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China

China Has Painted Itself Into a Semiconductor Corner (bloomberg.com) 123

Tim Culpan, writing at Bloomberg: As Washington embarks on a multi-billion dollar, decade-long semiconductor development campaign, Beijing is reckoning with its own 20-year effort that's largely failed to deliver. Both will need to grapple with wasted funds and misguided goals as they play catch-up to Taiwan and South Korea. Architects of China's ambitious efforts may be facing the music for having not produced world-beating technology, Bloomberg News reported this week. Multiple corruption probes announced by authorities stem from anger among the nation's top leaders over an inability to develop semiconductors that could replace American components, it reported. Two of the most scrutinized areas are the $9 billion bailout of Tsinghua Unigroup Co., and the National Integrated Circuit Industry Investment Fund -- known as the Big Fund.

For all intents and purposes, China has failed to achieve its semiconductor goals, and those tasked with realizing them are being brought to account. Beijing won't be smarting at the loss of money -- it's been willing to burn cash -- but at the lack of progress such expenditure was supposed to buy. Those looking at China's achievements are mostly finding what they seek, and ignoring the rest. Semiconductor Manufacturing International, for example, got a lot of attention recently when industry analysts TechInsights wrote: "SMIC has been able to fabricate features that are small enough to be considered 7nm."

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China Has Painted Itself Into a Semiconductor Corner

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  • by ickleberry ( 864871 ) <web@pineapple.vg> on Thursday August 11, 2022 @10:10AM (#62780022) Homepage
    Sunning themselves on the deck of their superyachts and plush Barbadian resorts on the backs of those they made redundant in their own factories so they could outsource to China. The CCP would be getting nowhere close to 7nm if it wasn't for the massive leg up given by the West over the past 30 or so years.
    • by Arethan ( 223197 )

      Chip fab is hardly the only industry that's been wooed by the siren song of globalization. Let's not lose sight of just how much manufacturing has been offshored over the past few decades in search of low worker wages.

      From the management perspective, offshoring makes a lot of sense. When production prices fall, profit margins increase - it is very simple math, an average 5th grader could do it easily. And, given the profit-seeking forces of the stock market, we should not expect any individual manager of a

    • by Luckyo ( 1726890 )

      SMIC's "7nm" is a DUV process. That means that it's extremely limited in what can actually be manufactured on it, and it likely has extremely high error rates and manufacturing is very slow.

      Everyone else is doing "7nm" on EUV, which requires far less passes and patterning tricks, resulting in being able to manufacture complex logic chips at relatively low error rates and high speed of manufacturing.

      • I was wondering what were the limitations of DUV. I have read some articles questioning if the world has to worry about Chinese fabs. For now, it appears not as SMIC can deliver 7nm chips but the cost is high and the capability is limited.
        • by Luckyo ( 1726890 )

          I will start with caveat that in spite of spending several weeks diving into reading about this topic, my understanding of it remains very cursory and due to intense secrecy surrounding top tier lithographic techniques, there are likely some errors below. It's engineering, but optics is not something I really touched after university before picking up this subject about a year ago, and semiconductor lithography is fundamentally applied optics.

          That said, the general concept is well understood at this point a

          • As far as I know, why Intel has failed for years at EUV has not been widely publicized. Considering that Samsung and TSMC are using the same EUV machines, it may not be the machines themselves but something about the Intel process. ASML also has a reputation of laser focused on working out any production issues with their machines regardless of the customer so I do not think the Intel problems were due to EUV. There was speculation I read that Intel was using cobalt in one part of the process that had very

            • by Luckyo ( 1726890 )

              It's been fairly reliably leaked that 2017 intel's problems were in the fact that they used specific fabrication technique/feature that was not functioning well in early iterations of EUV. I can't remember the specific name of the technique or lithographic feature in question off the top of my head unfortunately, so I can't search for it easily. Apologies, but like I mention above, this really is one of the very few engineering fields that I can't fully grasp in spite of diving into it.

              I just remember readi

    • by bwt ( 68845 )

      China is nowhere close to 7nm. Only Taiwan has that, not even the US, and the US is well ahead of China.

    • Sunning themselves on the deck of their superyachts and plush Barbadian resorts on the backs of those they made redundant in their own factories so they could outsource to China. The CCP would be getting nowhere close to 7nm if it wasn't for the massive leg up given by the West over the past 30 or so years.

