Microchips, semiconductors-- and related industrial policy

[Crafty_Dog]

Microchips are macro important and seem to keep coming up so herewith I begin this thread:


What on earth can be holding up the House (the Dems) from passing the bill in question?!?
==================

Too little, too late for American-made microchips

Supply interruptions in Asia to delay manufacturing well into next year

BY JEFF MORDOCK THE WASHINGTON TIMES

Thousands of new cars are piling up at manufacturers’ lots, the price of electric toothbrushes has surged, coffee machines have disappeared from store shelves, and Apple has drastically cut its iPhone production.

The global computer chip shortage is showing no signs of abating heading into 2022, and the Biden administration’s proposed solution remains years away.

President Biden and his Cabinet have urged Congress to pass legislation that would invest $52 billion to increase U.S. semiconductor chip production.

Supply interruptions have depleted consumer product inventory, and offi cials say domestic chip production is critical.

The bill, known as the CHIPS for America Act, passed the Senate in July with bipartisan support but stalled in the House.

At a speech last month in Detroit, Commerce Secretary Gina Raimondo implored Congress to pass the bill so the U.S. can “immediately” begin ramping up chip production.

Even if Congress does act urgently, the legislation is no quick fix, analysts say. By the time U.S. semiconductor chip manufacturing can get up to speed, the crisis will have long passed.

“The chip shortage is going to get resolved in the second half of 2022. It takes three years for a new chip [factory] to come to production,” said Gaurav Gupta, vice president of semiconductors and electronics for Gartner, a technology research and consulting company.

Even if the U.S. increases production significantly, he said, it can’t completely remove itself from the global supply chain. The testing and packaging are

completed in Southeast Asia, where costs are much lower.

It costs 30% more to make a chip in the U.S. than in Asia, according to a 2020 report by the Semiconductor Industry Association. That could add $10 billion to $40 billion to production expenses.

“You’ll still send the chips back to Southeast Asia unless you are bringing the complete ecosystem here, and you won’t because it’s impractical to do that,” Mr. Gupta said.

It is not clear whether the federal dollars allocated under the CHIPS Act would be enough to support domestic production. The U.S. share of the global semiconductor manufacturing market dropped from 37% in 1990 to 12% in 2020, according to the industry association. Europe’s share dropped from 44% to 9% in the same time frame. Asia now holds 75% of the world’s semiconductor manufacturing capacity.

“There’s no special sauce down there except money,” said Paul Gratz, who teaches computer engineering at Texas A& M University.

In China, where it costs nearly 50% less to produce a semiconductor than it does in the U.S., the government is spending $150 billion to increase chip production. That is nearly triple the investment under the CHIPS Act.

Some fear the U.S. bid to increase domestic manufacturing will lead to a glut of chips in the market, resulting in falling prices and negative or zero revenue growth.

The revenue of the top 10 semiconductor firms, including Intel and Samsung, declined by 12% in 2019 because of oversupply, according to Gartner’s research.

The potential for overcapacity is on the horizon as automobile and smartphone makers slash inventory because of sluggish sales.

“You have to solve this problem in a systematic manner,” Mr. Gupta said. “You don’t have to go with political sentiment.”

U.S.-based Intel Corp. announced Thursday that it will spend $7.1 billion to build a massive packaging and testing facility in Malaysia, bucking the administration’s call for more domestic manufacturing.

The $7.1 billion is part of Intel’s overall $30 billion investment in Malaysia, which will include a sprawling complex to build chips for cars, computers and other industries.

Mr. Gratz said the U.S. needs to stop relying on Asian countries for semiconductor chips.

South Korea and Taiwan are the world’s two chipmaking powerhouses, combining for roughly 43% of the global market, according to the Semiconductor Industry Association. Both nations, however, are under global threats that could lead to instability. South Korea has repeated conflict with North Korea, and fears of a full Chinese invasion of Taiwan persist.

“In the long term, [the CHIPS Act] is probably beneficial for us because two countries that have the lion’s shares of the market are Taiwan and South Korea,” Mr. Gratz said. “By investing domestically, it is going to give us more of a cushion if there is a geopolitical shake-up.”

Instead of ramping up domestic production, Mr. Gratz said, companies should invest in technologies to use alternate chips.

That strategy would pay off for the auto industry, which has been devastated by the chip shortage.

Automaker Tesla has survived by developing its own semiconductors and changing its software to use fewer chips.

The chip shortage is expected to cost the global automotive industry $210 billion in revenue this year, but Tesla has shown a string of profitable quarters and a growing business.

“What Tesla did was very impressive,” Mr. Gratz said. “They were very flexible with respect to retooling and spent a lot more on software so they can use different processors into their cars.”

Tesla’s technology investment enabled it to increase production while other automakers slowed or shut down production because of the chip shortage.

Toyota cut production targets in the U.S. and overseas by 15% last month. Ford announced this summer that it has 70,000 partially built cars awaiting semiconductor chips. Ford did not respond to repeated requests for comment about the number of vehicles that have been completed.

Other manufacturers are looking into technological investments. General Motors said it will work with chip manufacturers to develop devices that combine several functions previously controlled by chips.

Ford and other automakers are seeking partnerships with semiconductor companies to give them more control over the supply and design of chips.


LIKE WATCHING GRASS GROW: With new cars idle, U.S. automakers can’t wait for President Biden’s CHIPS for America Act to get factories running. Meanwhile, Tesla has found its own solution to the shortage. ASSOCIATED PRESS


Southeast Asian nations will continue testing and packaging semiconductors even if the U.S. increases domestic production significantly. It costs 30% more to make a chip in the U.S. than in Asia, adding $10 billion to $40 billion to production expenses. ASSOCIATED PRESS

[Crafty_Dog]

Taiwan Should Destroy Island’s Semiconductor Plants If China Invades, Paper Says
The proposed deterrence strategy aims at hurting the Chinese economy
By Frank Fang January 5, 2022 Updated: January 5, 2022biggersmaller Print

A scorched-earth policy involving Taiwan destroying its own advanced semiconductor plants in the event of a Chinese invasion would be a good deterrence strategy for the self-ruled island against warmongering China, according to a recent paper published by the U.S. Army War College.

“In practice, this strategy means assuring China an invasion of Taiwan would produce a major economic crisis on the mainland, not the technological boon some have suggested would occur as a result of the PRC [People’s Republic of China] absorbing Taiwan’s robust tech industry,” the paper’s (pdf) authors state.

The key is to make Taiwan “unwantable,” the paper states, and the economic costs would “persist for years” even after the regime in Beijing had taken over the island.

The paper, titled “Broken Nest: Deterring China from Invading Taiwan,” was published in the last 2021 issue of the institution’s quarterly journal Parameters, an official U.S. Army periodical. Jared McKinney, chair of the department of strategy and security studies at the eSchool of Graduate Professional Military Education at Air University, and Peter Harris, associate professor of political science at Colorado State University, are the authors.

The strategy centers around China’s current heavy reliance on importing semiconductors, which are tiny devices that power everything from computers, smartphones, and electric vehicles, to missiles. According to China’s state-run media, Beijing imported over $350 billion worth of chips in 2020.

That year, only 5.9 percent of semiconductors ($8.3 billion) used in China were manufactured domestically, according to a report by U.S.-based semiconductor market research company IC Insights.

In October last year, IC Insights warned that the Chinese regime believes it can solve its problem of not being able to produce leading-edge semiconductors through “reunification with Taiwan.”

China claims Taiwan as a part of its territory even as the self-governing island is a de facto independent country with its own democratically elected officials, military, and currency.

Currently, Taiwan Semiconductor Manufacturing Corp. (TSMC), the world’s largest contract chipmaker, and Samsung in South Korea are the only companies in the world capable of making the most advanced five-nanometer chips. TSMC is scheduled to produce the next-generation three-nanometer chips in the second half of this year.

Epoch Times Photo
A chip by Taiwan Semiconductor Manufacturing Corp. (TSMC) at the 2020 World Semiconductor Conference in Nanjing, Jiangsu Province, China, on Aug. 26, 2020. (STR/AFP via Getty Images)
As chips get smaller in size, they deliver more performance-per-watt, meaning that they run at a faster speed while consuming less power.

The paper recommends that Taiwan “destroy facilities belonging to” TSMC in the face of a Chinese invasion, given that the Taiwanese chipmaker is China’s most important supplier. The challenging aspect of the strategy would be to make the scorched-earth strategy “credible” to the Chinese regime, according to the paper’s authors.

“If China suspects Taipei would not follow through on such a threat, then deterrence will fail,” they explain.

The authors recommend that Taiwanese authorities set up an “automatic mechanism” to destroy TSMC’s plants, to be “triggered once an invasion [by Beijing] was confirmed.”

Without Taiwanese chips, China’s economy would take a hit and Beijing would be unable to maintain sustained economic growth, hurting the Chinese Communist Party’s legitimacy to rule mainland China, according to the paper.

“The purpose here must be to convince Chinese leaders invading Taiwan will come at the cost of core national objectives: economic growth, domestic tranquility, secure borders, and perhaps even the maintenance of regime legitimacy,” the authors add.

The authors offered several other recommendations that could further deter China from invading Taiwan. These include the United States threatening to lead a global sanction campaign against any chip exports to China, or giving a green light for U.S. allies such as Japan, South Korea, and Australia to develop their own nuclear weapons, if the invasion takes place.


“If penalties for invading Taiwan can be made severe and credible enough, Beijing could still be deterred from choosing such a course of action,” the paper states.

The authors also note that they were told by a Chinese analyst with ties to China’s navy that Beijing’s goal for a successful invasion of Taiwan was 14 hours, and Beijing estimated that it would take 24 hours for the United States and Japan to respond.

“If this scenario is close to being accurate, China’s government might well be inclined to attempt a fait accompli as soon as it is confident in its relative capabilities,” the authors write.

In October last year, Taiwan’s defense minister warned that the Chinese regime will be capable of mounting a full-scale invasion of the island by 2025.

“If Taiwan fell to China, a successful democracy would be extinguished, and Beijing’s geopolitical position in East Asia would be enhanced at the expense of the United States and its allies,” the authors write.

[Crafty_Dog]

https://www.businessinsider.com/intel-ceo-chip-largest-silicon-manufacturing-location-plant-ohio-2022-1?fbclid=IwAR3SQfPvl4dgBCIwe9jGYuxuFDwy-3IZ6BqqFPCTfuWZ-cOVec6esyVvtF0

[Crafty_Dog]

https://www.msn.com/en-us/news/us/us-warns-that-chip-shortage-could-shut-down-factories/ar-AAT8d8Q?ocid=msedgntp

[Crafty_Dog]

China’s Automotive Chip Supply Shortfall Will Reach 20 Percent Due to US Sanctions, Outdated Technology: Trade Group
By Jenny Li January 30, 2022 Updated: January 31, 2022biggersmaller Print

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China’s chip supply will remain tight this year, and the automotive chip supply shortfall will widen to 20 percent, the country’s car manufacturing trade group said. The regime’s own experts have revealed that the key reason for China’s chip shortage is not the pandemic, but China’s outdated chip technology and U.S. sanctions against the Chinese Communist Party (CCP).

Luo Junjie, a spokesman for the Ministry of Industry and Information Technology of the CCP, said on Jan. 20 that the shortage of chips last year had the greatest impact on the auto industry, and many domestic auto companies experienced production cuts or short-term shutdowns.

In 2022, the shortage of chips in China looks set to continue to worsen. Data fed back by foundries and chip manufacturers show that this year, the automotive-grade microprocessors, storage, logic, and analog chips produced can only meet the production needs of 4 million new energy vehicles in China.

