Intel's Global Leadership:
Intel Corp. (INTC), founded in 1968 in Silicon Valley, is the world's largest and the most advanced semiconductor company, larger than the second-ranked Samsung Semiconductors, and more than triple the size of the next-largest domestic producer, Qualcomm Inc. (QCOM).
What distinguishes Intel from most other semiconductor companies is that it manufactures its products in-house. The bulk of semiconductor “manufacturers” outsource the actual work of building their products out to foundries in China and Taiwan.
Last week, the company revealed that its smaller, faster 7-nanometer chipmaking technology was at least six months behind schedule and it would have to outsource manufacturing to keep its products competitive.
Taiwan Semiconductor Manufacturing Company (TSMC):
Taiwan-based TSMC has 6 nanometer technology in production already. There is widespread speculation that Intel will turn to it to manufacture its most advanced microprocessors.
TSMC manufactures chips for the vast majority of the leading fabless semiconductor companies including Advanced Micro Devices (AMD), Apple Inc., Broadcom Inc., Marvell, Nvidia, and Qualcomm.
US Technology Leadership Under Threat:
Semiconductor manufacturing technology is fundamental to all other computer and communications technologies. While the U.S. still has most of the leading chip design companies, there are very few leading semiconductor manufacturing facilities in the country. In fact, the US, which invented the chip technology, has slipped from being first in semiconductor manufacturing at the dawn of the industry to fifth in the world.
Recognizing the issue of foreign sourcing of critical technologies, the US has forced TSMC to start a fab in Arizona. But TSMC’s proposed fab in Arizona will have relatively small capacity, sufficient to meet only a fraction of the manufacturing demand of top companies like Apple, AMD, Marvell, Nvidia, etc. The US Congress is in the process of legislation that will provide greater incentives to companies to manufacture chips in the United States.
US-China Tech War:
TSMC is caught in the cross-fire of US-China technology war. Almost all major semiconductor manufacturers, including TSMC, rely on equipment made by US companies. The US government is attempting to leverage the dominance of US chipmaking equipment industry to shut out the Chinese technology companies.
US Commerce Department has recently announced that henceforth, any semiconductor chips made with equipment built by American companies cannot be sold to Huawei without prior approval and license from the DOC.
Summary:
Silicon Valley tech giant has revealed that its smaller, faster 7-nanometer chipmaking technology is at least six months behind schedule and it would have to outsource manufacturing to keep its products competitive. The company has blamed the failure on its Indian-American chief engineer who has since been fired. What is at stake here is the US technology leadership because semiconductors are fundamental to all computers and communications products. Taiwan-based TSMC appears to be the biggest beneficiary of Intel's failure.
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32 comments:
Nikkei reported earlier today that TSMC has moved to stop new orders from Huawei following the US government’s announcement last week. The rules are specifically designed to target Huawei and its chip subsidiary HiSilicon, requiring a license for any shipments from manufacturers that use US technology or equipment. TSMC didn’t deny the reports but called them “purely market rumor,” according to Reuters.
https://www.theverge.com/2020/5/18/21262042/huawei-us-export-tsmc-chip-manufacture
Huawei has in the past suggested that it could switch its chip supply to Samsung in this eventuality. The company has also recently been exploring domestic chip production through China’s Semiconductor Manufacturing International Corporation (SMIC), which just received a $2.2 billion investment from the Chinese government.
SMIC is a relatively tiny competitor to TSMC, however, and it would take a long time to scale up to Huawei’s cutting-edge demands. Last week SMIC started mass production of HiSilicon’s Kirin 710A processor on its 14nm node, but TSMC is expected to move onto a more advanced 5nm process this year. Even the original Kirin 710 was manufactured by TSMC at 12nm, and that was a mid-range chip in 2018.
“This decision by the US government does not just affect Huawei. It will have a serious impact on a wide number of global industries,” Huawei says in its statement. “In the long run, this will damage the trust and collaboration within the global semiconductor industry which many industries depend on, increasing conflict and loss within these industries. The US is leveraging its own technological strengths to crush companies outside its own borders. This will only serve to undermine the trust international companies place in US technology and supply chains. Ultimately, this will harm US interests.”
Richard Yu, CEO of Huawei’s consumer division, also spoke out against the US government today. “The so-called cybersecurity reasons are merely an excuse,” he wrote in a WeChat post reported on by Bloomberg. “The key is the threat to the technology hegemony of the US.”
Riaz Sab, Any chance you might be called back to Intel? Your contributions to Intel 80386 processor has been backbone to Intel for many years. Would be great to see a Pakistani American back in drivers seat.
#US squeeze on #China’s apps, #digital infrastructure could upend global internet. Over 20 of 100 top-grossing apps on #Google Play are #Chinese, while 10 of the 100 highest grossing apps on #Apple’s App Store are from China. #CleanNetwork https://www.scmp.com/tech/big-tech/article/3096323/us-squeeze-chinas-apps-digital-infrastructure-could-upend-global?utm_source=Twitter&utm_medium=share_widget&utm_campaign=3096323 via @scmpnews
“Many of the Chinese companies currently under unilateral US sanctions are innocent, and their technology and products are safe,” said Wang Wenbin, China’s Foreign Ministry spokesman, in a statement on Thursday. “It is absurd for the US to talk of a ‘Clean Network’ when it is covered in its own filth”, referencing the Edward Snowden incident and Prism surveillance.
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The Trump administration’s “Clean Network” programme threatens to further disrupt China’s technology industry, as the campaign seeks to restrict the international expansion of Chinese apps, cloud services and undersea cable networks.
US Secretary of State Mike Pompeo on Wednesday made sweeping remarks that – “to keep Americans’ data safe from untrusted vendors” – he will aim to remove Chinese-owned apps in the market as well as cut off links with China’s digital infrastructure.
The initiative, which the State Department said includes the commitment of more than 30 countries and territories, is likely to escalate the complex tech war between the world’s two largest economies, according to analysts.
“The negative effect of this programme is that it’s becoming harder to see a truly global vision of the internet and access without borders surviving this tech war,” said Paul Haswell, a partner who advises technology companies at international law firm Pinsent Masons. “It would seem that the object of the campaign is to remove Chinese technology from all aspects of US data transmission and processes. We’ll have to see if that is even possible in practice.”
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“This latest ramp-up in US-China tensions poses a potential barrier for the Chinese cloud companies to expand globally,” said Mathew Ball, Canalys’ chief analyst for global infrastructure, cloud and cybersecurity. He added, however, that this campaign “will be challenging to enforce outside the US”.
Pompeo said the US campaign is also focused on keeping the undersea cables that links the country to the global internet safe from intelligence-gathering by China.
In June, the US government blocked a major undersea cable network from linking Hong Kong to the US West Coast because it “would expose US communications traffic to collection” by China.
#US #CleanNetwork aims to restrict #international growth of #Chinese apps, cloud services and undersea cable networks. 20+ of 100 top-grossing apps on #Google Play are #Chinese, while 10 of the 100 highest grossing apps on #Apple’s App Store are from China https://www.scmp.com/tech/big-tech/article/3096323/us-squeeze-chinas-apps-digital-infrastructure-could-upend-global
The Clean Network campaign also aims to prevent sensitive personal information of US citizens and businesses’ most valuable intellectual property – including Covid-19 vaccine research – from being stored and processed on cloud computing platforms run by the likes of
Alibaba Group Holding
, telecommunications network operators
China Mobile
and
China Telecom
,
Baidu
and Tencent.
Tencent and Alibaba, the parent company of the South China Morning Post, declined to comment on the US programme on Thursday. Baidu did not immediately reply to a request for comment.
Alibaba Cloud
was the world’s fourth-largest cloud services provider in the second quarter, behind Amazon Web Services, Microsoft Azure and Google Cloud, according to research firm Canalys.
“This latest ramp-up in US-China tensions poses a potential barrier for the Chinese cloud companies to expand globally,” said Mathew Ball, Canalys’ chief analyst for global infrastructure, cloud and cybersecurity. He added, however, that this campaign “will be challenging to enforce outside the US”.
Alibaba vs. Amazon
https://www.nasdaq.com/articles/better-buy%3A-alibaba-vs.-amazon-2020-04-02
With just about everyone who is still working doing so from home due to the COVID-19 outbreak, there has been a huge increase in the use of cloud services and online grocery orders. Alibaba (NYSE: BABA) and Amazon.com (NASDAQ: AMZN) are two of the top e-commerce and cloud service providers in the world.
Alibaba dominates China's e-commerce market, with 824 million users on mobile. The Chinese tech giant is also the leading cloud service provider in China with Alibaba Cloud.
Amazon is increasing its share of e-commerce in the U.S., as it becomes the go-to online store for people relatively new to buying things online. The company has over 150 million Amazon Prime members who enjoy free shipping and other services as part of a yearly subscription. Most of the company's profit, however, is generated from Amazon Web Services, which is helping organizations migrate their data systems from on-premise servers to the cloud.
Both companies were growing fast going into the coronavirus crisis, but the practice of social distancing will only make these companies stronger as more people adopt online shopping. We'll compare Alibaba and Amazon on financial fortitude, growth, and valuation to determine which stock is the better buy.
In hard times, companies that have plenty of cash can weather the storm, while companies that are swamped with debt add an additional element of risk that you can avoid by investing in cash-rich companies like Alibaba and Amazon.
The main difference between the two is that Alibaba generates more free cash flow relative to revenue than Amazon. Free cash flow is an important profitability metric to watch, as it shows the actual cash that is left over for value-creating moves like dividends, share repurchases, and acquisitions after paying all expenses and reinvesting in the business for growth.
Overall, Alibaba has the advantage here.
Which company is growing faster?
While Alibaba and Amazon have both been around for more than 20 years, both companies are still growing very fast, especially for companies of their size.
