A reappraisal of China's semiconductor strategy

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gelgoog

Brigadier
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China should just scrap its policy of information act , where government can access any company’s data. These kinds of rules kills off any chance of chinese technology to be adopted worldwide. Government should only intervene during the case of corruption , monopoly, fraud etc . China government wants full control over technology but no people in westernworld would like that. Government should reduce its influence on technology that have global economic significance.

The US has similar policies with the PATRIOT Act. The Snowden revelations clearly showed the spying the US security apparatus makes even on US citizens. Worse, the US is de facto known to spy on foreign communications, including those of their allies, with ECHELON. The US is being clearly hypocritical with this accusation.

China does have more censorship than the US, although this is also increasing in the US namely on Twitter, Facebook, and YouTube. Videos get demonetized or even banned. China does have the firewall, and a lot of people complain about the social credit system. In the US, something like the social credit system also exists, but it is corporate driven, distributed, and hidden from view. Different people might see different airline ticket prices online, banks keep your credit score, even Amazon can do price differentiation depending on your purchase history and personal data. Companies actively drug test their employees and people with a criminal record have a hard time finding employment.

Huawei is an equipment provider. They have to follow the laws of the country they operate in just like any other company. As with any electronic equipment, it can be configured according to the telecom user's needs and national law requirements of the client. Do you think Ericsson or Nokia telecoms equipment in China do not follow Chinese laws and are not configured to "spy" on Chinese citizens just the same? It is bunk.

The instant Huawei complied with a Chinese government order to spy on another country they would lose their customer's good will and sales.
 
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styx

Junior Member
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SAN FRANCISCO — Alex Lidow has sold semiconductors in China for decades, starting at a company, called International Rectifier, that his father and grandfather founded in the Los Angeles area in 1947.

Now Mr. Lidow runs Efficient Power Conversion, which makes chips that manage electrical power in cars and other products. Efficient Power has a strong foothold in China, but has lately run into resistance from customers there that he traces to moves in Washington.

Mr. Lidow is among the semiconductor executives in the United States who have become concerned that the trade war with China — particularly the Trump administration’s ban on selling chips to some prominent Chinese customers — won’t just squeeze current revenue. He fears that recent events have convinced Chinese companies that American component makers can no longer be seen as dependable partners and are permanently shifting away from them.

“In my 40 years in this business, I’ve had friends in China that viewed me as a trusted supplier,” Mr. Lidow said. “They can’t now.”

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, China’s big maker of mobile phones and networking equipment. And the administration
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on the same blacklist this month, including the computer maker Sugon and three subsidiaries. China has responded by saying it would
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including many American tech companies.

Even if a new trade deal eases tensions — Mr. Trump is set to meet with President Xi Jinping of China in Osaka, Japan, on Saturday — American chip executives and others said lasting damage had already been done. They said Chinese officials and companies would step up efforts to design and make more chips domestically. And Chinese customers seem likely to turn to vendors from countries like Japan, South Korea and Taiwan if no homegrown chips are available.

“The U.S. is in danger of becoming the vendor of last resort for China,” said Walden Rhines, chief executive emeritus of Mentor, a unit of Siemens that sells software for designing chips

Already, big American chip makers have taken a financial hit from the China bans. Micron Technology, which sells two of the most widely used varieties of memory chips, disclosed Tuesday that the Huawei ban had lowered sales in its most recent quarter by nearly $200 million. Huawei is Micron’s largest customer, accounting for around 13 percent of its revenue.

To ease the blow, Micron appears to have found a workaround. It said it had recently
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based on its interpretation of the Trump administration’s restrictions, noting that some goods produced by American companies overseas are not always considered American-made.

Broadcom, which makes chips for smartphones and networking equipment, also recently pointed to the Huawei sales ban as the biggest factor in a reduction of about $2 billion in its annual sales forecast. Broadcom had been on track to sell more than $1 billion of components to Huawei in its current fiscal year, analysts said.

Yet even beyond Huawei, customers have begun cutting their chip inventories and are putting off new orders because of general uncertainty over the ban, Hock Tan, Broadcom’s chief executive, said in a conference call with analysts on June 13.

“We’ll see a very sharp impact,” he said, calling the situation a compression of the electronics supply chain. “And it’s broad based.”

The disruption has been even more dramatic at smaller companies. One is NeoPhotonics, a maker of optical components for communications, which cut its financial guidance last month after the Huawei ban.