The China Association of Automobile Manufacturers (CAAM) predicted at the end of December 2021 that the sales of new energy vehicles in China will reach 5 million in 2022. Compared with the supply of auto chips, China’s new energy vehicle market will face a 20 percent demand gap.

Luo blamed the pandemic and the “sanctions and suppression” of the United States for the tight supply of chips in China. However, Yuan Chengyin, general manager of China’s National New Energy Vehicle Technology Innovation Center, told Bloomberg in January 2021 that the main reason for the shortage of automotive chips in China is not the impact of the pandemic, but the lack of domestic technical knowledge and ongoing geopolitical tensions. Yuan believes that if Chinese companies cannot produce their own semiconductors, the domestic supply chain will continue to be affected by international factors. He predicted that the shortage of automotive chips will continue for 10 years.

Hong Kong-based electronics industrialist Yuan Gongyi said in an interview with The Epoch Times that the threat of U.S. sanctions has made it difficult for Chinese companies to obtain chips.

“When the world is short of supply, all chip factories outside China will certainly put China at the bottom of their list. Why? The U.S. policy is changing every day. They say they want to sanction Chinese companies, so no one dares to help China. Most of these chips are custom chip fabrication. For example, the delivery may take place after six months. During the waiting period, if the U.S. government imposes sanctions, the chip products will not sell.”

The chip industry has become at the forefront of wrangling between the United States and China. The United States has sanctioned China’s telecom giant Huawei twice, once in 2019 and again in 2020, blocking Huawei’s access to chips. When explaining the U.S. sanction against Huawei, former U.S. Attorney General William Barr said in a speech at the Center for Strategic and International Studies in February 2020 that since the 19th century, America’s technological prowess has guaranteed its prosperity and security.

Yuan Gongyi said that the United States is now in a military confrontation with the CCP, and chips are an important component of weapons.

“Now you see that China has some supersonic missiles, and other high-tech weapons, all of which must have chips. Didn’t Japan have a meeting with the United States recently? In fact, it is about the materials used in the CCP’s chips. Many materials are Japanese manufactured … I think there is a great chance of actual military conflicts on the western side of the Pacific Ocean, especially in the Nansha district. Therefore, the United States must stop [the exports of] all equipment and raw materials related to chips. So this is not just a car problem, it is a problem regarding all of China’s chip supply.”

At the China Automobile Forum in June 2021, Ye Shengji, chief engineer and deputy secretary-general of the CAAM said that China’s semiconductor self-sufficiency is at 15 percent, of which the auto chip self-sufficiency is less than 5 percent. Among all kinds of chips, MCU control chips are the shortest in supply, and China’s MCU control chip companies are the weakest.

Microcontroller units, also known as microcontrollers or single chips, integrate peripheral interfaces such as memory, timers, USB, analogue to digital conversion and LCD driver circuits on a single chip, forming a chip-scale computer.

Today, an average car requires more than 40 chips. With the rise of new energy vehicles, the demand for chips has greatly increased. According to Deloitte survey data, the average demand for chips for fuel vehicles is 934, while the demand for new energy vehicles is 1,459.

In addition to low production capacity, Chinese chips’ technological level is also far behind Europe and the United States. State-funded media outlet “Chen Bo Observation” stated that Chinese chips are at least three generations behind the international level. At present, the most advanced mass-produced chips in the world are 5-nanometer chips, and the manufacturers are Taiwan Semiconductor Manufacturing Company (TSMC), Samsung of South Korea, and Intel of the United States.

TSMC and Samsung are working on 3-nanometer technology, which is expected to be launched in the first half of 2022.

China’s Semiconductor Manufacturing International Corporation started mass production of 14-nanometer chips in 2020. The next-generation technology after 14 nanometers is 10 nanometers, then 7 nanometers, and finally 5 nanometers. Therefore, Chinese chips are three generations behind the leading international level.

Mario Morales, vice president of technology and semiconductors at the International Data Corporation, also believes that Chinese chips may be “three to four generations” behind the world’s cutting-edge level.

Over the past three years, the Chinese regime has invested $2.3 billion in at least six major chip construction projects in China, including the Wuhan Hongxin and the Jinan Quanxin project, but all have failed.

Yuan Gongyi said: “The fundamental problem is that there is no individual creativity, so it will never catch up … All the things we see today are made by talented people, not by money. Why is the United States so successful? There are many independent thinkers in the United States.”

[Crafty_Dog]

European chipmaking. The European Commission on Tuesday launched a plan aimed at improving Europe’s microchip production capacity. The goal of the plan is to strengthen supply chains for products dependent on semiconductors, which have been in short supply worldwide for months now.

[Crafty_Dog]

China’s 5G Soars Over America’s
In some U.S. cities, it’s slower than the old 4G system. Washington should make it a priority.
By Graham Allison and Eric Schmidt
Feb. 16, 2022 6:27 pm ET


At this point, football fans have seen so many ads from AT&T and Verizon claiming to have the fastest and most reliable 5G service on the planet that those without a 5G smartphone might think they are really missing something. Don’t be misled. Unless you are traveling internationally, you won’t enjoy faster speeds with a new 5G-enabled smartphone than you’d get on a 4G phone streaming games from New York, Los Angeles or many other U.S. cities. AT&T’s and Verizon’s new 5G networks are often significantly slower than the 4G networks they replace. America is far behind in almost every dimension of 5G while other nations—including China—race ahead.


America’s average 5G mobile internet speed is roughly 75 megabits per second, which is abysmal. In China’s urban centers 5G phones get average speeds of 300 megabits per second. Though that’s not quite the fastest 5G in the world—South Korea claims that title at over 400 Mbps—it’s still fast enough to download a high-definition movie in two minutes. Mobile internet speed is a central advancement of 5G, which enables a new domain of breakthrough applications with potent economic and national-security implications. American 5G upload speeds are slower than those of many developed countries, including Israel, Singapore and Canada. In Boston, Chicago and New York City, AT&T’s 5G speeds are at least 10% slower than its 4G; in Washington, Los Angeles and Austin, Texas, Verizon’s 5G speeds are at least 20% slower than the company’s 4G.

The U.S. also trails China in the global market for 5G-related services. Although American sanctions have hurt Huawei, China’s national champion is still the global leader in supplying 5G infrastructure with 30% of the market, while no U.S. firms sell 5G infrastructure abroad. Strategically significant countries including Russia, Saudi Arabia, South Africa and Turkey have installed Huawei infrastructure and are already using it to deliver 5G services.

While Beijing has prioritized broadening its 5G network, Washington has a dysfunctional relationship with the U.S. mobile industry—as typified by the Federal Aviation Administration’s hysterics over the proximity of American airports to 5G services, which operate near scores of airports around the world with no problem. For its part, China has been rapidly allocating the most efficient part of the wireless spectrum, called midband, to 5G service providers. China has deployed at least three times as much midband to 5G providers as the U.S. has. AT&T and Verizon are using the same spectrum bands for both their 4G and 5G networks. As a result, as one industry analyst aptly put it, their 5G networks are “just 4G with sprinkles on it.”


Washington’s dithering has left America well behind China in the race to build 5G infrastructure. Because 5G signals have short wavelengths, reliable service requires proximity to many wireless base stations. China has installed more than one million 5G base stations, while the U.S. has built only 100,000. The American fiber-optic network is also less dense than that of many developed countries like Japan, making it more difficult for mobile operators to deploy these small cell sites.

China’s investment in 5G also dwarfs America’s. The Innovation and Competition Act, which Senate Majority Leader Chuck Schumer hailed as “the key to preserving America’s position on the world stage as a current and future technological leader in the 21st century,” would authorize $1.5 billion in spending on 5G mobile networks through 2026. China has already spent $50 billion to build out its 5G network and is on track to spend an additional $100 billion on 5G over the next five years.

The pathetic U.S. performance in the 5G race is a sign of America’s larger failure to keep up with China on strategically important technologies. China is also ahead of America in high-tech manufacturing, green energy and many applications of artificial intelligence. On current trajectories, by 2030 it will likely lead the U.S. in the number of semiconductor chips it produces and in applications of biotechnology to defeat diseases like cancer.

In 2019 the Pentagon’s Defense Innovation Board tried to sound the alarm, stating bluntly: “China is on a track to repeat in 5G what happened with the U.S. in 4G.” The transition from 3G to 4G made possible a previously unimaginable world of mobile computing, smartphones and applications from Google Maps and Uber to Facebook and Instagram. The step up to real 5G speeds will lead to analogous breakthroughs in autonomous vehicles, virtual-reality applications like the metaverse, and other areas that have yet to be invented. Applications abound that could advantage a country’s intelligence agencies and enhance its military capabilities.

It will take far more than an additional $1.5 billion investment from Congress to change this. The Biden administration should make 5G a national priority and take the lead in building digital highways across the country as the government did in creating our national highway system. Otherwise, China will own the 5G future.

Mr. Allison, a professor of government at Harvard, is author of “Destined for War: Can America and China Escape Thucydides’s Trap?” Mr. Schmidt was CEO of Google, 2001-11 and executive chairman of Google and its successor, Alphabet Inc., 2011-17 and is a co-author of “The Age of AI: And Our Human Future.”

[G M]

https://foreignpolicy.com/2021/04/17/smart-cities-surveillance-privacy-digital-threats-internet-of-things-5g/

There are reasons various governments wants 5G.

China’s 5G Soars Over America’s
In some U.S. cities, it’s slower than the old 4G system. Washington should make it a priority.
By Graham Allison and Eric Schmidt
Feb. 16, 2022 6:27 pm ET


At this point, football fans have seen so many ads from AT&T and Verizon claiming to have the fastest and most reliable 5G service on the planet that those without a 5G smartphone might think they are really missing something. Don’t be misled. Unless you are traveling internationally, you won’t enjoy faster speeds with a new 5G-enabled smartphone than you’d get on a 4G phone streaming games from New York, Los Angeles or many other U.S. cities. AT&T’s and Verizon’s new 5G networks are often significantly slower than the 4G networks they replace. America is far behind in almost every dimension of 5G while other nations—including China—race ahead.


America’s average 5G mobile internet speed is roughly 75 megabits per second, which is abysmal. In China’s urban centers 5G phones get average speeds of 300 megabits per second. Though that’s not quite the fastest 5G in the world—South Korea claims that title at over 400 Mbps—it’s still fast enough to download a high-definition movie in two minutes. Mobile internet speed is a central advancement of 5G, which enables a new domain of breakthrough applications with potent economic and national-security implications. American 5G upload speeds are slower than those of many developed countries, including Israel, Singapore and Canada. In Boston, Chicago and New York City, AT&T’s 5G speeds are at least 10% slower than its 4G; in Washington, Los Angeles and Austin, Texas, Verizon’s 5G speeds are at least 20% slower than the company’s 4G.

The U.S. also trails China in the global market for 5G-related services. Although American sanctions have hurt Huawei, China’s national champion is still the global leader in supplying 5G infrastructure with 30% of the market, while no U.S. firms sell 5G infrastructure abroad. Strategically significant countries including Russia, Saudi Arabia, South Africa and Turkey have installed Huawei infrastructure and are already using it to deliver 5G services.

While Beijing has prioritized broadening its 5G network, Washington has a dysfunctional relationship with the U.S. mobile industry—as typified by the Federal Aviation Administration’s hysterics over the proximity of American airports to 5G services, which operate near scores of airports around the world with no problem. For its part, China has been rapidly allocating the most efficient part of the wireless spectrum, called midband, to 5G service providers. China has deployed at least three times as much midband to 5G providers as the U.S. has. AT&T and Verizon are using the same spectrum bands for both their 4G and 5G networks. As a result, as one industry analyst aptly put it, their 5G networks are “just 4G with sprinkles on it.”


