TSMC halts new Huawei orders after US tightens restrictions
asia.nikkei.com
asia.nikkei.com
The problem starts when there is a massive asymmetry in the trade. China has completely blocked US services from Google to Uber, and gladly accepts manufacturing investment - Tesla Shanghai factory, Intel's Chengdu factory, etc. because the CCP knows that they will gain tremendously by having IP physically based in China. It leaks like a sieve. I've seen it first hand (in semiconductor industry).
America should protect its own interests and interests of other democratic nations before they get eroded, dismantled and sold off to CCP's interests. If China doesn't want American software services running and fairly competing because of CCP surveillance requirements, well...then the US should block all Chinese services from exploiting users[1] and their data, may be EU should block Chinese services from running there until there is strict GDPR requirements and the data is located in EU datacenters. There should be independent datacenter security audits just like CCP wants keys to iCloud datacenters. That would just get us to the fairness level and that's still not enough - there should be a reverse asymmetry to make up for last 20 years of damage - incentivize US/EU services and manfuacturing while simultaneously imposing sanctions and import duties on goods/services made in China. Why not? Can someone tell me why the US/EU shouldn't do the same? I should not be able to buy $1.99 USB cable including shipping from China.
U.S. needs to work on making its foreign policy self consistent. Recognizing Taiwan as a separate country would be a great start (logically and morally)
That's a mistaken interpretation and it has been clarified on numerous occasions.
There are two critical words to the context: recognize and acknowledge. And two separate entities to be considered as far as the US is concerned: China and Taiwan. The US has intentionally left the situation in limbo, to neither give in to China nor prompt a military confrontation between China and Taiwan.
The US does not officially recognize China and Taiwan as one. The US "acknowledges" China's position; specifically China's belief that they are one country.
Here is a good explanation:
> The United States did not, however, give in to Chinese demands that it recognize Chinese sovereignty over Taiwan (which is the name preferred by the United States since it opted to de-recognize the ROC). Instead, Washington acknowledged the Chinese position that Taiwan was part of China. For geopolitical reasons, both the United States and the PRC were willing to go forward with diplomatic recognition despite their differences on this matter. When China attempted to change the Chinese text from the original acknowledge to recognize, Deputy Secretary of State Warren Christopher told a Senate hearing questioner, “[W]e regard the English text as being the binding text. We regard the word ‘acknowledge’ as being the word that is determinative for the U.S.” In the August 17, 1982, U.S.-China Communique, the United States went one step further, stating that it had no intention of pursuing a policy of “two Chinas” or “one China, one Taiwan.”
> To this day, the U.S. “one China” position stands: the United States recognizes the PRC as the sole legal government of China but only acknowledges the Chinese position that Taiwan is part of China.
https://www.csis.org/analysis/what-us-one-china-policy-and-w...
You buy something, but you get value in return. That's why it's not called "donation". If the thing you bought is not valuable to you then why did you buy it in the first place?
Also, there is all this talk about "forced" tech transfers, but nobody forced US companies at gunpoint. US companies always had the choice to not enter the China market. They signed tech tranfer contracts, willingly, because they think the upsides (gaining a new market) are higher than the downsides, or that the downsides are manageable. The fact is, companies made a choice. And now the US government is making that choice for them?
From a national supply chain security or technology hegemony point of view it makes sense to deny certain transfers, but let's recognize that this is just geopolitics and not about ethics, fairness, etc. The rherotic about fairness just doesn't make sense upon further scrutiny. If the US government doesn't fully believe in free market, why not just go ahead and say so instead of all the mental gymnastics?
I am confused by your question. How is this relevant to anti-competitive behavior of the CCP?
> You buy something, but you get value in return. That's why it's not called "donation". If the thing you bought is not valuable to you then why did you buy it in the first place?
Again, what does your patronizing clarification have to do with competitive marketplace where all parties can play fair? I am genuinely asking instead of just raising rhetorical questions. Literally the first line on Free Trade wikipedia page [1] says:
"Free trade is a trade policy that does not restrict imports or exports."
I thought I was talking about "Free Trade" as in freely be able to compete in China just as local companies. Perhaps there was a misunderstanding?
You talk about anti-competitiveness, but isn't that just a matter of perspective and not an absolute moral high ground? When Microsoft was accused of anti-competitive behavior, it was because Microsoft used existing cash and influence to squat smaller parties like flies and gain dominance. In the same manner, we can argue that Facebook could squat other smaller social media networks in China as flies because Facebook was already big, and thus Facebook would be the one being anti-competitive.
I won't argue with you about US interests. But I can't agree with taking the moral high ground.
> "Free trade is a trade policy that does not restrict imports or exports."
You can argue that China is not engaging fully in the free trade principle. But in my opinion it still doesn't make sense to turn this into a moral high ground thing, because all countries have import and export controls to some extent, because in the end all countries look after their interests.
And not everybody agrees that the free trade principle is a good thing (note: this is not my personal opinion). See the rise of populism in Europe, and the number of people who yell that the Poles or refugees or whatever are "stealing our jobs". Now that I think about it, don't you have the same issue with US people complaining about Mexicans?
Turning this into a moral issue is, in my opinion, a childish view of how the work works. I am saying: let's recognize that this is plain geopolitics and interests, and not about morals.
Having ideals is a fine thing but we need to stay realistic. Is it at all possible to create rules that benefit everybody, given that countries differ in development status, culture, values, etc? I have no idea. We can try, we should try, but don't get too surprised if things fall apart sometimes, and when things fall apart it's unhelpful to point fingers.
Those in positions of dominance risk their power when they ignore these questions. Unfair practices can increase dominance in the short-term but what happens in the long-term when more and more people recognize the practice as unfair? What happens when we get to a point where most of the world consider western nations/corporations to be stewards/enablers of oppression and injustice?
