China is Buying Record Amounts of Semiconductor Manufacturing Equipment to Fortify its Chip Industry—While DC Tries to Clamp Down Harder With Sanctions
Semiconductor equipment manufacturer are amping up the production to supply to Samsung & TSMC’s facilities in China as they have 1 year permission/extension. China is building buffer/spare equipment. to run these fabs for foreseeable future (hence the inflated buying in the last 2 years)
However, equipment guys predict a sales dip once the extension gets over.
Let’s hope TSMC and Intel’s new fabs in US will be commissioned as per their plans. It’s interesting turn of events indeed!!
China's history of partnering with foreign companies to entering into a market then stealing the I.P. and dominating the value added parts of the manufacturing process is well know. Combine with cheap coal, lax environmental regulations, & cheap labor, China has come to dominate many industries: EV batteries, EVs, Solar Panel, Wind Turbines, Car manufacturing, electronic hardware, etc.
Trying to learn from history the U.S.-under Mr. Trump-started to attack an area where China does not yet dominate and under Mr. Biden has increase the pressure. But as proven with Russian Sanctions, the reality is that with China advantage-see above-& a government backing it will be hard to stop the train. The Western attack will slow down China progress and like Russia, China will find away around the export restrictions as they have done with many others.
Really informative post! One thing worth mentioning again and again....
The ASML shipments to China exlude the most sophisticated machines (needed to make cutting edge chips). Without those, China will still be one or two steps behind on AI/computing power.
The loopholes exist, but trade restrictions (aka friction; aka pain-in-the-butt-supply-path) are having the desired effect.
I love your graphs but do you know of such things as headings and paragraphs? I have covid right now and I don't have the effort to read these massive blocks of text all apologies.
There is a need to overcome this historic transition which will likely see an increase in productivity and a reduction in costs, thanks to the new energy paradigm and AI; on the other hand, there will be a rethinking of welfare, education, and healthcare. To do this, money is needed, and it can only come from the finances of the involved governments.
There is therefore a need to keep the debt-to-GDP ratio under control.
Just as there are forces pushing towards decoupling, exacerbating international tensions, there are others that act in the opposite direction. Regardless of the problem of having to deal with inflationary pressures
for an indefinite period of time with possibly a level of rates incompatible with global debt, the consequences of a trade conflict (up to a proxy war like the one in Ukraine, between NATO and China) would be lethal for both the West and China.
Semiconductor equipment manufacturer are amping up the production to supply to Samsung & TSMC’s facilities in China as they have 1 year permission/extension. China is building buffer/spare equipment. to run these fabs for foreseeable future (hence the inflated buying in the last 2 years)
However, equipment guys predict a sales dip once the extension gets over.
Let’s hope TSMC and Intel’s new fabs in US will be commissioned as per their plans. It’s interesting turn of events indeed!!
You hit the nail on the head. Thanks for sharing it!
Fantastic insights. Thanks for a great post.
As nearshoring intensified semiconductors imports to Mexico from China increased considerable since 2021.
China's history of partnering with foreign companies to entering into a market then stealing the I.P. and dominating the value added parts of the manufacturing process is well know. Combine with cheap coal, lax environmental regulations, & cheap labor, China has come to dominate many industries: EV batteries, EVs, Solar Panel, Wind Turbines, Car manufacturing, electronic hardware, etc.
Trying to learn from history the U.S.-under Mr. Trump-started to attack an area where China does not yet dominate and under Mr. Biden has increase the pressure. But as proven with Russian Sanctions, the reality is that with China advantage-see above-& a government backing it will be hard to stop the train. The Western attack will slow down China progress and like Russia, China will find away around the export restrictions as they have done with many others.
Really informative post! One thing worth mentioning again and again....
The ASML shipments to China exlude the most sophisticated machines (needed to make cutting edge chips). Without those, China will still be one or two steps behind on AI/computing power.
The loopholes exist, but trade restrictions (aka friction; aka pain-in-the-butt-supply-path) are having the desired effect.
I love your graphs but do you know of such things as headings and paragraphs? I have covid right now and I don't have the effort to read these massive blocks of text all apologies.
There is a need to overcome this historic transition which will likely see an increase in productivity and a reduction in costs, thanks to the new energy paradigm and AI; on the other hand, there will be a rethinking of welfare, education, and healthcare. To do this, money is needed, and it can only come from the finances of the involved governments.
There is therefore a need to keep the debt-to-GDP ratio under control.
Just as there are forces pushing towards decoupling, exacerbating international tensions, there are others that act in the opposite direction. Regardless of the problem of having to deal with inflationary pressures
for an indefinite period of time with possibly a level of rates incompatible with global debt, the consequences of a trade conflict (up to a proxy war like the one in Ukraine, between NATO and China) would be lethal for both the West and China.
IMVHO