Huawei reportedly building 'secret' semiconductor fabs | Hacker News Reader

Huawei reportedly building 'secret' semiconductor fabs

theregister.com

90 pointsBender67 comments

When the Japanese government decided prioritized domestic fabrication equipment, Canon and Nikon took over the lithography market with equipment that outclassed everything else.

I'm doubtful that sanctions can keep their technology generations behind over the long term. I don't know if it will come from research or espionage, but the CCP will throw enough resources at the problem to catch up with ASML.

That's the point. Instead of effortlessly being able to copy tech that's handed to them, they're going to have to spend time, money and talent to just catch up. While that's happening it isn't as though ASML and others will be standing still, and they won't have to make a national espionage project out of their attempts.

Sanctions are about adding cost and friction, not some magical ideal of totally boxing countries off.

In addition, it gives the United States and EU the chance to catch up and build up their domestic semiconductor capabilities without being undercut by chips from China. Countries have too slowly realized the importance of this and are playing catchup after years of underinvestment.

Exactly this. Increase cost of acquisition 10-1000x current market rates. The added benefit is that they may produce a competitor to ASML which actually drives down costs and increases innovation. Win win win!

It's not sanctions alone. It's the chinese culture of guanxi and corruption that will.

Individualism and exceptionalism is not rewarded.

On this topic, I am about halfway through a great book written in the 1930s that tries to explain to Westerners the Chinese way of life/thought/relationships/morals that seem well, foreign.

It was actually written to explain Western culture to Chinese readers, but it's just as good the other way.

"From the Soil: The Foundations of Chinese Society" https://www.amazon.com/Soil-Foundations-Chinese-Society/dp/0...

I wonder how much pre-CCP Chinese culture has been distorted since the CCP took over and implemented the Cultural Revolution and its more might-makes-right philosophy, and how much of that book still applies? Some does I’m sure, but is all of it still accurate?

Again, it cuts both ways. How much will westerners willingly misunderstand because it intersects with the ideological conflict?

Why aren't we asking questions about western colonialism's impact on the culture? Too awkward?

It's a culture of 1.5 billion people presently, over a few thousand years. Probably "fewer generations separated from subsistence farming" is more influential than anything ideological.

To claim it's a single culture of 1.5 billion is really interesting. China is many countries and cultures in one, but ruled by a certain class. Any outward disrespect China may feel could be seen as a handy distraction from problems of keeping 1.5 billion people the "same".

Ok, mostly one culture. Yes there are Mongols, uyghurs, etc but they're a pretty small % even added all together.

Sounds interesting. What are your thoughts and impressions so far?

China has basically caught up and exceeded (EVs) in the worst case, or absolutely dominated (manufacturing) pretty much every industry it touched. Why are semiconductors going to be different?

Secret to whom? Were they supposed to file permits with the US after we cut them off?

Yes, they need a license to acquire equipment. It’s in the article.

I double checked and couldn't find mention of a license. There was a handwave towards "evading sanctions" but not much detail.

I think the link was changed or comments merged. The article I was referencing was on Bloomberg I believe.

> Secret to whom?

To propagandists hired to write propaganda.

History repeats itself

https://www.history.com/news/industrial-revolution-spies-eur...

It is curious how the process of entrenchment and even ennoblement tends to lead to claiming others prosecuting the behaviour that got you into that position is the greatest possible evil.

Arguable examples include piracy, slavery, intellectual property protections and nuclear proliferation. The ascendancy to the moral high ground does not require abandoning any of the benefits of past behaviour.

Economic leadership is usually based on having been a copycat before and ignoring protective laws.

The US did it, Germany did it, Japan did it, China did it.

> It has also received some $30 billion in government subsidies to help

That's such an incredible amount of money. It would be fair to say they are really just an arm of the government right ?

Not to say you’re wrong, but “TSMC seeks $15 billion in US subsidies for Arizona chip plant”[1] and the fact they may get a sizeable share of the EU’s $46 billion subsidy pot [2], suggests that this is just the sort of money that governments are willing to spend to secure access to one of the 21st century’s most critical resources.

If anything, given China will not have access to ASML’s latest tech and will need to develop much of the tech itself, the $30 billion seems a bit low for a whole “network” of fabs.

[1] https://finance.yahoo.com/news/tsmc-seeks-15b-subsidies-want...

[2] https://www.reuters.com/technology/tsmc-feeling-good-about-p...

Yes, just as much as airlines are an arm of the US government:

> U.S. airlines avoided broad bankruptcies and cuts with the record $74 billion in government Covid-19 aid (https://skift.com/2021/07/29/federal-aid-saved-u-s-airlines-...)

Or the US semiconductor industry > Most of the money is going into industry and supporting industry investments. Of the $52.7 billion in subsidies, the bulk of that will end up going to private companies. (https://www.scientificamerican.com/article/nearly-53-billion...)