Particularly around IP law, which is what China is most flagrant about ignoring. Nothing in IP law comes from any sense natural principle. It is all arbitrary judgements.
It makes sense for America to claim IP is important since they own most of it, but it is wise for China to ignore their arguments as far as they can get away with it.
As you say, countries without IP have an interest in having weak IP enforcement, but China has significant IP now, and is enforcing IP rights (not just of Chinese firms, but also of foreign firms) much more rigorously than before.
US does behave amorally tons of times, so does EU, so does everybody else. US slapping super massive tariffs on non-US products (airplanes for example) ain't fair to european manufacturers by any definition, and if we aren't allies anymore, then who is. US stealing trade secrets via NSA, spying on all foreign politicians, dissent, supporting dictators and so on.
The thing is, out there is mostly unrestrained capitalism - everybody for themselves, and help even between allies normally only comes if its mutually beneficial. US has very little moral ground if any in this topic.
Such hubris.
So the heads of two powerful nations are to decide the fate of humanity - where is the morality in that ?
And why does there have to be an endgame ? and who are we to decide ?
We recognize that "fairness" in boxing and other sports requires things like weight classes. The same goes for trade between countries at very different levels of economic development. Developed, undeveloped and developing countries should not have identical policies. Most countries that are developed today got to where they are using protectionist policies.
Ha-Joon Chang explains his views in this talk: https://youtu.be/T5-ojv5-b3U
Further consider the advantage US has from being the center of global finance, and having many generations of wealth accumation compared to India and China being recent colonies and having recent devastating wars.
Is that trade policy still unfair taking those variables in account
Both are wrong, Google quit from China, and Uber sold its China division to a rival company.
Western social media platform are welcome to participate in China if they follow local laws - in this case onerous censorship requirements, which every domestic company comply to. That's what project Dragonfly was for, but internal Google politics killed it. Bing still operates fine in China while Google and Facebook still makes billions off Chinese adsales. For some reason people find it appalling that US companies have to operate by foreign laws when operating abroad. As far as I know, TikTok keeps US data on US servers. I'm not sure about Europe, but data siloing regulations is becoming the norm as countries realize the importance of domestic information control. So yes, the US/EU should do the same and if Chinese companies don't want to comply they should get booted from the market.
Uber's story is more complicated. At the end of the day, Uber and many Chinese rideshare startups got out competed by Didi Chuxing. One narrative is various local and national regulations on ride sharing made gave domestic entrants and unfair competitive advantage, but Uber had a strategic partnership with Baidu (to circumvent Google Map block) which had every interest in Uber succeeding.
Sure, that is the reason why people were appalled - some reason -can't clearly put a finger on it.
I heard that they relaxed those restrictions a bit to appease the WTO but in practice are often still denying basic permits for foreign companies until they can show to have a ≥51% Chinese share.
It varies by industry. And loosened quite a bit since the trade war.
The most recent case:
Exxon Mobil starts building $10 billion China petrochemical complex
https://www.reuters.com/article/us-exxonmobil-china-petroche...
Now Shanghai FTZ allows foreign Internet services operate without the ICP licence. Interesting times.
This has been explained like hundreds of times on HN. If you truly believe such nonsense, there are one simple question to ask - what Chinese business entity is control Microsoft/Apple/Intel when they enjoyed all those revenues from the Chinese market.
Wikipedia says regarding Volkswagen in China:
> In 1984, Volkswagen signed a 25-year contract to make passenger cars in Shanghai. Since, at that time, vehicle manufacturers could not own a majority stake in a manufacturing plant, Volkswagen's venture took the limit of 50 per cent foreign ownership.
I'm glad that someone else answered my comment sincerely instead of making a snarky comment that turns out to be wrong.
How come people are not aware of this? Did Tesla have to give up controlling ownership to set up a plant in China?
https://europe.autonews.com/article/20180417/COPY/304179943/...
* Azure is provided by 21Vianet
* AWS is provided by Sinnet and NWCD
Generally speaking, serving the Chinese market is rather difficult as a foreign entity. My understanding is that unless you export more than 50% of the production value, you need to have a local partner. And even that's only allowed in certain industries.
I really don't agree.
Were I ungenerous, I could interpret "I see no reason to pay more so you can make money off the rest of us" as "If local conditions permit me to loot someone else's future for my own present benefit, I will do so."
Furthermore, "trade is always beneficial to both sides" is clearly false, unless you define trade as "that which is always beneficial to both sides."
(I agree as a matter of fact that free trade and free markets are in general the most effective way to allocate capital, decide prices, maximize the realized value of goods, and provide individual economic autonomy. I do not, however, see them as end-goals in and of themselves. I do not see them as infallible in fulfilling personal or human values. I do not see them as especially resistant to having their function subverted.)
China blocked Google, but not Uber
People also invent false lies like "China blocked Amazon, eBay, Yahoo" etc.
What will happen when they will own all the supply chains and the buyers will have the choice between US tech, with their propension to want to rule the world, or Chinese tech; of course China may eventually do the same thing as the US, but strategically it is easy enough to not do it for long enough so that it is a major advantage to develop their market.
In (at least parts of) the EU, btw, we see this attitude of the US as a critical problem, more than a solution... As far as those kind of affairs are concerned, we don't view the US as a close ally but more as a distant cousin which is sometimes even a blatant economic enemy, especially when they attempt and do rule the world through $US and tech policies (and demonstrated, not only suspected, systematized world scale espionage). For example the embargo on Iran is particularly problematic. The China might be "worse" than the US in some dimensions, including critical ones, but there are some movement in the EU to guarantee/redevelop our independence from the US too, and this involves developing our own versions of more technologies which are for now originating from the US in a far too large proportion, given their policies and the risk they produce. (For some of those projects already existing, I suspect they initially won't be very successful, but that is another issue; if the problem becomes more pressing, there is no reason to not be able to do it: 10 or 20 years is an eternity in tech, but international equilibrium is a longterm affair)
It's a pretty much mafia move and has nothing to do with fair trade.
