting for already substantial, but heading for decline things-that-matter markets.
That used to be a working strategy. But now that ZTE was sanctioned by the US and almost crumbled overnight, it is obvious that the United States is capable and willing to throttle China on these "already substantial, but heading for decline things-that-matter markets". So China has no choice but to master the state-of-the-art of every important sector.
that is not very smart. the ZTE drama is a wake up call for Chinese, the message is loud and clear - US products are not reliable in term of its supply, it can be cut at any time for some stupid political reasons ordered by a moronic US president like Trump.
if you look at the whole story, it is push the lower limit of the business IQ - - forcing your competitor to invest in high profit sectors - telling your customers to rely on less American products by convincing them that the supply won't be reliable
US deserves a better president.
This would have been pretty uncontroversial under any other President.
Read this for more detail on ZTE's malfeasance: https://www.justice.gov/opa/pr/zte-corporation-agrees-plead-...
Generally this makes sense, but not in China’s case where they require all foreign ventures to team with a Chinese company who then steals the foreign partner’s IP. No way a Western semiconductor company could set up a fab in China without creating a competitor 5-10yrs later using their own IP against them.
Thus the Wassenaar Arrangement makes sense, it prevents any Western semiconductor company from gaining a short term advantage over its competitors by leveraging Chinese cost efficiencies, incentivizing all of them to self-destructively follow suit.
China is also capable of figuring things out from first principles, or espionage from non-partners. An example of this was the decision by the US to exclude China from the ISS - they built a couple on their own (no partners) and will be there after the ISS de-orbits or privatizes.
Not if your enemy has a habit of reverse engineering and copying everything they buy.
I recall that China was has a competition for foreign companies to sell them attack helicopters. They had trials and evaluations, and settled on a South African one. You'd assume they made a big order, right? Wrong. They placed an order for a single copy, which the South African company wisely declined.
I can't seem to find a source for the above story, but I think I read it in Wired maybe 5-10 years ago.
kinda of true, assuming you want to be more than a fabless company. But spinning up a fab 1 gen behind can be profitable, especially if it means higher yields (and thus lower costs).
true
* Still lots of money to be made at the forefront, i.e new chemistry, new lithography, better process control, etc. Lots of money in layout and software. Pretty decent money in RF work.
China has proved itself more than capable of replicating anything you put out there -- all it takes is some plans and a few key engineers, plenty of whom are Chinese nationals.
I agree.
Past its prime in what sense? We'll need them for the foreseeable future. Salaries and all can be fixed virtually overnight, with funding...like this $47 Billion.
https://en.wikipedia.org/wiki/Loongson#Loongson_3
Out of curiosity I tried to buy the Loongson 3 one year ago on Taobao (Chinese ebay/Amazon). It was basically impossible to buy except for underpowered old versions.
As far as I know the company has been called a scam by some Chinese (just sucking gov incentives etc.)
If you are interested, not very powerful MIPS boards are available: https://creatordev.io/ci20.html
I guess the company "imagination" is for sale too. There were some issues last year.
Similarly, in the US you can make something that was patented in China as long as it isn't also patented in the US.
Like already someone commend. They did! It's called "Big Fund" and started in 2005. This is just another round. They already have been multiple rounds as far I know.
These days you are require to prove. And there are people qualify to judge whether you are actually getting somewhere.
That said, Semi Conductor is expensive, and requires lots talents and a whole IP ecosystem around it none of which China has. They are trying to paid to get these component and talent, copying and learning from it as we speak. But whether that works and how long it will take we have no idea. After all Semi moves at a very fast pace, by the time they caught up with 14nm, the world would have moved to 5nm.
A truer dichotomy would be between a rigid semi-dictatorship and quasi-democracy... given that even China has token democracy at some levels despite now essentially having a rubber stamped dictator, and many western states are a long way from true democracy - the voting system in the US hardly allows representative democracy and special interest groups are adept at manipulating voting blocs very effectively, and is 2 party democracy really democracy? Other countries do better jobs (ie Australia’s preferential voting, germany’s Proportional representation) but you can argue that till the cows come home
Can I buy a porn magazine, a bag of weed, and assault rifle in China? Hell, the party chairman is now chairman for life.
China is no longer about communism any more than the U.S. is about the Enlightenment. China today is about Gilded Age-type capitalism with a strain of collectivism running through it.
Every Chinese today is caught up in a mad scramble for personal enrichment, often at the expense of his fellow man. Most American Marxists would shrink back in horror at the capitalist fever that grips the average Chinese. Even most of those on America's political right do not have the stomach for the level of Gordon Gecko-ness that animates many Chinese. While many on the American right prefer to retreat to dens, family, and countryside, Chinese capitalists are busily trying to get rich any way they can (ethically or otherwise).
