Sanctions on letting them buy chips 1. reduced available R&D money for US competitors by reducing their revenue and 2. raised the local price to monopoly prices, creating a great reward for the first local manufacturer to achieve parity.
If you want to see effective de-industrialization, look at what happens to US industry when China applies the opposite of sanctions (subsidies).
Adam Smith figured out that mercantilism is inherently self-defeating over two hundred years ago. Maybe nation-states will catch up in the next few centuries.
>2. raised the local price to monopoly prices, creating a great reward for the first local manufacturer to achieve parity.
The government was both going to demand, and fund local companies creating a competing product and was already doing so long before sanctions arrived. Nothing about the sanctions sped up the process in the least. The Western sanctions had almost 0 bearing on accelerating local chip production, but it did do a GREAT job of limiting their ability to buy the hardware required for advanced fabrication.
You also seem to have a belief that a "monopoly" in China is anything remotely like the West. It's not a free market, if a company in China tries to gouge the market or take it in a direction that's not approved at the expense of what the party wants, their executive leadership will quickly find themselves on the outside looking in (if they're lucky) or sitting in a jail cell if they aren't. See: Jack Ma
Semiconductors were core to the "Made in China" strategy the party was pushing in 2014...
> The government was both going to demand, and fund local companies creating a competing product and was already doing so long before sanctions arrived. Nothing about the sanctions sped up the process in the least.
Whatever encouragement or pressure the Chinese government was applying was insufficient to get manufacturers like Huawei to switch to domestic suppliers. Chinese companies still worked with established companies like TSMC, until forced by US sanctions to switch to worse domestic alternatives.
> CCP could just do the same thing to themselves via a trade ban on imported goods.
They could, but a domestic trade sanction, just like foreign sanctions, would guarantee at least near-term damage to Chinese companies.
Domestically, Beijing would be seen as the responsible party for the resulting economic damage, causing resentment towards the government, with no actual guarantee of self sufficiency. Companies, in general, do not care about having a domestic supply chain; they want to increase profits.
Internationally, other countries would also see China as the initiator of the conflict, and those that are negatively affected may want to respond with sanctions of their own, escalating it beyond what Beijing intended.
The risk analysis is different between foreign sanctions and domestic sanctions. In the end, the Chinese government was not prepared to take that risk, but the American government was.
I have some good news - you suggest that the Party will step in if there is gouging or an independent direction being taken - that is to the advantage of China's competition.
One of the reasons groups like the USSR or Serious Communist China ended with everyone starving is that there is literally no known method to determine the correct price without mass signalling through a free market. Ditto what direction "should" be taken - the only known method is 10s of companies (ideally with funding weighted by what clever investors think is likely to work) where 9s of them fail and a selection succeed.
China isn't getting where they are because the party is helping. If anything it is the opposite, the party must have some capitalist incubators where they are holding themselves back from interfering all that much, otherwise the whole thing will collapse at some point because some bureaucrat refuses to believe prices were set too low until the shortages starve millions to death.
> Serious Communist China ended with everyone starving
This is certainly a claim, let's see how it stands up against the historical record (as from wiki):
1961: Last famine in the PRC
1966: Start of the Cultural Revolution
1976: Mao dies
I'm having a bit of trouble reconciling these, but if you've got some arguments explaining why the Cultural Revolution was after the end of "Serious Communist China" I'd be interested.
The 'USSR' starved in the 90s after the fall of communism.
> Serious Communist China ended with everyone starving
Oh this nonsense. Serious Communist China had to deal with nuclear threats from both the US and the USSR. Serious communist china tok a back water colonized nation to a nuclear power within a single generation.
> there is literally no known method to determine the correct price without mass signalling through a free market.
You have it backwards. 'Free markets' led to 'starvation'. That's why we, in the US, have farm subsidies. A form of 'price control' along with many other measures. There is no nation ( especially a major ) on earth that has a 'free market'. There was also never a time when we had 'free trade' either. I'll let you figure that one out by yourself.