      A lot of the Chinese progress comes from Taiwanese that are bought by Chinese government money. There have been and continue to be a non-zero number of important TSMC folks who can be bought, either with enough money or enough criticism of the traditional Asian hierarchy at TSMC that makes promotions very challenging.

      There are one million Taiwanese businessmen in China, and that's out of a nation with only 23 million total people. The deal with the devil was for the Taiwanese businessmen to get rich in Ch

    • You want us to blame fat-bellied western businessmen for China failing to achieve its semiconductor manufacturing goals? (that is what the article and summary above are talking about)

      ok....

      CONGRATS FAT-BELLIED WESTERN BUSINESSMEN !!!!

      Good Job!

      -Your anti-american rant failed, bro.

  • by Rick Schumann ( 4662797 ) on Thursday August 11, 2022 @10:16AM (#62780046) Journal
    Taiwan is a technological powerhouse China wants to posess. They're willing (on paper, anyway) to start World War 3 over it. Of course I don't think the rest of the world will sit back and just allow them to do that, not anymore than the rest of the world is willing to put up with Chinas' other expansionist bullshit.
    On the one hand I think it's good that the U.S. is starting to move it's semiconductor manufacturing back into it's own borders, but on the other hand that's going to make China more desperate both for financial reasons as well as technological reasons; they like and want the revenue, but they also like and want the opportunities to steal more technology, and we're going to deny them that.
    • According to official US Policy China already "possesses" Taiwan. It's the same country.

      • the distinction for the US, China, and Taiwan is if the companies on the island are state owned.

      • by phantomfive ( 622387 ) on Thursday August 11, 2022 @12:49PM (#62780570) Journal

        Official US policy does not recognize Chinese sovereignty over Taiwan. I admit it is confusing, but that is on purpose. However, there are two things to note:

        1) China follows the "one China principle" and wishes everyone else would.

        2) America follows the "one China policy" which is different, and not what China wants.

        The details are explained on Wikipedia [wikipedia.org]. Another way of looking at it (if anyone really wants to argue), you can always accurately say Taiwan is de facto a free, independent sovereign country. De jure it might not be independent.

        Either way, the CCP has threatened to kill Taiwanese people on multiple occasions, and that is not good under international law.

        • So far as I can see, the Chinese government would like nothing better than to posess and be in control of every Asian country and every Asian person -- for starters. After they consolidated all of Asia under the Chinese flag, they'd move on to the rest of the world. No different fundamentally than Putin wanting to re-create the Soviet Union, starting with all the previously Soviet-block countries, then moving on to conquest of the rest of Europe (and don't sit there and tell me he doesn't have wet dreams ab
          • No different fundamentally than Putin wanting to re-create the Soviet Union,

            The Soviet Union is gone, and anyway Putin was KGB, not Soviet (soviet just means council, and was one power structure in the USSR. The other two were the army and NKVD or KGB).

            It's the Russian Empire that Putin wants to recreate. He's a Mongol.

      • Uh huh. However Taiwan begs to differ, and I don't blame them.
    • by windypops ( 8247864 ) on Thursday August 11, 2022 @10:27AM (#62780082)
      It's likely that their semiconductor manufacturing capability is the thing stopping China from invading. Taiwan could destroy the plants, leaving China with nothing, and having a massive knock-on effect on the world economy.
      • It also would not take much to sabotage their own plants as semiconductor fabrication is very delicate. When there are natural disasters like a nearby earthquake, production is disrupted.
      • by Sin2x ( 1189089 )
        But why would they do that? It profits nobody.
        • Why wouldn't they? Why let them come in and steal all that from them? The threat of it all being destroyed so China can't just take it is a very potent threat indeed, and it's probably about 50% of the reason China just hasn't landed a bunch of troops on Taiwan, marched in, and taken over already. If I were Taiwan and I knew invasion was imminent, nothing and nobody could stop it, I'd blow everything up, too, evacuate everyone who knew how to re-create it all, and leave the enemy with nothing of value.
          • by Sin2x ( 1189089 )
            I don't see this being reasonable since those people who ordered the blowup and performed it are going to be judged and sentenced by the Chinese authorities for that, might be even a death sentence if it is deemed an act of treason -- Taiwan is de jure a part of China, remember? The only side that would profit from such act is USA, not Taiwan itself if it is indeed invaded.
      • It's likely that their semiconductor manufacturing capability is the thing stopping China from invading.

