Chinese semiconductor industry


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weig2000

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More information: with the capital injection ($2.2 billion from Chinese state investors+$2.8 billion from this IPO on Shanghai stock exchange = $4 billion), SMIC could march into the production of 7-nm and even 5-nm wafers in the coming three years.

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It's hugely capital intensive to invest in semiconductor fabs. SMIC's investment strategy mirrors that of BOE in LCD in the past. That is, they create subsidiaries or form joint ventures with government funds or local governments (Big Fund I, Big Fund II, Shanghai Fund I, Shanghai Fund II, etc.) to invest in separate projects or fabs. That way, they can leverage their capital and invest in more projects. Their fabs are in different cities, and the respective local governments also have incentive to chip in. They can easily leverage tens of billion dollars this way.
 
Maybe they won't go that far. But at this point Trump has stopped caring about market share or losing business from China. This is full on assault on China short of war.

Number 3 could involve designating all Chinese companies as national security threat similar to the state sponsor of terrorism list that Iran or North Korea is on. So if anyone works for Chinese companies they will be sent to Guantanamo Bay if the US detains them etc.
Sure, they could do that; they could even say that all Chinese people including Chinese Americans are terrorists and sanction them. Then they can say every ethnicity that looks possibly Chinese are all terrorists too, and anyone who does business with any of these people are terrorists and all enemies of the US. It can sanction all Anglo-saxon countries that don't commit their full power to American's fight against China as traitors to their race. But that's all pointless because we're trying to talk about potentially effective strategies, not the final death throe tantrum of a former superpower.
 

muddie

Junior Member
Sure, they could do that; they could even say that all Chinese people including Chinese Americans are terrorists and sanction them. Then they can say every ethnicity that looks possibly Chinese are all terrorists too, and anyone who does business with any of these people are terrorists and all enemies of the US. It can sanction all Anglo-saxon countries that don't commit their full power to American's fight against China as traitors to their race. But that's all pointless because we're trying to talk about potentially effective strategies, not the final death throe tantrum of a former superpower.
People are just overthinking this and the general public has zero info on what really happens behind closed doors.

The only thing certain is that as China comes closer and closer to the U.S. in terms of technology, economy, military, the push back from the U.S. will increase. China/Huawei saw the U.S.'s intentions on China's 5G development from a mile away. Even if Trump loses in November Biden will continue the crusade against China/Huawei.
 

Weaasel

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Registered Member
Sure, they could do that; they could even say that all Chinese people including Chinese Americans are terrorists and sanction them. Then they can say every ethnicity that looks possibly Chinese are all terrorists too, and anyone who does business with any of these people are terrorists and all enemies of the US. It can sanction all Anglo-saxon countries that don't commit their full power to American's fight against China as traitors to their race. But that's all pointless because we're trying to talk about potentially effective strategies, not the final death throe tantrum of a former superpower.
I will not be surprised if they eventually do such things. They could fashion tensions that lead them to eventually doing such things.
 

AndrewS

Captain
Registered Member
People are just overthinking this and the general public has zero info on what really happens behind closed doors.

The only thing certain is that as China comes closer and closer to the U.S. in terms of technology, economy, military, the push back from the U.S. will increase. China/Huawei saw the U.S.'s intentions on China's 5G development from a mile away. Even if Trump loses in November Biden will continue the crusade against China/Huawei.
Yes, there will be a lot more friction with the US as China catches up.

But once China catches up and starts pulling ahead of the USA, tensions will decrease.

If China has a hi-tech economy which is twice the size of the US, and potentially a military also twice the size, what would the US gain from having a tense relationship?

That will take some years to happen, but should be China's strategy.
 

free_6ix9ine

Junior Member
Registered Member
Yes, there will be a lot more friction with the US as China catches up.

But once China catches up and starts pulling ahead of the USA, tensions will decrease.

If China has a hi-tech economy which is twice the size of the US, and potentially a military also twice the size, what would the US gain from having a tense relationship?

That will take some years to happen, but should be China's strategy.
Economy size is not as relevant as who has a more desirable currency when it comes to geopolitical power. The US can increase their influence by simply printing more money. So if the USD somehow is not the dominant currency anymore, then the US will not be a super power anymore.

As for the last point, America cannot stand anyone overtaking them. I think China should be prepared for asymmetrical war with the US, because there is a very good chance the US will start a war with China if they feel that their status is threatened. Precision ballistic missiles, UCAVs, submarines, hypersonic missiles, low band with anti-stealth radars, surface to air missiles, and attack boat drone swarms should be the focus. Essentially we need to prepare our offensive capabilities that exploit their weaknesses. Instead of building aircraft carriers or destroyers which aren't useful in a high intensity war against the US.