Washington’s dithering has left America well behind China in the race to build 5G infrastructure. Because 5G signals have short wavelengths, reliable service requires proximity to many wireless base stations. China has installed more than one million 5G base stations, while the U.S. has built only 100,000. The American fiber-optic network is also less dense than that of many developed countries like Japan, making it more difficult for mobile operators to deploy these small cell sites.

China’s investment in 5G also dwarfs America’s. The Innovation and Competition Act, which Senate Majority Leader Chuck Schumer hailed as “the key to preserving America’s position on the world stage as a current and future technological leader in the 21st century,” would authorize $1.5 billion in spending on 5G mobile networks through 2026. China has already spent $50 billion to build out its 5G network and is on track to spend an additional $100 billion on 5G over the next five years.

The pathetic U.S. performance in the 5G race is a sign of America’s larger failure to keep up with China on strategically important technologies. China is also ahead of America in high-tech manufacturing, green energy and many applications of artificial intelligence. On current trajectories, by 2030 it will likely lead the U.S. in the number of semiconductor chips it produces and in applications of biotechnology to defeat diseases like cancer.

In 2019 the Pentagon’s Defense Innovation Board tried to sound the alarm, stating bluntly: “China is on a track to repeat in 5G what happened with the U.S. in 4G.” The transition from 3G to 4G made possible a previously unimaginable world of mobile computing, smartphones and applications from Google Maps and Uber to Facebook and Instagram. The step up to real 5G speeds will lead to analogous breakthroughs in autonomous vehicles, virtual-reality applications like the metaverse, and other areas that have yet to be invented. Applications abound that could advantage a country’s intelligence agencies and enhance its military capabilities.

It will take far more than an additional $1.5 billion investment from Congress to change this. The Biden administration should make 5G a national priority and take the lead in building digital highways across the country as the government did in creating our national highway system. Otherwise, China will own the 5G future.

Mr. Allison, a professor of government at Harvard, is author of “Destined for War: Can America and China Escape Thucydides’s Trap?” Mr. Schmidt was CEO of Google, 2001-11 and executive chairman of Google and its successor, Alphabet Inc., 2011-17 and is a co-author of “The Age of AI: And Our Human Future.”

[DougMacG]

Oh no!  We've fallen behind Communist China in citizen surveillance!

Not completely true if you count Google and Facebook's work in the field - and merge it with government.

[ccp]

"WSJ: America pathetically behind China in 5G"

George Gilder has been touting China's lead in this and other categories
We subscribed to a 2 newsletters for one yr.

[Crafty_Dog]

GM:

I have reached my free article limit at FP but would like to read the article you just posted.  May I ask you to paste it here in its entirety?

[G M]

GM:

I have reached my free article limit at FP but would like to read the article you just posted.  May I ask you to paste it here in its entirety?

‘Smart’ Cities Are Surveilled Cities
When everyone and everything is connected, the door is open to all kinds of digital threats.
By Robert Muggah, a principal at the SecDev Group and co-founder of the Igarapé Institute, and Greg Walton, a fellow at the SecDev Group and a researcher at the Oxford Internet Institute.
Pedestrians walk in China.
Pedestrians walk near a massive electronic screen supported by a face recognition system, which shows the image of a jaywalker at an intersection, in Nanjing, China, on July 4, 2019. Traffic police in Nanjing use facial recognition technology to capture jaywalkers. WANG FENG/IMAGINECHINA/REUTERS
APRIL 17, 2021, 6:00 AM
Cities around the world are getting smarter. A growing number even designated themselves “smart cities.” There are, of course, as many definitions of smart cities as there are cities professing to be smart. Very generally, smart cities deploy a host of information communication technologies—including high-speed communication networks, sensors, and mobile phone apps—to boost mobility and connectivity, supercharge the digital economy, increase energy efficiency, improve the delivery of services, and generally raise the level of their residents’ welfare. Becoming “smart” typically involves harnessing troves of data to optimize city functions—from more efficient use of utilities and other services to reducing traffic congestion and pollution—all with a view to empowering public authorities and residents.

However one defines them, data-enabled cities are booming. By one estimate, there are over a thousand smart city projects underway around the world. Rankings and indices are also proliferating, with such cities as Singapore, Helsinki, Seoul, and Zurich routinely topping the list. Notwithstanding global enthusiasm for hyperconnected cities, this futuristic wired urban world has a dark side. What’s more, the pitfalls may soon outweigh the supposed benefits.

That’s because “smart” is increasingly a euphemism for surveillance. Cities in at least 56 countries worldwide have deployed surveillance technologies powered by automatic data mining, facial recognition, and other forms of artificial intelligence. Urban surveillance is a multibillion-dollar industry, with Chinese and U.S.-based companies such as Axis, Dahua, Hikvision, Huawei, and ZTE leading the charge. Whether they are in China or elsewhere, smart cities are usually described in benign terms with the soothing promise of greener energy solutions, lower-friction mobility, and safer streets. Yet in a growing number of places from New York to Hong Kong, there are growing concerns about the ways in which supercharged surveillance is encroaching on free speech, privacy, and data protection. But the truth is that facial recognition and related technologies are far from the most worrisome feature of smart cities.

Part of what supposedly makes cities smarter is the deployment and integration of surveillance technologies such as sensors and biometric data collection systems. Electronic, infrared, thermal, and lidar sensors form the basis of the smart grid, and they do everything from operating streetlights to optimizing parking and traffic flow to detecting crime. Some cities are adopting these platforms more quickly than others. China, for example, is home to 18 of the top 20 most surveilled cities in the world. Shanghai, which achieved full 5G coverage in its downtown area and 99 percent fiber-optic coverage across the city, is covered by a veritable thicket of video surveillance. Identity collection devices are commonplace, having exploded across public and private spaces. Shanghai recently installed Alibaba’s City Brain public surveillance system, which oversees over 1,100 biometric facial recognition cameras. A combination of satellites, drones, and fixed cameras grab over 20 million images a day. The bus, metro, and credit cards of local residents are also traced in real time. And these tools are spreading. Chinese firms are busily exporting surveillance tech to Latin America, other parts of Asia, and Africa, helping enable what some critics call digital authoritarianism.

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A video surveillance camera
A video surveillance camera hangs from the side of a building in San Francisco on May 14, 2019. The city was the first in the United States to ban facial recognition technology by police and city agencies. JUSTIN SULLIVAN/GETTY IMAGES
Surveillance technologies are hardly confined to China. They are also widespread in U.S. cities. Throughout the 1990s and 2000s, law enforcement agencies and private companies deployed surveillance tools, ostensibly to improve public and private safety and security. The 9/11 attacks and subsequent U.S. Patriot Act dramatically accelerated their spread. Yet support for facial recognition systems appears to be ebbing. San Francisco was the country’s first major city to ban its agencies from using them in 2019. San Francisco was among the top five most surveilled cities in the United States when eight of the nine members of its Board of Supervisors endorsed the Stop Secret Surveillance Ordinance. Rolling back surveillance has proved difficult—digital rights advocates recently detected over 2,700 cameras still in use for police surveillance, property security, and transportation monitoring. In 2000, campaigners sued the city for tapping into private cameras to surveil mass protests, in defiance of the new ordinance.

Across North America and Western Europe, the tensions over smart cities can be distilled to concerns over how surveillance technology enables pervasive collection, retention, and misuse of personal data by everything from law enforcement agencies to private companies. Debates frequently center on the extent to which these tools undermine transparency, accountability, and trust. There are also concerns (and mounting evidence) about how facial recognition technologies are racially biased and inaccurate when it comes to people of color, discriminating particularly against Asian and African Americans. This helps explain why in the two years since San Francisco banned facial recognition technologies, 13 other U.S. cities have followed suit, including Boston; Berkeley and Oakland in California; and Portland, Oregon. By contrast, in China, racial bias seems to be a feature, not a bug—patented, marketed, and baked into national policing standards for facial recognition databases. What’s more, Chinese companies are bringing their technologies to global markets.

But a narrow preoccupation with surveillance technologies, as disconcerting as they are, underestimates the threats on the near horizon. Smart cities are themselves a potential liability—for entirely different reasons. This is because many of them are approaching the precipice of a hyperconnected “internet of everything,” which comes with unprecedented levels of risk tied to billions of unsecured devices. These don’t just include real-time surveillance devices, such as satellites, drones, and closed-circuit cameras. By 2025, there could be over 75 billion connected devices around the world, many of them lacking even the most rudimentary security features. As cities become ever more connected, the risks of digital harm by malign actors grow exponentially. Cities are therefore entirely unprepared for the coming digital revolution.

Baltimore office door
Baltimore’s information technology office lost dozens of time-sheet records in a 2019 ransomware attack. KENNETH K. LAM/THE BALTIMORE SUN VIA REUTERS
One of the paradoxes of a hyperconnected world is that the smarter a city gets, the more exposed it becomes to a widening array of digital threats. Already, large, medium, and small cities are being targeted for data theft, system breaches, and cyberattacks, all of which can undermine their operation and provision of essential services, and pose an existential threat. Hundreds of cities around the world have reported major digital disruptions to municipal websites, emergency call centers, health systems, and utilities delivering power or water. When city security is compromised and data privacy jeopardized, it undermines the faith of residents in digitally connected services and systems. As people feel more insecure, they may feel less inclined to participate in online health care, digitized utilities, remote learning opportunities, electronic banking services, or green initiatives—key tenets of the smart city. While not all digital threats can be countered, cities need to mount a robust capability to deter, respond to, and recover from attacks while preserving, as best they can, data protection and privacy.

To start, city authorities, companies, and residents need to design digital security into all domains of governance, infrastructure, commerce, and society. At a minimum, new smart city technologies must avoid reinforcing disproportionate surveillance that undermines basic freedoms, especially privacy. National, regional, and city governments should also mandate and enforce standards that require that all internet-enabled devices sold and deployed in their jurisdictions have minimum password protection, authentication, and encryption built in. It is essential that cities encourage digital literacy across the public, private, and civil society sectors, since many potential digital harms can be reduced through basic awareness and precautionary measures.

To get smarter, cities need to know their blind spots. This requires undertaking real-time monitoring to map the vulnerability of wireless devices in their environment. Passive monitoring across broad-spectrum wireless networks to detect data leakages will need to be routine—and properly explained to citizens. Cities will need to invest in automated incident response and in identifying and fixing their vulnerabilities in relation to networks and devices. Above all else, cities will need to take digital risks seriously and enforce security requirements across all connected devices, from the health watch to the ticket scanner to the internet-connected refrigerator, in a smart city ecosystem. The pursuit of smarter cities can and should not come at the expense of safety, privacy, or liberty. Indeed, the failure to prioritize both human well-being and security in a world of exponentially increasing complexity is a monumentally dangerous folly.

[Crafty_Dog]

Thank you.

[G M]

https://telecom.cioreview.com/cxoinsight/5g-and-china-lessons-from-a-surveillance-nation-nid-31353-cid-39.html

[G M]

https://telecom.cioreview.com/cxoinsight/5g-and-china-lessons-from-a-surveillance-nation-nid-31353-cid-39.html

https://www.newyorker.com/news/annals-of-communications/the-terrifying-potential-of-the-5g-network

[Crafty_Dog]

I had not considered 5G from this point of view.

Hypothetical:  Assuming this to be correct and as a result we blow off 5G, what implications for our conflict with China?

[G M]

I had not considered 5G from this point of view.

Hypothetical:  Assuming this to be correct and as a result we blow off 5G, what implications for our conflict with China?