        Taiwan's military is stopping China from invading. In addition, the US military is preventing China from setting up a blockade and attempting to starve the people into submission.

      • by bwt ( 68845 )

        Even if China came in a took the plants over without damage, they don't have the skills to run them. Plus, modern fabs require continual support from equipment suppliers. Plus, if China invades, their access to international shipping (importing oil, exporting products) will disappear immediately. China has a huge navy of small boats that can police the China Sea, but not the Indian ocean and definitely not the Pacific.

      • Exactly, as I've stated myself a few times: they could destroy their technology, blow up all their servers, and all that technological mastery would be gone, nothing for China to take control of, just some buildings and an island.
    • by RobinH ( 124750 ) on Thursday August 11, 2022 @10:29AM (#62780090) Homepage
      The west was willing to trade technology to China for access to their huge consumer market, but now that their market is starting to age out, and isn't being replaced by a younger generation (seriously, look at a China population pyramid) the west doesn't have as much economic interest in China anymore, and isn't going to continue playing along with China's demands. At the same time, China just watched what happened to Russia in Ukraine, particularly the insanely damaging sanctions which are crushing the Russian economy, and they can see they're even more susceptible than Russia to similar sanctions. If China actually makes a move for Taiwan, then Xi is even more cut off from reality than we all think he is. But he still might try... he's created an ultranationalist sentiment inside China and they want blood. If he doesn't offer up Taiwanese blood, he's probably afraid the people might turn on the government.
      • by phantomfive ( 622387 ) on Thursday August 11, 2022 @12:55PM (#62780602) Journal

        The west was willing to trade technology to China for access to their huge consumer market,

        That is only half the story. The hope was that by increasing economic ties and their standard of living, China would become democratic. This idea was popular in the Clinton era, and admittedly was better than going to war.

        Unfortunately it didn't turn out that way. China has gotten richer and now the CCP oppresses anyone they want.

        • Personally I think that a Chinese internal revolution is inevitable, it's just a matter of when it happens. I don't care how much military the Chinese government controls, if you have even 500,000,000 people deciding they're tired of your bullshit, your regime is going down. It may not happen in my lifetime, but I'm certain it'll eventually happen. Oppressive regimes don't last forever.
      • by tlhIngan ( 30335 )

        The west was willing to trade technology to China for access to their huge consumer market, but now that their market is starting to age out, and isn't being replaced by a younger generation (seriously, look at a China population pyramid) the west doesn't have as much economic interest in China anymore, and isn't going to continue playing along with China's demands. At the same time, China just watched what happened to Russia in Ukraine, particularly the insanely damaging sanctions which are crushing the Ru

    • Whatever the rest of the world intends to do to defend Taiwan, and to what extent they do so, is going to be besides the point in the next decade or so. Diversifying of supply will have the effect of reducing Taiwan's importance as a supplier of semiconductors, and any hope that China, whether by seizing Taiwan or by developing the technologies on the mainland as a means of beating out rivals, will fade. The West tried to buy China into being a nice cooperative capitalist power, but China grabbed for the br

      • by necro81 ( 917438 )

        Whatever the rest of the world intends to do to defend Taiwan, and to what extent they do so, is going to be besides the point in the next decade or so. Diversifying of supply will have the effect of reducing Taiwan's importance as a supplier of semiconductors

        On a 10-year timescale, I don't think it's a zero-sum game. Demand presently outstrips supply by fair margin. The size of the market will continue to grow, even as new manufacturing capacity comes online. By the time new fabs in the U.S. or China o

    • by Ziest ( 143204 )

      Taiwan is a technological powerhouse China wants to posess. They're willing (on paper, anyway) to start World War 3 over it.

      Yes, China would like to get hold of Taiwan and it's technological manufacturing capacity but you have to know that if it looks like China is about to land troops on Taiwan that most, if not all, of the people who have the education and experience of running these companies will flee to America, South Korea, etc. Having possession of a semiconductor fab is one thing but unless you have

      • It wouldn't surprise me if lot of the software which prepares EUV steppers for a run, runs from cloud computing. Nevermind ongoing maintenance and parts. Even with their ASML software theft, the EUV steppers would probably be useless bricks.