We should also boost our nuclear defense as well, doesnt need to achieve parity with the US, but it needs to be strong deterrent. Rail or road based DF-41 would be excellent for this.
 

AndrewS

Captain
Registered Member
Economy size is not as relevant as who has a more desirable currency when it comes to geopolitical power. The US can increase their influence by simply printing more money. So if the USD somehow is not the dominant currency anymore, then the US will not be a super power anymore.

As for the last point, America cannot stand anyone overtaking them. I think China should be prepared for asymmetrical war with the US, because there is a very good chance the US will start a war with China if they feel that their status is threatened. Precision ballistic missiles, UCAVs, submarines, hypersonic missiles, low band with anti-stealth radars, surface to air missiles, and attack boat drone swarms should be the focus. Essentially we need to prepare our offensive capabilities that exploit their weaknesses. Instead of building aircraft carriers or destroyers which aren't useful in a high intensity war against the US.

We should also boost our nuclear defense as well, doesnt need to achieve parity with the US, but it needs to be strong deterrent. Rail or road based DF-41 would be excellent for this.
Economic size is actually a big factor in how desirable a currency is.
The more a currency is used (as a medium of exchange or a store of value), the more influential the currency becomes.

The US printing more money (and therefore devaluing the currency) actually make the US Dollar less attractive.

I would agree that there are people in the USA who cannot stand being overtaken in anything.
But I do not think these are in the majority.
And in any case, none of them actually advocate a pre-emptive war against China, because of the nuclear factor already.

So that is why I say that China still needs to focus on internal economic and technological development, which provides the fuel for economic/financial/industrial/military power.
 

free_6ix9ine

Junior Member
Registered Member
Economic size is actually a big factor in how desirable a currency is.
The more a currency is used (as a medium of exchange or a store of value), the more influential the currency becomes.

The US printing more money (and therefore devaluing the currency) actually make the US Dollar less attractive.

I would agree that there are people in the USA who cannot stand being overtaken in anything.
But I do not think these are in the majority.
And in any case, none of them actually advocate a pre-emptive war against China, because of the nuclear factor already.

So that is why I say that China still needs to focus on internal economic and technological development, which provides the fuel for economic/financial/industrial/military power.
Increasing supply of USD doesn't mean it will depreciate, especially if demand increase at a higher rate. Demand is increasing because investors have a long held belief that USD is a stable and safe currency during global economic crisis, among other reasons. Hence why USD strengthening even when US has depression level unemployment.

What can potentially destroy the USD, is when people lose trust in the USD or treasuries as a safe haven (which represent USD indirectly because it's repayment is in USD).

-default on US debt to punish China economically
-destabilizing political crisis on the scale of a civil war (ie. military coup in November, canceling election)
-supply side shocks that cause mass inflation (ie.going to nuclear war with China)
-an alternative asset emerges that is liquid, holds value and is accepted globally (ie. Libra)
 

AndrewS

Captain
Registered Member
Increasing supply of USD doesn't mean it will depreciate, especially if demand increase at a higher rate. Demand is increasing because investors have a long held belief that USD is a stable and safe currency during global economic crisis, among other reasons. Hence why USD strengthening even when US has depression level unemployment.

What can potentially destroy the USD, is when people lose trust in the USD or treasuries as a safe haven (which represent USD indirectly because it's repayment is in USD).

-default on US debt to punish China economically
-destabilizing political crisis on the scale of a civil war (ie. military coup in November, canceling election)
-supply side shocks that cause mass inflation (ie.going to nuclear war with China)
-an alternative asset emerges that is liquid, holds value and is accepted globally (ie. Libra)
What you've written is accurate, but isn't relevant to the prior discussion.

I mentioned that printing money makes the US dollar less attractive.
Of course, others are also printing money (to a lesser or greater degree), so their currencies are also becoming less attractive.
But this is a short-term viewpoint, and the prior context was some point in the far future, when the Chinese economy is 2-3x the size of the USA.

Remember that:
1. the the US dollar is regarded as the reserve currency
2. the US has a persistent and large trade deficit
3. the US has a significantly negative "international investment position" - where it owes the rest of the world more in terms of financial liabilities
4. the US has a persistent and large federal spending deficit
5. There is a large and growing federal debt

So if the US government continues to print money, and run large government and trade deficits, eventually everyone will see that the debts and payments will be unsustainable. That would be the US Dollar losing the trust of the market.

So you don't actually need a significant crisis or alternative to emerge, as you put it.

The US just has to continue running large trade deficits which continue to increase how much the USA owes to the rest of the world.

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The Eurozone and China are also economic blocs that already rival the USA in terms of size.
But the difference is that both these currency areas have small trade surpluses.
That means they do not rely on foreign currency inflows to fund their government spending deficits.
 
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