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US-China Fight Spreads To the Chip Factory (axios.com) 62

Posted by msmash from the tussle-continues dept.
The Trump administration's campaign against TikTok gets all the headlines, but the U.S. move last week to place restrictions on Semiconductor Manufacturing International Corp. (SMIC), China's top chipmaker, could end up making a greater difference. From a report: Semiconductor analysts say SMIC represented China's strongest bid to build a domestic chip industry and bolster its tech independence. Sanctions that cut off its access to advanced manufacturing and testing equipment from the U.S. could seriously set that effort back. The Commerce Department sent a letter Friday to U.S. semiconductor firms telling them they would need licenses to export some kinds of equipment to SMIC because anything they sold the company might be subject to "diversion to a military end use." SMIC denies any relationship with China's military.
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US-China Fight Spreads To the Chip Factory More

US-China Fight Spreads To the Chip Factory

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  • "Denies any relationship" (Score:5, Insightful)

    by GotNoRice ( 7207988 ) on Tuesday September 29, 2020 @01:25PM (#60554500)
    "SMIC denies any relationship with China's military". They are probably telling the truth, but it doesn't matter. There doesn't have to be any relationship in order for the Chinese military to take what they need, whenever they need it. If it's located in China, it's fair game for the government and the military. That is how totalitarian dictatorships work.

    • Re:"Denies any relationship" (Score:4, Insightful)

      by hackingbear ( 988354 ) on Tuesday September 29, 2020 @01:40PM (#60554566)

      American companies -- Microsoft, amazon, Google, Intel, ... -- are all suppliers to the US military which has launched endless wars on foreign countries based on fabricated accusation. So why can't Chinese company not be able to sell to its military?

      That's what bullying and hypocrisy are all about.

      • Re:"Denies any relationship" (Score:4, Insightful)

        by spun ( 1352 ) <loverevolutionary&yahoo,com> on Tuesday September 29, 2020 @01:43PM (#60554584) Journal

        We create our own IP though, we don't steal it from other countries like China does. So if we send it to China to manufacture, they will steal it and their military will use it.

        Sorry but if you want to be a totalitarian government and use our military gear, you have to pay like everyone else.

        • Re:"Denies any relationship" (Score:5, Interesting)

          by hackingbear ( 988354 ) on Tuesday September 29, 2020 @02:02PM (#60554668)

          We create our own IP though, we don't steal it from other countries like China does.

          Yeah, right after done most of the stealing [jstor.org] and then [dw.com] some [reuters.com] more [nytimes.com].

          • Re: (Score:2)

            by spun ( 1352 )

            Classic whataboutism. Did your handler teach you that trick? https://en.wikipedia.org/wiki/... [wikipedia.org]

            I encourage everyone to read the sources this person linked to. They do't really make a strong case (except for the well known fact that before we had any international agreements on patent or copyright, we stole IP from England. As they did with us. Two hundred years ago.)

            • He's a well-known troll and cycles the same links and articles. Just ignore him.

            • https://www.washingtonpost.com... [washingtonpost.com]

              This is most certainly not 200 years ago.

              • A CIA-spying station in the middle of the cold war? Who'd have thought?!

                From the link: "The German magazine Der Spiegel reported last June that German lawmakers were invited inside the Bad Aibling station in an unusually open attempt by U.S. officials to dispel rumors of economic espionage."

                And here's another link: https://abcnews.go.com/Interna... [go.com]

                "Echelon is said to be operated worldwide by five principal countries: the United Kingdom, the United States, Canada, Australia and New Zealand. It is b
          • Comment removed based on user account deletion

        • We create our own IP though,

          That's what Operation Paperclip was all about... /s

          • Is that the one where we paid a group of mercenaries to break Clippy out of Guantanamo bay after he pissed off one too many powerful folks with his incessant suggestions?

          • Why is this rehash of a an old playbook meaningful? It's the Schwinn bicycle story all over:

            1) Want to sell product or manufacture in China
            2) Agree to give 50% of your business, intellectual property and manufacturing secrets in China to a Chinese company
            3) Train your competition
            4) Chinese company pops up with state funded loans to compete with you
            5) Your non-China operations are undercut by your newly trained competitor
            6) You close down, go bankrupt or stop being a leading company in your industry
            7) China

        • Re: (Score:3)

          by AmiMoJo ( 196126 )

          The next story on Slashdot is about Apple allegedly stealing technology from another company. I seem to recall Uber was accused of the same thing.