I like retrotech and I don't need to download a movie on my phone in 4 seconds. Somehow I think we'd survive.

[Crafty_Dog]

Understood, but my question seeks to assess whether China having 5G and us not having it would in some way give them an advantage over us?


Seems to me this should be part of the analysis.

[G M]

Understood, but my question seeks to assess whether China having 5G and us not having it would in some way give them an advantage over us?


Seems to me this should be part of the analysis.

A better police state? Hard pass.

[Crafty_Dog]

Losing out to the CCP?

Hard pass.

To underline my point-- I am not advocating, I am saying a cost-benefit analysis needs to include this.

[G M]

Losing out to the CCP?

Hard pass.

To underline my point-- I am not advocating, I am saying a cost-benefit analysis needs to include this.

Competing with China for most high tech police state doesn't seem like a good policy.

[Crafty_Dog]

You fail to engage with my point.  Moving on.

[DougMacG]

Yes, it is a very bad thing that China is flying by us technologically and 5G is evidence of that.

[G M]

Yes, it is a very bad thing that China is flying by us technologically and 5G is evidence of that.

It’s almost like teaching American children that America is evil and racist and getting rid of academic rigor and gifted programs in the name of fighting racism has consequences.

[Crafty_Dog]

China competition bill set for final negotiations after delays

BY JOSEPH CLARK THE WASHINGTON TIMES

The Senate has forged ahead with a long-stalled bill to promote U.S. production of microprocessor chips to better compete with China, preparing to inch the legislation forward and into a tough round of negotiations with the House.

President Biden has pressed Congress for quick passage of the sweeping legislation but key differences remain between the House and Senate versions.

The Senate version is the $250 billion U.S. Innovation and Competition Act. The House counterpart is the $335 billion America COMPETES Act.

After months of stalls, Senate Majority Leader Charles E. Schumer set up the votes to get the legislation into a bicameral conference committee to begin reconciling the two bills.

“This legislation has been dissected and debated for well over a year now,” Mr. Schumer, New York Democrat, said on the Senate floor Tuesday. “But the need to pass this bill really boils down to two simple words: J-O-B-S, jobs and C-O-S-T-S costs.”

Both the House and Senate versions include a $52 billion boost for semiconductor manufacturing to combat a chip shortage.

“There’s nothing abstract about the shortage of chips,” Mr. Schumer said. “It impacts Americans’ abilities to buy cars, refrigerators, phones, and other household items. By passing bipartisan legislation that invests in domestic chip production, we can help alleviate this vexing chips crisis.”

The Senate version first passed in June with the support of 18 Republicans and 50 Democrats.

But the nearly 3,000-page House version also includes a hodgepodge of spending including $8 billion to help developing countries address climate change, funding to make the U.S. less reliant on Chinese solar technology and $45 billion to shore up U.S. supply chains.

House Republicans railed against the bill, which passed 222 to 210 last month, as a “foreign policy failure” that funnels taxpayer dollars into an “unaccountable U.N. slush fund” without addressing threats to U.S. national security posed by China.

House Republicans also voiced frustration with the process, saying they were sidelined while Democrats wrote the bill.

Sen. Todd Young, an Indiana Republican who worked on the Senate version, said he is committed to making the final bill more palatable for House Republicans.

The bill is a priority for Democrats and its passage would be a big win for Mr. Biden, who has been hobbled by a string of legislative defeats. Mr. Biden also has struggled to untangle a global supply chain hobbled by shipping delays and backlogs. And, the U.S. has been edged out of semiconductor manufacturing in recent decades by overseas producers.

On Monday, Commerce Secretary Gina Raimondo urged lawmakers to quickly move the legislation through Congress.

“The situation as it relates to semiconductors is quite dire,” Ms. Raimondo said in a call with senators of both parties.

Ms. Raimondo brought in former Trump administration officials, for the call including former national security adviser H.R. McMaster, to help sway lawmakers.

During the call, Mr. Young said he welcomed the start of formal negotiations between the House and Senate but wanted an open process “with input from all of my colleagues and consistent with what we call around here regular order.”

“I know the vote will not be unanimous and that both parties and members of both parties are going to have to make principled compromises, principled concessions, in order to get an agreement done,” he said. “That’s always what happens when you approach a negotiating table. But America and the world will be better off with a bipartisan, broadly supported final product.”

[Crafty_Dog]

https://www.vox.com/recode/23048906/chip-shortage-manufacturing-america-biden?fbclid=IwAR1UD1eSqr5mM2H7ZZiSMXbohXygpMPETq8LtrEYx4PMifHlRLHdUoMCv54

[Crafty_Dog]

By: Geopolitical Futures
Trucker strike. Approximately 1,000 South Korean truckers, angry about rising fuel costs, launched a strike in front of Hyundai Motors’ largest factory complex in Ulsan. They said they plan to curb shipments of raw materials for semiconductors that are produced in the city. The strike has totally suspended movement of containers at the Ulsan port in southeastern South Korea.

[Crafty_Dog]

US Chips Are Paving China’s Path to AI Superiority and There’s No Easy Fix
Patrick Tucker
BY PATRICK TUCKER
TECHNOLOGY EDITOR
JULY 1, 2022
CHINA
TECHNOLOGY
Chips designed by U.S. companies are helping China work toward its goal of becoming the world leader in artificial intelligence by 2030, according to a new report out this week from the Center for Security in Emerging Technology, or CSET. But fixing that isn’t as simple as just passing new controls.

Some 97 public records of Chinese military purchases of AI chips show that “nearly all of them were designed by Nvidia, Xilinx (now AMD), Intel, or Microsemi”—all U.S. companies, the researchers wrote. “By comparison, we could not find any public records of [Chinese military] units or stateowned defense enterprises placing orders for high-end AI chips designed by Chinese companies, such as HiSilicon (Huawei), Sugon, Sunway, Hygon, or Phytium.”

Moreover, those U-S-designed chips are largely manufactured in bulk by Asian companies such as Samsung in South Korea and the Taiwan Semiconductor Manufacturing Company in Taiwan—the self-governing island that U.S. Indo-Pacific Command leaders say could be invaded by China in the next five years.

Graphics processor units, or GPUs, designed by Nvidia are the international market leader in chips to run complex artificial intelligence applications. While the Chinese government has spent heavily to develop its own chips, the report says, “High barriers to entry, including a reliance on intrinsic knowledge and highly specialized equipment, have so far prevented Chinese companies from catching up.”

In 2020, the Trump administration imposed restrictions to keep U.S. chip designs out of China; the Biden administration has maintained those controls. But that hasn’t stopped the Chinese military from obtaining chips through a variety of avenues, including purchases by Chinese intermediaries and, in some cases, by setting up dummy corporations.

To curb the problem, the U.S. government could look at more controls but without a ramp up in the government’s enforcement and investigation capabilities, new controls by themselves likely won’t achieve their desired effect. “Chips themselves are hard to track. Although they are technically sophisticated, physical inputs to AI development, chips in transit do not carry an easily observable signature,” the authors write.


Instead, they say, the Commerce Department should should work with industry to better identify what chips might be most relevant to the Chinese military’s AI goals and “coordinate with partners to screen intended end-users and prevent their export.” And the U.S. intelligence community should bulk up its analysis of open source intelligence on Chinese chip contracts. The CSET researchers “identified seven Chinese military vendors which are not listed in U.S. end-user export control regimes. There is room for open-source analysis to address other security challenges.”

Taiwanese manufacturers are also pressing the United States for subsidies to speed the process of building new manufacturing facilities in the United States.

In January 2021, Congress passed the CHIPS Act–as part of the FY 2021 National Defense Authorization Act–to secure almost $52 billion to incentive the develop of chip manufacturing in the United States. But chip makers have complained that the funds aren’t moving fast enough.

[Crafty_Dog]

https://www.reuters.com/markets/europe/global-markets-wrapup-1-2022-07-07/?utm_source=Sailthru&utm_medium=newsletter&utm_campaign=daily-briefing&utm_term=07-07-2022

[Crafty_Dog]

US Chips Are Paving China’s Path to AI Superiority and There’s No Easy Fix
Patrick Tucker
BY PATRICK TUCKER
TECHNOLOGY EDITOR
JULY 1, 2022
CHINA
TECHNOLOGY
Chips designed by U.S. companies are helping China work toward its goal of becoming the world leader in artificial intelligence by 2030, according to a new report out this week from the Center for Security in Emerging Technology, or CSET. But fixing that isn’t as simple as just passing new controls.

Some 97 public records of Chinese military purchases of AI chips show that “nearly all of them were designed by Nvidia, Xilinx (now AMD), Intel, or Microsemi”—all U.S. companies, the researchers wrote. “By comparison, we could not find any public records of [Chinese military] units or stateowned defense enterprises placing orders for high-end AI chips designed by Chinese companies, such as HiSilicon (Huawei), Sugon, Sunway, Hygon, or Phytium.”

Moreover, those U-S-designed chips are largely manufactured in bulk by Asian companies such as Samsung in South Korea and the Taiwan Semiconductor Manufacturing Company in Taiwan—the self-governing island that U.S. Indo-Pacific Command leaders say could be invaded by China in the next five years.

Graphics processor units, or GPUs, designed by Nvidia are the international market leader in chips to run complex artificial intelligence applications. While the Chinese government has spent heavily to develop its own chips, the report says, “High barriers to entry, including a reliance on intrinsic knowledge and highly specialized equipment, have so far prevented Chinese companies from catching up.”

In 2020, the Trump administration imposed restrictions to keep U.S. chip designs out of China; the Biden administration has maintained those controls. But that hasn’t stopped the Chinese military from obtaining chips through a variety of avenues, including purchases by Chinese intermediaries and, in some cases, by setting up dummy corporations.

To curb the problem, the U.S. government could look at more controls but without a ramp up in the government’s enforcement and investigation capabilities, new controls by themselves likely won’t achieve their desired effect. “Chips themselves are hard to track. Although they are technically sophisticated, physical inputs to AI development, chips in transit do not carry an easily observable signature,” the authors write.

Instead, they say, the Commerce Department should should work with industry to better identify what chips might be most relevant to the Chinese military’s AI goals and “coordinate with partners to screen intended end-users and prevent their export.” And the U.S. intelligence community should bulk up its analysis of open source intelligence on Chinese chip contracts. The CSET researchers “identified seven Chinese military vendors which are not listed in U.S. end-user export control regimes. There is room for open-source analysis to address other security challenges.”

Taiwanese manufacturers are also pressing the United States for subsidies to speed the process of building new manufacturing facilities in the United States.

In January 2021, Congress passed the CHIPS Act–as part of the FY 2021 National Defense Authorization Act–to secure almost $52 billion to incentive the develop of chip manufacturing in the United States. But chip makers have complained that the funds aren’t moving fast enough.

[Crafty_Dog]

https://dailycaller.com/2022/07/15/pelosis-husband-massive-amount-in-chips-stock-before-expected-senate-vote-subsidies/?utm_source=piano&utm_medium=email&utm_campaign=2680&pnespid=ub18UTlVK6xK2vXf.CusTpKSpg28SpJrc_6k2utq8UNmE0JWsk6FYn_Jr3mvnyvjPjuT.2HJ

[Crafty_Dog]

Congress Goes All in for Chip Subsidies
Competing with China is the new excuse for corporate welfare.
By The Editorial BoardFollow
July 18, 2022 6:37 pm ET
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President Joe Biden holds a semiconductor chip.
PHOTO: JONATHAN ERNST/REUTERS

Industrial policy is back in fashion in Washington, or as it ought to be called, corporate welfare. The semiconductor industry is first in the queue, but it won’t be the last. Taxpayers should at least know they’ll be subsidizing highly profitable companies that don’t need the help and might end up regretting the political handcuffs they’re acquiring.

