Is the US shooting itself in the foot by banning Huawei?

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Faithlock

New Member
Registered Member
Here is another interview of Richard Chang,

it talked about why China can't grow a true semiconductor fab.

Richard said China already grow a lot already. Just not enough. Biggest problem is not enough talent. Even foreign companies (from Singapore, Korea, and US)
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In the interview, he only mentioned companies from Singapore, Korea, and USA as the source of talent recruitment. But in actuality, in other Taiwanese interviews, it is Taiwan and China are the main culprit. Taiwan's TSMC had a personal feud with him. But the main culprit is actually from other Chinese companies.

Chinese companies wanted a fab industry so much that they do the only thing they know how, they throw money at the problem. Once Grace semi and SMIC started the fab in 2000, and trained Chinese engineers. It didn't take long before many of them start to open their own companies due to generous government policy encouragement. Since money is virtually free from the government, they can keeps on sucking engineering talent from SMIC and Grace semi. This make SMIC very difficult to go to the next node.

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I felt like China is at a tipping point. China has so many fabs in construction. She also have so many startups that build different aspects of semiconductor equipment. A intelligent government policy that requires all fabs in China (including foreign owned) to use different percentages for their equipment. You can't have a blunt force approach. Each difference piece of equipment need different percentage.

I truly hope Xi understand that all the conditions are there now. Moore's law had completely broken down, you are not chasing someone faster than you anymore. A strong industrial policy that requires Chinese content in EVERY part of the supply chain and discriminatory toward US companies will create truly independent industries in both Semiconductor fab industry and Semiconductor Equipment industry for China. While it is against the WTO policy, China can certainly do it now given what happens with Trump. It might also force China to forget about the 7nm or even decrease the expansion of 14 nm. But in return, China can truly create national champions in Semiconductor fab companies and Semiconductor equipment companies.

The ball is in Xi's court.

Wow, sorry. I was talking to somebody else at the same time. There are lots of grammar and spelling errors.
 

solarz

Brigadier
I'm reminded of a quote from one of my favorite books, 《倚天屠龙记》:

他强由他强,清风抚山冈。
他横由他横,明月照大江。
他自狠来他自恶,我自一口真气足。
-- 九阳神功口诀

Trump is sacrificing long term benefits for short term gain.

Some posters are panicking at the prospect of Huawei not having access to some key components. My response is: so what?

So what if Huawei has to slow down production and devote more resource into R&D? So what if Huawei is forced out of the American market completely?

What American company is ready to take over the vacuum left by Huawei? Even if Huawei cannot continue its 5G development on schedule, what American or Western company is poised to take the lead?

Sure the US currently has a few strategic grips on key technological components. As long as they kept those in hand, they stood to make a ton of money from a global economy. However, they have now played those cards, and China will respond by devoting more R&D into those areas. Maybe Huawei will lose some market share, maybe they will lay off some employees, maybe even close some production facilities, but 2-3 years down the road, they will be in control of every component of their business, and they'll be back at the forefront of the industry. Need I remind everyone that only a short 5 years ago, Apple was dominating the smartphone market in China?

Now let's say Trump was successful beyond his wildest dreams. Huawei, for some reason or other, declares bankruptcy. Again, so what? Other firms will rise to take its place. The Chinese economy will chug along, and again, 2-3 years from now, the US will have lost its technological choke points. Some other version of Huawei will be up and running, and maybe taking the lead in 6G or whatever.

China doesn't need to play Trump's game, nor should it. It just needs to continue doing its own thing. The storm may rage, but the mountain just stands there, neither pushing back nor giving way. Sooner or later, the storm will be spent, while the mountain will still be there.
 

Faithlock

New Member
Registered Member
By the way, for those who think China didn't try to create electronic industry supply chain before are mistaken.

I don't blame them. They might get that impression from the current Chinese administration.

But before the current Xi administration, previous administrations had being putting significant resources in building a semiconductor fab industry. Sometimes, even to the point of having negative returns.

Can you get more significance when the son of China's president (and Party chairman) try to start up a semiconductor fab?

That is right. The son of President Jiang Zemin, Jiang Mianheng started the Grace Semiconductor in 2000. He started the fab with Winston Wang of Taiwan. Winston Wang is the son of Taiwan's Formosa plastic king. Winston Wang is also politically closer to DPP (the pro- Taiwan independence party).

Also in 2000, SMIC was started by another Taiwanese, Richard Chang. Richard Chang is regarded as the father of China's semiconductor industry. Richard is a devout Christian. Part of the reason of him wanting to go to China is to spread the word of gospel.