Every industry, from housing to oil, has price controls on them. It's all a matter of the degree and levers used.
The same idiots who praise government subsidies to build up our own chip industry are whining about 'price controls'.
China is still a few decades from commercially viable high end semiconductors. Yes, they can subsidize poor yields, but it doesn’t really bring them closer to figuring out the problem (they basically need to experiment a lot, and that will take time even if the money is there). China was always going to do this, they announced they were going to pour billions into semiconductors and modern jet turbines more than a decade ago. The trick is ensuring the money isn’t siphoned off to corruption.
The tooling is ultra specialized and requires whole teams of highly skilled techs to assemble and calibrate. That's like half the cost involved, and the crews running the lines don't know much about how it works, they don't need to. If something goes wrong, they have service contracts.
So China can glean some of the process, but, because the design, assembly, and setup of the machines is done by western contractors, they're effectively locked out of 'the hard part'. Not to say they can't learn it, it's just not nearly as trivial as the rest of the things they clone.
Also worth noting that, many of the chinese clones are made in the same plants as the orignals, sometimes in parallel to the originals as to benefit from existing successful processes that were already in place, but using cheaper materials, less QC, different branding, etc.
It's actually quite impressive engineering really, they can often reduce part count and cost significantly while shipping a functional, albeit inferior, product. Chip fabs don't work in that model though, so, that presents an additional difficulty.
The processes being hard to just clone, involving a lot of detailed expertise and being extremely sensitive to minute differences.
The West is able to lean on existing knowledge Intel has from running its own fabs in the US and the knowledge of ASML in the Netherlands who makes the machines.
Basically, they could get a machine and take it apart and figure out how it works, but that's meaningless if they don't understand how to make the stuff or how to keep it working well.
You don't think China already has folks working in TSMC fabs stealing IP?
If you believe that every Taiwanese engineer is rabidly anti-China then I have a vaccine I want to sell you.
It is my belief that China will steal what it can, corrupt who it can, threaten who it can and most importantly, re-invent what it is missing (they have a bigger STEM education pipeline that most Western countries combined) until they no longer have this achilles heel.
The only unknown is if there is will be hot war before they reach that inflection point.
The proof is in the pudding: they haven’t been able to replicate the process.
ASML tools are step 432 of 1234. There’s a whole fab built around it and a whole supplier ecosystem.
They will eventually succeed. That is obvious. High end chips have become existential in the modern world, especially now with AI, but have already been before that. When will they succeed is an open question as stealing the blueprint is absolutely not enough.
>It is my belief that China will steal what it can, corrupt who it can, threaten who it can and most importantly, re-invent what it is missing
So, from 10,000ft I see what you're saying, and might even agree.
But what possesses someone to describe a people or country like this? We do the same with Russia; "other" them, like they have inherently "evil" traits. As if the US isn't above or involved in espionage.
I guess I'm confused how otherwise seemingly intelligent people can look at another country and think their people are fundamentally different. But god forbid you point that lens at the wrong group.
>China will steal what it can, corrupt who it can, threaten who it can and most importantly, re-invent what it is missing (they have a bigger STEM education pipeline that most Western countries combined) until they no longer have this achilles heel.
TSMC itself relies on lithography tooling coming from the west. I get people want the western world to be wrong here but they have the edge and China doesn’t. It’s going to take them awhile to catch up and by that point the west will have innovated in new ways. China overplayed its hand way to early and will suffer technologically for this.
1) Industrial processes are stupidly hard to duplicate.
It doesn't even have to be something as advanced as semiconductors, duplicating a line that manufactures something as prosaic as paint is an exercise in patience and frustration. It's like building software from source using documentation, you may think you wrote down all the steps, but you find all the crap you missed when you actually try to execute the task.