Lack of #Computer Chips Disrupts #Automobile Factories Worldwide. #Semiconductor chips are used in touch screens, engine controls & transmissions, communications, suspensions, anti-lock brakes & collision avoidance systems with cameras and other sensors https://www.nytimes.com/2021/01/13/business/auto-factories-semiconductor-chips.html
Geopolitics also played a role. The Trump administration in September placed restrictions on Semiconductor Manufacturing International Corporation, China’s main foundry, which produces chips for cars and many other applications. The company’s customers began looking for alternatives, generating additional competition for chip supplies from other foundries, said Gaurav Gupta, a vice president at the research firm Gartner.
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The chip crisis is an example of how the pandemic has shaken the global economy in unpredictable ways. Carmakers expected to face supply chain shortages, and plants closed early in 2020 because of fear that workers would infect one another, or because trucking firms had stopped delivering. Most U.S. auto factories ceased production for roughly two months last spring.
Automakers braced for turmoil when the pandemic hit. They expected supply chain disruptions and plummeting sales. But they never figured that a year later one of their biggest problems would be PlayStations.
Strong demand for gaming systems, personal computers and other electronics by a world stuck indoors has sucked up supplies of semiconductors, forcing carmakers around the world to scramble for the chips that have become as essential to mobility as gasoline or steel.
Virtually no carmaker has been spared. Toyota Motor has shut down production lines in China. Fiat Chrysler Automobiles temporarily stopped production at plants in Ontario and Mexico. Volkswagen has warned of production problems at factories in China, Europe and the United States. Ford Motor said last week that it was idling a Louisville, Ky., factory for a week because of the shortage.
When Covid-19 hit, automakers slashed orders for chips in anticipation of plunging sales. At the same time, semiconductor makers shifted their production lines to meet surging orders for chips used in products like laptop computers, webcams, tablets and 5G smartphones.
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Businesses also upgraded their digital infrastructure to handle online meetings and employees working from home, while telecommunications companies invested in broadband infrastructure, further fueling demand for semiconductors.
Then auto sales bounced back faster than expected at the end of 2020, catching everyone off guard. The shortages of chips that ensued are expected to last well into 2021, because it can take semiconductor makers six to nine months to realign production.
“Consumer electronics exploded,” said Dan Hearsch, a managing director at the consulting firm AlixPartners. “Everybody and their brother wanted to buy an Xbox and PlayStation and laptops, while automotive shut down. Then automotive came back faster than expected, and that’s where you get into this problem.”
While the shortage is not expected to cause auto prices to rise very much, buyers might have to wait longer to get the vehicles they want.
The chip shortage has its roots in long-term forces reshaping the auto and semiconductor industries, as well as short-term confusion from the pandemic.
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“Future investment in these foundries will therefore be critical so that the automotive industry can avoid such supply chain upheavals in the future,” Continental said in a statement.
Infineon, based in Munich, said it was stepping up investment in new production capacity in 2021 to as much as 1.5 billion euros, or $1.8 billion, from €1.1 billion in 2020. The company is also ramping up production at a new chip factory in Villach, Austria, that will produce 12-inch wafers.
#Superpower status will depend on #semiconductor chips. #TSMC building world's largest $20 billion fab in #Taiwan to manufacture chips at dimensions of just 3 nanometers that'll power everything from latest iPhones to medical equipment to F-35 fighters. https://www.ft.com/content/44e28cad-55b7-4995-a5c5-6de6f9733747
This vast capital expenditure highlights the near-insatiable demand for computer chips, the dominance of Taiwanese chipmakers and the sophistication of modern manufacturing. TSMC’s chips power everything from Apple’s latest iPhones to medical equipment to F-35 warplanes, accounting for about 55 per cent of global semiconductor sales.
But the manufacture of semiconductors is becoming a geopolitical imperative, too. As part of its squeeze on China’s tech industry, the US has pressured TSMC to stop supplying Huawei, previously one of its biggest customers. China, which spends more on importing computer chips than oil, is developing a semiconductor industry to reduce dependence on overseas suppliers.
Sensing their own vulnerability, the US, Japan and the EU are also stepping up their efforts to develop indigenous semiconductor industries, as their carmakers and computer games companies wail about the lack of supply. Computer chips currently vie with vaccines as must-have resources for any nation state.
If military capability in previous centuries was built on breech-loading rifles, warships or atomic bombs, it may well depend in the 21st century on the smartest use of advanced chips. The centrality of TSMC to the global semiconductor industry is sometimes given as a reason why mainland China might yet invade Taiwan. But far bigger military and political considerations will determine Beijing’s course of action.
By any measure, TSMC is an extraordinary company which is reaping the benefits of out-investing its rivals. It has just announced that its capital spending will further increase to between $25bn and $28bn this year as it struggles to add capacity fast enough to match demand. During an earnings call last month, CC Wei, TSMC’s chief executive, said that surging sales of smartphones and high-performance computers and the adoption of 5G mobile technology were fuelling demand for the company’s leading-edge logic chips. “We believe that 5G is a multiyear megatrend that will enable a world where digital computation is increasingly ubiquitous,” he said.
Most other semiconductor companies have dropped out of the race to manufacture 3nm chips due to the stratospheric costs. It will now be hard for any rival to catch up with TSMC because of its vast capital spending, its technological expertise, its network of suppliers and its support from the Taiwanese government. Only Samsung of South Korea is visible in its rear-view mirror.
“What separates TSMC from other foundries is its appetite to take risks and its ability to execute. It is an incredible business model,” says Brett Simpson, a tech analyst at Arete, an independent research firm. “The market is heading for one dominant player and one subscale player that is hanging in there and executing very well.”
The bigger concern for TSMC is the geopolitical tension between the US and China. With two fabrication plants in China, one in the US state of Washington and another planned in Arizona, TSMC has been hedging its bets. But like many other companies in a fast-polarising world, it is being forced to choose.
Shelley Rigger, a professor at Davidson College in North Carolina and author of Why Taiwan Matters, says that US pressure on China is only reinforcing Beijing’s determination to become self-sufficient in semiconductor manufacturing: “China has infinite money to throw at a problem like this and no scruples about doing what needs to be done.”
Taiwan has long feared that the world could divide into Chinese-dominated red supply chains and US-focused blue supply chains, jeopardising relations with either its biggest trading partner or its main strategic ally. The island’s room for manoeuvre is becoming as thin as TSMC’s wafers.
Is There a War Coming Between China and the U.S.?
https://www.nytimes.com/2021/04/27/opinion/china-us-2034.html
If you’re looking for a compelling beach read this summer, I recommend the novel “2034,” by James Stavridis, a retired admiral, and Elliot Ackerman, a former Marine and intelligence officer. The book is about how China and America go to war in 2034, beginning with a naval battle near Taiwan and with China acting in a tacit alliance with Iran and Russia.
I’m not giving it all away to say China and the U.S. end up in a nuclear shootout and incinerate a few of each other’s cities, and the result is that neutral India becomes the dominant world power. (Hey, it’s a novel!)
--------------
Are we up to the challenge? I’m pretty sure we can keep a more aggressive, nationalistic Russia and Iran deterred at a reasonable cost, and with the help of our traditional allies.
But China is another question. So we’d better understand where our strengths and weaknesses lie, as well as China’s.
China is now a true peer competitor in the military, technological and economic realms, except — except in one critical field: designing and manufacturing the most advanced microprocessors and logic and memory chips that are the base layer for artificial intelligence, machine learning, high-performance computing, electric vehicles, telecommunications — i.e., the whole digital economy that we’re moving into.
China’s massive, state-led effort to develop its own vertically integrated microchip industry has so far largely failed to master the physics and hardware to manipulate matter at the nano-scale, a skill required to mass produce super-sophisticated microprocessors.
However, just a few miles away from China sits the largest and most sophisticated contract chip maker in the world: Taiwan Semiconductor Manufacturing Company. According to the Congressional Research Service, TSMC is one of only three manufacturers in the world that fabricate the most advanced semiconductor chips — and by far the biggest. The second and third are Samsung and Intel.
Most chip designers, like IBM, Qualcomm, Nvidia, AMD (and even Intel to some extent) now use TSMC and Samsung to make the microprocessors they design.
But, just as important, three of the five companies that make the super-sophisticated lithography machines, tools and software used by TSMC and others to actually make the microchips — Applied Materials, Lam Research Corporation and KLA Corporation — are based in the United States. (The other two are Dutch and Japanese.) China largely lacks this expertise.
As such, the American government has the leverage to restrict TSMC from making advanced chips for Chinese companies. Indeed, just two weeks ago, the U.S. made TSMC suspend new orders from seven Chinese supercomputing centers suspected of assisting in the country’s weapons development.
The South China Morning Post quoted Francis Lau, a University of Hong Kong computer scientist, as saying: “The sanctions would definitely affect China’s ability to keep to its leading position in supercomputing,” because all of its current supercomputers mostly use processors from Intel or designed by AMD and IBM and manufactured by TSMC. Although there are Korean and Japanese alternatives, Lau added, they are not as powerful.
China, though, is doubling down on research in the physics, nanotechnology and material sciences that will drive the next generation of chips and chip-making equipment. But it could take China a decade or more to reach the cutting edge.
That’s why — today — as much as China wants Taiwan for reasons of ideology, it wants TSMC in the pocket of Chinese military industries for reasons of strategy. And as much as U.S. strategists are committed to preserving Taiwan’s democracy, they are even more committed to ensuring that TSMC doesn’t fall into China’s hands for reasons of strategy. (TSMC is now building a new semiconductor factory in Phoenix.) Because, in a digitizing world, he who controls the best chip maker will control … a lot.
