Trade War Has Created Demand for Chinese Made Chips

China’s government was always willing to fund domestic chip production but the Trade War has created demand for domestic chips.

There was not much demand for Chinese chips because the assumption was that US chips would be available.

China will aggressively push their chips domestically and into Africa and other markets.

It be an expensive roughly ten year effort for China to catch up in semiconductors.

China is making good progress in some areas and should not be under-estimated. For a key type of memory chip known as NAND, Chinese firms are closing the gap.

“Money is not an issue for the Chinese government,” says one executive at a South Korean memory chip maker.

U.S. firms such as AMAT, LAM, KLA and Teradyne have very high market share in many niche markets of semiconductor manufacturing equipment. China has to build up competency in the entire supply chain and production technology.

The manufacturing process for advanced chips requires a lot of fine-tuning, and the NDAs covered the crucial tips and tricks on how to best use the machinery and achieve the necessary levels of “yield”, or the number of working chips in each batch.

There can be 800 people working on one part of the chip, so there is a lot of talent required.

22 thoughts on “Trade War Has Created Demand for Chinese Made Chips”

  1. Not too worried, let the Chinese steal and take whatever they need to catch up, but once they start innovating, you can bet they will scream bloody murder when their IP are stolen or otherwise copied.

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  2. There is no such thing as 7 nm. Nothing on a 7 nm chip is 7 nm. Not fin width, height or length. Not gate width, height or length. Not gate pitch or half pitch or metal pitch or anything. A node is not a standardized thing anymore.

    It is just a name. It is absolutely essential to look at density, power, performance.

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  3. Well, you focused on a sub point rather than the entire thrust of what I was saying which was economic, but I will address your point none the less.

    I will allow that this separation is imperfect as is the economic one, it is a battle that is constantly fought, but western states are not equivalent to Christian religious states. The US is seen as the leader, one might even say paragon, of a western state, and they specifically enshrine economic/church/state separation.

    However to address your point directly and to expand upon my own, a national church is not the same as having no separation of church and state. If the Christian bible explicitly condemns homosexuality and yet England, despite their national church, still allows it by law, you have separation of Church and State. Religious commandments are not equivalent to the law of the land. This is perhaps not quite as much separation as my American sensibilities might prefer, but still it exists.

    Broadly speaking Western states are not supposed to favor one religion or religious group over another. You won’t be stoned for insulting Christianity, deconverting, or be subjected to any different treatment on the basis of your religious belief. That is another way in which we express the separation to which I was referring. Our rulers are not religious leaders. They are separate. That is yet another way we express the separation to which I was referring.

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  4. This is not at all surprising, as necessity had always been the mother of inventions.
    What is more worrying as far as US companies is how they will win back these businesses once China starts using their own chips & technology.
    Of course in the short term, no country in the world can compete against the US in terms of technology BUT for the long term, it’s anyone’s guess as can be seen at the numbers of recent registered patents China seems to be catching up fast – rising from practically ZERO to second only to the US.
    As to the China government subsidising research, this is also true for the US as practically ALL US high tech companies have some connections with the government disguised as security or military spendings.

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  5. Western society operates with separation of church, state, and the economy.

    That would be a surprise to all the western nations that have national churches.

    Unless you don’t consider England or FInland, Iceland, Norway etc. to be “western”. Which is a point that could be argued for the increasingly Big Sister state of England I suppose..

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  6. I dunno, chip design is one thing, but chip manufacturing is another. Intel, TSMC, and Samsung are all struggling with the push to 10nm and below. I suppose it becomes the question of value of stealing an imperfect manufacturing process that might be a evolutionary dead end. Extreme UV lithography is serious business.

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  7. Hopefully we will come to a fair resolution, but it would require a complete paradigm shift on the part of China. They view themselves as to be above the rule of law and rules of fair trade. This situation has been long in the making.