          Aside from some anecdotes I don't see any evidence it's worse in China these days. Certainly doesn't seem to have discouraged foreign companies from having things made there or working with Chinese companies.

          • Re: (Score:3)

            by spun ( 1352 )

            You did not look very hard for evidence then, Chinese IP theft is an epidemic. Sure, "all companies do it" but not all companies are tools of a tyrannical authoritarian country.

            https://www.cnbc.com/2019/02/2... [cnbc.com]

            https://www.theguardian.com/wo... [theguardian.com]

            https://law.stanford.edu/2018/... [stanford.edu]

          • If you're looking for a counterexample, you'll always find it. There's bad stuff everywhere, and hence no absolutes. That doesn't mean there aren't meaningful differences between companies or countries, though.

            Masimo will get their day in court, and unlike some other jurisdictions on this planet, if Masimo wins they will benefit from Apple's stalling to gain increased sales, since the damages figures will be higher due to those sales. The US does not have broad programs in place where state-sponsored esp

            • Re: (Score:2)

              by jabuzz ( 182671 )

              Explain to me the how the rank hypocrisy of the Republicans appointing someone to the Supreme Court of the USA at the moment is an independent judiciary. If you think the USA has an independent judiciary you are on the crack pipe again.

              Over here in the UK while appointments are techincally done by the Minister of Justice, he has absolutely no hand whatsoever in the selection of the candidates. That my friend is an independent judiciary.

              • It is indeed hypocrisy, 100% agreed.

                To clarify the language we use on this side of the Atlantic, "partisan" (your idea of independence) and "independent" as we use it are not the same thing. When people say "independent judiciary" in the US, we mean that in general, the judiciary, congress and executive are independent branches. Judges are not compelled to follow whoever is in power "just because". You might find one that is, but you'll also find plenty that aren't.

                That is clear from the context of t

      • Re: (Score:2)

        by DarkOx ( 621550 )

        Cool well this isn't dictatorship and we don't have any walls keeping people in. Fell free to leave, renounce your citizenship and go someplace else.

        Is it rules for thee and not for me form us on the national stage - yes. Is that wrong, nope. China is free to develop their own implanters and other technology. Nobody is suggesting some kind of pee-emptive military to strike to stop them from getting 7nm chip technology!

        We are just saying, they don't share our values so we are not going to freely give them

        • More likely they'll use them to defend against you imposing your warped values on them. The Chinese don't try to impose their values on you, so why does the US keep trying to do so to them? The US is exactly what they claim China is, and what China is not. Anything "bad" has simply a copy of what the US has done, or even an attempt to do it in a "better" way.

      • Comment removed based on user account deletion

        • Wow, what a load of bollocks. Even that article doesn't claim to know who they are, where they come from, or where they're going. Somehow, people make the leap from hooded prisoners to knowing the race, gender and location.
          Sorry, but I'm gonna need more than that.

      • Re: (Score:2)

        by rtb61 ( 674572 )

        They are minor delays that will generate major hatreds but will extend US corporate monopolistic prices for a few more quarters and maintain bigger corporate executive bonuses. It is all about money NOW and screw the future, that is someone else's problem, war what ever, who gives a fuck, bigger bonus next quarter. Really stupid stuff, considering how toxic it makes the relationship between the US and China. When they catch up, what kind of mood do you want them in, seriously, wake the fuck up to your stupi

    • Re: (Score:3)

      by 1s44c ( 552956 )

      "SMIC denies any relationship with China's military". They are probably telling the truth, but it doesn't matter. There doesn't have to be any relationship in order for the Chinese military to take what they need, whenever they need it. If it's located in China, it's fair game for the government and the military. That is how totalitarian dictatorships work.

      That is how all governments work. The US has the defense production act to compel companies to produce things for "national security, and for other purposes." This isn't just a wartime power, it can be invoked at any time and for a great variety of purposes.

      https://en.wikipedia.org/wiki/... [wikipedia.org]

    • Under the conditions in China there is no such thing as a business with no ties to the military. They tell businesses who they will be doing business with.