Somehow Korea managed to create best movie of the year without this mafia-style ruling. They use the weaknesses of regular people who want gains now.
For mobile network and services they have their own standard giving virtual monopoly to SK and KT telecom and local manufacturers. No foreign car manufacturer can setup easily in Korea, Samsung rebrand Nissan car as S5 and S7. Except high end German cars with high tariffs you will only see Korean brands.
Check any sector and you will find more hurdles. Doing business in Korea compared to China is harder, if you target local businesses.
These all are not visible or so pronounced because Korea is relatively small compared to China in terms of GDP and size. Actually Korea is more like China and unlike USA except for political systems.
Good luck convincing the average consumer (voter) to do without for a while and then pay more after that. They'll lynch you if they can't get the latest iTurd for 499.99 plus tax.
Also, as long as the CCP run China, they'll be stronger than the west (consumerism and short-termism and Chinese abuses of them aren't just US issues). We need them to democratise, consumer domestically and sort out other issues (wet markets, treatment of minorities). That's the long term win here. Convincing them to treat Google and Uber fairly is nice but it's not going to make them reasonable partners in 2,5,10,50 years time...
Wet markets exist are all over the world with similar setup like the one in China.
Maybe it's better to go even vaguer though: "food hygiene standards so low they keep causing pandemics".
Covid19 spread faster, unfortunately. There are quite a few viruses/infectious diseases spreading in Asia that didn't made it big-time like Covid19.
Also in some societies the idea of intellectual property is not widely accepted, and obviously their laws and behaviour will reflect that.
I have a friend who worked in Tencent an iconic Chinese IT company that owns WeChat. They work from 9 to 9, six days a week. This is not an option. It's mandatory.
She literally escapes to the US because been a single woman in the early 30s considered a very bad misdo in their society. The same rule doesn't apply for man btw. So you as young female pushed to work 9-9-6 and do a very bad choice very early because you have to do it before 30, otherwise you're considered a renegade. Their society is an extremely racist and sexist to the point where their own parents don't want to talk to you if you're a woman who doesn't want to mary a Han-Chinese person( a title nationality in China).
I don't believe that scientists of the western world that put their life for a breakthrough in Computer science, agriculture, medicine, etc... dedicate their life for this kind of society where humanity is just a bio-mechanism that has one day off to clean the room and recover a bit. No social life... nothing. It's a huge gap. While the western world is debating about 4 days of work week china is double down on 9-9-6 which anti-human. You might remember GitHub issue with software developers complains about it and how china tried to stop this "leak" So no matter how stupid it's sound. It's a free world with the neo-feodal country as it is.
You vote for that with your money. Right now is a tipping point they either slow down and the CCP will collapse in a natural way or they will be ruling the world means their way to do business one day might apply to you.
I'm not trying to idealize US or any other country. EU seems to be much more socialistic, Canada seems to be much more inclusive ( at least Toronto). EU is putting so much more money into green energy compared to the US. But this competition is a much better direction rather than what Chinese leadership offers. Racism, sexism, neglecting ecology impact, no human rights, no socialism in any form, no rule of law. Don't get messed with US wrong things.
You have so many reasons to hate Donald and what he's doing but that doesn't automatically make his opponents saint. In fact, Donald will disappear in 0.5 or 4 years. And the threat to the middle-class people's lifestyle because of China and CCP will not.
China has experienced grinding poverty for over a century, and have its work ethic to thank for pulling it out. 996 is enabled because of that history, rather than being a control plot. Even school kids have that kind of schedule.
Chinese people are very focused on the lower tiers of Maslow's hierarchy, and survival of the family is somewhat on the line if one of your only grandchildren is female and isn't married at 30. That's her life you say? Equally the parents can feel like all their sacrifices were for naught.
It's getting a bit tangential but the pattern in all societies is that women have the choice in mates and men have to be more willing to look abroad. So any racist sentiments would judge women harsher.
Regarding your other points, China has been much better about including minorities in its country than the West. It has furthered environmental controls vs. Trump reversing them, and most of the greening in the last decade occurred in China (and India). It has sensible universal healthcare and supported its citizens during Covid-19, unlike the US which passed legislation that supports big business, letting small ones fail and charging its own citizens for evacuation flights.
Anyway, the point is that once we understand the history we need not paint China as the malevolent entity that is common in media.
The problem starts when there is massive asymmetry in those countries in terms of human rights, worker protections, and environmental regulations.
Criticize the US all day (I certainly can), but compared to the Chinese single party dictatorship the US is massively better in all those areas. The EU is even better than the US in some.
Occupational safety, environmental laws, and a free and open society imposes costs on business in the form of higher wages and overhead. It's impossible -- repeat, impossible -- for businesses in countries that operate to those standards to compete in a "free trade" regime with businesses in countries that do not. It's even worse when said countries (like China) also subsidize their industries and implement protectionist asymmetrical trade policies of their own.
I am all for free trade between free countries to within some reasonable minimal standard for "free." Trade with totalitarian and lawless regimes should be heavily taxed.
The free world should form a trade pact among its members with heavy tariffs for imports from non members.
One way of implementing it would be penalties for wages below domestic median, carbon emissions, and human rights violations. Use those factors to calculate a score and impose tariffs accordingly.