He brought hundreds of Taiwanese engineers to start the SMIC. He built special school where the curriculum is based on Taiwan school system. His company has school that uses textbooks that says communists steal China from the Nationalist. Japanese had made significant contribution to the economy of Taiwan, how Taiwan is being bullied by China, etc...

All of these are approved by the Chinese government.

You think Jiang Zemin's administration will take all those crap if he is not eager to create a semiconductor industry.

By the way, a little more color on this Winston Wang. Because it will show how much Jiang's administration is willing to go to build a Semiconductor fab industry for China.

Winston Wang is the eldest son of Taiwan's Plastic King. He is very friendly toward DPP and Chen Shui-bian. DPP believes in the Taiwan independence. Many of its followers believe in the genetic superiority of Japanese and the genetic inferiority of Chinese. Many DPP followers believe Taiwanese as being distinct from the inferior Chinese.

Winston Wang won't touch China with a 10 foot pole.

But he felt in love with a young woman and he seeks divorce from the current wife. His father is very morally rigid and forbid the affair. His father kicked him out of the family. His father was the riches man in Taiwan and no company will dare to hire Winston Wang.

Winston was out of job and without any future. But he did have connection and he can get hundreds of Taiwanese semiconductor engineers to go with him. Thus President Jiang had his son to recruit Winston to start a fab company.

President Jiang knew of Winston's political leaning and his distaste of Chinese. But Jiang is willing to do anything to get a Semi industry in China.
 

taxiya

Brigadier
Registered Member
Guys, all these back and forth, whether China is tough or not, etc. is not helping the debate.

Before Trump use this trump card (no pun intended). I was optimistic regarding the trade war, I was confidence that Trump was desperate by the way he acted, like requesting China to move tariffs to Democrat areas, and requesting China to purchase soya beans immediately. I know from that he was loosing it.

And because he is loosing it, he has now step over the line with this national security thing which prohibit US companies from trading with Huawai.

Furthermore, he's technically stop non-US companies trading with Huawai by ways of threats "sanctions" to those companies livelihood in the US.

This, I think has crossed the line!

There are two points to this,

1, Can Huawai survive this, and what can Huawai do? Although it does look like Huawai has taken actions to mitigate this in the short term, it'll need to come up with a strategy to solve this problem in the long term.

2, What can/should China do about this trump card Trump has just played?

Myself, I don't know, but I do know China should respond even just to send a message that this action is below the belt.

Maybe China should move from trade to services industries?

Whatever it is, we can't stand by and let this bully continue, because a bully will continues until it get hit back!
The escalation has gone far beyond simple trade issues by now. BTW, it was never believed to be a simple trade issue by thinktanks. So Trump's "crossing the line" was no surprise in the mind of leaderships in both Beijing and Washington.

As it is not about trade in essence, the answer to your two questions would have to be broader than trade or Huawei itself. Here are my trying.
  1. Huawei certainly will survive. The bottom line is domestic market, plus whichever country not in the league of US, there are many. Huawei may not be able to source some top-of-the-line components from US, but China has good-enough replacements. And Huawei has the price and size advantage, that is a more concern of developing countries than "top speed".
  2. China doesn't have to beat a non-existent US telecom vendor in the tit-for-tat fashion just like China can not put the same amount tariff on US goods. But China should and is responding in other places, "Marshal Z unloading Iranian oil in China on May 12th" is the kind of retaliation that China has been saying for months.
Service is important, BUT it is just grease in the machine, something one must have but nothing of purpose by itself. The falling of US power was exactly because the country shifted to all sorts of service "industry" like banking, retailing, entertaining etc while outsourcing all real (physical) industry.

What China need to do and is doing is to build its own "world" after (being forced) decoupling US "world", it is BRI, it is Asia, Africa and most of Latin America and part of Europe. Just continue doing it and let Trump to play whatever card he think he has. Don't focus on Trump, focus on elsewhere, it is a much bigger world outside North America.
 

taxiya

Brigadier
Registered Member
I'm reminded of a quote from one of my favorite books, 《倚天屠龙记》:

他强由他强,清风抚山冈。
他横由他横,明月照大江。
他自狠来他自恶,我自一口真气足。
-- 九阳神功口诀

Trump is sacrificing long term benefits for short term gain.

Some posters are panicking at the prospect of Huawei not having access to some key components. My response is: so what?