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The bill that will head to the Senate floor as early as Tuesday includes $52.2 billion in grants to the computer chip industry. But wait, there’s more. Congress is also offering a 25% tax credit for semiconductor fabrication, which is estimated to cost about $24 billion over five years. That’s $76 billion for one industry.

Republicans on the House Ways and Means Committee point out that for the same money Congress could double the research and development tax credit for all companies through 2025. It could also throw in 100% expensing for companies and allow immediate R&D deductions through 2025. But that would mean the politicians aren’t picking favorites, which is what they prefer to do.

***
The impetus for the bill was a severe pandemic chip shortage that disrupted supply chains and raised the cost of autos and many other products. But the shortage is easing as global demand and the economy slow. South Korea, the world’s top producer of memory chips, last month said its national chip stockpile has increased by more than 50% over the past year as demand for electronics ebbs.

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Intel, the giant U.S. firm, froze hiring in its PC-chip division in June. Micron Technology CEO Sanjay Mehrotra warned a few weeks ago that “the industry demand environment has weakened” and it would cut back investment. Nvidia is scaling back hiring due to declining demand for its chips that are used in crypto mining and videogames.

As often happens, yesterday’s shortage may be tomorrow’s glut, as chip firms have expanded production without subsidies. Taiwan Semiconductor Manufacturing Co. (TSMC) tripled capital spending between 2019 and 2022. Intel nearly doubled capital spending during the pandemic, and Samsung last year increased its 10-year investment plan by more than 30%.

Global semiconductor capacity increased 6.7% in 2020 and 8.6% in 2021 and is expected to grow another 8.7% this year. The risk of over-capacity is growing as China heaps subsidies on its semiconductor industry as part of its Made in China 2025 initiative, and the U.S. and Europe race to compete.

Some 15,000 new semiconductor firms registered in China in 2020. Some have drawn investment from U.S. venture-capital firms. Intel has backed Chinese startups even as CEO Pat Gelsinger lobbies Congress for subsidies to counter Beijing. Intel has threatened to delay a planned Ohio factory unless Congress passes the subsidy bill.

The other claim for the bill is that the U.S. must subsidize domestic chip-making to compete with China, but this also isn’t persuasive. The companies like to point out that the U.S. share of the world’s chips has fallen to 12% from 37% in 1990. They don’t mention that the U.S. leads in chip design (52%) and chip-making equipment (50%). Seven of the world’s 10 largest semiconductor companies are based in the U.S. China trails American companies by years in semiconductor technology.

Chip fabrication has moved to South Korea and Taiwan because many chips are commodities with low margins. But chip makers are working to diversify their manufacturing bases to avoid future supply disruptions and have announced $80 billion in new U.S. investments through 2025. Samsung plans to build a $17 billion factory in Texas. TSMC has a $12 billion plant under construction in Arizona.

One unfortunate impetus behind this bill is that, for all their talk of competing with China, many politicians believe that Beijing’s economic planning is superior to the U.S. free-market system. It reminds us of the 1980s when legendary Intel CEO Andrew Grove warned that Japan was going to dominate the chip industry and the future of global technology.

As former Cypress Semiconductor CEO T.J. Rodgers explained on these pages last year, the government set up the Sematech chip consortium that “was obsolescent when it opened.” But Intel innovated with more advanced chips, and no one is talking now about Tokyo’s central-planning genius.


***
History shows that easy government money can undermine competitiveness. It often leads to inefficient spending and investment. The politicians will also attach their own strings, perhaps with limits on stock buybacks and dividends. Wait until Bernie Sanders is heard from on the Senate floor.

The chip bill isn’t needed to compete with China, and it will set a precedent that other industries will follow. Anybody who can throw up a China competition angle will ask for money. Why Republicans want to sign up for this is a mystery, especially when they might control both houses of Congress in six months.

[Crafty_Dog]

Shortage. Marketing intelligence firm Cru Group has warned of a growing shortage in fiber optic cable. Over the past 16 months, Europe, India and China have also seen a 70 percent increase in prices. The situation is related to a surge in demand over the past two years, particularly from government 5G development projects and infrastructure initiatives led by companies like Amazon, Google, Meta and Microsoft. It’s also due to a shortage of helium, a critical input material for manufacturing fiber optics.

[DougMacG]

Shortage. Marketing intelligence firm Cru Group has warned of a growing shortage in fiber optic cable. Over the past 16 months, Europe, India and China have also seen a 70 percent increase in prices. The situation is related to a surge in demand over the past two years, particularly from government 5G development projects and infrastructure initiatives led by companies like Amazon, Google, Meta and Microsoft. It’s also due to a shortage of helium, a critical input material for manufacturing fiber optics.

https://www.thestockdork.com/helium-stocks/

[Crafty_Dog]

The CHIPS Act Won’t Reduce the U.S.’s Strategic Reliance on the Global Semiconductor Sector
7 MIN READJul 28, 2022 | 20:16 GMT



The latest U.S. bill to support the domestic semiconductor industry will struggle to reduce the United States’ reliance on foreign chipmakers and suggests Congress is unwilling to impose strict controls on companies looking to invest in China. On July 27, lawmakers in the U.S. Senate passed the $280 billion the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, which subsidizes U.S.-made semiconductor chips and boosts investments in cutting-edge science and technology initiatives. U.S. President Joe Biden strongly supports the bill, which he argues will create more jobs for Americans by incentivizing more firms to manufacture chips in the United States. The U.S. House of Representatives passed the bill on July 28, sending it to Biden’s desk.

The CHIPS Act portion of the bill allocates $50 billion in subsidies for the CHIPS for America fund to bolster the U.S. semiconductor industry — including by building new chip fabrication plants, expanding research and development (R&D) efforts, and supporting workforce development — as well as an additional $2 billion in subsidies for the CHIPS for America Defense fund to bolster projects specific to the U.S. defense sector. The CHIPS Act portion also includes $700 million in subsidies for various other semiconductor-related funds.

The science portion of the bill includes a wide range of measures, including increasing financial support for several programs being run by the U.S. Department of Energy, like those related to carbon storage and nuclear power. The bill also establishes new mechanisms and incentives designed to boost the United States’ STEM workforce, and provides additional funding for a number of NASA programs.

The passage of the bill in Congress comes after more than a year of legislative debate and dialogue with U.S. business leaders on how to support the semiconductor industry in the wake of the disruptive global chip shortage and the growing competition with China. For lawmakers, the chip shortage was a visible example of how far the United States had fallen in semiconductor manufacturing, despite its dominance in key areas of the industry like semiconductor design and R&D. The bill itself borrows from a number of predecessor bills that have been introduced but not passed, including the Endless Frontiers Act and the United States Innovation and Competition Act (USICA), since the semiconductor shortage began in 2020. However, the CHIPS and Science Act stands a greater chance of passage in part because it represents a watered-down version of previous bills. It is also more likely to pass because U.S. officials have pointed to the hollowing out of the U.S. semiconductor industry as a national security risk, particularly as China tries to make strides in developing its semiconductor industry. Even so, some Republicans and Democrats have still criticized the new CHIPS and Science Act, highlighting how divisive the issue has become and the number of iterations it has gone through.

Between 1990 and 2021, the U.S. share of global semiconductor production fell from 37% to just 12%, according to data from the U.S. Semiconductor Industry Association. This drop has coincided with the rise of chip manufacturing in Asia, which now accounts for roughly 75-80% of global semiconductor production.

Democratic Senator and former presidential candidate Bernie Sanders has criticized the bill for what he accuses of enabling “crony capitalism” by providing subsidies to companies that are already making billions of dollars in profits.

Republican and fiscally conservative voices in the United States have also expressed concern about the cost of the new CHIPS and Science Act, which expands on what was originally a $76 billion bill for semiconductors subsidies and tax credits to authorize billions of dollars of more funding for other projects — with The Wall Street Journal’s editorial board recently calling it a “spendorama.”

If signed into law by Biden (as expected), the CHIPS Act portion of the bill will increase domestic semiconductor manufacturing. But this is unlikely to significantly reduce the United States’ overall reliance on the global semiconductor industry. Intel and other semiconductor manufacturers will certainly take advantage of the extra financial assistance offered by the tax credits and subsidies to boost production in the United States. But any new investments in U.S. fabrication plants are likely to still pale in comparison to global investment in the sector. While $52 billion is a large sum, it can cost anywhere between $10-15 billion to build a single semiconductor manufacturing facility, illustrating the limits of the bill’s funding. Taiwan’s TSMC, for example — the largest contract semiconductor manufacturer — is planning to invest $100 billion alone over the next three years to keep up with demand. The semiconductor industry is also highly segmented as different companies concentrate on specific parts of the industry or types of chips, which makes it difficult for Washington to create legislation that supports all of the necessary areas of investment. Moreover, chip fabrication is just one of many parts of the semiconductor value chain. Even if the United States has more fabrication plants, semiconductor packaging and testing, key raw material inputs and manufacturing equipment would still need to be imported.

The recent global energy shortage and rise in oil prices offer a cautionary tale about how domestic production does not necessarily isolate a country from global market conditions in a globalized industry. From 2012-2020, U.S. politicians lauded the growth of domestic oil and gas production, saying it boosted U.S. energy security. But the 2021-22 energy crunch, highlighted how that domestic growth failed to significantly protect the United States from international market conditions during global crises (like the COVID-19 pandemic and the war in Ukraine). The same would likely be true in the semiconductor industry, which, like the energy sector, is also highly globalized.

Proposals that were ultimately left out of the final version of the bill also highlight that Congress may not have enough support for more aggressive measures to slow the advancement of China’s semiconductor industry, as well as deter U.S. (and Western) companies from investing in strategic industries in China. The final version of the bill left out a proposal to create an outbound screening mechanism for foreign direct investments that would have allowed a new review board to block investments into countries like China over national security concerns. The mechanism would have been similar to one that currently allows the U.S. government to review the national security risks of investments in the United States, such as if a Chinese company sought to acquire a U.S. semiconductor firm. However, various business leaders and some U.S. lawmakers in Congress criticized the outbound investment screening mechanism for giving the government too big of a role in the private sector. Moreover, there were also concerns over the vagueness of what would constitute a national security risk, given that former President Donald Trump had placed tariffs on steel and aluminum on U.S. allies with what most observers called a dubious national security argument. To assuage these fears, the final version of the bill only scrutinizes outbound investments in the semiconductor industry itself, rather than more holistically covering outbound investments in other key emerging technologies. It does so in the context of wanting to ensure that the government funding provided by the act does not lead to investments in China. Tech companies, however, will still be free to invest in other strategic Chinese sectors, which is why some U.S. lawmakers have called for a broader mechanism than what is currently included in the bill.

If Biden signs the the CHIPS and Science Act into law, companies that seek funding under the bill must enter an agreement with the U.S. Commerce Department that they will not make transactions that lead to a “material expansion” in China’s semiconductor manufacturing capacity over the next ten years. But the bill includes clear exemptions for investments into legacy chips (defined as those from the 28-nanometer generation or older).

[Crafty_Dog]

https://www.theepochtimes.com/house-passes-280-billion-chips-act-without-china-provision-sending-bill-to-bidens-desk_4628943.html?utm_source=China&utm_campaign=uschina-2022-07-29&utm_medium=email&est=mWo4kQxROchzIqJl%2F6gLWRArUENaQ3WYxAjbhyqgjeYMGFztLeYfLVPLYVLHdHRzaukI

ARE YOU FG KIDDING ME?!?