Elliot Ackerman & James Stavridis, 2034: A Novel of the Next World War
https://americanwritersmuseum.org/program-calendar/elliot-ackerman-james-stavridis-2034-a-novel-of-the-next-world-war/
On March 12, 2034, US Navy Commodore Sarah Hunt is on the bridge of her flagship, the guided missile destroyer USS John Paul Jones, conducting a routine freedom of navigation patrol in the South China Sea when her ship detects an unflagged trawler in clear distress, smoke billowing from its bridge. On that same day, US Marine aviator Major Chris “Wedge” Mitchell is flying an F35E Lightning over the Strait of Hormuz, testing a new stealth technology as he flirts with Iranian airspace. By the end of that day, Wedge will be an Iranian prisoner, and Sarah Hunt’s destroyer will lie at the bottom of the sea, sunk by the Chinese Navy. Iran and China have clearly coordinated their moves, which involve the use of powerful new forms of cyber weaponry that render US ships and planes defenseless. In a single day, America’s faith in its military’s strategic pre-eminence is in tatters. A new, terrifying era is at hand.
So begins a disturbingly plausible work of speculative fiction, co-authored by an award-winning novelist and decorated Marine veteran and the former commander of NATO, a legendary admiral who has spent much of his career strategically outmaneuvering America’s most tenacious adversaries. Written with a powerful blend of geopolitical sophistication and human empathy, 2034 takes us inside the minds of a global cast of characters—Americans, Chinese, Iranians, Russians, Indians—as a series of arrogant miscalculations on all sides leads the world into an intensifying international storm. In the end, China and the United States will have paid a staggering cost, one that forever alters the global balance of power.
Everything in 2034 is an imaginative extrapolation from present-day facts on the ground combined with the authors’ years working at the highest and most classified levels of national security. Sometimes it takes a brilliant work of fiction to illuminate the most dire of warnings: 2034 is all too close at hand, and this cautionary tale presents the reader a dark yet possible future that we must do all we can to avoid.
2034: A Novel of the Next World War
What a US nuclear war with China would look like
World Socialist Website
https://www.wsws.org/en/articles/2021/03/25/nuke-m25.html
2034 is co-written by a man who would be a leading architect of such a war. Stavridis was one of the Pentagon’s most prominent political commanders, having been vetted as a potential running mate by the Clinton campaign and a possible secretary of state by President-elect Donald Trump in the fall of 2016.
----------
Finally, the military dynamics are themselves totally unrealistic. The central assumption of the book is that there exists such a thing as a “tactical” nuclear war. Military actions are calmly and rationally discussed and deliberated.
Even so, it is only through an absurd and unbelievable plot twist that a strategic nuclear exchange is avoided. In a ridiculous deus ex machina, India attacks both Chinese and US vessels, bringing about an end to the war.
There is no such thing as a “tactical” nuclear world war. There has never been a full-scale war between two countries armed with nuclear weapons. More importantly, there has never been a full-scale war between “great powers” armed with 21st century technology.
The range, cheapness, and speed of offensive weapons, including drones and high-speed missiles, will mean that a third world war will be conducted everywhere at once, at dizzying speed and complexity. The logic of these phenomena—the complexity of global relations and domestic opposition, the expansion of the battlefield to the entire globe, the delegation of warfare to artificial intelligence—makes nuclear war impossible to control and limit to the “tit-for-tat” military exchanges depicted in the book.
A normal person, that is, one for whom moral derangement is not a professional requirement, would read Stavridis’ book with horror and do everything to avoid the massive level of death it depicts. But the fact is that, for its intended audience within the Beltway and the Pentagon, the tactical nuclear exchanges depicted in the book, constitute, in the words of Dr. Strangelove’s Gen. Buck Turgidson, “getting our hair mussed”—an entirely acceptable consequence of the use of nuclear weapons.
Stanley Kubrick’s masterful Dr. Strangelove, Sidney Lumet’s Fail Safe, and, more obliquely, John Frankenheimer’s Seven Days in May (all released in 1964) were scathing critiques of the military and of nuclear war. No such critical works are being written and produced today, and ground has been ceded to Stavridis’ sanitized depiction of nuclear war from the standpoint of a practitioner.
2034 is a wake-up call. The US military is actively planning and discussing a nuclear war, based on the false claim that such wars can be managed and contained. No, they cannot. Nuclear war threatens the annihilation of humanity. These well-advanced war plans must be opposed and stopped before it is too late.
Chip shortage highlights U.S. dependence on fragile supply chain - 60 Minutes - CBS News
https://www.cbsnews.com/news/semiconductor-chip-shortage-60-minutes-2021-05-02/
Lesley Stahl: Should Americans be concerned that most chips are being manufactured in Asia today?
Mark Liu: I understand their concern, first of all. But this is not about Asia or not Asia I mean, the shortage will happen no matter where the production is located because it's due to the COVID.
Lesley Stahl: But Pat Gelsinger at Intel talks about a need to rebalance the supply chain issue because so much, so many of the chips in the world now are made in Asia.
Mark Liu: I think U.S. ought to pursue to run faster, to invest in R&D, to produce more Ph.D., master, bachelor students to get into this manufacturing field instead of trying to move the supply chain, which is very costly and really non productive. That will slow down the innovation because-- people trying to hold on their technology to their own and forsake the global collaboration.
Within the world of global collaboration there's intense competition. Days after Intel announced spending $20 billion on two new fabs, TSMC announced it would spend $100 billion over three years on R&D, upgrades, and a new fab in Phoenix, Arizona, Intel's backyard, where the Taiwanese company will produce the chips Apple needs but the Americans can't make.
Mark Liu: That was a big investment.
But there's a looming shadow over TSMC, which supplies chips for our cars, iPhones, and the supercomputer managing our nuclear stockpile: China's President Xi Jinping, who has intensified his long-time threat to seize Taiwan.
China's attempts to develop its own advanced chip industry have failed and so it's been forced to import chips. But last year, Washington imposed restrictions on chipmakers from exporting certain semiconductors to china. Both Liu and Gelsinger fear the escalating trade war with China may backfire, and in Intel's case: could hurt business.
Lesley Stahl: Are they your biggest customer?
Pat Gelsinger: China is one of our largest markets today. You know, over 25% of our revenue is to Chinese customers. We expect that this will remain an area of tension, and one that needs to be navigated carefully. Because if there's any points that people can't keep running their countries or running their businesses because of supply of one critical component like semiconductors, boy, that leads them to take very extreme postures on things because they have to.
The most extreme would be China invading Taiwan and in the process gaining control of TSMC. That could force the U.S. to defend Taiwan as we did Kuwait from the Iraqis 30 years ago. Then it was oil. Now it's chips.
Lesley Stahl: The chip industry in Taiwan has been called the Silicon Shield.
Mark Liu: Yes.
Lesley Stahl: What does that mean?
Mark Liu: That means the world all needs Taiwan's high-tech industry support. So they will not let the war happen in this region because it goes against interest of every country in the world.
Lesley Stahl: Do you think that in any way your industry is keeping Taiwan safe?
Mark Liu: I cannot comment on the safety. I mean, this is a changing world. Nobody want these things to happen. And I hope-- I hope not too-- either.
On CBS 60 Minutes show aired May 2, 2021, Intel CEO Pat Gelsinger speculated about unilateral US technology sanctions against China triggering "extreme postures". CBS reporter expanded on it by talking about "China invading Taiwan and in the process gaining control of TSMC", She said, "The most extreme would be China invading Taiwan and in the process gaining control of TSMC. That could force the U.S. to defend Taiwan as we did Kuwait from the Iraqis 30 years ago. Then it was oil. Now it's chips".
https://www.cbsnews.com/news/semiconductor-chip-shortage-60-minutes-2021-05-02/
Why has US fallen behind? It can mainly be attributed to Intel's failure to stay ahead s a result.
Intel has recently fired its Indian-American chief engineer Venkata Murthy Renduchintala, who also served as Group President of the Technology, Systems Architecture and Client Group (TSCG), for failure to deliver 7 nanometer semiconductor technology on schedule, according to Reuters. The news has knocked the market value of Intel by tens of billions dollars. The American company, the biggest global chip manufacturer with in-house fabrication plants, has also decided to outsource manufacturing. This could deal a serious blow to America's global leadership in chip manufacturing which is fundamental to all other computer and communications related technologies.
https://www.riazhaq.com/2020/07/has-intels-indian-american-techie.html
Shortage of #semiconductors, dubbed the 'new oil,' could dent #GDP growth, boost #inflation. "While semiconductors account for only 0.3% of US output, they are an important production input to 12% of GDP” #technology #SiliconValley #Intel #TSMC #Samsung https://cnb.cx/2RVCitw
KEY POINTS
A variety of factors have converged to make coveted semiconductors scarce.
Goldman Sachs says the GDP hit from the shortage could be 0.5% this year while price increases could hit 3% for affected goods.
TS Lombard economist Rory Green calls semis the “new oil” for the global impact that disruptions can cause.
Economic growth could slow and inflation is likely to see at least a momentary bump higher as the semiconductor shortage worsens, economists say.
A variety of factors have converged to make the coveted computer chips scarce. Soaring demand coupled with supply bottlenecks have led to a situation in which orders for everything from cars to televisions to touch-screen computers and more are on backup for six months or more.
With semis at the core of so much U.S. economic activity, the ongoing supply problems are likely to have ripples.
Goldman Sachs economists say that for the bulk of 2021, the shortage will translate into an inflationary tax that could result in prices rising as much as 3% for affected goods. That would boost inflation as much as 0.4 percentage points through the rest of the year, the firm said.
“Taken together, while we see relatively modest implications of the semiconductor shortage for GDP growth and the industrial sector, it represents another reason to expect core goods inflation to remain firm this year,” Goldman economist Spencer Hill said in a note.