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  8. I work for one of the “big three” software companies that make the software that computer chip design companies use. Our software when pirated attempts to “phone home” and deliver metrics.
    Huawei has always been the worlds largest pirate of our software. They’re so brazen they don’t even attempt to firewall it. If they paid for what they used (that’s actual use of floating licenses, not just number of licenses pirated) it would amount to more than a quarter billion dollars of revenue per year. They would be our largest “customer” bigger than Intel.
    Instead they buy about 1/8 of what they actually use through their HiSilicon subsidiary.
    So Huawei has ripped off just one US software company to the amount of over 3 billion dollars.

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  9. Western society operates with separation of church, state, and the economy.

    The problem with China is that they don’t have a proper separation of government from the economy, thus they are incentivized to use the national security apparatus to steal all sorts of technology for use in their economy. This non-economic factor to competition in free markets must be stopped as these models cannot co-exist peacefully. The only way to stop it is to force the Chinese to abandon their state driven model and commit to reform (trade war negotiations) or to accept that we are in a economic cold war &our firms and economy will always be under economic siege by the Chinese.

    The US has no effective rejoinder to this policy because, due to economic separation of the state and the economy, we broadly try to not pick winners and losers in our market, which passing critical tech stolen from a foreign competitor would be tantamount to. To do so is corruption and cronyism. Not to say it never happens but it isn’t happening broadly across the economy as matter of normal policy as it is in China with SOE across virtually all critical sectors of China’s economy.

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  10. Huawei stole so profligately from Cisco, that they didn’t even bother to scrub the original Cisco coder’s notes from the stolen code. They stole the manuals wholesale. They had to delay their launch to spend time scrubbing known Cisco bugs from the code before they released it and this was a comment that came from a Huawei employee.

    There are so many instances of known Huawei theft, what is scary is to think of how many happened that we will never know about.

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  11. its all bullcrap… the Chinese government has been plotting literally for years to completely cut out all non-Chinese chip suppliers… it’s part of their “50 year” plan…. the only thing that stops them is they can’t get far enough ahead of the United States to make it happen… it’s complete bullcrap to say because of trade war they are plotting to do this… it’s what they have been actively pursuiting since forever…. trade war might speed it up… but it’s really they were already were plotting the demise of us chip industry… they have Chinese govt spies all over the us chip industry .. they even let them use Chinese investment money to take over us semi businesses via Singapore… and rip them off directly using free trade deals … look at Broadcom for instant…the Chinese completely own that company even though the US DOD provided the seed money to setup Broadcom… still bought out by the Chinese and transplanted overseas by “duplicating” and “mirroring” the job function of us semi workers…

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  12. What about the president of huawei on the record telling his chinese employees in the US to steal as much tech from other companies they worked for as possible to get a promotion…

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  13. They knew better, but still chose the easy path while neglecting the more difficult one.
    In 2018, China imported $312 billion worth of integrated circuits, they hope to localize this by 70% by 2025. The ban on using American tech would be beneficial then, but not now. The slow status quo would continue indefinitely if not for the new sense of urgency, they only have to develop the home-grown base once, no matter how expensive it will be.

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  14. Obviously, the Chinese government has spys operating inside of micron in Boise… Chinese spy’s walking around in the halls of micron, intel, and, etc… no wonder the UNited states is getting screwed by the Chinese…

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  15. Quote Godfree Roberts “China has never stolen significant technology, so why would it start now?”

    Are you living in LaLa land, of course it has!
    But then again, if China would come up with somthing significant, at least once in a while, so would we.

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  16. hough it has spent hundreds of billions buying and licensing IP, China has never stolen significant technology, so why would it start now?

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  17. It would be interesting to see how far China could get buying and stealing outside technology and know how. The trade war will probably end long before that ever happens.

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  18. The China agent is trying to educate us against the sanctions on China. The big picture is that China is moving to a fair trade with the US which is very beneficial to the US and the global economy.

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