      • Oh, I realize all that, it seems obvious to me. They might even literally destroy the equipment on the way out, leave China with nothing. That's what I'd do anyway, it's strategically sound if your enemy is going to take you over and you can't stop them, deny them your resources.
    • They want to isolate them and bully them into surrender. They don't want their navy to get Moskva'd, which even with a bombing campaign would happen.

    • by jmichaelg ( 148257 ) on Thursday August 11, 2022 @01:57PM (#62780824) Journal

      I think TSMC may have averted an invasion by warning China that mere possession of their physical plant wouldn't be sufficient to continue operations. TSMC tweeted that they rely on a global supply chain to make chips. Invade Taiwan and away goes that supply chain. Moreover, if TSMC's equipment is damaged beyond repair during an invasion, it would be years before the equipment was replaced, if at all.

      The U.S. has repeatedly said it would support reunification with the caveat it was a peaceful process that Taiwan agreed to. China screwed up when they didn't honor their commitment to allow Hong Kong to self rule after Britain left. They promised a One Country - Two Systems approach which they reneged on when Britain left. Reneging on Hong Kong warned the Taiwanese they wouldn't fare any better after reunification.

      A path forward would entail restoring self rule to Hong Kong. Leave Hong Kong alone and Taiwan wouldn't be as reluctant to join the mainland. If China was smart, China could end up becoming the United States of Asia by letting other countries maintain their democratically elected governments and joining China like the Territories joined the United States. The word "States" in "United States" means self rule for each region subject to the powers reserved to the Federal government.

          For that to happen, China would need a new Deng Xiaopeng to replace Xi Jinping. China's huge strides forward were due to Deng allowing private ownership, a huge break from Mao's legacy. Hopefully the Chinese recognize that before WWIII breaks out.

  • by Anonymous Coward

    They've been willing to burn money, you say? They've been at it for 20 years? The Chinese leadership are nothing if not patient and harbouring long-term plans.

    Then the question is whether the money was pissed away entirely, or whether the progress that they wanted to buy just goes slower than hoped for. In the latter case, just burn some more money and push a bit harder.

    It's only when they cannot buy enough progress for the money allotted and in the time they need it to that suddenly buttfucking Taiwan st

    • From what I have read some of the money was pissed away due to corruption inherent in the system. Some of the money has lead to progress but that progress is not near to accomplishing the goals. And more money will not necessarily buy more progress.

      For example, SMIC can make 7nm chips but they are using DUV which is an older process and not EUV. EUV is extremely restricted as only one company in the world, ASML, is capable of making the machines and due to trade restrictions, China has only 2 machines in t

    • Putin did not invade Ukraine to get their oil fields because Russia did not have enough oil. It was because Ukraine was a COMPETITOR.

  • China has a different view on Intellectual Property Rights then the rest of the world. Numerous cases where startups trying to be bold and cost effective teamed up with China to help produce their new product to the market, to find within weeks or months later there is a Chinese knockoff of your idea being sold at half the price.

    This isn't a big deal for a lot of products, as the product itself isn't that hard to copy and reproduce anyways and the markup is just based on the Brand Name, however for Chips th

    • by Luckyo ( 1726890 )

      This is actually normal in most of the world. Western economies are in a small minority with intellectual property right protections both existing and being actually workable for startups.

  • For all intents and purposes, I would have liked more facts in this China bashing article. It appears to be the opinion of the author to discredit China's dominance in the semiconductor industry. This reminds me of a stock analyst who says Apple is suffering because they failed to meet the quaters expectations of the market.

    China is a power house in the semiconductor industry and deserves a lot of respect. Do not forget that they have a monopoly in rare earth metals:
    https://www.bloomberg.com/news... [bloomberg.com]

    • If got enough paint not to difficult to paint yourself out of a corner or make a little mess. Not the best aNalogy or meta4
    • I think it's OK to bash totalitarian states with appalling human rights records and a penchant for stealing other nations' IP.
      • by djinn6 ( 1868030 )

        I think it's stupid to assume your opponents will fail. People have been saying Russia is running out of weapons, ammunition and supply trucks since March. It's August now and last I heard Ukraine is complaining they're being out-gunned 8 to 1. That's not "running out" according to any definition I know.

  • Everyone remember the 2008 chinese Milk scandal https://en.wikipedia.org/wiki/... [wikipedia.org]

    Now, imagine that on the chip industry.