Even though the hit won’t cause a dramatic slowdown to an economy expected to roar in 2021, the impact could still be noticeable. Goldman said the impact could reach as high as a 1% subtraction from activity, but likely will be closer to 0.5%.
Disruptions to the ‘new oil’
“While semiconductors account for only 0.3% of US output, they are an important production input to 12% of GDP,” Hill said, nothing that the shortage could cut auto production by 2% to 6% this year.
Indeed, multiple automakers have curtailed production due to lack of chips vital to their vehicles.
Stellantis NV said it will be temporarily laying off workers at its Detroit Jeep plant, while Volvo also has said the chip issues will cause it to shut some plants until the situation is resolved.
The knock-on impacts of any disruptions in the semiconductor industry are becoming increasingly apparent.
“As the world becomes more interconnected, more automated and greener, each unit of GDP growth will contain a higher content of semiconductors. Integrated circuits are becoming the key commodity input for economic activity,” wrote TS Lombard economist Rory Green.
Green calls semis the “new oil” for the global impact that disruptions can cause.
“The current severe shortage of semiconductors, which is halting automotive production worldwide, underscores the speed and scale of the changes under way,” he said. “Chips have always been an important part for manufacturing and consumer electronics, but their use will broaden to transport and digital services.”
Still, Goldman’s Hill said the inflationary impact likely won’t last far as supply increases later this year and into 2022. But the shortage now “represents another reason to expect core goods inflation to remain firm this year,” he said.
#Pakistan #Punjab government budgets Rs41.75 million to establish #computer chip design centers at 8 universities, including UET Lahore, the UET Taxila, the ITU Lahore, and the Islamia University Bahawalpur. #semiconductor #technology #Silicon https://www.dawn.com/news/1629534
MNS UET Multan, the KF UEIT Rahim Yar Khan, the University of Gujrat, and the University of Chakwal next year.
Integrated Circuits (ICs), commonly known as chips, have radically altered the industry and nanotechnology has greatly contributed to major advances in computing and electronics, leading to faster, smaller, and more portable systems that can process, manage, and store larger and larger amounts of information.
Chip design technology is one of the most important and significant technologies globally in the electronics industry. With the Covid-19 crisis disrupting supply chains and geopolitical tensions increasing, semiconductor companies have become more interested in achieving end-to-end design and manufacturing capabilities for leading edge technologies.
Local universities in Pakistan are not extensively teaching the skills which are flourishing quite rapidly all over the world such as micro and nano-electronics IC design because of a lack of highly-trained faculty and academic resources in these domains.
Punjab Minister for Higher Education Raja Yasir Hamayun took an initiative of skills development in micro and nanoelectronics design technologies in the universities of the province. He constituted a committee led by UET VC Prof Dr Syed Mansoor Sarwar.
The minister says they can’t afford to wait anymore since leading players are already years ahead in technology development. He says the future of the semiconductor industry belongs to advancements in nanoelectronics chip design technologies. He says a project was approved for the provision of software and hardware facilities for Microelectronic Design and Development in eight universities to promote R&D culture and train faculty in the universities.
#China appoints Harvard-educated chip czar to accelerate domestic #semiconductor #manufacturing #technology. Vice Premier Liu will be in charge of industrial policy to catch up with #US, #Taiwan and #SouthKorea in advanced #semiconductors. https://asiatimes.com/2021/06/is-the-us-chip-wall-starting-to-crumble/
The Harvard-educated career bureaucrat is not an engineer, but more of an expert in economics and industrial policy.
That means the 69-year old Liu will have to rely on experts when it comes to decisions in his remit: semiconductor materials, equipment and processes.
But rather than merely catch-up, Liu’s chip strategy will likely be to explore areas rivals have yet to master in the hope that China can colonize these technologies.
It’s the kind of moonshot approach that the People’s Republic already practices. China last week released the first images taken on Mars as part of its Tianwen-1 interplanetary mission.
That success, according to Beijing-based consultancy Trivium, “validates the focus on pursuing leapfrog development,” focusing on next-generation technologies where no country has a clear advantage.
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“Failure is not an option” is an epic phrase associated with Gene Kranz and the Apollo 13 Moon landing mission, which went terribly wrong, but ended happily thanks to some Mission Control heroics.
Likewise, with a newly-appointed vice premier at the microchip helm, China is leaving itself no more excuses to fail.
The nation’s decision to anoint a “chip czar” is the latest step to advance its semiconductor industry in the face of harsh US sanctions.
While China still has a ways to go in catching up to the US, Taiwan and South Korea, Vice Premier Liu He is a worthy choice to spearhead the development of future semiconductor technologies, Business Standard reported.
He’s headed China’s technology reform since at least 2018, acted as chief negotiator in US-China trade talks and his position within leader Xi Jinping’s inner circle ensures his recommendations get heard.
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Beijing is right to trumpet this success in space, and the results ought to boost morale within its struggling chip sector.
According to the South China Morning Post, China’s output of integrated circuits (IC) in May reached an all-time, single month high, as the country pulled out all stops to produce chips, according to central government data.
China’s chip output in May surged 37.6% from a year ago, to 29.9 billion units, the National Bureau of Statistics date showed.
While China’s chip makers are not able to produce high volumes of advanced 14-nm node chips — the type needed to power the latest iPhones — the country’s chip designers and manufacturers can produce mature technology ICs for home appliances and automobiles, SCMP reported.
In the first five months of this year, China produced 139.9 billion IC units, a 48.3% surge compared to the same period last year, data showed.
The latest data confirms that China is sparing no effort in its pursuit of self-sufficiency in semiconductors, SCMP reported.
In March, Beijing moved to waive levies on imported semiconductor parts and materials until 2030, SCMP reported. The Chinese government has declared its ambition to cultivate a US$237 billion domestic component market by 2023.
Meanwhile, Huawei Technologies is adamant in its pursuit of developing world-beating semiconductors, despite toughened US sanctions, according to Catherine Chen, a Huawei director and senior vice-president, Nikkei Asia reported.
Chen said the company has no intention of restructuring chip design subsidiary HiSilicon, despite the fact it has more than 7,000 workers on its payroll and is expected to go years without contributing to earnings.
But Huawei is privately held and unaffected by external forces, and its management has clearly shown it intends to retain HiSilicon, Chen said.
Xi Jinping Picks Top Lieutenant to Lead China’s Chip Battle Against U.S.
https://www.bloomberg.com/news/articles/2021-06-17/xi-taps-top-lieutenant-to-lead-china-s-chip-battle-against-u-s
Liu He, Xi’s economic czar whose sprawling portfolio spans trade to finance and technology, has been tapped to spearhead the development of so-called third-generation chip development and capabilities and is leading the formulation of a series of financial and policy supports for the technology, according to people with knowledge of the matter.
It’s a nascent field that relies on newer materials and gear beyond traditional silicon and is currently an arena where no company or nation yet dominates, offering Beijing one of its best chances to sidestep the hurdles slapped on its chipmaking industry by the U.S. and its allies. The sanctions, which emerged during Donald Trump’s presidency, have already smothered Huawei Technologies Co.’s smartphone business and will impede longer-term efforts by chipmakers from Huawei’s HiSilicon to Semiconductor Manufacturing International Corp. to migrate toward more advanced wafer fabrication technologies, threatening China’s technological ambitions.
“China is the world’s largest user of chips, so supply chain security is of high priority,” said Gu Wenjun, chief analyst at research firm ICwise. “It’s not possible for any country to control the entire supply chain, but a country’s effort is definitely stronger than a single company.”
The involvement of one of Xi’s most-trusted lieutenants in China’s chip efforts highlights the importance accorded by Beijing to the initiative, which is gaining urgency as rivals from the U.S. to Japan and South Korea scramble to shore up their own industries. The Chinese president has long called upon his Harvard-educated adviser to tackle matters of top national priority, making him the chief representative in trade negotiations with the U.S. as well as chairman of the Financial Stability and Development Committee, where Liu leads the charge to curb risks in the nation’s $5-trillion-plus financial sector.
In May, Liu spearheaded a meeting of the technology task force that discussed ways to grow next-generation semiconductor technologies, according to a government statement. The 69-year-old vice premier, who has led the country’s technology reform task force since 2018, is also overseeing projects that could lead to breakthroughs in traditional chipmaking, including the development of China’s own chip design software and extreme ultraviolet lithography machines, one of the people said, asking not to be identified as they weren’t authorized to speak to media.
The State Council and the Ministry of Industry and Information Technology didn’t respond to faxed requests for comment.
During trade negotiations with the Trump administration, Liu emerged as one of the most visible advocates of Beijing’s agenda. He’s known Xi since childhood -- both are sons of veteran Communist Party leaders and were among masses of young people dispatched to work in impoverished rural areas during the Cultural Revolution. Now, Liu is leading the charge to reform the tech sector, which was identified in China’s latest five-year economic plan as a key strategic area in which the “whole nation system” should be used to mobilize any necessary resources.
First introduced under Mao Zedong to help the then-fledgling Communist China industrialize, the approach was crucial to helping Beijing attain a number of top national priorities, from developing its first atomic bomb in the early 1960s to achieving Olympic sporting success. After that it was largely set aside as officials shifted to focus on economic growth. But following a series of U.S. sanctions that exposed the vulnerabilities of China’s chip capabilities, Xi is once again reactivating the mechanism to achieve breakthroughs in advanced chip development and manufacturing.