"However, many legislators disagree with that statement because Democrats removed a provision of the legislation at the last minute that would have prevented U.S. companies from outsourcing subsequent technologies to China. Because of the removal of that provision, tech companies in the United States will be able to research new semiconductor technologies using billions of dollars in taxpayer funds, then outsource the production of those new technologies to China."

[Crafty_Dog]

third

Semiconductor Independence and the Failure of US Sanctions
John Mac Ghlionn
John Mac Ghlionn
 July 28, 2022 Updated: July 28, 2022

Commentary

Unless you happen to live under a rock, you’re no doubt aware that the world is in the midst of an “everything” crisis. With global shortages of gas and grains, baby formula, and bananas, it’s time to add semiconductors to this ever-expanding, rather eclectic-sounding list. According to analysts at McKinsey, the semiconductor industry accounts for $450 billion dollars in direct annual revenues. To put that number in perspective, that’s almost the combined GDP of New Zealand and Finland. Semiconductors are the heartbeat of modern society; without them, no laptops, no phones, no health care, no military systems, no transportation. In other words, no life.

The chips are down; according to Intel’s Pat Gelsinger, and they’ll remain down for the foreseeable future. He expects the industry to suffer supply shortages until 2024. This is bad news for the United States. Although the current administration is planning to open up a host of new chip factories, these facilities won’t be ready in time to address the current crisis. Reactive in the extreme, the United States now finds itself closing the barn door long after the horse has bolted. Moreover, infrastructure projects take time; in the United States, they take an ungodly amount of time. The chips are coming, just not any time soon.

Meanwhile, 11,500 kilometers away, in China, the Chinese Communist Party (CCP) is attempting to achieve “semiconductor independence.” With huge companies like Baidu, Alibaba, Huawei, and Oppo all moving into the chip-making market, China is fast becoming the global leader in semiconductors. By 2024, when the shortage is expected to be addressed, China looks likely to control a huge portion of the global chip market. (Interestingly, Taiwan is home to TSMC and MediaTek, two of the biggest chip manufacturers on the planet, perhaps explaining why China is so obsessed with the island). As the United States struggles to strengthen its domestic chip industry, Chinese power moves ahead.

Interestingly, in an attempt to maintain its ascendancy and growing dominance, the CCP has zeroed in on Europe, a key player in the semiconductor sector.

The Netherlands is a country synonymous with a number of rather random things: windmills, vertically unchallenged citizens, cheese, bicycle lanes, and understandably irate farmers. In recent times, however, the Netherlands has become more synonymous with semiconductor chips—a fact that is not lost on China. The Netherlands is home to NXP, one of the largest chip manufacturing plants in Europe. In 2019, NXP executives announced that the company had signed a highly-lucrative deal with Hawkeye Technology, a Chinese company specializing in automotive radars.

The Netherlands is sandwiched between Belgium and Germany, two other countries also supplying chips to China. In 2019, the Interuniversity Microelectronics Centre (IMEC), headquartered in Leuven, Belgium, announced that it was building a new research facility in Wuxi National Hi-Tech District, close to the city of Shanghai. Besides researching and creating semiconductors, IMEC also focuses on microsystems, wireless communications, and bioelectronics.

When it comes to the manufacturing of semiconductor chips, Infineon Technologies, a German company, is perhaps the most important player in Europe.

Epoch Times Photo
An Infineon Technologies AG memory chip plant in Suzhou, Jiangsu Province, China, on Sept. 23, 2004. (Wu Niu/Bloomberg via Getty Images)
A little over a decade ago, Infineon opened a huge facility in the Beijing Economic and Technological Development Area. Since then, the company’s ties with China have only grown stronger. Last year, as the South China Morning Post reported, members of China’s Ministry of Commerce held extensive talks with Infineon, Intel, and STMicroelectronics, a Franco-Italian multinational semiconductors manufacturer, in the hope of facilitating” cross-border semiconductor investment.” Like Infineon, STMicroelectronics is a company with real clout. With a gigantic factory in Shenzhen, the Silicon Valley of China, the European manufacturer is fueling China’s tech-based dominance.

What does all of this mean for the United States?

Although the United States and China are not engaged in traditional warfare, they are engaged in a war of ideas, trade, and technology. On all three levels, China appears to be winning. In an effort to stop its biggest rival from gaining even more chip-fueled momentum, the Biden administration has attempted to dissuade European partners from enabling China. Again, though, all of this smacks of desperation, a reactive measure that is a decade too late.

As author David P. Goldman recently noted, the “Biden administration’s belated attempt to suppress China’s semiconductor industry appears to have backfired.” He’s right. Last year, China produced 33 percent more chips than it did in 2020. Moreover, by strategically partnering with major European manufacturers and proactively focusing on the aforementioned idea of “semiconductor independence,” the CCP has “found workaround technologies that bypass the aging American IP that Washington has embargoed,” Goldman added.

To compound matters, despite U.S. sanctions, the Chinese are figuring out how to manufacture 7-nanometer chips. Intriguingly, the chips appear to be a very “close copy” of the ones manufactured by TSMC, the aforementioned Taiwanese company. The chips, we’re told, will likely be used to advance China’s military. The CCP found itself backed into a corner and appears to have responded in a highly-aggressive manner. In this game of high-stakes poker between the United States and China, there’s a real chance that the Chinese will be the ones holding all the chips.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

[DougMacG]

https://www.theepochtimes.com/house-passes-280-billion-chips-act-without-china-provision-sending-bill-to-bidens-desk_4628943.html?utm_source=China&utm_campaign=uschina-2022-07-29&utm_medium=email&est=mWo4kQxROchzIqJl%2F6gLWRArUENaQ3WYxAjbhyqgjeYMGFztLeYfLVPLYVLHdHRzaukI

ARE YOU FG KIDDING ME?!?

"However, many legislators disagree with that statement because Democrats removed a provision of the legislation at the last minute that would have prevented U.S. companies from outsourcing subsequent technologies to China. Because of the removal of that provision, tech companies in the United States will be able to research new semiconductor technologies using billions of dollars in taxpayer funds, then outsource the production of those new technologies to China."

The election of Trump was Democrats fault.  This kind of governance by insiders is what elects the outsider to clean it up - if there is anything left to clean up.

Brought to you by the people who sent plane loads of cash to the terror sponsoring regime of Iran.

In one post we recognize them as our enemy and in the next, same day, we help them develop military technology.

There used to be a word for aiding and abetting the enemy, treason, punishable by hanging.

[G M]

https://www.theepochtimes.com/house-passes-280-billion-chips-act-without-china-provision-sending-bill-to-bidens-desk_4628943.html?utm_source=China&utm_campaign=uschina-2022-07-29&utm_medium=email&est=mWo4kQxROchzIqJl%2F6gLWRArUENaQ3WYxAjbhyqgjeYMGFztLeYfLVPLYVLHdHRzaukI

ARE YOU FG KIDDING ME?!?

"However, many legislators disagree with that statement because Democrats removed a provision of the legislation at the last minute that would have prevented U.S. companies from outsourcing subsequent technologies to China. Because of the removal of that provision, tech companies in the United States will be able to research new semiconductor technologies using billions of dollars in taxpayer funds, then outsource the production of those new technologies to China."

The election of Trump was Democrats fault.  This kind of governance by insiders is what elects the outsider to clean it up - if there is anything left to clean up.

Brought to you by the people who sent plane loads of cash to the terror sponsoring regime of Iran.

In one post we recognize them as our enemy and in the next, same day, we help them develop military technology.

There used to be a word for aiding and abetting the enemy, treason, punishable by hanging.

The people in power see you and me as the enemy.

[Crafty_Dog]

Superficial article that leaves out mention of the gaps and loopholes:
=======================

Biden signs ‘once-in-a-generation’ semiconductor bill into law

BY JOSEPH CLARK THE WASHINGTON TIMES

President Biden on Tuesday signed Congress’ $280 billion technology spending bill aimed at boosting domestic semiconductor manufacturing and spurring scientific research, lauding it as a “once-in-a-generation investment in America itself.”

“America invented the semiconductor,” Mr. Biden said during a ceremony on the South Lawn of the White House. “And this law brings it back home.”

The House gave final passage to the bill, which includes a $52 billion payout to semiconductor manufacturers, in a 243-187 vote last month, one day after the Senate passed the measure 64-33 in a key legislative win for the administration.

Proponents of the bill, which includes more than $50 billion in the next five years for chip manufacturing and a 25% tax credit through 2026 for new chip production, say it will reduce America’s dependence on China and resolve a major supply chain issue that has contributed to high inflation.

Passage of the bill in the narrowly divided Congress marked a legislative win for the White House and for Democrats hungry for a policy victory ahead of the Nov. 8 midterm elections.

Mr. Biden was joined by Senate Majority Leader Charles E. Schumer, New York Democrat, and House Speaker Nancy Pelosi, California Democrat, and Commerce Secretary Gina Raimondo for the signing ceremony.

Mr. Schumer lauded the Senate’s progress on Democrats’ key legislative priorities in recent weeks, including the semiconductor legislation and the party’s $740 billion health care, climate, tax and spending package passed by the chamber over the weekend. The Senate is divided 50-50, with Vice President Kamala Harris providing the tie-breaking vote.

“All too often, government and businesses are accused of thinking too short term,” Mr. Schumer said. “But this is one of the most significant long-term thinking bills in ages. I firmly believe our grandchildren will work in jobs we can’t even envision now because of these great investments.”

“Today we are laying the foundation for a bold future by enacting the Chips and Science Act,” he said. “We are making clear we believe another great American century lies on the horizon.”

Mrs. Pelosi said by signing the bill, Mr. Biden has “declared our economic independence” and is returning “American semiconductor production to world leadership status.” The bill’s passage capped months of tense negotiations on the long-stalled $52 billion incentive for chip manufacturers.

The White House had been in a full-court press for weeks to get the measure passed, urging lawmakers to shed a bevy of tough-on-China measures to get the broadly supported semiconductor funding to his desk before industry heavyweights take their money elsewhere.

Ms. Raimondo, who led classifi ed briefings last month on Capitol Hill to compel lawmakers to move the stalled chip funding across the finish line, has warned the U.S. is running out of time to woo chip manufacturers as other countries begin to roll out similar incentives.

“This could not have come at a more urgent moment,” she said during the signing ceremony. “The linchpin of our economy and our national security, and our over-reliance on foreign manufacturers is a real vulnerability. With these investments, that changes right now.”

Without a steady flow of semiconductors, which are used to manufacture a variety of goods such as smartphones, washing machines and advanced weapons, proponents warn that the U.S. will be severely hobbled in maintaining economic stability.

Opponents, including some Republicans and self-described Democratic socialist Sen. Bernard Sanders of Vermont, labeled as “corporate welfare” the bill’s $52 billion of funding for the chip manufacturing industry.

Several semiconductor heavyweights have hinged further investment in the U.S. on the federal subsidies included in the bill.

Micron announced this week that it would spend $40 billion in domestic semiconductor manufacturing, creating 5,000 new high-tech jobs, the Boise, Idaho firm said. Micron says its investment will boost the U.S. share of chip production from 2% to 10% over the next decade.

Qualcomm this week has also agreed to buy $4.2 billion in chips produced from GlobalFoundries’ upstate New York factory. Global-Foundries is expected to expand its domestic chip manufacturing footprint to benefit from the federal subsidies under the legislation

[Crafty_Dog]

Biden team vows to closely watch funds for semiconductors

BY JOSEPH CLARK THE WASHINGTON TIMES

Secretary of Commerce Gina Raimondo on Tuesday promised to impose strict guardrails on the $52 billion payout to semiconductor manufacturers that President Biden signed into law last month.