Of course there's more examples for almost any country.

I'm not debating your conclusion. I think it is spot on. I am calling out the tone though as if this was not the norm for all the mega corps/mega industries.

Yes but no government puts listening devices into their planes to spy on passengers considering they have full control.

Wait, that's actually a good idea. Probably likely that one of China/Russia/N Korea/Iran have done this.

..a good idea from the perspective of an authoritarian government. Not saying it's good for airplanes to do this.

What about the CHIPS act and its $52 billion in subsidies and tax benefits? Is Intel just another arm of US government now? And EU will do the same. I believe it's understandable that every political block wants to be independent in such important technologies.

There is a pretty strong argument that there are a set of companies that the USG considers "too big/important to fail" given the roles they have played in defense and associated industries. Boeing and Lockheed certainly, Microsoft and Intel and Dell most probably.

Without Intel, the CIA and NSA can't do CIA and NSA stuff. I think they're safe.

I can't see them changing their domain controllers and sharepoint out for macs and mediawiki any time soon, any more than I can see them flying A330s.

Dell???

Agree on Intel, MS, Boeing. And there are others.

But how is Dell strategic?

Want your government to buy Lenovo instead of Dell?

Don't they mostly buy HP? For example, I remember see HP trash sitting on the desk in that famous Bin Laden raid photo.

Snowden was working under contract at Dell for the alphabet boys. Dell is not just a HW manufacturer but also a service provider, like IBM.

> CHIPS act and its $52 billion in subsidies and tax benefits?

This is a fair point, and I don't know or will assume but is all of that going to 1 company ?

It should be safe to assume they are pumping money to other companies, such as SMIC and, more recently, Moore Threads. Although they are years behind and, for example, MTT S80 is at 750Ti levels in lots of aspects, it's quite astonishing the advancements they made in such short amount of time.

TSMC spends $36B annually on capital by itself. It’s hard to fathom how massive they have become, few government budgets can keep up with such tech costs.

I mean they're clearly vital to China, but private industry receives tons of subsidies in the U.S. too, 'defense' contractors, fossil fuels, farming... It's a pretty normal thing for a government to do regarding sectors it considers important. Obviously that buys them influence, in China and in the US alike.

Every Chinese company is an arm of the government, whether they have state funding or not. Look at what happened with Jack Ma and the Ant Financial IPO. If the CCP can exert this level of control over a $280B company is anyone out of reach?

Government definitely is above the Corporations in the China. Perhaps the reverse in the US

The US Chips and Science Act gives $52bn in subsidies and $24bn in "tax credits" to semiconductor companies.

You think Intel, AMD and NVidia aren't?

It's a carrot not stick model over here, but they're absolutely arms of the government and this is squarely in the realm of industrial policy. Everything else is pretend.

Intel is supposed to capture how many billions from the CHIPS act (alone - then add in state subsidies) and NVidia can't sell it's most powerful GPUs to China (they have capped memory bandwidth of 600GB/s).

AMD tiptoed around x86 designs in "mainland" China through a complex subsidiary agreement - and none of those designs were the most complex (they were reduced in various ways).

The gloves are off and we've stopped pretending it's a free market.

> That's such an incredible amount of money.

For reference, Huawei reported a revenue of $92 billion last year.

I might be biased by my time there but I never got the impression that Huawei particularly cared about anything beyond business. Sure, the ownership structure meant management could take a more long term view but finally it was still about the bottomline.

Pretty much all companies in China are required by law to co-operate with the government. They don't need a warrant or anything like that. There is no such thing as a truly private enterprise in China.

Plus, as paranoid as the CCP is, they probably have agents in these big businesses keeping track on things.

Hmm, that sounds a lot like the Twitter files story :)

It is true, but normally CCP is not worried about private companies. Many times, they would ask private companies to help in developing an area, creating jobs. Sometimes private companies are asked to take over a bankrupted company to save jobs at the cost of private company, very few companies would say no because they know they are going to be rewarded later. It is very interesting dynamic in business sector.

If CCP does have agents in those big businesses, there would be no recent bad news from the real estate companies.

Musk has pocketed $5bn and that excludes "government contracts".

It would be fair to say they are really just an arm of the government right ?

Government contracts are work done in exchange for money. They are not subsidies as much as you might wish for them to be.

If the government buys 1000 pens because it literally needs them to do its job, it isn't subsidizing the pen industry.

In the case of Musk, that isn't true. The COTS contract awarded half the money ($150M) without any hardware built--it was up-front. This amounted to more than the total amount Elon invested and more than covered Falcon 1, meaning he never had to spend his own money.

Part of the money being given up front doesn't make it a subsidy either...