The Chinese Communist Party functions the same way Chinese government has functioned for thousands of years. Anyone can join, if he can pass the necessary tests. Passing tests to gain a coveted spot in the government has been a national priority since before Confucius's day, 2.5 millennia ago, and continues to be today.
China does not have legally enshrined freedom of speech. But at a societal level, the 'real' freedom of speech is greater than what I've experienced in America. In America, you must very carefully watch your words, lest you offend any of a number of easily offended groups. You won't go to jail for it (unlike certain parts of Western Europe - Germany and Britain, for instance), but you will lose friends and you may lose your job. The result is that while speech may be legal in America, it ends up stifled nevertheless. Large chunks of American society no longer value free speech, and there is actual debate in many corners of the country about whether certain speech ('hate speech') should be outlawed. In China, so long as you do not loudly criticize or subvert the Chinese government, you are free to speak your mind - and won't be harassed by the government OR be James Damore'd / Donglegate'd out of a job.
As for the "10s of millions dead", there's extremely good reason to be skeptical of these claims.[1] They become harder and harder to swallow the more older, Mao-era Chinese you talk with - most of whom, no matter where in the countryside they hail from, know of no one who died of starvation or malnutrition. The press is the propaganda arm of a nation's powerful - whether in China or America. Don't believe it just because they tell you to.
[1] http://www.unz.com/article/mao-reconsidered-part-two-whose-f...
From what I gather, this is unfortunately true.
> The Chinese Communist Party functions the same way Chinese government has functioned for thousands of years. Anyone can join, if he can pass the necessary tests. Passing tests to gain a coveted spot in the government has been a national priority since before Confucius's day, 2.5 millennia ago, and continues to be today.
Nah. I don't think you have to pass any tests. You get into the party if you or your parents have the right connections or are willing to bribe the right people.
> China does not have legally enshrined freedom of speech. But at a societal level, the 'real' freedom of speech is greater than what I've experienced in America. In America, you must very carefully watch your words, lest you offend any of a number of easily offended groups.
China doesn't have "real" freedom of speech because you can voice your personal prejudices with fewer social repercussions. China is literally throwing defense lawyers in jail because they have the temerity to defend their clients against the government prosecutors! https://www.nytimes.com/2017/07/25/magazine/the-lonely-crusa... There is no "real" freedom of speech in China in any way.
Try to organize a protest march against Xi Jinping in China and let me know if you still think that "the 'real' freedom of speech is greater in China."
The double standard in many places, even by regulation and law.
I am still hopeful they will open up more in the future, nearly 20 years since the joining of WTO.
> That’s a false dichotomy. China is ostensibly commmunist but free market is alive and well (with heavy doses of state directed influence, but so as in other western countries, witness the military industrial complex)
"Freedom" does not mean only the "free market." China is certainly against many things Westerners would consider necessary for freedom:
> Communist Party cadres have filled meeting halls around China to hear a somber, secretive warning issued by senior leaders. Power could escape their grip, they have been told, unless the party eradicates seven subversive currents coursing through Chinese society.
> These seven perils were enumerated in a memo, referred to as Document No. 9, that bears the unmistakable imprimatur of Xi Jinping, China’s new top leader. The first was “Western constitutional democracy”; others included promoting “universal values” of human rights, Western-inspired notions of media independence and civic participation, ardently pro-market “neo-liberalism,” and “nihilist” criticisms of the party’s traumatic past.
https://www.nytimes.com/2013/08/20/world/asia/chinas-new-lea...
The Chinese communist party literally opposed to constitutional democracy (meaning checks on its power), human rights and accurate, nonpartisan history.
Firstly, are the people of the USA freer than the people of China? I find that quite an easy question to answer.
Secondly, a harder one. Are the people of Chile freer of less free than they would have counterfactually been if the USSR had come to dominate Latin America (and won the Cold War into the bargain)?
To your second point: I don't know, yet in my opinion it should be left to the people of that country to decide what they want for themselves, don't you think? -_- "Democracy!", scream the US patriots, yet meddling and overthrowing democratically elected rulers when it doesn't align with their interests, under the flimsy excuse of "they didn't make the right choice, we know better, with our dictator they will be more free than with their choice". Just doesn't sit right with me.
You do realize that they're closer to being a dictatorship now than they've been for decades? Xi has purged most of his rivals and has recently abolished term limits for his positions, so he could rule indefinitely.