She said the government would “look after every nickel of taxpayer money.”

The Commerce Department is starting to dole out the funds that include $28 billion in “leadingedge” semiconductor manufacturing, $10 billion in new manufacturing capacity and $11 billion to strengthen U.S. leadership in semiconductor research.

Ms. Raimondo sought to tamp down criticism that the funding amounted to corporate welfare for already profitable companies.

“This is not a blank check for companies,” Ms. Raimondo told reporters. “There are clear guardrails on this money and the Department of Commerce intends to be vigilant and aggressive in protecting taxpayers.”

She added that the money could not be used for stock buybacks and that the government dollars are meant to enhance rather than replace private investment, and the U.S. taxpayer dollars cannot go to develop leading-edge semiconductor technologies in China.

“These are some of the most stringent taxpayer protections and guardrails we’ve ever had,” Ms. Raimondo said. “We’re going to look after every nickel of taxpayer money.”

The government also can claw back funds from companies if they are misspent or if companies fail to put them to use, according to Ms. Raimondo.

“Make no mistake about it, we will use that clawback authority if, after giving the money to a company, they fail to start their project on time, fail to complete their project on time, or fail to see the commitments that they’ve made,” she said.

Ms. Raimondo led classified briefings on Capitol Hill during the administration’s final push to move the stalled chip funding bill across the finish line. She warned lawmakers that the U.S. is running out of time to woo chip manufacturers to its shores as other countries offer similar incentives.

The funding was approved by Congress as part of a $280 billion technology spending bill that Mr. Biden lauded as a “oncein- a-generation investment in America itself.”

“America invented the semiconductor,” Mr. Biden said when signing the bill into law. “And this law brings it back home.”

Passage of the bill in the narrowly divided Congress marked a legislative win for the White House and for Democrats hungry for a policy victory ahead of the Nov. 8 midterm elections.

Proponents of the bill, which includes more than $50 billion in the next five years for chip manufacturing and a 25% tax credit through 2026 for new chip production, say it will reduce America’s dependence on China and resolve a major supply chain issue that has contributed to high inflation.

Without a steady flow of semiconductors, which are used to manufacture a variety of goods such as smartphones, automobiles, washing machines and advanced weapons, proponents warn that the U.S. will be severely hobbled in maintaining economic stability.

Opponents, including some Republicans and self-described democratic socialist Sen. Bernard Sanders of Vermont, labeled it “corporate welfare.”

Several semiconductor heavyweights have linked further investment in the U.S. to the federal subsidies included in the bill.

Micron announced after funding was approved by Congress that it would spend $40 billion in domestic semiconductor manufacturing, creating 5,000 new high-tech jobs, the Boise, Idaho, firm said. Micron says its investment will boost the U.S. share of chip production from 2% to 10% over the next decade.

Qualcomm has also agreed to buy $4.2 billion in chips produced from GlobalFoundries’ upstate New York factory. GlobalFoundries is expected to expand its domestic chip manufacturing footprint to benefit from the federal subsidies under the legislation.

Later this week, Mr. Biden will attend a groundbreaking ceremony in Ohio for Intel’s planned $20 billion semiconductor complex. The groundbreaking was initially scheduled for July, but Intel delayed the start of construction on the new facility until Congress’ final passage of the semiconductor funds.

“These investments have been made by these companies, because the CHIPS Act passed, and they have confidence now that the money will be put out the door,” Ms. Raimondo said

[DougMacG]

"Biden team vows to closely watch funds for semiconductors"


   - Nobody watches over wasteful crony government spending more closely than that Biden team.  They will watch, watch, watch until they are certain every dollar and more go to their political cronies.

A neat trick, they have found if you silence and jail all opponents, money can be more efficiently steered to the right people.

[G M]

"Biden team vows to closely watch funds for semiconductors"


   - Nobody watches over wasteful crony government spending more closely than that Biden team.  They will watch, watch, watch until they are certain every dollar and more go to their political cronies.

A neat trick, they have found if you silence and jail all opponents, money can be more efficiently steered to the right people.

Heh!

[Crafty_Dog]

iden Admin Unveils Tough Restrictions on Semiconductor Exports to China
By Andrew Thornebrooke October 7, 2022

The Biden administration unveiled sweeping new export controls on Oct. 7, in an effort to hamstring the military modernization of an increasingly hostile China.

Among the new export rules is a measure that will cut communist China off from certain semiconductor chips that are made with U.S. technologies, regardless of whether the chips were manufactured in the United States.

The move is likely to be seen as a natural follow-up to the CHIPS and Science Act, which Biden signed into law in August. That law allocates billions of dollars of investments into domestic manufacturing of advanced semiconductor chips.

“China is trying to move way ahead of us in manufacturing [advanced chips],” President Biden said during an Oct. 6 speech. “It’s no wonder, literally, the Chinese Communist Party actively lobbied against the CHIPS and Science Act that I’ve been pushing in the United States Congress.”

“The United States has to lead the world in producing these advanced chips.”

Advanced semiconductor chips are used to make everything from pickup trucks to hypersonic missiles. Currently, more than 60 percent of the world’s supply of chips is produced in Taiwan, many of them with the help of American research and design.

The rules announced by the administration this week will build on restrictions developed earlier in the year which effectively require some companies to halt shipments of equipment to Chinese-owned factories producing advanced chips.

US Asserts Strength With New Rules

The move to cut off China from American research and design presents a vast expansion of the White House’s efforts to retard the Chinese Communist Party’s (CCP) military modernization and associated technological advances in quantum computing and artificial intelligence.

If effective, the new rules could set China’s domestic chip manufacturing industry back years by compelling American and foreign companies that use U.S. technologies to cut off support for China’s leading factories and chip designers.

The move is also likely to ameliorate previous fears about the CHIPS and Science Act over the issue of whether some companies might develop new chips with taxpayer money and then export their manufacture to China.

Senior government officials said in a Thursday briefing that many of the rules sought to prevent foreign firms from selling advanced chips to China or supplying Chinese firms with tools to make their own advanced chips.

“We’re going to make sure that companies that take these taxpayers’ dollars do not turn around and make investments in China investments that undermine our supply chains and national security,” Biden said. “That’s a guarantee.”

“The future of the chips industry is going to be made in America.”

“The supply chain is going to start here and end here in the United States.”

Officials conceded that they have not yet secured promises from allied nations to implement similar measures. Discussions to create a multinational effort toward that end were ongoing.

“We recognize that the unilateral controls we’re putting into place will lose effectiveness over time if other countries don’t join us,” one official said.

The expansion of U.S. powers to control chip exports to China is based on a broadening of the so-called “foreign direct product rule.”

The rule was previously expanded to give the U.S. government authority to control exports of chips made overseas to Chinese telecommunications giant Huawei.

The new regulations will also severely restrict the export of U.S. equipment to Chinese chip makers and effectively formalizes letters sent to Nvidia and AMD earlier in the year restricting shipments to China of chips required for supercomputing systems that could be used to develop nuclear weapons and other military technologies.

Reuters contributed to this report.

[Crafty_Dog]

U.S. Suppliers Halt Operations at Top Chinese Memory Chip Maker
Tool makers are pulling out staff and pausing work as they assess the impact of Commerce Department restrictions on semiconductor exports to China

U.S. export control measures restrict companies sending chips and chip-making equipment to China.
PHOTO: FLORENCE LO/REUTERS
By Yoko KubotaFollow
 and Raffaele HuangFollow
Updated Oct. 12, 2022 10:44 am ET

BEIJING–U.S. chip equipment suppliers are pulling out staff based at China’s leading memory chip maker and pausing business activities there, according to people familiar with the matter, as they rush to assess the impact of Commerce Department semiconductor export restrictions.

State-owned Yangtze Memory Technologies Co. is facing a freeze in support from key suppliers including KLA Corp. KLAC -1.80%▼ and Lam Research Corp., LRCX -0.84%▼ the people said. The suspensions follow last week’s sweeping curbs imposed by the U.S. on China’s chip sector, ostensibly to prevent American technology from advancing China’s military power, though the impact might reach further into the industry.

The U.S. suppliers have paused support of already installed equipment at YMTC in recent days and temporarily halted installation of new tools, the people said. The suppliers are also temporarily pulling out their staff based at YMTC, the people said.

U.S. chip equipment manufacturers have dozens of employees stationed at YMTC’s factory. They play a crucial role in operating the factory and developing its manufacturing capabilities, as they bring in expertise on highly technical chip production tools, people familiar with the situation said. If the halt is extended, customers such as YMTC face being cut off from upgrades, maintenance expertise and future technology they need to develop chips.

While the moves might be temporary, they are immediate signs of business disruptions facing Chinese chip makers and U.S. technology suppliers as Washington escalates its efforts to stifle China’s emerging semiconductor industry. The U.S. export control measures, which restrict companies sending chips and chip-making equipment to China, are some of the broadest the U.S. has enacted against China’s semiconductor industry. They veer from previous actions that often targeted individual companies and a narrower subset of technology.

The new rules, announced Friday by the Commerce Department, add new license requirements for advanced semiconductors and chip-making equipment destined to a facility in China. Licenses for facilities owned by U.S. and U.S.-allied firms would be decided on a case-by-case basis, while Chinese-owned facilities would face a presumption of denial.

Some foreign companies in ally countries are expected to get exemptions to keep their China-based facilities running, with South Korea’s SK Hynix the first to reveal such an approval on Wednesday.

U.S. tool makers are assessing what they need to do to comply with the new restrictions in working with Chinese clients, and the longer-term impact is still unclear, people familiar with the matter said.

American companies dominate the global chip-production equipment supply chain, with a combined share of 41%, while China’s is 5% or lower, according to a Boston Consulting Group analysis.

The Commerce Department’s measures are far reaching because they restrict the ability of “U.S. persons” to support the development or production of some of the most cutting-edge chips in China.


“U.S. persons” would include those with American passports and green-card holders as well as U.S. companies, said Kevin Wolf, a former Commerce Department official and a partner at Akin Gump Strauss Hauer & Feld LLP.

KLA is known for its inspection and testing equipment and Lam Research for etching machines. Another major American supplier to China’s chip industry, Applied Materials Inc., produces tools including those that deposit layers of materials on wafer surfaces—all critical steps in producing chips. China, the biggest market for the three U.S. chip equipment suppliers, contributes around 30% of the companies’ revenues.

Share prices of Applied Materials, KLA and Lam Research have all dropped by more than 20% over the past month.

Applied Materials didn’t respond to a request for comment.

Beyond the broad new restrictions targeting China’s chip sector, the U.S. last week placed YMTC on a list of companies the Commerce Department is concerned about, called an unverified list. Companies on the list could be added to a more restrictive export blacklist if its concerns aren’t allayed.

Based in China’s central Hubei province, YMTC is a maker of flash memory chips used for storage, and China’s largest maker of memory chips overall. It is responsible for about 6% of global memory output, according to market tracker TrendForce.

The company last year began shipping a type of advanced memory chip containing 128 layers, putting it within the scope of new U.S. restrictions. More layers allow a chip to store more data.

YMTC is controlled by the Hubei government and China’s national integrated circuit fund. Previously, it was a unit of Chinese chip conglomerate Tsinghua Unigroup Co., which in recent years has been heavily indebted and completed a yearlong asset restructuring in July.

Asa Fitch contributed to this article.

[Crafty_Dog]

China’s Threat to Taiwan Semiconductors
Why aren’t American asset managers paying attention to the risks from an invasion of the island?
By Vivek Ramaswamy and Mike Pompeo
Oct. 10, 2022 1:28 pm ET


Xi Jinping’s all-but-certain installation for a third term as leader of the Chinese Communist Party marks an important milestone in the party’s progress toward annexing Taiwan. That creates significant risks for U.S. investors—many of which have been overlooked.