About a trillion dollars of government funding have been set aside under the technology initiative,
The White House released a report on Tuesday that offers a solemn assessment of American companies prioritizing profits over national security and long-term sustainability. “A focus on maximizing short-term capital returns has led to the private sector’s underinvestment in long-term resilience,” the 250-page report states. The United States has a competitive advantage over China in the production of semiconductor manufacturing equipment (SME), which provides a chokepoint that can limit “advanced semiconductor capabilities in countries of concern.”
https://www.forbes.com/sites/roslynlayton/2021/06/10/white-house-report-on-china-short-term-profits-undermine-long-term-resilience/?sh=4725be6a2c19
The report details the findings and recommendations of the Administration’s 100-day supply chain review required by President Biden’s executive order from February that directed the review of four key industries: semiconductors, large capacity batteries, critical minerals and pharmaceuticals. The report states that the Chinese government’s “massive subsidy campaign [as much as $200 billion over the past eight years] to develop its domestic semiconductor capability” has exploited “gray areas” in international trade rules and avoided World Trade Organization (WTO) oversight. The Chinese government has propped up key tech industries, including semiconductors manufacturing and SME production, through a “novel subsidy strategy” meant to avoid “transparency requirements of the WTO subsidy regime.” Essentially, government subsidies are booked as “investments” to avoid WTO disclosure rules.
This one of many “innovation mercantilist” tactics that Chinese state has practiced for years, according to a recent report and event by the Information Technology & Innovation Foundation which details China’s deleterious impact on competitive international ecosystems for semiconductors, telecommunications equipment, biopharmaceuticals, solar photovoltaics, and high-speed rail. Co-author Stephen Ezell estimates that the US loses out on some 5000 semiconductors patents annually because of this predation.
The Chinese Communist Party has made a concerted effort to dominate the semiconductor market. The Made in China 2025 plan aims to produce 70 percent of China’s chip demand indigenously and pledges as much as $1.4 trillion of investment into China’s semiconductor industries.
Memory chips are the “most mature” of these efforts. Yangtze Memory Technologies (YMTC), which has received $24 billion in state subsidies, has emerged as a “national champion memory chip producer.” A report by James Mulvenon this year identifies ties between YMTC and the People’s Liberation Army.
“It’s not just YMTC,” cautioned Emily de La Bruyère, senior fellow at the Foundation for the Defense of Democracies, during a China Tech Threat roundtable forum this week. “Changxin Memory Technologies [CXMT] is equally propped up and potentially equally connected to the [People’s Liberation Army].” The roundtable titled "Let the Chips Fall?" explored the theme of how the next Undersecretary for the Department of Commerce’s Bureau of Industry and Security (BIS) should address semiconductor policy.
The White House report appears to be a de facto roadmap for the next BIS chief and is notable for naming leading Chinese fabs with military connections which have yet to be designated as Military End Users or on the Entity List. In no uncertain words, the bipartisan United State China Commission issued a report earlier this month, Unfinished Business: Export Control and Foreign Investment Reforms which critiqued BIS for failing to issue the lists of foundational and emerging technologies as required by the 2018 Export Reform and Control Act. Such a publication would likely trigger action against the Chinese fabs.
“While the United States no longer leads the world in semiconductor manufacturing capabilities,” it has a competitive advantage over China in semiconductor manufacturing equipment (SME), the White House report adds.
#China wants to buy advanced #chip machine from #Netherlands. #US says NO. It's an ASML machine called an extreme ultraviolet (EUV) lithography system that is essential to making advanced #semiconductor #microprocessors. #silicon #technology https://www.wsj.com/articles/china-wants-a-chip-machine-from-the-dutch-the-u-s-said-no-11626514513?st=lhp86rcfoink017&reflink=desktopwebshare_twitter via @WSJ
Beijing has been pressuring the Dutch government to allow its companies to buy ASML Holding ASML -2.35% NV’s marquee product: a machine called an extreme ultraviolet lithography system that is essential to making advanced microprocessors.
The one-of-a-kind, 180-ton machines are used by companies including Intel Corp. INTC -1.51% , South Korea’s Samsung Electronics Co. and leading Apple Inc. supplier Taiwan Semiconductor Manufacturing Co. TSM -1.52% to make the chips in everything from cutting-edge smartphones and 5G cellular equipment to computers used for artificial intelligence.
China wants the $150-million machines for domestic chip makers, so smartphone giant Huawei Technologies Co. and other Chinese tech companies can be less reliant on foreign suppliers. But ASML hasn’t sent a single one because the Netherlands—under pressure from the U.S.—is withholding an export license to China.
The Biden administration has asked the government to restrict sales because of national-security concerns, according to U.S. officials. The stance is a holdover from the Trump White House, which first identified the strategic value of the machine and reached out to Dutch officials.
Washington has taken direct aim at Chinese companies like Huawei and has also tried to convince foreign allies to restrict the use of Huawei gear, over spying concerns that Huawei says are unfounded. The pressure aimed at ASML and the Netherlands is different, representing a form of collateral damage in a broader U.S.-China tech Cold War.
ASML Chief Executive Peter Wennink has said that export restrictions could backfire.
“When it comes to targeted, specific, national security issues, export controls are a valid tool,” he said in a statement. “However, as part of a broader national strategy on semiconductor leadership, governments need to think through how these tools, if overused, could slow down innovation in the medium term by reducing R&D.” He said in the short to medium term, it is possible that widespread use of export controls “could reduce the amount of global chip manufacturing capacity, exacerbating supply chain issues.”
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That currently isn’t on the table inside the Biden White House, people familiar with the matter say. The U.S. is trying to put together alliances of Western countries to work jointly on export controls, people familiar with the matter said. The move could also have ramifications beyond ASML, further roiling semiconductor supply lines already under strain around the world.
ASML spun out of Dutch conglomerate Royal Philips NV in the 1990s. It is based in bucolic Veldhoven, near the Belgian border. It specializes in photolithography, the process of using light to print on photosensitive surfaces.
Photolithography is key to chip makers, which use light to draw a checkerboard of lines on a silicon wafer. Then they etch away those lines, like a knife carving into wood, but with chemicals. The remaining silicon squares become transistors.
The more transistors on a piece of silicon, the more powerful the chip. One of the best ways to pack more transistors into silicon is to draw thinner lines. That is ASML’s specialty: Its machines print the world’s thinnest lines.
The machines, which require three Boeing 747s to ship, use a laser and mirrors to draw lines five nanometers wide. Within a few years, that is expected to shrink to less than a nanometer wide. By comparison, a strand of human hair is 75,000 nanometers wide.
Indian fantasizes having a major semiconductor manufacturer on its shores. It wants to lure a #Taiwanese name to burnish its #semiconductor #tech credentials but #Taiwan doesn't see much point in the exercise given #India's lack of expertise in the field https://www.bloomberg.com/opinion/articles/2021-10-03/india-s-chip-dreams-with-taiwan-aren-t-crazy-they-re-just-misguided
For more than two decades, India has maintained the fantasy that a major semiconductor manufacturer will set up shop on its shores, kicking off the nation’s journey along an inevitable path toward chip glory. It never happened, but there’s now a very clear script for how it might be done, if only government and industry leaders would take a more pragmatic approach.
In the latest incarnation of the dream, officials in India and Taiwan are apparently in talks to lure a new factory worth up to $7.5 billion. The local government is likely to foot half the bill to build and kit out such a project, Bloomberg News reported. While Taipei is eager to build closer ties with New Delhi, facilitating the construction of a chip fab in South Asia is not high on its priority list. That’s not due to Taiwan being particularly protectionist, but because it can’t see much point in the exercise given India's lack of expertise in the field.
The U.S. Military 'Failed Miserably' in a Fake Battle Over Taiwan
https://www.popularmechanics.com/military/a37158827/us-military-failed-miserably-in-taiwan-invasion-wargame/
The U.S. military reportedly "failed miserably" in a series of wargame scenarios designed to test the Pentagon's might. The flunked exercises, which took place last October, are a red flag that the way the military has operated for years isn't going to fly against today's enemies.
Specifically, a simulated adversary that has studied the American way of war for decades managed to run rings around U.S. forces, defeating them decisively. "They knew exactly what we're going to do before we did it," Gen. John Hyten, Vice Chairman of the Joint Chiefs of Staff, revealed at an industry event.
While Hyten did not disclose the name of the wargame (it's classifed), he did say that one of the exercises focused exclusively on a brawl between U.S. and Chinese forces fighting over Taiwan—a scenario that seems increasingly likely.
He says there are two main takeaways for the U.S. military. The first involves the concentration of combat power—the American military, like many armed forces, tends to concentrate ships, planes, and ground forces for maximum efficiency and effect. Concentrating forces allows the military to mass firepower, operate more efficiently, and more easily resupply while in the field. In other words, it's easier for everyone on the good guys' side.
But the problem with concentration of mass is that it makes it easier for the enemy to find and kill you. If an enemy knows that American carriers always operate together, for instance, and an enemy discovers one carrier, it then knows a second carrier is close by. By the same token, an Air Force wing of 72 fighter jets operating from a huge, sprawling air base makes it easier to efficiently arm, fuel, and service the fighters, but destroying the base will take out the entire wing. And an Army infantry battalion concentrated in two one-kilometer grid squares is easy to control, but will suffer heavy casualties to artillery barrages.
Another takeaway is that the U.S. military's information dominance is no longer guaranteed, and would probably be in doubt in a future conflict. Since 1991, most of America's enemies have been relatively low-tech armies without the aid of satellites, long-range weapons, cyber forces, or electronic warfare capabilities. As a result, the U.S. military's access to communications, data, and other information has been very secure during wartime, giving friendly forces a huge advantage.
That won't happen in the next war. Potential adversaries Russia and China both have a strong motivation—and more importantly, capability—to attack the Pentagon's information infrastructure. Both countries are aware that U.S. forces are heavily reliant on streams of data, and in a future conflict will attack, jam, and disable the nodes that distribute that information (such as satellites and aircraft-based node) whenever possible.
What does that mean for U.S. forces? Hyten says that the Pentagon is pushing a new concept known as "expanded maneuver," and wants the entire military to adopt it by 2030.