So what if Huawei has to slow down production and devote more resource into R&D? So what if Huawei is forced out of the American market completely?

What American company is ready to take over the vacuum left by Huawei? Even if Huawei cannot continue its 5G development on schedule, what American or Western company is poised to take the lead?

Sure the US currently has a few strategic grips on key technological components. As long as they kept those in hand, they stood to make a ton of money from a global economy. However, they have now played those cards, and China will respond by devoting more R&D into those areas. Maybe Huawei will lose some market share, maybe they will lay off some employees, maybe even close some production facilities, but 2-3 years down the road, they will be in control of every component of their business, and they'll be back at the forefront of the industry. Need I remind everyone that only a short 5 years ago, Apple was dominating the smartphone market in China?

Now let's say Trump was successful beyond his wildest dreams. Huawei, for some reason or other, declares bankruptcy. Again, so what? Other firms will rise to take its place. The Chinese economy will chug along, and again, 2-3 years from now, the US will have lost its technological choke points. Some other version of Huawei will be up and running, and maybe taking the lead in 6G or whatever.

China doesn't need to play Trump's game, nor should it. It just needs to continue doing its own thing. The storm may rage, but the mountain just stands there, neither pushing back nor giving way. Sooner or later, the storm will be spent, while the mountain will still be there.
The quote is so perfect reflection of what China is doing.
 

SpicySichuan

Senior Member
Registered Member
Huawei's $105 billion business at stake after U.S. broadside

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HONG KONG/BEIJING (Reuters) - The latest U.S. broadside against Huawei that puts the Chinese firm on an exports blacklist threatens to rattle the global tech supply chain, linked closely to the $105 billion business of the world’s top supplier of telecoms network equipment.






The Trump administration has said it would add Huawei Technologies and 70 affiliates to its “Entity List” - a move that will likely ban the firm from acquiring U.S. components and technology without government approval, adding another incendiary element to the U.S.-China trade war.

The ban is not yet effective.

A similar U.S. ban on China’s ZTE Corp had almost crippled business for the smaller Huawei rival early last year before the curb was lifted.

RELATED COVERAGE
Such sanctions on Huawei are, however, likely to have ramifications beyond the company itself, analysts said.

It would disrupt Huawei’s business at a minimum and all but put it out of business in an extreme, while its U.S. suppliers would also be hit, they said.

Out of $70 billion Huawei spent for component procurement in 2018, some $11 billion went to U.S. firms including Qualcomm, Intel Corp and Micron Technology Inc, and they could see that revenue disappear.

On the other hand, U.S. companies like Apple face the risk of severe retaliation from China, a key market.


“This is going to be very messy,” a China-based source at a U.S. tech company said.

It will be tough for Huawei too, the person said, noting none of its U.S. suppliers “can be replaced by Chinese ones, not within a few years, at least. By then, they are already dead”.

Revenue for the company, also the world’s second-biggest maker of smartphones, touched 721 billion yuan ($105 billion) last year, eight times ZTE’s and half the annual sales of South Korea’s Samsung Electronics Co.

But its business has come under pressure over the past year given mounting international scrutiny, led by U.S. allegations that its equipment could be used by Beijing for spying, a concern the company has said is unfounded.



FILE PHOTO: Visitors walk past Huawei's booth during Mobile World Congress in Barcelona, Spain, February 27, 2017. REUTERS/Eric Gaillard/File Photo
STOCKPILING
A range of Asian and European suppliers would also be hurt if Huawei was forced to curb production, while telecom carriers that rely on Huawei, and have largely resisted U.S. calls to bar the company, would be left scrambling just as countries race to roll out next-generation 5G mobile networks.

“Huawei being unable to manufacture network servers, for example, because they can’t get key U.S. components would mean they also stop buying parts from other countries altogether,” said an executive at a Huawei chip supplier.

“They can relatively better manage component sourcing for mobile phones because they have their own component businesses for smartphones. But server and network, it’s a different story,” the executive said.

According to brokerage Jefferies, the sanctions would mean a “nightmare for China’s 5G” too. The country, which is targeting a nationwide rollout next year, will very likely slow down its 5G push as a result, it added.


However, industry participants pointed out that Huawei had been stockpiling components such as chips to ease disruptions.

Its initial target was to build inventories of six to nine months, and it has recently been raised to 12 and, in some cases, 24 months, Jefferies said.

Shares in Huawei suppliers fell across in Asia on the news of the U.S. blacklist.