So making their president "president for life" doesn't count as a dictatorship now?
>These examples are on a governmental scale, but the same thing happens in industries where startups are fighting to compete against entrenched competitors.
And if they win, they become the new entrenched competitors and abuse their market position just the same, because that's exactly what they were "competing" for in the first place.
>Innovation, technological advancement, and a higher standard of living for all spring forth from competition and necessity.
I think the best way to drive technological advancement and standards of living would be an economic system that actually values those things directly.
No contradiction there, the competition comes from the other country. It's the same in companies competing domestically too. Within the company, resources are shared and divided in a top-down approach, everyone working to a common goal, using the company's funds to do so. Externally, companies compete with other companies.
I once heard the saying that companies are communistic internally and capitalistic externally.
This pattern seems to stem or be consistent with how humans cooperate and compete, according to Realistic Conflict Theory: https://en.wikipedia.org/wiki/Realistic_conflict_theory
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That said, companies competing have overall done a lot less harm than nations competing. At least companies can't declare war on each other, collect taxes, or execute/incarcerate people.
That's what they try to achieve, but they fail to do so, because the labour relationships are still fundamentally transactional.
Workers aren't working for the common goals of the company, they're working for their salary. And since the primary goal of the company is profit, they are fundamentally in conflict with the goals of the company.
The goal of the employee is thus to seem valuable, and get promotions. Sometimes that means working harder, but often it means making sub-optimal decisions for their own benefit. This isn't always conscious or intentional, but nonetheless, it's what people end up doing, and it leads to a lot of inefficiency: Workers not mentioning difficulties for fear of looking incompetent. Managers insisting on impossible deadlines and so on.
Competition pushes systems to be more efficient, but the problem is it never stops pushing.
https://www.forbes.com/sites/stevedenning/2013/07/16/do-inte...
I know! The US should just resign itself to being a provider or raw materials to the Chinese party-state, so we can focus on China achieving those glorious common goals!
China is rising to fight common perils such as "'Western constitutional democracy'; others included promoting 'universal values' of human rights, Western-inspired notions of media independence and civic participation." (https://www.nytimes.com/2013/08/20/world/asia/chinas-new-lea...)
More seriously now: your perspective is embarrassingly naive, and forgets, many, many significant areas of difference between the US and China. China's leadership, now, is committed to am authoritarian, autocratic path. No amount of progress in "space exploration" is worth throwing support behind that kind of government.
many of the chip designers in USA are not native citizens, which again says, our education system needs a revamp.
It turns out that the market believes that building CRUD apps is more valuable and useful to society than whatever it is physics researchers do.
You are right that we don't have a Stem shortage. Instead we have a Technology shortage, and way too many people are going into these other fields that aren't actually very useful.
on the other hand, more and more are learning programming these days, I recall after 2008(or 2000) some CS departments lost nearly 50% enrollment because coding jobs were saturated then, that may happen again.
still, the "safe" way will be good at coding while specializing in some STEM fields(including chip design, which is mostly software tool usage these days). Wall street is another way out, but I don't like it and won't recommend it to kids.
If research paid above starvation wages I'd do it.
But crud pays 10x as much as working on the latest particle accelerator and I can plan more than 1 year in the future.
"Catherine Rampell found that in 2006, just before the financial crisis, 25% of graduating seniors at Harvard University, 24% at Yale, and a whopping 46% at Princeton were starting their careers in financial services."
in https://www.project-syndicate.org/commentary/the-rent-seekin...
USA need not be number 1 in everything because it can't. USA however can allow Chinese students to come to USA in much greater numbers and tap their talent.
US public education system does not need a revamp. It needs razing down to ground and a complete recreation.
What would the disgruntled Chinese-born, US-educated engineers and scientist do back home in China if not compete with US?
If competing with China for talent is the goal, easeness of doing business and more early stage VC funding - a la “back to 2015” - can help, but it’s not clear those are the right things to do.
Are you kidding? That happens literally all the time. I personally know tons of Chinese friends who wanted to stay in the US but couldn't due to visa issues.
Really though - the US is making money (in the education sector) from the people it brings in and educates, you have to balance that with the US citizens who don't get those same educational opportunities because the space is not available at the good schools
But even if they all leave it is not a zero sum game because even if these people build industries in China that compete with USA they are pushing the boundaries of science that helps everyone. Will USA benefit if some Chinese kid invents say a diabetes cure ? Of course it will.
Of course American can complain that it was not invented in USA but that is how the future is going to be and that is likely to be the new world order.