Expanded maneuver is likely exactly what it sounds like—a greater use of mobility to keep U.S. forces out of the enemy's gunsights. Two aircraft carriers, for example, might sail a thousand miles apart while still working together. A wing of fighter jets might be spread out among half a dozen smaller airfields so the destruction of one won't mean the loss of all 72 warplanes. An infantry battalion's subunits might operate farther apart from one another and stay on the move to avoid destruction by enemy artillery.
How the West Can Win a Global Power Struggle
In an economic Cold War pitting China and Russia against the U.S. and its allies, one side holds most of the advantages. It just has to use them.
https://www.wsj.com/articles/how-the-west-can-win-a-global-power-struggle-11647615557?mod=Searchresults_pos1&page=1
Of course the East plays a central role in the global economy. As recent market turmoil illustrates, Russia is a key supplier of not just oil and gas but metals such as palladium, used in catalytic converters, and nickel. China dominates manufacturing of countless goods whose value became abundantly clear during the pandemic, when demand for some, such as protective personal equipment, skyrocketed.
To a great extent these strengths reflect Russia’s comparative advantage in geology and China’s in factory labor. The West’s comparative advantage is in knowledge. That’s why Russia and China court Western investment. For example, to develop a complex liquefied natural gas (LNG) project in the Arctic, Russia relied on Norwegian, French and Italian contractors for essential expertise, research firm Rystad Energy notes.
Catching up with the West is no easy task, as semiconductors illustrate. Western companies dominate all the key steps in this critical and highly complex industry, from chip design (led by U.S.-based Nvidia, Intel, Qualcomm and AMD and Britain’s ARM) to the fabrication of advanced chips (led by Intel, Taiwan’s TSMC and South Korea’s Samsung ) and the sophisticated machines that etch chip designs onto wafers (produced by Applied Materials and Lam Research in the U.S., the Netherlands’ ASML Holding and Japan’s Tokyo Electron ).
Russia and China have made efforts to reduce this dependence. Russia developed locally designed microprocessors called Elbrus and Baikal to run data centers, cybersecurity operations and other applications. Though neither has achieved significant market share, they “represent the pinnacle of local design capability,” said Kostas Tigkos, principal at Jane’s, a defense intelligence provider. Russia hoped that they would eventually displace chips made by Intel and AMD, he said. “This would not only have been the foundation for diversifying their installed base, but a stepping stone for exports of those processors to other friendly nations.” But without manufacturers like TSMC to make the chips, Russia is facing “the complete disintegration of their aspirations to develop their own industry.”
China has a much bigger semiconductor industry than Russia, and its partly state-owned national champion, Semiconductor Manufacturing International Co. (SMIC), could in theory make Russia’s chips, but that would take at least a year, Mr. Tigkos said. Moreover, its efforts to catch up to its Taiwanese competitor have been set back by sanctions. In 2020 the U.S. required companies using American technology to obtain a license to sell to SMIC. This effectively limited its ability to acquire advanced equipment from Netherlands’ ASML, which is critical for “any country that wants to have a competitive semiconductor industry,” Mr. Tigkos said.
Why does all this matter to the outcome of the geopolitical contest? Over time economic weight, strength and vitality are what allow countries to sustain military capability, achieve and maintain technological superiority, and remain attractive partners for other countries.
Yet GDP does not automatically equate to strategic influence. To win a Cold War, it’s not enough for the West to hold the best economic cards, it has to know how to play them. Economic statecraft, as this is called, does not come naturally to the West: Its institutions are built on the assumption that companies are private enterprises, not instruments of the state. They do business wherever it’s profitable, regardless of their home countries’ strategic interests.
Chip Sanctions Challenge Russia’s Tech Ambitions
Losing access to some top-end chips from Asia over the invasion of Ukraine undercuts efforts to develop advanced weaponry, AI, robotics
https://www.wsj.com/articles/chip-sanctions-challenge-russias-tech-ambitions-11647682202
Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chip maker, said it is committed to complying with the new export-control rules. South Korea’s Samsung Electronics Co., a leading memory-chip maker and an electronics producer, said this month it has suspended shipment of all its products to Russia because of geopolitical developments and is monitoring the situation to determine its next steps.
Russia’s chip-building technology lags behind that of industry leader TSMC by more than 15 years, said Western semiconductor-industry executives who have studied the state of Russia’s industry. The country’s leading chip maker, Mikron Group, has said it is the only local company capable of mass producing semiconductors with 65-nanometer circuitries—a technology introduced to the industry for mass production around 2006. Mikron didn’t respond to a request for comment.
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An international tech blockade threatens to deprive Russia of sophisticated semiconductors needed to power advanced weaponry and cutting-edge technologies like 5G, artificial intelligence and robotics, experts say.
In late February, the U.S. imposed a ban on selling high-tech products including semiconductors and telecommunications systems used by the defense, aerospace and maritime industries to Russia and its ally Belarus, days after Russia invaded Ukraine. The ban also extended to certain foreign items produced with U.S. equipment, software or blueprints.
South Korea and Taiwan, which dominate in high-end chips, and Japan, strong in chip-making materials and tools, have also banned exports of the items that the U.S. has put on its export-control list. Their moves cut off Russia’s access to many top-end chips, and materials and components needed to re-create production of such items locally.
For Russia, the impact from the coordinated sanctions will be significant, said Tom Rafferty, Asia regional director at the Economist Intelligence Unit. “The big export bans are going to be on semiconductors and high-end semiconductors in particular, for which Korea and Taiwan almost monopolize production. So there won’t be supply of that anywhere that Russia can lean on.”
While the sanctions would appear to limit Russia’s access to chip supplies, the actual impact couldn’t fully be determined. Russia’s Ministry of Industry and Trade, and the Ministry of Economic Development didn’t respond to requests for comment.
Russia continues to largely rely on foreign technology to design chips and has limited chip-production capabilities of its own. In 2020, Russia imported roughly $440 million worth of semiconductor devices, including components like diodes and transistors, and around $1.25 billion worth of electronic integrated circuits, or “chips,” built by incorporating various components, according to the United Nations Comtrade database.
While the majority of these imports come from Asian countries that aren’t imposing sanctions, Russia would still be left in the dark on high-end chips or homegrown chips. Taiwan produces most of the world’s cutting-edge semiconductors, with the rest produced in South Korea, data from Washington, D.C.-based trade group Semiconductor Industry Association showed. South Korea also dominates in memory chips, while Japan is a stronghold of semiconductor materials and manufacturing tools, both crucial for chip building.
TSMC has suspended all sales to Russia and to third parties known to supply products to Russia while it sorts through the sanctions rules to ensure it fully complies, according to a person familiar with the company’s business, who spoke on the condition of anonymity to discuss sensitive matters.
https://www.washingtonpost.com/technology/2022/02/25/ukraine-russia-chips-sanctions-tsmc/
In a statement, TSMC said it is “fully committed to complying with the new export control rules announced.”
GlobalFoundries, the chip manufacturer based in Malta, N.Y., said it also has begun complying with the rules. The company has a system to review and block any prohibited sales to Russia, said Karmi Leiman, the company’s head of global government affairs and trade, though he added that the size of the company’s sales to Russian buyers is “not material.”
Leiman said the internal review system is similar to the one the company uses for Huawei, the Chinese tech giant that has been a target of U.S. sanctions for several years.
Intel, based in Santa Clara, Calif., said it “complies with all applicable export regulations and sanctions,” including the new Russia-focused export controls.
Russia is vulnerable to the export ban because it doesn’t produce consumer electronics or chips in large quantities, analysts say. In particular, it doesn’t make the highest-end semiconductors needed for advanced computing, an area dominated by Taiwan, South Korea, the United States, Europe and Japan.
TSMC’s participation in the sanctions is particularly damaging because the company is the world’s largest manufacturer of chips, including the most advanced.
Among the chips TSMC is no longer manufacturing and shipping are Elbrus-branded semiconductors that are designed in Russia, according to the person familiar with TSMC’s business.
Russia’s military and security services use Elbrus chips in some computing applications, according to Kostas Tigkos, an electronics expert at Janes, a U.K.-based provider of defense intelligence, who described the loss of TSMC’s help with the chips as “devastating” for Russia.
The Russian government has also been encouraging large domestic companies and banks to use Elbrus chips in their computers because the components are designed in Russia.
Russian drones shot down over Ukraine were full of Western parts
The Semiconductor Industry Association, a trade group representing big chipmakers, said its members are “fully committed to complying” with the new rules “in response to the deeply disturbing events unfolding in Ukraine.”
“While the impact of the new rules to Russia could be significant, Russia is not a significant direct consumer of semiconductors, accounting for less than 0.1% of global chip purchases, according to the World Semiconductor Trade Statistics (WSTS) organization,” the group’s president, John Neuffer, said in a statement.
The United States and other Western nations have long regulated sales to Russia of chips and other electronic components specifically designed for military use. Any such sales already required a government license to proceed, industry experts said.
The new rules largely block the sale of dual-use chips, which have both military and commercial applications, to nonmilitary users in Russia, including those in high-tech industries.
In a novel move that the United States has used only once before — against China’s Huawei — it is also requiring companies worldwide to abide by the rules and block such sales to Russia if they use U.S. manufacturing equipment or software to produce chips. Most chip factories around the world use software or equipment designed in the United States, analysts say.
U.S. tech dominance could offer leverage over Russia — or backfire
Silicon Valley’s increasingly aggressive stance against Russia could fuel the growth of rivals there and in China, Iran, too
https://www.washingtonpost.com/technology/2022/03/03/us-russia-technology-dependence/
Withholding technology can be a soft-power weapon to potentially turn a population against its leaders. Yet it also can be costly to the U.S. economy, slow to deliver results and scattershot in its effects — much more likely to affect ordinary Russians using their iPhones than generals firing missiles into Ukrainian cities.
