He who sets the standards can generate more property rent on ideas. Having a western consortium setting the standards means China might need to partial license western IP.
Chinese semiconductor industry
- Thread starter Hendrik_2000
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Liu He is the new "chip boss". According to the article, "The Harvard-educated career bureaucrat is not an engineer, but more of an expert in economics and industrial policy".
Hmmm.
(1) Liu He is not an engineer.
(2) He may have the Harvard MBA virus.
That does not seem good to me. But I am hoping for the best.
The good news in the article is that China produced 139 billion "IC units" in the first five months of 2021. If that rate is sustained for the rest of the year, China will have manufactured 333 billion IC units, which I hope means 333 billion chips.
(which may not be accurate, as this is SCMP after all), China imported 155.6 billion IC units in the first quarter of 2021. Extrapolated to the rest of 2021, that means 622.4 billion chips will be imported this year.
Thus China's total IC consumption will be 622.4 + 333 = 955.4 billion ICs this year. This means 333/955.4 or 38.9% of China's IC market will have been supplied by local manufacturers. That is actually rather good for just this year, and means the 40% target of "Made in China 2025" is almost done.
Of course, mainland China's probably producing only the lower-level chips in volume. The production of 14 nm, 7 nm, 5 nm chips will take some time.
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He brings government agency,project management and most importantly overseeing the allocation of huge government resources. He cannot afford to fail.
In my opinion, China's semiconductor localization movement has too much momentum to fail. However, Liu can do much to slow it down or render it less effective. For example, it seems most Harvard MBAs are focused on reducing R & D costs: this makes their companies more profitable in the short term, but seriously damages it in the long run -- as the US is experiencing now.
Liu He obtained a Harvard MPA. That's a huge difference from an MBA.
I think this will speed up China's semiconductor development.
First and foremost I don't really know much about semiconductors. However I do know a little about the working relations of the Politburo, so here are some of my thoughts:
Liu He was a trusted advisor of Hu Jintao during the 2008 financial crisis, and he has been Xi's right hand man when it comes to finance, economic, and trade policy. If the party's unofficial rules of retirement were waved next year, he'd have a very good shot at gaining promotion from his current position as Vice Premier to Li Keqiang's job of Premier next year. As such the move isn't so much about bureaucracy, but more about Xi putting his top lieutenant from the State Council for the job.
An engineer would know the ins and outs of semiconductor production, but you also need financial as well as policy support to sustain and grow the industry.... and that's something an engineer might not necessarily know how to do. Liu He has an abundance of experience leading reforms (transforming the country's economy from debt-fulled investment and exports to sustainable consumption based growth to open up the market), investment, and more importantly a proven track record of working with technology firms (he played a crucial part in Ant Group "crackdown"). His skill set as a technocrat mixes and weaves between policy making, finance and economics, as well as insights into the technology industry.
China has dumped years of money into the industry, assigning Liu He to the job might just signify that the country is taking a different approach.
I hope you're right. However, Liu was China's chief negotiator against Trump's trade war team consisting of Robert Lighthizer et al. What I remember is that the final deal was basically a sellout of some crucial Chinese interests. Fortunately, Beijing rejected the deal, so no damage was done. But that episode has formed my negative view of Liu's true loyalties: a Harvard brainwash goes deep.
One does not become an engineer without being able to learn quickly. I submit that an engineer can become financially astute much sooner than financial fakers can learn engineering.
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While Liu He was nodding his head “conceding ground” and “selling out”to the US during trade negotiations, it was ultimately a plot to stall for time (negotiations practically spanned Trump’s tenure in office) - back home he was busy transforming China’s economy to one that grows through its own consumption base. As you said so yourself China rejected the deal, but by which time its economy was restructured to become self reliant whilst also providing healthy growth. Trump and Lighthizer might’ve won the verbal battle, but China with Liu He as it’s economic architect has been winning the trade war…. To rub salt into the wound China continues to enjoy a growing trade surplus with the US too. While all this is off topic thread, what I’m trying to say is that you need to look past words and evaluate actions behind the scene and the final outcomes they’ve led to.
Based on Liu He’s track record, I believe a systematic approach will be taken where he works with troops on the ground (executives and engineers in this case) to identify key areas of the industry that require investment (rather than cutting corners on r&d as you suggest) that will lead to progress and breakthrough. More importantly I imagine he’d continue to lead reform policies in order to create an environment that will organically grow and sustain the country’s semiconductor industry… all this as compared to past practices of almost blindly throwing money and acquiring foreign external components. You need a technocrat with experience that sees the bigger picture amidst a volatile geopolitical environment that won’t exactly give time or grace for an engineer to find his or her footing in the bureaucracy. Not when the country wants to be a global leader in the industry in short order anyway.
@crash8pilot bro precisely on this technical field you need a good manager to coordinate myriads of proposal especially on new materials and at the same working on a EUVL solution. And comparing his past working experience in reorienting China economic development, this task seems easy for him to do and should had been done previously.
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