What you've described is simply - unfair. Another extremely unfair thing is different employment & environmental standards. If an EU company opens a Chinese factory just because they can make people work more hours and can pollute the environment more, I don't really see that as a "globalization benefit", but rather as "unlawful competition" which results in a race to the bottom (other EU/US companies being forced to open polluting exploiting factories abroad to compete on price).
That's why I strongly support tariffs on imported products, unless foreign companies/factories conform to strict standards and allow strict (and random) inspection that they do conform to said standards.
Consider Mongolia, perhaps they want to match EU employment standards but can't afford do. What are they suppose to do?
Suppose a democracy decided on different employment standards, should EU ban imports from US due to EU having higher standards of employee and environmental protection? How big does the difference have to be?
Does your free trade "fairness" account for the advantages US gets from being a global center of finance?
For disadvantages Vietnam has from being a recent colony and having a devastating war?
Does a country with loads of natural resources, or elderly population, or struck by natural disaster change the calculus?
Is this a robust rule you would like to see implemented, or is it just justifying current politics?
But in general, my argument isn’t about some specific countries, but instead about specific products. A company in Mongolia selling to EU could either not give their employees medical insurance and sell widgets to EU for €50 + 100% tariffs, or treat their employees by EU standards and sell widgets for €100 and no tariffs. The ideal tariffs would exactly balance that (while still allowing Mongolian widgets to be cheaper because of lower wages because of lower cost of living.)
there are ways to mitigate the growing pains of economic development but to prevent it completely is not a solution. nearly all industrial nations have, at some point in their history, gone through the whole process - discovering necessary safety standards, methods to encourage cooperation and where it fails, enforcement and legal repercussions remedies and punishment, etc... that really ought to be hyper-local and community-specific in their implementation. first world governments are fully complicit in preventing emerging nations from developing this themselves.
If a country pays its workers pennies and craps all over the environment, it sucks for the people that live there, but really it's fine, they're a sovereign nation, nobody's gonna send in the troops over it.
Let's simply charge them enough to take all the money they save / make from these practices out of their pockets. If they don't pay up, the goods can't cross the border.
And it's ironic for you to say the CCP wants keys to iCloud, because your government literally forces American companies to hand over the keys[1].
[1] https://www.reuters.com/article/us-apple-fbi-icloud-exclusiv...
There is this thing called knowledge transfer, and you do this when you change jobs. Are you suggesting that the employee work in the same company indefinitely?
> well...then the US should block all Chinese services from exploiting users[1] and their data
Which is exactly what China is doing to you.
A secret court issued nearly 100% of requested warrants. Some of the warrants that have come to light were blatantly unconstitutional, but because the entire system was hidden from the public, nobody could complain. Even now, legally challenging this surveillance is almost impossible, because nobody can prove standing - the list of surveillance targets is secret after all.
The very existence of this system was secret. It wasn't democratically legitimized. Nobody voted for the system, and the voters were kept in the dark about the system's existence.
This isn't to say that China and the US are identical. They're bad in different ways. You'll be spied on in both countries, but you have legal avenues to protect yourself from imprisonment/etc. in the US. Then again, China doesn't drone strike its own citizens abroad, as far as we know.
Up until a few years ago, there was a massive asymmetry, but in the opposite sense to the asymmetry that Americans usually complain about. Because China was a developing country with very little capital but a huge labor pool, there were huge investment inflows into China. Western companies took advantage of cheap labor in China, setting up factories to produce for Western consumers. Chinese consumers were almost completely out of the picture. China did not have the capital to invest in foreign countries, so the investment was almost entirely unidirectional.
That began to change as China's workers began to earn more, and Western companies jumped into the Chinese consumer market (Starbucks has thousands of locations in China, VW sells millions of cars in China a year, and so on for countless Western companies). Whereas you would see almost no Chinese brands in Western consumer markets, the Chinese market was awash with Western brands.
Now, Chinese brands are starting to enter Western markets, and China also has capital to invest abroad. The relationship is becoming more bidirectional. To the United States, which was happy to exploit cheap Chinese labor and to sell airplanes to the Chinese market, the idea that China might be transforming into a serious economic and political competitor is alarming. That's why there are suddenly these myopic complaints about the relationship being one-sided.
> China has completely blocked US services from Google to Uber
Google is blocked in China for political reasons. Uber was allowed, and indeed operated in the Chinese market for a number of years. It failed there, because there was strong competition from companies that understood the local market and local consumer preferences better. Let me ask a simple question to test if the relationship really is asymmetric, and in which direction the asymmetry points: Do Chinese brands have a larger presence in the US than American brands have in China?
I find it pretty difficult to blame China for this "asymmetry in trade," when that asymmetry was exactly what foreign governments wanted. They wanted China to open up its labor market, so that foreign companies could exploit cheap labor in China. The consumer market in China was tiny, whereas the American and European consumer markets were huge, so the relationship could not be symmetric.
Now, China's consumer market is actually quite large, and foreign companies play a huge role in that market. I didn't just mention Starbucks. I also mentioned VW, but I could equally have mentioned Boeing, Apple, Intel, Qualcomm or Micron. You'll notice a trend here: the US exports high-value-added products to China (including IP licenses and services). Most of what you have in your living room that's actually manufactured in China is lower on the value chain.
Over time, in other words, the US trade relationship with China is becoming more symmetric. Huawei's development into high-value-added products is a sign of that. It's actually this symmetry that the United States wants to avoid, because it means China becoming a peer-level competitor.
The US trade relationship with China will never become fully symmetric, though, because the US runs a net trade deficit with the rest of the world, for reasons that appear to me to have to do with the United States' unique financial position in the world.
