Miscellaneous News

plawolf

Lieutenant General
Cont due to character limit

Biden bets $52 billion on semiconductors​

Supposedly, Biden will throw $52 billion at the American semiconductor industry to build new manufacturing facilities in the US, known as fabs. I am doubtful that this will work.

The US used to be the world’s leading maker of semiconductor chips. But as the design of the chips became more complex, the cost of the fabs increased geometrically, and soon Silicon Valley companies gave up manufacturing and just concentrated on designing proprietary chips, relying largely on Taiwan Semiconductor Manufacturing Corporation to make them.

Today, Intel is the only US company that still owns fabs, and it has publicly admitted that they are two to three generations behind TSMC’s. Morris Chang, founding chairman of TSMC, has openly questioned whether US companies would still have engineers with the experience and skills needed to run a state-of-the-art fab.

China also does not own state-of-the-art fabs because the US will not allow the sale of advanced manufacturing equipment to China. Therefore, regardless of whether the $52 billion will be well spent, China will not catch up for some time.

But if Beijing needs skilled engineers to run an advanced fab, it can always recruit from Taiwan to supplement its own staff. Many are already working in China.

To attain the most advanced fab, China will need to buy lithographic machines from ASML, based in Netherlands. Already, Peter Wennink, chief executive of ASML, is
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that the US export control measures will prevent his company from selling the most advanced machines to China, each with a $1 billion+ price tag.

The loss of the China market would mean the loss of more than one-third of ASML’s revenue, and therefore funds for further research and development, necessary in order to maintain the company’s technological lead. Wennink is worried that the export restriction will force China to develop its own technology and soon not only ASML will lose a major customer but will face a new competitor.

You’d have to wonder how long the European company will go along with the Washington ban on exports to China.

Another aspect of disengaging China is to discourage the enrollment of STEM (science, technology, engineering and mathematics) graduates from that country in US universities. US Senator Tom Cotton, for one, thinks Chinese students are here just to steal American knowhow.

But without the infusion of the best and brightest international students – and students from China make up more than one-third of them – elite schools such as the Massachusetts Institute of Technology (MIT) would wither and shrivel if they had only America’s own graduates, trained by a faltering K-12 system, to draw from.

One anecdotal story will illustrate my point. At a recent international math competition among high-school students, the US team beat the team from China for first place. But the “upset” win can be attributed to the fact that every member of the US team was ethnic Chinese, students whose parents had immigrated to the US from China.

The quality of China’s universities is improving; many are already among the world’s top 50 schools. China’s elite schools may not yet on par with their US counterparts but Beijing believes in investing in human capital. If its graduate students can’t come to the US, they can go elsewhere, or simply stay home and learn from the best professors recruited from around the world.

The loser in the long run would be the US.

Engagement has been good for America​

All along, we Americans have been acting like the 40+ years of engagement has been a one-way boon for China at our expense. That’s hardly the case.

Collaboration enabled Apple to “design in California and assemble in China,” a strategy so successful that the company is now worth more than $2 trillion. Had Apple designed and assembled in the US, the high costs would have limited its sales and stunted the profitability and growth of the company.

With much fanfare, Trump announced that Foxconn, which had been the principal assembler of Apple products, would build a big plant in Wisconsin. He chalked that win up to his “persuasive” personality. Yet the plant
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because the labor rates of China are just too far apart from those of the US. Even Trump can’t wring water out of a rock.

And that was at the high end. On the low end of the economy, low-cost imports filled the shelves of Walmart and American consumers continued to enjoy their standard of living and not face rising prices. As much as 60% of China’s trade surplus with the US was due to goods made by American companies in China.

Because China’s economy grew at a remarkable rate, doubling every eight to 10 years, American companies that initially went there to source their products began to expand their investments in order to participate in the Asian country’s growing middle class as the size of China’s market became comparable to their home market.

America’s leading technology companies soon saw the wisdom of designing in China for the world. They set up R&D centers to take advantage of the technical talents in China, which produces eight times the number of STEM university graduates as the US.

Sadly, our leaders in Washington only know that might makes right and we have the strongest military in the world. They are banking on the premise that we can outcompete with China on the basis that we can wreak more death and destruction.

Otherwise, disengaging and competing with China will be at best a mutually diminishing outcome. It won’t help Washington solve our deteriorating infrastructure, failing school system, deaths by random shootings, and widening gap in income between the super-rich and the have-nots.

We need leaders with the vision and political courage to see and tell the American people what’s good for America and that competing with China is not the way. In fact, as we continue on the Biden trajectory, we could be on a downward spiral that spells the end of the American empire.

Dr George Koo recently retired from a global advisory services firm where he advised clients on their China strategies and business operations. Educated at MIT, Stevens Institute and Santa Clara University, he is the founder and former managing director of International Strategic Alliances. He is currently a board member of Freschfield’s, a novel green building platform.
 

Gatekeeper

Brigadier
Registered Member
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All I hear is the Aussie side moaning and complaining. Sometimes they write about how Australia is winning in the economic dispute against China. Sometimes they say they are backed by allies and they US masters against Chinese bullying. Sometimes they say China is not responding to them.

It's a whole lot of whingeing. And the Aussies won't shut up.

Just wait until commodity prices to return normal in a year.

wake me up when the US and Japan give up their market share to australia.

anglo strategy is a lot of propaganda and fluff...very little substance.

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Here you have it folks, straight from the horses mouth. Morrison is descended from thief! He's nothing but a convict trying to please his masters. Well I supposed his reward is getting an invite to the G7 summit table as a guard dog with a bone given as a consolation price.

G7: Australia PM Scott Morrison remembers Cornish ancestor​

6 hours ago

Australia's prime minister has spoken about one of the darker moments of his ancestry, as he prepares to attend the G7 summit in the UK.

Scott Morrison said his great grandfather was on one of the first transport ships to arrive in Australia, after being convicted of stealing yarn.
William Roberts was from Cornwall, the English county where the summit is taking place this weekend.
Australia has been invited as a guest to the Carbis Bay talks.

Link here:

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