I wonder if the Taiwanese or the US has a plan for destroying those and similar advanced facilities to keep the technology out of the hands of the Chinese after an invasion? It might disincentivize the Chinese a bit, though I'm sure the nationalistic motivations would override any practical concerns.
The US is investing $47 billion into semiconductors: it's being directed by individual corporations rather than command & control style as in China. Intel's R&D budget alone is ~$13 billion every year.
Over the decades the US approach produced: the Internet, Bell Labs, Lucent, Xerox, Motorola, Intel, Fairchild, Cisco, HP, Texas Instruments, AMD, nVidia, Apple, Analog Devices, Micron, Qualcomm, Applied Materials, EMC, IBM, Sun, and a lot more. It's also in part responsible for ARM, which was partially founded by Apple and VLSI.
What has China's approach produced after their truly vast investments spanning 30+ years? Other than endless copy-cat technology. We'll see if their approach can actually lead to the kind of extraordinary innovation the US has been demonstrating for the last 70 years non-stop in tech.
"Why Can’t China Make Semiconductors?"
https://www.bloomberg.com/view/articles/2018-04-29/why-can-t...
http://www.ejinsight.com/20160121-what-ball-pen-tells-us-abo...
>The root cause of China’s backwardness in some of the key industrial technologies lies in the fact that state-run and private manufacturers are unwilling to invest in research and development because,
This HN submission about the exact opposite: china is investing into semiconductors. Therefore it's not possible to draw conclusions from the article you linked.
It goes on to state that the government has invested in "a RMB$60 million program four years ago to facilitate the research and development of strategic industrial materials such as high-quality steel so as to reduce the country’s reliance on foreign imports, because it is not only an industrial issue but also a national security concern." And then note that, "four years have passed, and the program seems to have achieved nothing."
Clearly there have been some very successful funding initiatives in China, but clearly others have not panned out. I think it's fair to say that time will tell whether the semiconductor investment pays off.
Granted it was a politically hot issue so there must have been lots of top-down pressure rather than allowing a need to rise organically (if some German company will sell you tiny metal balls for less than it would take to sell them the pen, why not just buy it from them?)
And in the case of some technologies, like thorium reactors, humanity ought to hope it changes sooner rather than later.
[1] The China Dream: Great Power Thinking and Strategic Posture in the Post-American Era
If he reunites Korea and keeps the US economy going (and I do believe both of those things will happen), “soon” will be late 2024. For semiconductors that’s eternity. Intel and TMSC will be cranking out 5nm with high yields by then.
I am not worried about the strength of China at all. It comes with too many weaknesses. What worries me is the weakness of Europe, but not the strength of China.
We need another sputnik moment before the public will spend money on innovation.
This isn't a Democrat or Republican issue. I understand debate is constrained along party lines but the issue I'm arguing is that in the context of a contest of nations the neither party of the United States will allow the United States to lose its technological advantage. I think our sputnik moment will come in 10-15 years when the United States is the worlds #2 GDP.
"Soon"? You're putting too much faith in the Almighty Cheetos' thinking skills.
My guess is that any such money will flow elsewhere. The government likes to spread its money around, and Silicon Valley is an expensive place and too hot on selling ads.
Back a decade ago, they were ready to dish out few million bucks to anybody who just had word "solar" in their company name.
I don't see how it will be different this time.
https://www.quora.com/Is-Canadian-Solar-a-Chinese-company
https://www.pv-magazine.com/2017/12/11/canadian-solar-next-c...
China brute-forced building cheap solar panels and flooded the market with them, and the markets generally prefer cheap panels to expensive ones. It's the kind of market China has historically excelled in - high volume, labor & environment intensive, relatively low tech.
Semiconductors are way more complex and the markets prefer the latest and greatest for a variety of reasons. Also (afaik) while fixed costs continue to grow at each new process node, variable costs for a given chip on each new node I believe are lower due to being able to produce more in a given wafer, so that further makes markets like the latest.
Samsung's style is somewhat similar to China, and Samsung cracked world semiconductor market twice: DRAM and NAND flash. I don't see why China can't replicate that.
What will happen is that the world will now have more and better semiconductors. Everyone wins.
https://www.bloomberg.com/news/articles/2018-02-08/sizing-up...
Unlike the US, the demographics of their population are a big problem, as their working age population peaked in 2016 and is now in decline. Maintaining a growth in GDP with an aging shrinking workforce will be a challenge.
I'm not disagreeing, I honestly am not knowledgeable or well-read enough to decisively agree or disagree, but the rationale behind why semiconductors would have saved the USSR from its demise sounds fascinating
They have no equivalent to a company like Bosch in Germany.