There is another cost, as well. The United States’ dominance of global technology, experts warn, was built over generations but could be eroded in just a few years as rival powers — and especially Russia and China — invest billions of dollars to develop alternative technologies at home, in part to decrease U.S. leverage at moments such as these.
Even as Russians furiously buy iPads, Android devices and Windows-based computers, President Vladimir Putin is pushing hard to wean the country from Western technologies. And if Russia and other U.S. rivals succeed, there also could be long-term damage to the ability of American intelligence agencies — particularly skilled in exploiting U.S.-made tech — to track developments in the next conflict, experts say.
The upshot is that although technology sanctions can be unquestionably powerful, it’s a power that, when deployed, can spark backlashes that undermine its long-term utility. Depriving rivals of American-made technology also threatens the future global prospects of an industry that has driven U.S. economic growth for most of this century. The rise of a Russian Google — or a Chinese Facebook or an Iranian YouTube — are not theoretical developments. They are happening already.
“When you cut them off from American tech, they will find alternatives,” said Peter Micek, general counsel for Access Now, a human rights group that lobbies to keep Internet services available to people worldwide.
U.S. officials and technology executives are attempting to navigate this chessboard of risk and reward as they assemble a potent set of punitive moves against Russia.
The result has been growing restrictions on hardware, with Apple joining others in blocking sales to Russia, and moves by major social media platforms to curb the spread of Russian propaganda through its state-funded RT information service — often in response to the demands of Western governments. Digital purchasing tools, such as Apple Pay, also have stopped working as Western sanctions cut off Russian banks for ordinary operations.
But calls by Ukrainian officials to deprive Russians in general of access to social media and even the Internet itself have sparked significant resistance from both the companies and digital rights groups, which argue that the likes of Twitter, WhatsApp and Telegram are key to delivering information in Russia. They often are the only sources of news on the horrors Putin is inflicting on Ukrainians at a time when his control over national news media is nearly total.
The Russian government, meanwhile, has been squeezing these same companies, throttling Facebook and Twitter, and threatening action against Google in retaliation for its YouTube subsidiary limiting access to RT in response to demands by Western governments.
But as this conflict plays out, the idea of depriving Russia of software updates or online support from U.S. companies has not gained traction, even though such moves could gradually erode the functioning of technological tools used every day by the Russian government and its citizens.
SMIC's 7-nm chip process a wake-up call for US - Asia Times
https://asiatimes.com/2022/07/smics-7-nm-chip-process-a-wake-up-call-for-us/
But SMIC has no choice. It must use DUV because the US Commerce Department put in on its Entity List in December 2020, stating at the time that “Items uniquely required to produce semiconductors at advanced technology nodes – 10 nanometers or below – will be subject to a presumption of denial to prevent such key enabling technology from supporting China’s military-civil fusion efforts.”
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Reports of a China chip-making breakthrough are behind the curve but US sanctions are increasingly too little, too late and out of date
By SCOTT FOSTER
JULY 25, 2022
A TechInsights report stating that a bitcoin mining integrated circuit (IC) sold by MinerVa “appears to be manufactured in SMIC 7-nm technology node” has triggered an outburst of commentary about the failure of American sanctions to stop the advance of Chinese semiconductor technology.
TechInsights is a Canadian provider of semiconductor-related analysis and intellectual property services to technology companies and other subscribers. It is known for its reverse engineering capability.
Referred to as “China-based” by Bloomberg, MinerVa Semiconductor is registered in Canada. But the three directors listed in its registration are Chinese and the address given for one of them is in China’s Henan province. The “About Us” section on the company’s website is blank.
MinerVA Semiconductor claims that its MinerVa7 is “one of the best-valued chips” for mining Bitcoin and that it “utilizes mature foundry technology to ensure chip yield, quality and reliability.”
Semiconductor Manufacturing International Corp, or SMIC, is China’s largest semiconductor foundry (contract manufacturer) and a prominent target of US technology sanctions aimed at curbing China’s access to advanced chips and the capacity to produce them.
The report describes SMIC’s efforts to put 7-nm process technology into production as a qualified success. After noting similarities with Taiwan Semiconductor Manufacturing Company’s (TSMC) 7-nm process, it goes on to say that SMIC’s System-on-Chip (SoC) device seems to be a low-volume “steppingstone” that has the logic but not the memory aspects of a standard TSMC or Samsung product.
This is possible because “bitcoin miners have limited RAM [random access memory] requirements,” the report said. For reference, an SoC is an IC that incorporates a processing unit (logic), memory and other components, creating a specialized computer or other type of electronic system in a single device.
TechInsights also points out that SMIC’s use of Deep Ultra-Violet (DUV) lithography has resulted in a more complex and costly process that probably has lower yields than the Extreme Ultra-Violet (EUV) lithography-based processes now used by TSMC and Samsung.
Samsung says it is manufacturing 3nm chips in global first
South Korean tech company seizes lead over TSMC in advanced semiconductor race
https://asia.nikkei.com/Business/Tech/Semiconductors/Samsung-says-it-is-manufacturing-3nm-chips-in-global-first
SEOUL -- Samsung Electronics said on Thursday that it has started mass producing 3-nm chips at its semiconductor plant in Hwaseong, south of Seoul, becoming the first to reach the milestone.
The latest advance in a relentless race to cut the size and increase the power of semiconductors gives Samsung an edge over its archrival Taiwan Semiconductor Manufacturing Co. for now, though competition is only set to intensify.
The South Korean tech giant said the new advanced chip allows a 16% decrease in surface area, 23% higher performance and 45% lower power consumption compared with current 5-nm chips. Samsung has been competing with TSMC to develop cutting-edge chips.
Smaller, more advanced chips are harder to make because they squeeze more transistors onto the same space. The ability to mass produce them is an indication of a manufacturer's technological prowess.
"Samsung has grown rapidly as we continue to demonstrate leadership in applying next-generation technologies to manufacturing," Choi Si-young, head of the company's chip foundry business, said in a news release. "We seek to continue this leadership with the world's first 3-nm process."
The company also said: "Samsung is starting the first application of the nanosheet transistor with semiconductor chips for high performance, low power computing application and plans to expand to mobile processors."
It declined to say which customers will be buying the new chips, citing confidentiality.
Analysts said that while the development is a technological advance, the initial impact will likely be limited.
"While 3nm will be the most available leading-edge technology, in our estimates, the total capacity would account for less than 10% of [the] global foundry industry in leading-edge nodes (16-nanometer and below) in 2023, not a significant factor yet for industrywide demand/supply outlook," Dale Gai, an analyst at Counterpoint Research, told Nikkei Asia in an email. He added that capacity constraints could limit output going forward.
Analysts also say that while the start of the 3-nm chip production is positive for Samsung in reaching the milestone ahead of TSMC, it will take time until the advanced technology creates new revenue for the company.
"It's meaningful that Samsung is mass producing 3-nm chips based on new architecture technology for the first time," said SK Kim, an analyst at Daiwa Captial Markets. "However, it will not automatically lead to attracting new customers and improving earnings because it is not yet ready to produce main stream chips such as mobile CPUs." CPU stands for central processing unit.
The announcement comes amid a global shortage of semiconductors due to bottlenecks caused by the coronavirus pandemic. Manufacturers are still struggling to raise production.
Despite its latest improvement, Samsung will not be able to rest on its laurels.
C.C. Wei, CEO of TSMC, said during an earnings call in April that his company's 3-nm technology will be entering mass production in the second half of this year, adding he believes it will be the world's most advanced in terms of performance, power, and size as well as transistor technology.
TSMC also said in June that it would begin production of ultra-advanced 2-nm chips by 2025. The Taiwanese chipmaking titan is gearing up to introduce 3-nm chip production technology in the second half of this year. Its key manufacturing site is in the city of Tainan in southern Taiwan.
Semiconductor Manufacturing International Corp. has likely advanced its production technology by two generations, defying US sanctions intended to halt the rise of China’s largest chipmaker.
https://www.bloomberg.com/news/articles/2022-07-21/china-s-top-chipmaker-makes-big-tech-advances-despite-us-curbs
The Shanghai-based manufacturer is shipping Bitcoin-mining semiconductors built using 7-nanometer technology, industry watcher TechInsights wrote in a blog post on Tuesday. That’s well ahead of SMIC’s established 14nm technology, a measure of fabrication complexity in which narrower transistor widths help produce faster and more efficient chips. Since late 2020, the US has barred the unlicensed sale to the Chinese firm of equipment that can be used to fabricate semiconductors of 10nm and beyond, infuriating Beijing.
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Semiconductor Manufacturing International Corp has likely advanced its production technology by two generations, defying US sanctions intended to halt the rise of China's largest chipmaker. From a report:
The Shanghai-based manufacturer is shipping Bitcoin-mining semiconductors built using 7-nanometer technology, industry watcher TechInsights wrote in a blog post on Tuesday. That's well ahead of SMIC's established 14nm technology, a measure of fabrication complexity in which narrower transistor widths help produce faster and more efficient chips. Since late 2020, the US has barred the unlicensed sale to the Chinese firm of equipment that can be used to fabricate semiconductors of 10nm and beyond, infuriating Beijing.
