Semiconductors Demand 30% Above Supply, 20% Year-on-Year Growth

China urbanized 550 million people in the last 30 years.

They aren't building cities and highways to stand empty. They are building them in advance of demand. Sometimes the demand arrives a few months, or a few years after the infrastructure is in place. [1]

All those ghost cities you read about last decade? Most of them are now brimming with people.

In contrast, here in the US, we don't build housing until a decade after we need it (and when we do, the supply is anemic), so we have a crippling housing shortage in all major metro areas, which leads to sky-high rents. And through all that, we still have the occasional real estate bubble exploding, in a way that takes the entire world's economy down with it.

[1] https://en.wikipedia.org/wiki/Under-occupied_developments_in...

Defense pork/corruption is a liability in economic war. We need to wake up and realize that China is kicking it into high gear.

There’s a narrative in the west that China is “willing to spend what it takes to win”, but at the same time, China’s spending is tied up by internal politics (also, corruption, pork, kickbacks) as much as US spending is. China is also, for example, willing to spend as much money as it takes to make a mega-blockbuster movie and yet keeps churning out flops (again, due to causes that are intimately connected with internal Chinese politics).

If you look at major US boondoggles like the F-35 program you might think of it as a partial success (the plane works) and yet a massive waste of money (we could have spent the money better), and some of these massive initiatives in China suffer from the same problems.

But it's Taiwan that is doing the chip fabs in TSMC, not mainland China. While they do have some capacity in the mainland, it's best to not conflate the two when discussing the geopolitical situation.

What are you on about? Have you seen the defense budget in the us? It’s massive by any metric you look at. A huge chunk of that is pure R&D.

If the governments go head to head, China wins easily. Their government is stuffed with PhDs, scientists and engineers. The US government has lawyers.

Makes sense as the cells are a commodity and extremely cheap (7¢/Watt...). They’re a minority of solar panel costs (15-30¢/Watt) which are themselves a minority of installed solar costs (70-100¢/Watt utility, above $2/Watt residential), but it leaves the US heavily reliant on imports for the Green New Deal or related initiatives.

Violet power is interesting as they’re setup across the street from a shuttered polysilicon plant in Washington state IIRC. They’re planning to be vertically integrated in panel manufacture (& eventually use that silicon plant) for cells with extremely high efficiency (20 and eventually 30%) cells with a 50 year warranty lifetime (double the normal 25). It’s a good approach for a US company, IMHO. They want to eventually get to 5GW/year output capacity. Which sounds like a lot but is minuscule compared to what we need.

To transition to electrified everything, the US needs 1TW average electricity. We currently produce ~500GW average, 300GW of which comes from fossil fuels. Nameplate solar capacity is only about 10-20% of average electricity output (depending on lots of factors including seasonal effects), so to replace the 300GW average of fossil fuel electricity, we’d need 1500-3000GW of solar nameplate. To electrify everything, we’d need an additional 500GW average, for a total of 4-8 Terawatts of additional nameplate solar.

To do that over 20 years would require 200-400GW per year of solar cell and panel capacity output. And this is just the existing US demand. We need to be investing a ridiculous amount in solar factory capacity RIGHT NOW if we’re serious about climate action.

(Luckily solar panel factories only cost about 20¢/(Watt/year) in capital cost even in the US... maybe about the same for combined cell/wafer/silicon capacity for a total of 50¢/(W/year), so 200GW/yr vertically integrated factory capacity may only cost $100 billion to build out which is not that much when you think about it... Except we aren’t doing it.)

Excuse me

"Win" what exactly? Why even use such adversarial polarizing language when we are talking of overall human development?

Huge segments of the US live in economic precarity, do you feel like you have "won"? After all that was the point of the Cold War, wasnt it?

This must be weighed against the fact that subsidized businesses will outcompete less subsidized businesses, and so if you want to bankrupt your foreign competitors you can do that by subsidizing your own domestic firms.

One approach is to not trade or impose targeted tariffs on government subsidies to help balance the scales. That was basically the idea of the 90s era trade agreements, which hasn't worked out so well, as targeted tariffs don't work. You apply a broad, long lasting blanket tariff on all goods coming from the offending country or nothing.

Another approach is to jump in with massive subsidies of your own and create a race to the bottom where every government has to subsidize any industry that some other government is subsidizing.

I'd like to throw restrictions on foreign capital inflows into the mix. A combination of banning capital inflows, some subsidies, and some broad, permanent tariffs against bad actors like China might be the best option to deal with the "spend anything to win" problem. Really we don't know.

What I don't want to see is governments rushing in to subsidize industry in a race to the bottom. That is bad for innovation as well as for democracy.

What the free trade crowd needs to realize that free trade is vulnerable to the subsidize-attack which can destroy your own industries, and right now they have an ideological commitment that is blinding them to this reality.

who are the memeticists driving this analagy into our collective consciousness? why is this popularizing? ive been seeing this crop up more and more frequently.

it feels a bit like begging the question, except the arguer also holds TSLA

Companies with stock are making bank--there aren't many of them and they're draining. Companies with their own fabs are making bank because they can prioritize their production runs by profitability.

The problem is that inventory has both risk and weird tax consequences so nobody wants to hold it. The risk is simply that nobody ever wants the part so you lose the money you spent. The weird tax consequences are how you "write down" inventory--the problem is that the IRS lumps a lot of inventory into the same boat: bolts are sort of treated the same as semiconductors even though they have very different life cycles.

The real lesson in all this is that there is no longer a surplus in worldwide fab capacity. The "fabless" semiconductor business plans relied on this surplus to beat up the "fab owning" companies for years.

The fabs all just figured out that "Fabs are the walled garden" and the fabless guys just got a reminder that "Your profits are dependent on some else's platform and they can take it away."

It will be interesting to see what the reckoning is after this all shakes out.