    China will never get out of the middle age corruption style politic if they don't chance their politic system, look at the Russian that have the same corruption level in the army equipments. Same type of politic system, and same type and level of corruption

    • by oumuamua ( 6173784 ) on Thursday August 11, 2022 @11:50AM (#62780348)
      That scandal was by one bad company in China and the country that suffered the worst fallout was China itself. The severe punishment, from your own link, went to company executives and officials, the same people Slashdotters often complain escape punishment in the US.:

      A number of trials were conducted by the Chinese government resulting in two executions, three sentences of life imprisonment, two 15-year prison sentences,[13] and the firing or forced resignation of seven local government officials and the Director of the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ).[14] The former chairwoman of China's Sanlu dairy was sentenced to life in prison

  • by bwt ( 68845 ) on Thursday August 11, 2022 @12:02PM (#62780376)

    China has many, many problems and will literally crumble in the next 5-10 years. The top three of these are their real estate bubble (neutering 30% of their GDP), an incurable aging problem (comparable or worse than Japan's), massive waste due to high speed rail overbuilding, massive banking scandals, loss of world respect over their "wolf warrier" diplomacy style, predatory debt traps associated with the belt and road initiative, bullying neighbors over South China Sea territory and trade policy, and of course Taiwan. They've created an economy that requires massive foreign exports, but are going to see their foreign investment evaporate as they are increasingly viewed as evil and their shipping routes undefended by the US at best. If they try anything truly evil, like invading Taiwan, oil will be cut off and their economy will burn.

    In sum, China is fucked.

    • People are deluding themselves if they think China won't handle those problems. They've been talking about how China will fail for decades now.
  • Multiple corruption probes announced by authorities stem from anger among the nation's top leaders

    Those top leaders, of course, are definitely not corrupt, and definitely not part of the problem. /s

  • https://auto.economictimes.ind... [indiatimes.com]

    An interesting conclusion is that TSMC and Samsung became the top dogs via internationalization, not "go it alone" because cutting edge chips need access to a wide variety of experts. A "walled nation" won't cut it unless you are happy with slow commodity chipsHear that Xi and Don/Joe?

  • Architects of China's ambitious efforts may be facing the music for having not produced world-beating technology, Bloomberg News reported this week. Multiple corruption probes announced by authorities stem from anger among the nation's top leaders over an inability to develop semiconductors that could replace American components, it reported.

    I'm going to predict the US chip production boosting effort will end in the same pork barrel festival and corruption as the Chinese one except nobody will face any music over spending he taxpayer's chip production boosting money on stock buybacks and bonuses and multiple congress critters will fatten their wallets off of insider trading deals.

  • And that's something you don't get in China. The result is a brain-drain - smart people moving to democratic countries.
  • Yes, China has problems and China is politically a problem. But I do not buy this "having painted themselves into a corner" in this area. This seems to be western propaganda that tries to belittle China and paint them as significantly less capable than they are.

    That seems to be an entirely stupid stance to me. Underestimating a potential opponent is not a good idea.

  • China never had any tech of their own. Entire industries have been leaving for many years already. How many phones does Samsung make in China? Zero, since 2019. Even low tech industries like shoes and apparel have been leaving for over 10yrs. This all started long before COVID as well. The only reason AAPL is still there is because they still enjoy blowing CCP for sales in mainland China.

  • Companies like Intel that want to build fabs in the US under the new laws will have no problems getting access to things like the latest EUV machines from ASML.

    Chinese companies like SMIC are blocked from getting these machines which puts China at a huge disadvantage.

  • There is plenty of demand overall for chips that aren't on the latest manufacturing node, or even close to it. Chips for cars are typically what, a 32 nm process? Mind you, there's very little profit at this end, but this still constitutes what I'd call "a playable hand", and the world would probably be happy to snap up that supply if the CCP would stop playing chicken over the dumbest shit, but they won't, because they've invested too much face and can't afford to back down now.

    As the commercial for a cert

  • I read the Bloomberg article that this Slashdot "article" tries and fails to summarize. You can't just quote two random paragraphs and call it a "Slashdot article." C'mon /. editors, why did you let this through as-is? At least kick it back to the author and say, "yes, this is interesting, and we'll publish this if you rewrite it." To be fair, this is the first time I've seen a summary this bad, but it is also fair to hold Slashdot to a high standard.

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