A person familiar with the developments confirmed the report, asking not to be named as they were not authorized to discuss it publicly. SMIC's surprising progress raises questions about how effective export controls have been and whether Washington can indeed thwart China's ambition to foster a world-class chip industry at home and reduce reliance on foreign technologies. It also comes at a time American lawmakers have urged Washington to close loopholes in its Chinese-oriented curbs and ensure Beijing isn't supplying crucial technology to Russia. The restrictions effectively derailed Huawei Technologies's smartphone business by cutting it off from the tools to compete at the cutting edge -- but that company is now quietly staffing up a renewed effort to develop its in-house chipmaking acumen.
https://tech.slashdot.org/story/22/07/22/1328251/chinas-top-chipmaker-achieves-breakthrough-despite-us-curbs
#Intel says it has no current plans to start #manufacturing #semiconductor #chips in #India. The comments came after India's transport minister said earlier in the day that the #chipmaker will set up a #semiconductor manufacturing plant in the country.
https://www.reuters.com/technology/intel-says-it-has-no-current-plans-start-manufacturing-india-2022-09-07/
#Apple to use #TSMC’s next 3-nm #semiconductor chip #technology in iPhones, Macs next year. There is a cost increase of at least 40% for the same area of silicon when moving to 3-nm chips from the 5-nm family, which includes 4-nm chips. #computers #phones https://asia.nikkei.com/Business/Tech/Semiconductors/Apple-to-use-TSMC-s-next-3-nm-chip-tech-in-iPhones-Macs-next-year
TAIPEI -- Apple aims to be the first company to use an updated version of Taiwan Semiconductor Manufacturing Co.'s latest chipmaking technology next year, with plans to adopt it for some of its iPhones and Mac computers, sources briefed on the matter told Nikkei Asia.
The A17 mobile processor currently under development will be mass-produced using TSMC's N3E chipmaking tech, expected to be available in the second half of next year, according to three people familiar with the matter. The A17 will be used in the premium entry in the iPhone lineup slated for release in 2023, they said.
N3E is an upgraded version of TSMC's current 3-nanometer production tech, which is only starting to go into use this year. The next generation of Apple's M3 chip for its Mac offerings is also set to use the upgraded 3-nm tech, two sources added.
Nanometer size refers to the width between transistors on a chip. The smaller the number, the more transistors can be squeezed onto a chip, making them more powerful but also more challenging and costly to produce.
N3E will offer better performance and energy efficiency than the first version of the tech, TSMC said in a recent technology symposium in Hsinchu. Industry sources said the upgraded production tech is also designed to be more cost-effective than its predecessor.
As TSMC's largest customer and the biggest driver for new semiconductor technologies, Apple is still its most loyal partner when it comes to adopting the latest chip technology. The U.S. tech giant will be the first to use TSMC's first generation of 3-nm technology, using it for some of its upcoming iPads, Nikkei Asia reported earlier.
Previously, Intel told TSMC that it would like to secure 3-nm production by this year or early next year to be among the first wave of adopters like Apple, but it has since delayed its orders to at least 2024, three people told Nikkei Asia.
However, 2023 could mark the second year in a row that Apple uses TSMC's most advanced chipmaking technology for only a part of its iPhone lineup. In 2022, only the premium iPhone 14 Pro range has adopted the latest A16 core processor, which is produced by TSMC's 4-nm process technologies, the most advanced currently available. The standard iPhone 14 range uses the older A15, which was used in the iPhone 13 and iPhone 13 Pro models released in the second half of 2021.
Meanwhile, the race is on among chipmakers to roll out ever more advanced production tech. TSMC and Samsung each hopes to be the first to put 3-nm tech into mass production this year. This technology is suitable for all types of central and graphics processors for smartphones, computers and servers, as well as those used in artificial intelligence computing.
Apple, meanwhile, is likely to use the different levels of production tech to introduce greater differences between its premium and nonpremium models, according to Dylan Patel, chief analyst with Semianalysis. Previously the biggest differences have been in screens and cameras, but this could be expanded to include processors and memory chips, he said.
According to the analyst's estimate, there is a cost increase of at least 40% for the same area of silicon when moving to 3-nm chips from the 5-nm family, which includes 4-nm chips.
TSMC, Intel and Apple declined to comment.
Foxconn and Vedanta to build $19bn India chip factory
https://www.bbc.com/news/62873520
Foxconn and Vedanta have announced $19.5bn (£16.9) to build one of the first chipmaking factories in India.
The Taiwanese firm and the Indian mining giant are tying up as the government pushes to boost chip manufacturing in the country.
Prime Minister Narendra Modi's government announced a $10bn package last year to attract investors.
The facility, which will be built in Mr Modi's home state of Gujarat, has been promised incentives.
Vedanta's chairman Anil Agarwal said they were still on the lookout for a site - about 400 acres of land - close to Gujarat's capital, Ahmedabad.
But both Indian and foreign firms have struggled in the past to acquire large tracts of land for projects. And experts say that despite Mr Modi's signature 'Make in India' policy - designed to attract global manufacturers - challenges remain when it comes to navigating the country's red tape.
Gujarat Chief Minister Bhupendrabhai Patel, however, said the project "will be met with red carpet... instead of any red tapism".
The project is expected to create 100,000 jobs in the state, which is headed for elections in December, where the BJP is facing stiff competition from oppositions parties.
According to the Memorandum of Understanding, the facility is expected to start manufacturing chips within two years.
"India's own Silicon Valley is a step closer now," Mr Agarwal said in a tweet.
India has vowed to spend $30bn to overhaul its tech industry. The government said it will also expand incentives beyond the initial $10 billion for chipmakers in order to become less reliant on chip producers in places like Taiwan, the US and China.
"Gujarat has been recognized for its industrial development, green energy, and smart cities. The improving infrastructure and the government's active and strong support increases confidence in setting up a semiconductor factory," according to Brian Ho, a vice president of Foxconn Semiconductor Group.
Foxconn is the technical partner. Vedanta is financing the project as it looks to diversify its investments into the tech sector.
Vedanta is the third company to announce plans to build a chip plant in India. A partnership between ISMC and Singapore-based IGSS Ventures also said it had signed deals to build semiconductor plants in the country over the next five years.
Wisconsin Is Coming to India and Not in a Good Way
Analysis by Tim Culpan | Bloomberg
https://www.washingtonpost.com/business/wisconsin-is-coming-to-india-and-not-in-a-good-way/2022/09/15/cba3a702-3531-11ed-a0d6-415299bfebd5_story.html
The project is fantastical: A $19 billion investment into semiconductor and display-panel sectors, with the creation of 100,000 jobs in a state with little experience in technology manufacturing.
If voters and taxpayers in India’s northwestern Gujarat state are excited about this “ landmark investment” they ought to read up on recent Wisconsin history. The US state bought into a similar pipe dream in 2017 when then-President Donald Trump teamed up with then-Governor Scott Walker to lure Foxconn Technology Group, whose Taipei-listed flagship is Hon Hai Precision Industry Co. The Taiwanese company said it’d invest $10 billion and hire 13,000 workers.
Wisconsin never hit its targets. And neither will Gujarat.
What’s playing out today in India is eerily similar to what happened in the US Midwest five years ago, but this time the people and government of Gujarat have no excuse for not being aware of what’s likely to unravel. Americans were told clearly that the project in Mount Pleasant didn’t make sense. But still, they went ahead.
It’s inconceivable that Foxconn truly thought it would spend as much as $10 billion to build a high-tech manufacturing plant in the middle of US farm country. But, as founder and Chairman Terry Gou said early on in the planning phase: “There is such a plan, but it is not a promise. It is a wish.”
So when Vedanta Ltd. chairman Anil Agarwal says his company will invest 1.54 trillion rupees ($19.4 billion), we ought to take it as wishful thinking, rather than a promise. And we can also pause to bathe in the sweet irony of his chosen venture partner: Foxconn, the same name behind the Wisconsin project. Though, to be fair, the Taiwanese are less a driving force behind this India project and more a consulting partner. The numbers, choice of location, and project scope are mostly decided by Vedanta, which is bearing most of the financial burden.
Foxconn made various pledges in Wisconsin that never came to fruition, with a promise for a state-of-the-art 10G liquid-crystal-display panel factory being the most egregious. At least it never committed to assembling iPhones, the product for which Foxconn is most famous.
The Taiwanese company’s perfidiousness was in some respects spurred by local and national governments intent on selling to their voters (and taxpayers) the assurance that a $3 billion incentives package — the largest in US history — would be worth the expense. It will be the “Eighth Wonder of the The World,” Trump proclaimed at the groundbreaking ceremony in 2018.
Governments from Washington to New Delhi don’t want to offer corporate welfare to lure hum-drum projects like chip-testing and assembly. They want to send press releases and tweets that hail their territory’s move into the upper echelons of industrial society. To meet that PR goal, they often tie incentives not to reasonable evolutionary steps in economic development, but to extravagant plans that people never dreamed of.
And the recipients of such sweeteners are more than happy to oblige, safe in the knowledge that there’s almost no downside in overpromising and under-delivering. And those who doled them out — either long gone from office, or safely entrenched — won’t be required to foot the bill either. Scott Walker lost his re-election bid, in large part because of the failure of the Foxconn deal; however, he didn’t lose his home like dozens of Wisconsinites who were displaced to make way for the “wonder” that never was.
Wisconsin Is Coming to India and Not in a Good Way
Analysis by Tim Culpan | Bloomberg
https://www.washingtonpost.com/business/wisconsin-is-coming-to-india-and-not-in-a-good-way/2022/09/15/cba3a702-3531-11ed-a0d6-415299bfebd5_story.html
Now it’s India’s turn to dream, until such time comes that it must face reality.
Perhaps it’s a coincidence that the project went to the home state of Prime Minister Narendra Modi. Neighboring Maharashtra state thought it was a shoe-in for the deal, going so far as to issue a statement two months ago announcing that the Vedanta-Foxconn venture would invest there.
Accusations and rancor were flying thick and fast in Maharashtra after Agarwal and Modi took to the stage to celebrate the winner. But in reality, the people of India’s second most-populous state may end up celebrating not that they lost the project, but that they dodged a bullet.
Indians — in Gujarat and Maharashtra in particular — can take this as a warning: You don’t want to be another Wisconsin.
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