2) Top-down command is anathema to engineering progress
American corporations are bad enough for only reporting good news up the chain (see: Intel and deep UV lithography). A dictatorship like China is going to be ridiculous. You will deliver good news to Dear Leader, and you will deliver it when expected, or you will find yourself in the doghouse. So, especially if your task fails, you will make bloody sure that it either gets reported as successful or that you leave someone else hanging with the consequences (see: China and water and rocket fuel). This slows the engineering process to a crawl as nobody can trust anything delivered from anybody else.
A not insubstantial part of China's economy involves private corporations that compete with each other. The image of China as a command economy hasn't been true since Deng's reforms of the early 1980's. At the higher levels, sure, a lot of executives will be beholden to the CCP, but there are few places China places a single bet on a single state venture. Even their fully government-owned ventures are often companies that compete with each other or have corporate subsidiaries that compete with each other, and so while you might be tempted to just deliver good news, you face the risk that your competitors will deliver better news backed with results.
This is not an attempt to suggest China's government is good, because it's not, but it's also not a carbon copy of the worst sides of the Soviet Union - for all of Deng's brutal authoritarianism, he did recognise and address a lot of the worst mistakes of Mao and the Soviets in terms of the economy.
It also still doesn't necessarily mean employees in a private company in China will be as open to reporting issues as they might have been elsewhere, but it does mean there are incentives in play that at least make many executives want to put effort into identifying and addressing issues.
What’s the difference between American Corporations and International Dictators? Serious question. I’ve always been under the assumption they operate similarly.
As an employee of a corporation, I often speak my mind. The most I risk is being fired, and I believe I can find another job relatively easy. I sometimes do keep my mouth shut, because saying the truth would get me some sour looks, and I don't feel like dealing with that right now.
I lived for a few years behind the iron curtain, in an actual honest to god dictatorship. The fear pervading and perverting society was palpable. Say the wrong thing at the wrong time and you might die, and your family will suffer too. Not to mention destroying your career and social status. Best to lie most of the time, even to realtives. You never know who to trust, and the price of a mistake is enormous.
From the way you phrased your question, I get the feeling you have no idea what a dictatorship is like. The two are only very superficially similar. Look at how Navalny ended up vs Ilya Sutskever.
I heard that five and ten years ago so I’m not really worried (or if you mean china will always be three years away from commercially viable high end chips?).
I lived in Beijing for 9 years. You know you are doing something right when the pro Chinese crowd calls you anti Chinese and the anti Chinese crowd calls you pro Chinese.
Personal attacks, such as you posted in this thread, aren't allowed on HN and will get you banned here. I don't want to ban you, so please don't do this again. If you'd please review https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here, we'd appreciate it.
It's of course difficult to remain respectful to other people when their views are remote from yours. The temptation is strong to think that they can't possibly be reasonable or fair, they must be in bad faith, etc. But after many years of moderating these disputes I can tell you that most of these perceptions are mistaken—what's really going on is that people have such different backgrounds that it's hard for them to relate to each other.
Those are separate issues. We need users, including you, to follow HN's rules regardless of what other people are up to. The way you attacked seanmcdirmid in this thread was unacceptable and obviously against the rules.
At the same time, users aren't allowed to accuse each other of being shills, etc. - this too is well-established and also in the site guidelines: https://news.ycombinator.com/newsguidelines.html. If you feel that users are breaking the rules you're welcome to flag the comments or to let us know at hn@ycombinator.com but responding by breaking the rules yourself is not ok.
The inherently parasitic, extractive elite in every empire so far loved mercantilism though, it appeals to the centralization focused, extractive, landlording mindset. China is trying to be as mercantilistic as possible (buy raw goods everywhere, ship only final products) and has none of the free trade idealism of the us. Which is one of the reasons the belt and road initivative is already collapsing.
The empire, the external face-hugger to any country, eats it all after a while, turning it into giant estates ala rome, with slaves and no middle class - with hired mercenaries for troops.
If you want to see effective de-industrialization, look at what happens to US industry when China applies the opposite of sanctions (subsidies).
Adam Smith figured out that mercantilism is inherently self-defeating over two hundred years ago. Maybe nation-states will catch up in the next few centuries.