The Silicon Valley company drew nearly 46 percent of its revenue in 2018 from Huawei, said Alex Henderson, a senior analyst at Needham & Company. Though NeoPhotonics has a factory in Japan that may allow it to do some business with Huawei, Mr. Henderson estimated that its third-quarter revenue would drop 40 percent.


NeoPhotonics, which has presented a plan to analysts for cutting costs and is evaluating its options, declined to comment.

Another example is Semtech, which makes communications chips for smartphones and optical components used in networking. The company, based in Camarillo, Calif., revealed last month that business with Huawei in its latest quarter was 16 percent of its total revenue. But with the restrictions now in place, Mohan Maheswaran, Semtech’s chief executive, predicted that sales would be roughly $7 million lower in the current quarter.

Semtech declined to provide additional comment. Few executives were willing to discuss how they are coping with the restrictions, fearing retribution or criticism from American or Chinese officials.

“Everybody is laying low. No one wants to be on the radar,” said Jodi Shelton, a co-founder and the president of the Global Semiconductor Alliance, which represents American and foreign chip companies.

Besides cutting into sales, the recent tensions have interrupted routine patterns of doing business at some chip companies. Some have limited travel to China, halted some software updates and even reconsidered international conference calls.

“I think what has shocked a lot of players is that normal supply-chain communication has now been politicized,” said Christian Lanng, chief executive of Tradeshift, a San Francisco company that manages an electronic trading network for global customers.


Not all the news is dire. Many American chip makers are experiencing strong sales to customers other than Huawei. Over time, they also expect to pick up more sales from Huawei’s rivals as those companies increase market share. And some analysts predict a new trade pact with Beijing in coming months.

“I really think it’s an 85 percent probability,” said Pierre Ferragu, an analyst with New Street Research.

Nor do all semiconductor veterans see lasting harm from the China sanctions. T. J. Rodgers, who led Cypress Semiconductor for 34 years before leaving the company in 2016, said the impact would be temporary and was a reasonable price to pay if China could be compelled to trade more fairly.

“I don’t think it’s a big deal,” Mr. Rodgers said. “There is always somebody to whine.”

Mr. Lidow built Efficient Power, starting in 2007, around the idea of making chips with gallium nitride, a semiconductor widely used in LED lights, on silicon wafers to handle jobs like converting voltage in automotive radar, wireless battery charging and infotainment systems. The company, which uses factories in Taiwan, originally projected it would get 70 percent to 80 percent of its revenue from China, he said.

Mr. Lidow said it still might reach that goal eventually, but he expects revenue from China to decline about 20 percent this year because of the trade tensions.

One major sign of trouble, he said, is that some customers in China have backed away from plans to ask Efficient Power to customize its chips to meet their specifications. They are still buying some standard products, he said, but have decided to avoid technical relationships that would cause a longer-term dependence on his company.

Customers in China believed “up to now that the U.S. democratic process was a force that couldn’t be compromised by an individual,” Mr. Lidow said. But not now, he said.

“You can never regain that confidence,” he added.

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Tyler

Captain
Registered Member
This this probably just a trick or a trap for signing the agreement, then he will just pull out of it a couple of years later.
The efforts to localize technology should continue.
 

Tam

Brigadier
Registered Member
The US has similar policies with the PATRIOT Act. The Snowden revelations clearly showed the spying the US security apparatus makes even on US citizens. Worse, the US is de facto known to spy on foreign communications, including those of their allies, with ECHELON. The US is being clearly hypocritical with this accusation.

China does have more censorship than the US, although this is also increasing in the US namely on Twitter, Facebook, and YouTube. Videos get demonetized or even banned. China does have the firewall, and a lot of people complain about the social credit system. In the US, something like the social credit system also exists, but it is corporate driven, distributed, and hidden from view. Different people might see different airline ticket prices online, banks keep your credit score, even Amazon can do price differentiation depending on your purchase history and personal data. Companies actively drug test their employees and people with a criminal record have a hard time finding employment.

Huawei is an equipment provider. They have to follow the laws of the country they operate in just like any other company. As with any electronic equipment, it can be configured according to the telecom user's needs and national law requirements of the client. Do you think Ericsson or Nokia telecoms equipment in China do not follow Chinese laws and are not configured to "spy" on Chinese citizens just the same? It is bunk.

The instant Huawei complied with a Chinese government order to spy on another country they would lose their customer's good will and sales.


Huawei can legitimately refuse a Chinese government order based on Article 8 of the National Intelligence Act, which states the following.

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Screenshot 2019-07-02 at 1.12.04 PM - Edited.png
 
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