A reappraisal of China's semiconductor strategy

Discussion in 'Strategic Defense' started by ZeEa5KPul, May 17, 2019.

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  1. ZeEa5KPul
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    ZeEa5KPul Junior Member
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    Reading about US attempts to hamstring Chinese semiconductor advancement, especially the well-known cases of ZTE, FJIC, and now Huawei, has caused me to think that it's time for China to significantly readjust its development strategy. I believe that the old strategy - import as much foreign technology as possible and use it to manufacture chips, then swap them out for domestic technology later - is simply doomed to failure. If a fab manager ever has to pick up the phone and dial ASML, he might as well just put the phone down and quit because America can put a proverbial bullet in his business's skull whenever the whim strikes it.

    This is especially true now that the US has finally figured out that the commie yellows can actually master technology and pose a competitive threat. I think that the present circumstances has shown everyone that the US president has enormous latitude for unilateral action, especially when "fuck China" is how Congressmen greet each other in the hallway now. Does any of this call for capitulation? Far from it. Even if you are a coward, capitulating is useless when the only thing your enemy wants is your blood. Fighting is the only chance you have.

    What is needed to win this war is a rethinking of industrial policy. The old strategy I outlined above depends crucially on a friendly enough business environment to acquire the foreign components, and then a lengthy period of waiting while domestic input producers catch up. You can master certain parts of the process that way but never all of them. Worse, by buying foreign inputs you finance technological development in the foreign country and disadvantage your own.

    China needs to turn this on its head: put the subsidized roll-out of chips on ice for now. Instead use the money to fund development of the components (photolithography machines, fibre-optic switches, etc.) that foreign firms have a stranglehold on. Crucially, this strategy calls for total invalidation of all patents held by foreigners in these crucial technologies. The primary reason China doesn't compete with ASML isn't because they have some sorcery that China doesn't, it's that they hold patents that block China's development down that path. Well, those patents should now become recipe books.

    China can even make a preemptive case to the WTO that since the US is imposing arbitrary technological blockades and press-ganging its allies into its cause, China is justified in taking these measures. China can argue that it will return to full compliance when the US lifts its siege and respects WTO rulings - but for as long as the US remains a renegade, China will take what measures it must to defend itself, its industry, and its right to development.

    This will not be an easy path, legalistically or practically. Reverse-engineering a complicated piece of technology - even with full access to its patents and whatever your spies can obtain - is never going to be as easy as paying its designer to show you how it works and how to build it. It's not going to be steak dinners every night for Huawei; some nights it will have to make do with lentil soup. But the rewards are well worth the struggle and hardship, for at the end of this path lies total self-reliance and technological mastery.

    It's also not without relevant precedent. It was precisely how the Chinese military modernized after the technological embargo imposed on it by all advanced countries after the fall of the Soviet Union, when China's strategic utility was spent. Although this modernization is still incomplete, it has already yielded a bountiful harvest. As an example, witness the Type 055 destroyer - the most fearsome warship to ever sail the seas. It stands head and shoulders above any foreign rival, and every nut and bolt on it, every transmit/receive element in its radars is Chinese. The PLA has much to teach civilian SOEs and private industry about how to thrive in the face of a technological blockade.
     
  2. Yodello
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    Yodello Junior Member
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    Couldn't agree more....!
    If I may add, China should be a bit more outspoken and bolder in their Public Relations. Also, China should be more stringent and tougher in their dealings with their Western counterparts, especially in terms of Military.
     
  3. solarz
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    solarz Brigadier

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    Definitely China should launch a WTO suit against the US for its actions, although realistically I don't think it will do much. It might generate some publicity though.

    As for China's policies, Huawei recently released a letter saying they've been preparing for this eventuality for years and they're now being used. This means that Huawei has devoted R&D resources into developing its own technology. It might still lag behind the main American suppliers, but they're not caught with their pants down. Give them a few more years and they will be able to catch up, especially with an infusion of cash from the government.
     
  4. ZeEa5KPul
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    ZeEa5KPul Junior Member
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    The point of a suit isn't to compel the US, it's to provide legal and PR cover for the actions (primarily the patent invalidation) that I advocate.

    Well, that's very nice, but Huawei is just one company and HiSilicon doesn't fabricate any chips (it uses TSMC). Even if SMIC could produce at 7nm, current plans call for it doing so using ASML's etchers. This is simply unacceptable.
    What I believe China must do is identify a complete set of strategically critical technologies, where by "complete" I mean the technologies themselves, the inputs used to produce them, the inputs used to produce the inputs, ad infinitum. For those technologies, China should do absolutely everything in its means to obtain them - both short-term, emergency measures like espionage, using foreign patents as recipe books (the main thrust of my strategy), offering foreign experts outrageous sums, etc. and long-term measures like research grants for developing these technologies and scholarships for students entering critical fields, etc.
    This war (I refuse to call it just a "trade war") with the US provides excellent justification for this very vigorous push to indigenize critical foreign technologies like extreme ultraviolet photolithography, which would be untenable in ordinary circumstances.
     
  5. solarz
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    solarz Brigadier

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    There are a lot of technological gaps that China need to bridge. Limitation of time and resources means priorities need to be set and some things just have to wait.

    We can speculate about what China should or should not do, but they are just empty speculations. From their track record, I have confidence that China's decision makers have things planned out.
     
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  6. zealotaiur485
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    zealotaiur485 New Member
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    China is going all in now:

    http://www.globaltimes.cn/content/1150269.shtml
     
  7. tidalwave
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    tidalwave Senior Member
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    Want to provide lithograph equipment read up on my thread on Carl Zeiss.

    First step is to go into optic field to produce those giant lens and mirror.

    Need to up to part with Carl Zeiss, and Nikon.

    By the way, Huawei camera lens use SONY.
     
  8. Josh Luo
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    Josh Luo Junior Member
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    It will take several years for achieving limited self-sufficiency. Without targeted state subsidies (import substitution industrialization head-on) directed toward R&D and manufacturing, many high-tech industries in Shenzhen could die without American chips.
     
  9. gelgoog
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    gelgoog Senior Member
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    I expected this sort of thing to happen eventually. Like I said here a long time ago it was rather obvious that the lack of a leading machine tools industry in general was always a weakness in China's industrial policy. Germany and Japan have had at least since the XIXth century state policies with regards to the development of industrial machine tools. China has improved somewhat in that area with either purchases of companies like Kuka from Germany or having their own heavy duty construction equipment manufacturers, but it is still a long way from what a country of their scale should be. The photolitography tools being just one example.

    This is also an area where the Russians have always had a severe weakness. They typically imported leading edge machine tools and processes.
     
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  10. phynex92
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    phynex92 New Member
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    Time is on China's side for this matter as the West's tech advantage is eroding away. With Moore's Law slowing down, I expect China to reach parity with the West within 5-10 years. If China can weather out the current storm, the future is still brighter than most people think.
     
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