Estimates are that China is 10 years away to be able to build chips domestically that can compete with TSMC. Mostly because a lot of the precision chip making technologies are hard to make and are only made by a few manufactures and their exports are controlled.
However, I feel like our new competitive mindset is using the wall to block others. To wall off China to wall off immigrants.
I love to see manufacturing sector return to US and protect US jobs, however, it seems like instead of investing into the future, like we had in the 50s, 60s, 70s we are spending our limited resources waging all types of wars and then using our might to block other countries now.
We've lost our ability to make political decisions and planning with a long-term vision, and if we think building walls will stop innovation in other places, we're wrong.
All we're doing is setting back China for a few years, fueling a nationalistic fervor to motivate their public even more and once they've caught up, they'll even be stronger and more competitive.
While we might keep the aging Western Europe under our pressure, rest of the emerging world will be under China.
I'm also really curious how this action will ultimately impact Taiwanese views of merging with China. It's possible this might create more sympathy and create a massive defeat for the nationalist side of Taiwan and the country might vote to merge with China.
What would we do then? Stop Apple from buying chips from TSMC?
"Green," pro-independence, or "TI" (Taiwan Independence) would be the less confusing term for the side you think might lose with this development.
The TI side has been winning bigly in the past year thanks to Xi Jinping and Carrie Lam's treatment of Hong Kong, and to China's and WHO's lack of transparency in the early days of COVID-19.
>"Green," pro-independence, or "TI" (Taiwan Independence) would be the less confusing term for the side you think might lose with this development.
TIL, thanks for sharing!
There was an article in The Economist a few month back (can't find the link right now) that suggested that China might secretly like Donald Trump and accept the short term pain of his presidency because of the long term gain of the wedge he is driving between the USA and the rest of the world.
The world would be quite happy pinning the blame on China.
Instead, that would put them on the side of Donald Trump who is doing it in the most ham handed and transparently political way, and is, worse, messing with countries’ abilities to protect their citizens with a vaccine, by trying to buy away their companies, acquire exclusive rights, and refusing to sign any Coronavirus patent sharing agreements.
So as much as pretty much every leader in the world would like to blame China, thanks to Trump it’s hard for them to do so.
So in a way Trump is definitely helping China.
And that’s before we take into account the shattering of the image of American effectiveness and competence that Trump’s disastrous response has caused.
I'm no fan of Trump (not even american) but I feel that since it is easy to make him a fool on news reports, anything he does/says (or in some cases, doesn't do/say) makes big headlines so news reports tend to paint him in the worst possible light (drives revenue) and don't give a shit about what is really the truth.
During quarantine I was stuck about 2 months at my parents house and had basically 24h news cycle on TV. It is funny to see both national and international news to 'mock' Trump for something, and actually say nice things about other countries that did exactly the same. For example, when US stopped flights from china and then europe, news anchors were calling him everything from racist to idiot, when european countries did, they were smart to try and prevent the spread.
[1] https://www.politico.eu/article/trump-coronavirus-vaccine-ge...
It's quite possible that Trump simply reached out to the lead investor or others to ask about the possibility of making such an offer. That investor then informs the government who then gets upset and leaks inevitably happen.
Whenever there is a he said/she said situation the truth is often in the middle somewhere.
I understand if it's an accident like MERS from middle east or ebola from Africa. But the frequency of China is a lot, they're up to 3 deadly viruses now: SARS, Covid19, and Avian Flu.
China should at least share their health data on pandemic of these viruses. So other countries can decide a plan of actions. I'm sure they can do it in a way to anonymize these records.
10 years away from making todays chips? That means they are extremely far off.
10 years away from competing with what TSMC is putting out in 10 years? That would mean their pace of development would be much faster. Putting any kind of accurate prediction on that is absurd.
Isn't that really crossing the line; It implies that if a country buys American Equipment/Software then they are at the whims of American policy; American equipment comes with strings attached: Really does not look appealing to many countries this.
What if Huawei rebrand themselves or try to gain a new identity etc, then US regulations has to catch up again.
Moreover is this some sort of punitive measure against Huawei? What if they approach US courts, what shall be the outcome?
It's about time we start making China accountable. It's about time we start blocking Tencent and Alibaba from further American acquisition or investment. It's about time we restrict and throttle CCP-controlled media platforms like Tiktok; the same way China does for Western-owned media platforms.
We can't keep getting punched and just stand still.
So if those are the calculations the US starts forcing countries to make, the most likely impact will be on American companies before anyone touches the Chinese (largely also because it’s American companies that dominate the internet around the world, and not the Chinese, and restricting internet services will be far easier than physical products for most countries).
In both situation the outcome is even less control for the US.
China has proven it won't play by the rules, so let's make it compete on its own with its own resources. Given their dependence on imports for food and energy, exports and bottomless debt for the rest of their economy, for all its size China is not positioned to be cut off from the global economy and remain competitive.
Turning the U.S. into something no different from China is perhaps not what you would want to aim for.
So far so good, nothing wrong with that.
But in 1916 Romania decided to attack A-H. Okay, I guess?
The dumb part? As former allies, Romania used to get guns and ammo from A-H before 1916. That became a problem post-1916, for obvious reasons :-D
But speaking of Huawei they are'nt in the business of military supplies, they sell commodity telecom gear. Imposing such extreme restrictions, seemingly encroaching upon the sovereignity of other nations, feels strange. In this whole matter, it the US who appears to be acting foremost with political considerations.
Also if their weaponization of android and the google OS shows anything if it can be weaponized it will
So politically motivated measures are likely to be drawn into courts.
Also US has/had no issues doing business with many prominent non democratic countries like Saudi Arabia, South Korea (i.e before it transitioned to democracy), etc.