Mr. Xi has unambiguously stated that reacquiring Taiwan is a pillar of his national rejuvenation platform and a vital national objective. It’s also critical to his personal legacy. Mr. Xi’s ambitions have been checked by his need to secure a third term, as he likely feared international backlash that could threaten his grip on power. After this month, his calculus may change. Taiwan’s annexation could allow him to assert dominance and divert attention away from China’s domestic problems. Mr. Xi may be disinclined to wait, given the risk of a more assertive president in Taipei in May 2024 or Washington in January 2025. Beijing’s recent rhetoric has been consistent with this hypothesis.

Taiwan’s primary defense is its economic influence, not its military. The country’s dominant position in the semiconductor industry—what President Tsai Ing-wen calls Taiwan’s “silicon shield”—serves as a useful protection against Chinese aggression. The Taiwan Semiconductor Manufacturing Co. produces more than half of the world’s advanced semiconductors and 90% of the most advanced chips. TSMC is the exclusive producer of the most advanced semiconductors that power Apple’s iPhones, AMD’s advanced CPUs and Qualcomm’s snapdragon chip used in many Android phones.

If China were to invade Taiwan, TSMC’s lights would likely go out. “If you take a military force or invasion, you will render the TSMC factory inoperable,” TSMC chairman Mark Liu told CNN in July. A material disruption to the industry would send shock waves across global supply chains, rendering manufacturers unable to make everyday products.

Though financial analysts and think-tank experts have suggested this could deter China from invading Taiwan, there are other ways for Beijing to achieve its aims without jeopardizing TSMC’s capabilities. A naval blockade, for example, could bully Taiwan’s leadership into surrendering without Chinese troops setting foot on the island.

No matter how it is achieved, the annexation of Taiwan would spell disaster for U.S. interests. If TSMC can’t produce chips, the global economy will tank. If TSMC is still able to produce chips but China dictates the terms of access, companies that rely on TSMC and other Taiwanese semiconductor companies will be left at the mercy of Beijing’s demands.

The U.S. has already experienced the pain of such scarcity. A chip shortage in 2021 cost the auto industry an estimated $210 billion in revenue. A recent study estimates that a one-year disruption in the production of semiconductors in Taiwan would lead to a $490 billion drop in revenue for electronic-device makers, not counting fallout for sectors that aren’t directly reliant on semiconductors.

U.S. semiconductor stocks may offer a reasonable hedge for investors, but only if the companies are sufficiently prepared. U.S. companies should invest in semiconductor technology now to meet the demand that’s expected to grow 80% by 2030. If China annexes Taiwan, U.S. manufacturers could seize on a market dislocation by increasing domestic production while chip prices soar. Though America’s semiconductor industry isn’t as advanced as Taiwan’s, increased investments could change that. And if China bides its time until the U.S. Navy retires more ships as part of its “divest to invest” strategy in the coming years, that will afford U.S. manufacturers even greater flexibility to prepare.

If such investments aren’t made and China annexes Taiwan, U.S. semiconductor firms will face pain in the market and punishment from plaintiffs’ lawyers for failing to act on a known material risk factor.


The better prepared U.S. semiconductor companies are to fill the supply gap created by Chinese annexation of Taiwan, the more reluctant China may be to follow through on its plans. Mr. Xi’s motivations aren’t principally economic, but a rational leader weighs costs and benefits before taking action.

Yet amid rising tensions, the world’s largest asset managers, many of which regularly warn U.S. portfolio companies about risks relating to climate change and board diversity, are conspicuously silent about Taiwan-related risks. The most notable example is BlackRock, whose website raves about the importance of Chinese investments with little mention of Taiwan. In July the firm told investors that “geopolitical events typically have a modest and short-lived impact on markets and economies” and that “we do not see a military confrontation [between China and Taiwan] as imminent.” This came even as China announced military exercises in response to House Speaker Nancy Pelosi’s trip to Taiwan.

BlackRock’s behavior is unsurprising and may itself be part of China’s long-term strategy of influencing U.S. companies to advance its geopolitical goals. BlackRock has been eyeing the lucrative Chinese asset-management market for years. In 2019 CEO Larry Fink described China as “one of the largest future growth opportunities for BlackRock” and said the firm is “focused on building an onshore presence.”

But access doesn’t come cheap. Following Mr. Fink’s comments, BlackRock lobbied the U.S. government for policies favorable to China, such as lower tariffs. In August 2020, BlackRock became the first foreign company to win preliminary approval to offer mutual funds in China. In summer 2021, at the height of the selloff in Chinese stocks, China’s securities regulator summoned BlackRock executives to a meeting, after which BlackRock urged investors to triple their assets allocated to Chinese companies. Two weeks later, BlackRock launched its Chinese mutual funds. BlackRock would endanger its business if it alienated the Chinese government by openly warning U.S. investors and companies about Taiwan-related risks.

The effect of these admonitions is subtle but real. BlackRock is the second-largest shareholder of Intel, one of America’s largest and most advanced semiconductor companies. BlackRock includes Intel in its “Climate Focus Universe”—a selection of companies that BlackRock has targeted to demand “climate adaptation strategies” and “rigorous GHG [greenhouse-gas] emissions reduction targets.” This campaign has proved fruitful: Intel regularly touts its sustainability efforts, including committing to net-zero emissions by 2040, but it says little about the company-specific risks and opportunities posed by Taiwan’s potential annexation.

BlackRock’s silence demands a market response. While the consequences of China’s annexation of Taiwan would go far beyond stocks or the economy, market actors can make a difference. U.S. semiconductor companies and their investors can protect against Taiwan-related risks now by investing in a silicon shield of their own.

Mr. Ramaswamy is executive chairman of Strive Asset Management, which holds semiconductor companies through its new U.S. Semiconductor ETF, SHOC. Mr. Pompeo served as director of the Central Intelligence Agency (2017-18) and secretary of state (2018-21).

[Crafty_Dog]

China, Philippines: Beijing Looks to Shore Up Ties With Manila
2 MIN READOct 13, 2022 | 15:57 GMT





What Happened: China and the Philippines have agreed to cooperate under the Belt and Road Initiative on semiconductors, electronics and energy, the South China Morning Post reported Oct. 13. To that end, they will build complementary industrial parks that offer tax breaks and other incentives, the first of which will be built in China's Fujian province, from which many ethnically Chinese Filipinos originate, with a corresponding park located in the Philippines.

Why It Matters: As the United States continues to decouple more of its operations from China and limit the export of U.S. semiconductor technology to China, Beijing is looking to establish alternative production bases, integrate existing supply chains and boost innovation. China's efforts to court the Philippines are therefore due to Beijing's desire to use the country's geographic position to maintain supply chains across the Pacific, as it lies between the Americas and continental Southeast Asia. The Philippines is unlikely to side with either China or the United States amid their strategic competition, especially while territorial disputes in the South China Sea persist, but the country will continue to maintain strong economic ties with both world powers.

Background: On Oct. 7, the United States added more restrictions to the export of supercomputing and artificial intelligence chips and components to China, as well as exports of semiconductor equipment that can be used to make advanced logic and memory chips. Washington also made it easier for the U.S. Commerce Department's Bureau of Industry and Security to add companies to its Entity List, which is the bureau's toughest export control blacklist. Philippine President Ferdinand Marcos Jr. reaffirmed the U.S.-Phillippine partnership and alliance when he spoke with U.S. President Joe Biden in September, spooking China.

[Crafty_Dog]

https://www.youtube.com/watch?v=tQ_HeCalYq8

https://www.youtube.com/watch?v=tochLfjWuM4&t=206s

[ccp]

yes this sounds good

as long as we don't lose Taiwan which would negate some of the upside to this.

[Crafty_Dog]

New Chip Ban Accelerates US Decoupling From China: Experts
By Alex Wu October 16, 2022 Updated: October 18, 2022biggersmaller Print


The United States expanded its semiconductor ban on China and issued a China-focused “National Security Strategy” five days before the beginning of the Chinese Communist Party’s (CCP) party congress on Oct. 12.

Experts believe these unprecedented moves will accelerate the United States’ decoupling from China and that the “new Iron Curtain” may have fallen.

Experts believe that the Biden administration is moving to ensure and all-round containment of the CCP. Moreover, the sanctions in the semiconductor field are likely just the beginning. If similar sanctions expand to other fields like finance and biotechnology, the decoupling of the United States and China will truly take effect.

Chip Ban Extended to ‘Talents’

The U.S. Department of Commerce announced (pdf) on Oct. 7 that it imposed new export restrictions on advanced semiconductors and chip-manufacturing equipment to prevent American technology from being used for China’s military development.

The swiping ban also effectively prohibits U.S. persons from supporting the development or production of chips covered by the restrictions. Under this rule, U.S. nationals in Chinese chip-related companies will face a choice between losing U.S. citizenship or quitting jobs in China.

U.S. export controls to China for years have only been on technologies, products, companies, or organizations, and the new ban extends export controls to individual U.S. citizens and green card holders for the first time. It is considered to be the most restrictive ban on China’s semiconductor industry.

According to Radio Free Asia, on the day the ban took effect, hundreds of Chinese-Americans working in semiconductor companies resigned from Yangtze Memory Technologies, Changxin Memory Technologies, Shanghai IC R&D Center Jiading Factory, Hefei Changxin Memory Technologies, and others.

Chiou Jiunn-Rong, an Economics professor at National Central University in Taiwan, told The Epoch Times on Oct. 14: “It’s very likely to form a trend. Previously, capital was leaving China, and the next trend is technology professionals leaving China.”

Chiou said that the indirect effect is that after the chip industry is hobbled, China’s overall economy will be impacted, which will affect other fields, and even people in the field of business and business management will probably also leave China.

The United States also announced the National Security Strategy on Oct. 12, which focuses on the CCP and Russia, calling the latter an “immediate threat” and that the CCP was the only competitor with the intention and ability to reshape the national order.

Doong Sy-Chi, deputy chief executive of a Taiwanese think tank, told The Epoch Times on Oct. 14 that the United States has determined to set the CCP as a strategic competitor in all aspects. The trade competition that used to be focused on enterprises has now become on individuals. The Biden administration has made a larger strategic setting.

Decoupling Accelerated

Tsai Ming-fang, an Economics professor at Tamkang University, told The Epoch Times on Oct. 12 that from the new ban it can be seen that the trend of decoupling between the United States and China is more clear and certain. He predicts that “Taiwan factories will no longer help Chinese manufacturers but will help more brands in democratic countries.”

Shen Rongqin, a professor at York University in Canada, told The Epoch Times that the Biden administration has attached great importance to technological sanctions of China from the very beginning. Republican lawmakers have used the entity list to contain the CCP before. But what Biden has done is more radical and comprehensive than many Republican congressmen have suggested. “Starting from the Trump administration, now Biden has accelerated the trend of decoupling between China and the United States in semiconductor technology,” said Shen.

U.S.-based current affairs commentator Li Linyi told The Epoch Times on Oct. 14 that the Biden administration’s actions this time are much tougher than before.

He said: “These measures are likely to be just the beginning for the U.S. government. If these measures are extended to other fields such as finance, biotechnology, etc., it will really become a headache for the CCP. That is the U.S.-China decoupling is really happening.”

Chiou Jiunn-Rong pointed out that the tension between the United States and China seems to be very high now, but not in the military situation unlike the U.S.-Soviet relationship during the Cold War. The first will be economic wars and technological wars.

Xia Song, Luo Ya, Yi Ru, Li Xinan, and Zhang Yuanzhang contributed to this report.