South Korea’s Samsung dropped 2.4%, SK Hynix fell 3.5%, while China’s Luxshare Precision Industry fell as much as 6.1%. Shares in ZTE also tumbled.

Huawei has said it is “ready and willing to engage with the U.S. government and come up with effective measures to ensure product security”.


Slideshow (4 Images)
Its rotating Chairman Eric Xu also told Reuters in a recent interview that “in case of unforeseen events ... we definitely have our contingency plan. What we have prepared has already been used in some of our products in the Chinese market”.

Huawei has spearheaded China’s campaign to develop its own high-end technologies to reduce reliance on imports and such efforts have taken on urgency after U.S. sanctions on ZTE.

The ZTE case led to some “benefits” and “external pressures have developed into internal drivers” in China, said Wan Gang, vice chairman of China’s parliamentary advisory body.

TRADE TALKS
The pain for Huawei’s supply chain would be redoubled if the trade war put a damper on the Chinese technology industry.


“The bigger concern would be U.S. allies that used to buy Huawei’s components may not continue businesses with Huawei, because of fear of possibly upsetting the United States,” said Doh Hyun-woo, an analyst at NH Investment & Securities in Seoul.

The Trump administration’s rhetoric toward China had cooled in recent days after another round of tariffs between the world’s top two economies and a selloff on global stock markets.

Tensions escalated on Wednesday after U.S. President Donald Trump signed an executive order barring American companies from using telecommunications equipment made by firms deemed to pose a national security risk.

While the president’s order did not specifically name any country or company, U.S. officials have previously labeled Huawei a “threat”.

“The U.S. seems to have already decided to nail Huawei down,” said the China-based U.S. tech company source.

“The problem is that because there doesn’t seem to be a prospect for a trade deal in the near future, the U.S. has expedited the process of killing Huawei.”

(Story refiled to amend headline)

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Gatekeeper

Brigadier
Registered Member
I'm reminded of a quote from one of my favorite books, 《倚天屠龙记》:

他强由他强,清风抚山冈。
他横由他横,明月照大江。
他自狠来他自恶,我自一口真气足。
-- 九阳神功口诀

Trump is sacrificing long term benefits for short term gain.

Some posters are panicking at the prospect of Huawei not having access to some key components. My response is: so what?

So what if Huawei has to slow down production and devote more resource into R&D? So what if Huawei is forced out of the American market completely?

What American company is ready to take over the vacuum left by Huawei? Even if Huawei cannot continue its 5G development on schedule, what American or Western company is poised to take the lead?

Sure the US currently has a few strategic grips on key technological components. As long as they kept those in hand, they stood to make a ton of money from a global economy. However, they have now played those cards, and China will respond by devoting more R&D into those areas. Maybe Huawei will lose some market share, maybe they will lay off some employees, maybe even close some production facilities, but 2-3 years down the road, they will be in control of every component of their business, and they'll be back at the forefront of the industry. Need I remind everyone that only a short 5 years ago, Apple was dominating the smartphone market in China?

Now let's say Trump was successful beyond his wildest dreams. Huawei, for some reason or other, declares bankruptcy. Again, so what? Other firms will rise to take its place. The Chinese economy will chug along, and again, 2-3 years from now, the US will have lost its technological choke points. Some other version of Huawei will be up and running, and maybe taking the lead in 6G or whatever.

China doesn't need to play Trump's game, nor should it. It just needs to continue doing its own thing. The storm may rage, but the mountain just stands there, neither pushing back nor giving way. Sooner or later, the storm will be spent, while the mountain will still be there.

Hope you're right.

But isn't it typical of Trump to play "dirty", when after months of trying to pressure his "allies", the west to boycott Huawai 5G roll out by claiming "security risk". It even go as far as threatening allies of witholding security information sharing.

When all these dirty tricks failed, it now revert to old fashion sactioning and bullying. This is a message not only for China, but for US "allies" as well, it basically says that I, the US can veto whatever decisions you, (the allied nations) make that I, the US are not happy with!
 

s002wjh

Junior Member
I wonder if Huawei's own chips would be enough in carrying through a U.S. ban.
probably not, its not just chip but other stuff as well, either have to find another source or bite the bullets. but if they have clear planning R&D etc, eventually they can be self sufficient, but that depend how many talents they can acquire.
 

Biscuits

Major
Registered Member
I wonder if Huawei's own chips would be enough in carrying through a U.S. ban.

For the higher end Huawei stuff yes. Lower ends version maybe not. Perhaps they can be modified, or the manufacturing lines can be extended for low end as well.
 
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