There's no "Fair" in this situation, there's only "Winning" by forcing China into compliance with US demands.
Except that, as it's clear from the rest of your comment (with which I agree fully) there are no real demands from the US to China except a demand for subalternity. In other words, the only reason behind this moralising and chest-beating is simply that the US wants to keep its power by obstructing a competitor.
Next step, as China has already hinted towards, is actions in China against Apple. And we don't know how further the escalation will go. So far, any ambition of China towards Taiwan has been limited by the fact that China depends quite on Taiwanese fabs. Remove that, and accidents might happen... which would harm the whole world.
Also remember when United States pulled a similar stunt on ZTE a few years ago (banning us of American parts), only to reach an agreement and walk back the decision?
The goal isn't to kill Huawei... it's to make sure that Huawei 5G tech is delayed by 1 or 2 years. Banning their already-designed chips from shipping is a good way to delay them by a year or two.
Most of the USA doesn't even have 5G deployed yet, and the US is hoping local manufacturers will get the local market as well as lots of the world market.
https://media.defense.gov/2019/Apr/03/2002109302/-1/-1/0/DIB...
TLDR: US spectrum allocation forces US 5G suppliers to design products primarily for the mmWave portion of the spectrum, which suffers from more technical problems such than the sub-6 GHz spectrum that Chinese products are using. The reason why the US didn't allocate more sub-6 GHz spectrum is because those frequencies are used by the US military.
China was already planning on working more and more on their own fabs.
China spent over $6 billion in 2017 and over $10 billion in 2018 on fab equipment. I am not sure if they are on pace but they wanted to produce 40% of their chips by the end of this year and 70% by the end of 2025. These plans were created years ago before all of this started happening.
The worst case scenario is this just expedites any issues between Taiwan and China as TSMC becomes less important to them. With TSMC getting more cozy with the US it may actually benefit Taiwan. The US will be more likely to consider them to be a vital country worth going to war to protect because of TSMC.
This is about making it harder and inflicting some pain on them.
Which is interesting because it probably (not 100% sure about that) wasn't a resource issue to begin with (see below), the amount of money thrown at this so far has resulted in precious little in terms of concrete returns.
China is still stuck at 28 nm and a rough 6% or so of global capacity, technologically that's well over a decade behind TSMC, Samsung and GF, they also almost exclusively sell into their own market.
Whether this will be the push they needed to start moving remains to be seen but it will certainly add to the total weight of evidence that independence from US controlled manufacturing is a strategic goal.
It may also cause them to become more serious about Taiwan being a 'part of China' which may result in the longer term in the US shooting it's own foot. That would be a major game changer, TSMC is 50% of the global chip production.
From what I know about this the major roadblock from a tech perspective is the gear required to set up the fabs, specifically EUVL equipment, which is not the kind of equipment you make from scratch without having seen the intermediate stages. To what extent more money will be able to accelerate this is the big question.
I don't follow the industry closely, but recent reports say that Huawei's HiSilicon Kirin 710A chip is being manufactured on SMIC's 14nm process.
https://www.extremetech.com/computing/310559-mainland-chines...
Indeed they do! Thank you for pointing that out to me, I totally missed this. Wonder what the yield is?
This December '19 CGTN (I know, I know) article[0] says 16%
“China currently produces over 16 percent of silicon chips. To compete for semiconductor leadership and make its economic relationship with emerging economies easier, China plans to produce 70 percent of all semiconductors it uses by 2025.”
And this March 2020 Daexu Consulting article[1] pegs China's semiconductor consumption at ~60% (!) of the world's total, but notes “However, domestic Chinese manufacturers are still only capable of meeting approximately 30 percent of their own demand.” ~60%÷10×3 = ~18% which jibes with that 16% back there.
What's your source for 6% ?
[0] https://news.cgtn.com/news/2019-12-17/China-s-semiconductor-...
[1] https://daxueconsulting.com/chinas-semiconductor-industry/
India has already started taking steps. It’s likely the Europeans will as well now.
The US government is taking these actions with blinders on. They only seem capable of modeling effects 6 months into the future and only the direct impacts on China (and barely even that, considering how poorly their entire tariff wars have gone, with the US basically having got nothing so far). The reality is that there is an entire planet’s worth of other countries also watching the US lashing out. Especially American allies who have been directly attacked by the US government over the past couple of years, that are now convinced they need to start steadily moving away from US influence.
What is increasingly clear is that both the US and China see domestic leading-edge semiconductor production capacity as a core national security interest. It is not so easy to assist China's project; serious moves to help China establish independence in semiconductors will cause cascading changes in the relationship with the US. While they may be disquieted by recent US behavior, western European leaders can see perfectly well that China is not a viable strategic partner and that the risks and costs of being kicked out of the US security and trade umbrella (this stupid trade war with the EU is peanuts to the kind of coercive tariffs and sanctions looming in such a case) outweigh the benefits of helping China make better semiconductors.
Don't be ignorant and try to judge on things you don't fully understand.
The first bit was ok, but this is uncalled for.
Does this mean that Huawei loses the 5G competition because they are not going to be able to get the chips they need fabricated?
Is China going to try to split up Huawei into a bunch of "totally not Huawei" companies?
However, for base stations, which are the real prize, Huawei already has a ~1y stockpile of Xilinx FPGAs, so any effects on Huawei's 5G market position will take some time to manifest.
I thought this war of the giants will remain paused for the rest of the covid-19 situation, however, it seems unlikely before some major causality. And Huawei seems to be in the center of the stage.
Might need to wait for sometime to see exactly what its position in all these.
My bet it will eventually comply but leave some vagueness here and there. After all, hurting TSMC is hurting the world.