The COTS program required the development of an appropriate vehicle after a competitive process to evaluate different proposals. You're acting like it was money to cover his previous costs and not money intended to pay for the development of the thing they were being contracted for, along with associated milestones for further payments. And hell, not like they were the only ones to get that money or even the ones to get the most money, they were the only ones to actually manage to deliver.

Why is it that only when it comes to a Musk company people act like these are unique contracting methods? You can easily find this info using the very thing you're using to post deceitful half truths.

Edit: Actually it isn't even a half truth, it's outright wrong, the initial payment SpaceX got was $23M. Everything else was dependent on milestones and design reviews, with NASA being able to cancel any time for non-performance (as they had done with one of the other companies under the program). The end result was NASA paying slightly less than half the development cost that SpaceX incurred.

https://arpa-e.energy.gov/sites/default/files/Lindenmoyer_%2...

Look at the actual COTS agreement wording: https://www.nasa.gov/centers/johnson/pdf/189228main_setc_nnj...

page 34 details the milestones.

The first 12 milestones are paper design / powerpoints. Half the money before any hardware development at all.

Mike Griffin structured it this way for Elon.

Look, I get that you're trying to be malicious, but you could do a better job than that. They literally describe what the criteria for successful design reviews are in Appendix 3.

Hint: Design reviews are not "powerpoints". They're typically several hundred to several thousand page technical documents.

The point is Elon didn't risk his own money as is oft dramatized. In fact they were mostly spreadsheets and PowerPoints to obtain that money which could then be used for build out.

But it was a contract for work yes? That sounds more like a pre-payment than a grant.

If presenting a PowerPoint you already made is work (for $150M) then sure.

Others got the same (or better) deal no?

I believe the deal here was very unusual--not unless they had someone with government power directly pulling big strings. In this case Griffin.

that excludes government contracts

Absolutely?

At this point we are definitely treating SpaceX as the US space agency and not a private business. People were outraged when Musk was considering whether to continue supporting Ukraine with StarLink. Imagine if he refused to do the same when China cuts the cables to Taiwan, someone will probably try to charge him with treason, only to realize that a private business has no obligation to do so.

Support as in keep charging $500 for $1500 equipment and allowing use that wasn't agreed on at the outset?

> That's such an incredible amount of money. It would be fair to say they are really just an arm of the government right ?

If so, then every major US bank, oil, car, tech, transportation, banana, etc company is just an arm of the government. It's not just trillions in subsidies that we've provided for them over the past few centuries. We've fought wars to help these industries. The US government committed genocide against native, asians, middle easterners, etc to help these companies and industries.

It’s kind of space industry. Does US government own Starlink? Yes and no.

Are we ready for Stuxnet round 2?

I don't think something so sophisticated would be required in this case (but it would definitely do the trick). Semiconductor manufacturing is easily the most fragile industry on earth, inclusive of nuclear and aerospace.

If you wanted to completely cripple a fab, you wouldn't need a fancy computer program. All you would need to do is sneak some copper dust into a filter for an air handler and wait for chaos to emerge from yield analysis a few weeks (or months!) later. It wouldn't take much. An amount trivial to get past security. IIRC, Intel had incidents that could be traced back to fertilizer being spread a few counties over. The amount of time it takes to perform this defect analysis is what an intelligence agency would want to target in its activities. Without stable root cause analysis, no practical forward decision making can happen. You can easily get trapped in a vicious cycle of complexity.

Getting the fab clean again from this kind of contamination would be like starting over in many ways. You'd have to redo some recipes (because you'd have to throw away some tools) and many of your statistical baselines would be completely fucked - semiconductor mfg relies on statistical process control that takes time to settle, which is why you hear this term "ramping" a lot in the business. For flash memory or older LSI process nodes, you could recover a lot faster. When you are already operating at the bleeding edge, the slightest amount of malice is like the end of the universe by comparison.

Fascinating comment...but whats preventing China from performing the same actions against EU or American rivals? Surely the second biggest economy has the "potential" capability to damage their rivals in similar ways no?

> whats preventing China from performing the same actions against EU or American rivals?

Nothing other than the automation rate. If a factory can achieve 100% full-auto (which we are pretty much at already), security becomes much easier to manage. I believe US/EU facilities achieve higher automation rates than China in practice, but that is an assumption based upon former experience in the industry.

I haven't gone through fab security in over a decade, but I suspect protocols are much more intensive now.

Related Register story just yesterday:

China cooks covert chips, recruits global geeks to dodge US restrictions https://news.ycombinator.com/item?id=37249523

Guardian piece 2 days ago:

Huawei accused of building secret microchip factories to beat US sanctions https://news.ycombinator.com/item?id=37239793

The headline on this one should be along the lines of "Semiconductor Industry Assoc Responds to Recent Story"

Reply on news.ycombinator.com