Washington waited until the new fab deal was done before putting TSMC into crossfire. If that's the case, it probably backfires and the US must make hard choices.
Given the critical nature of semiconductors, if China invaded Taiwan it's hard to see the US not getting involved.
TSMC is Taiwan's largest company.
When it comes to 'invasion', there's no chance of defending Taiwan unfortunately. No one has the stomach for that. It's easily one step away from a nuclear war. You think coronavirus is bad...
If China invaded Taiwan, the US would not defend it. Super powers don't go to war. They have wars through proxy countries. If super powers did go to war, it would be nuclear war, and it would be bad.
However, this is thinking like American leadership: too short-term. What happens the day after China controls Taiwan? Do all Taiwanese meekly submit to their bullshit? Or do they become an extreme version of Hong Kong? It's mostly Han in Taiwan, so the depravities seen in Xinjiang and Tibet couldn't be instituted there without jeopardizing the legitimacy of the entire state. As long as Chinese leadership is fairly secure in their positions, they won't invade Taiwan.
Of course, during a war military planners expect massive cyber attacks against Taiwan, and CCP sympathizers within Taiwan committing sabotage. Military planners also expect NATO forces to use missile barrages against targets on the mainland of China (which would clearly cause escalation).
It's pretty much impossible to see the US getting involved.
The UN doesn't recognize Taiwan as an independent country, so China would just be exercising their authority over a chinese company, just like they do with Huawei, Lenovo, and many others.
NATO couldn't help either, because the US is not being militarily attacked by this. And well, the US has severed both their military ties with NATO, as well as their political ties with all countries in NATO (Paris agreement, Iran nuclear deal, tarifs, empty embassies, in bed with North Korea...). Also, many NATO countries are in bed with China economically, building the new Silk Road...
So... if China were to grab TSMC, and the US would try any kind of military action, who would support the US ? Europe, Russia, South Korea, Japan, South America, the Middle east, Australia, ... they would all stand by China. The US has been screwing them over the last 4 years, while China has been giving them money for them to return them the favor in a time like this.
Or do you imagine Trump going throughout the world kissing others asses to get their support?
Yeah, no. If Trump was "brave" enough to take military action, it would be game over before it even starts: world-wide embargo against the US, all US international companies assets frozen, the S&P500 would hit zero in a matter of days, inflation would explode, the troops wouldn't be getting paid, etc. The largest military force in the world would crumble in a week before even taking the first shot.
Even if the UN is just a “condemnation” paper tiger unless a world power is pushes and does the heavy lifting
Exactly my point.
Taiwan has a vibrant democracy and is highly regarded internationally. If China invades Taiwan, the resulting coalition will look more like the 2001 invasion of Afganistan in Operation Enduring Freedom [1], with United States and other NATO members attacking military assets on China's mainland to neutralize the invasion.
The risk of even a small scale nuclear exchange is huge, and so is the risk it will escalate into a Third World War with billions dead.
[1] https://en.wikipedia.org/wiki/Participants_in_Operation_Endu...
I can't comprehend how you wrote this sentence, 'attacking military assets on China's mainland to neutralize the invasion' What galaxy do you live in where you think this would ever happen?
"TSMC shares in Taiwan were down more than 2% in Monday morning trade, while the benchmark index was down less than 1%."
So the market seems to think that is probably not such a big deal or guesses that a solution/workaround will be found. Also that the US may cut-off TSMC supplies to Huawei has been rumoured for about a year now and is an extension of the restrictions on Google software/services and the ARM chip designs.
What? You just tried to bankrupt company by cutting off all of their suppliers and partners of business. Of course they will try to survive by trying to self-reliant. The company employs 100,000 people, is super important to the local economy and employment in the shenzhen area, and has over 50% of the shares in China's entire core internet infrastructure. If Huawei does not get the supply it needs, it cannot serve the entire China's core internet, do you know how much danger that causes to China's communication infrastructure security? How much economic damage to the country it's going to be? This actually directly harms China's national security. Whereas the US claims Huawei harms its national security, when Huawei is not even in the US. When Huawei gets killed off, how do you tell the workers of Huawei and their families, that their livelihood is gone because by its killed of by you, which is a foreign government to them. Are you sure you can deal with the anti-American sentiment afterwards. There is a saying in Chinese "cut of the way someone earns money is equal to killing their parents" （断人财路如杀人父母）You also know that the average Chinese person is super proud of Huawei as a brand right?
This rule change effectively forces all companies in the world that is in the semiconductor industry to abide by US governments wishes. TSMC 7nm processes has less then 10% of US IP and technology. It was developed by Taiwan people with TSMC own investment. But they invariably could use a technology that is in the ERA. Hell, Intel processors is one, and god forbid if the production line has a computer that contains Intel chips. You could argue that this Intel chip assisted in producing Huawei's chip no? Where do you draw the line? The US government can just decide how to enforce this based on their feelings of the day? Are you sure this the standard for international justice?
For alleged IP infringement against Huawei, get the evidence and sue the company at court. I am all for it, as long as there is trial. So far there are two cases IP infringement cases that I know of, 1 in 2003 with Cisco that settled out of court. 2 with T-mobile in 2013 with regarding a phone testing arm. But Huawei's main business is base bands, routers, and consumer electronics. By the way, Ercission has cross licence agreement with Huawei to access Huawei's 5G patents. Huawei has many invention patents in 5G, that is recognized globally. I don't get where the theft of IP comes from that warrant the company to be killed off.
For security issues. Let the market decide, let the customer decide. Customer should be able to make a comprehensive product selection process based on their needs. And if the market says no to Huawei, then Huawei is dead. But let the market decide. US companies can also compete with Huawei, and say they are more secure. Huawei sucks. That is all fine. And I am also fine with the US government producing security assessments on Huawei, and telling every country on earth to not use Huawei equipment. That is US government's right. But at least the customer can decide for themselves if Huawei is worth anything. If Huawei is dead because of that, then sure. Its all fair and square. The US can also form alliances with other countries and make sure the country ban Huawei equipment in their countries too. That is the US right too. There are so many ways to compete with Huawei.
US gov's action is as if, China ordered that every country in the world shall not do business with Microsoft, and forces Microsoft to go bankrupt right now. Imagine if the Microsoft cloud and office365 stops running because of that. US would probably sent warplanes to China by then.
Huawei's 4G technology worked really well for China's environment and was affordable for mass development. It is key enabler in allowing the country to deploy 4G to almost everywhere in China, even the remote villages. This enabled everyone with smartphone to use the internet. And as result, services like mobile payment, shopping, gaming all flourished in China. It in turns create a massive cellphone market in China. Apple, Qualcomn, Xllinx, and host of consumer product providers, or Huawei's US suppliers all benefited from this. Competitions in the phone space also pushed the innovation and pricing for smart phones. Huawei was one of the first to push smartphone camera quality and added multi-focal lengths to phones. It pushed Apple and Samsung to innovate on cameras too, look at where smartphone photography has become. I believe US and Chinese technology companies can work together in their respective markets, to make technology more useful, enrich the economy, and make people's lives better. Its not a zero sum game. But the US government is viewing it as such. If US wants to win, China must lose.
With the US government essentially taking the world's companies into hostage in killing off Huawei, I am not sure if US Gov is being a responsible world citizen.
> Huawei has been preparing for such a move by the U.S. since the end of last year, including stockpiling more than a year's worth of networking equipment-related chips, especially for its crucial telecom equipment and carrier business, sources told Nikkei Asian Review.
This is a "bigger" move than expected - the anticipated escalation was US reducing US origin tech % to <10. TSMC believes their 7nm was around 9-10% so there was a chance Huawei orders was still viable. Now it's a blanket export license requirement. While the article only covers Huawei, I think it's a broader blanket that applies to all Chinese companies with military connections, which is basically an impossibly difficult task for any company to determine. The impact is unclear. This is one move short of kicking Huawei off dollar trading.
Huawei (a Chinese company) and Qualcomm (a US company) both design modems[1]. Huawei and Qualcomm both need TSMC's fabs, or else they will not be able to manufacture their most advanced designs. If Huawei can't buy from TSMC, then new Huawei modems will have to be manufactured with inferior or more expensive alternatives.
With Huawei chips now more expensive or less performant, products designed by Qualcomm will be better in comparison. Presumably, this will cause Qualcomm's stock to rise in value, although it may be a net negative for the worldwide economy.
See also the recent announcement that TSMC reached an agreement with the US government to move some of its production to Arizona [2].
[1] Huawei's Kirin/Balong chips directly compete with Qualcomm's Snapdragon chips: both are currently manufactured on TSMC's 7nm process.
Qualcomm did. China's antitrust body proceeded to fine them for 1B and forced them to offer reasonable IP licencing deal to local tech companies.
China is fundamentally opposed to everything the US and Democracies around the world stand for politically. Likewise, the US and friends are fundamentally opposed to everything China stands for politically. There is no Universe in which two diametrically opposed juggernauts do not come into conflict. Conflict is simply inevitable when the stakes are this high and there is no greater power able to force deescalation.
Either China converts to Democracy or the US and friends adopt Chinese style authoritarianism, or one of the two belligerents collapses either on its own in the manner of the Soviet Union, or by force.
I fear the future will be dark in our lifetime.
Agreed, but to be perfectly honest, I would be 100% happy to see the US pull all manufacturing out of China and put it back on US soil. The US has gained a temporary price reduction in labor that is now evaporating, gained no access to the Chinese market or influenced China to open further, and has lost the actual ability to manufacture far too many goods.
If that means things will get more automated because of expensive labor, great! Then we should build our own robots, too. If things will get more expensive, then perhaps we will start throwing things away less and start worrying about longevity more.
And, you know, the US has a lot of unemployed people who will need jobs very shortly.
However, it doesn't take that long. The problem is that there is no continuity in American businesses:
https://operationsroom.wordpress.com/2012/12/06/why-is-ge-br...
https://www.businesswire.com/news/home/20190912005862/en/GE-...
GE learned the lessons and brought it back. Then shipped it back out. And now are bringing it back again.
The problem is nobody gets promoted for being solid--everybody needs to be a rockstar.
We need some innovation where small domestic businesses run rings around the big guns. The problem is--those aren't home-run businesses--they're solid and profitable so nobody wants to invest in them.
The US has no issue replacing democratic governments with dictatorships as long as they keep their influence and power. If China was a democracy, we would see the exact same rhetoric.
Not only that, but it's so much easier to misread your opponent and the nature of the game when the dynamics are very high dimensional as they are now. It's not just about tanks or militaries anymore. Information warfare and misinformation campaigns, economic warfare, cyber warfare... When all of these potential channels of conflict exist it's very hard to reduce tension in any one domain without tensions rising in another, which in turn fuels an increase in general tension.
I see no timeline in which this happens short of Xi Jinping catching coronavirus and dying.
China is headed into "What is best for Xi Jinping" rather than "What is best for China". Lysenkoism is coming.
Isn't this the same happening everywhere?
Yeah, I don't see it happening then either.
But it certainly isn't gonna happen after an enormous market opens up for domestic competitors.
The opposite is currently happening.
As horrible as this sounds, there will be a large number of entities in china that will view this as the opportunity of a lifetime.
But hey, here's hoping.