      There's some of that here too, of course. Plenty in fact. But then, Intel never claimed not to be a defense contractor

  • Private enterprise [freebeacon.com], Military and CCP. All roads lead to Xi.

  • Long term consequency (Score:5, Insightful)

    by hackingbear ( 988354 ) on Tuesday September 29, 2020 @01:43PM (#60554582)

    It may look like a powerful strike now. By cutting off supplies of American semiconductors and other high tech products, he effectively removes the biggest advantage of American hi-tech products -- the first mover advantage [investopedia.com] -- and forces Chinese companies, who otherwise have imported billions of intellectual properties and semiconductor, to develop and use domestic products even if those are inferior. In a few years, their domestic products will then be able to survive in the market, improve and eventually surpass the American competitor. No doubt that Chinese netizens joking that Donald Trump being their comrade [quora.com].

    • For semiconductor manufacturing tools, Chinese mostly don't have any domestic alternatives. First because China has always under performed in semiconductor industry compared to size of their economy, but also because no country can pull this kind of industry off in isolation, for many things the world has one and only one supplier with no viable alternatives and these suppliers are spread all over the world. That happens with hyper specialized technology like this. You have a gigantic barrier to entry and n
      • You mean now they don't. The poster's point was by forcing them to, they will. And as someone in the CAD industry, I'll just say that many many many of the individuals I've met over the years that have built many of the algo's used by DRC, P&R, synthesis have been Chinese immigrants. If a company needs a technology, they find the easiest one to get. A barrier just means they need to develop it, which at least in my industry, they have proven they can develop it. Somehow I get the impression many western
        • Sort of, I mean sure, a missing component be it a peace of software or hardware can in theory be developed domestically, just takes time and resources. But it's not just one missing thing and one way or another they don't have forever to develop it all. Business can't just wait forever on R&D to provide critical tools. On other end, Trump also isn't going to last forever and when he leaves office his bans are pretty much sure to go with him. Honestly I don't think the situation will last long enough for
          • I don't disagree it will take time. The problem is that up until now we(the US) would have been deemed a reliable partner and would not shut off the products you (almost any other country) have come to rely on. That is now over. So China (and really even the EU) will not plan for an unreliable supply chain from the US. That will be Trump's real legacy.
            • And the rest of the European government will likely join America on this. The reason is that China has been targeting Europe's economy for the last 2 years as Trump has clamped down on American/China economy. That is not working well for Europe, esp. with covid taking a HUGE hit on it.
              • The same European governments that are so happy with being banned from buying Iranian oil. Or selling chips to China.
                I'm sure they love it when an American King gets to decide which countries they can sell their products to. It's not even EU bureaucrats in Brussels telling them what to do any more.
                It's not hard to see which is the more reliable partner.
            • True enough, I don't think anyone in the world really expected US to elect a complete lunatic like Trump as head of state. Generally when you can expect rational behavior from an developed country, not so with US lead by Trump. These risks will certainly be accounted for in future planning.
        • Precisely, even if there is no manufacturing of specialized machinery for semiconductor in china right now, don't you think a good chunk of the employees of ASML aren't chinese and would go back home to do the same work bringing all the knowledge they've developed while in the US? One thing that the US has right now is that those machines to manufacture silicon chips are highly specialized, extremely expensive and not built in china, if they force their hand in a decade or so the game will probably change p

      • Yet at the same time, you have US freaking out about hardware level backdoors and such. Does this not broadcast that US uses them ourselves? If so, that is a powerful argument for making the bicycle in house at almost any cost.

    • imported billions of intellectual properties and semiconductor

      And copy them

    • Re: (Score:1)

      by aj1929 ( 7049601 )
      This is making good sense. On top of that, if the US is delayng the likes of TSMC from supplying China, but quickly giving Intel a special license to supply, this is really damaging to US credibility.

  • What Actions have Consequences? (Score:3)

    by jellomizer ( 103300 ) on Tuesday September 29, 2020 @01:50PM (#60554612)

    (Sarcasm) Who would have thought that a nation like China, with nearly the same area of the United states and access to a similar set of Natural Resources however with 10x the population. Would just sit back and Take the US demands without some other sort of fall back method.

    China is a tough customer, they always have been. They are big and they know it. And unlike many of the smaller countries, they can stand up to the United States. They may not be as powerful, but they are powerful enough to give the US a bloody nose.

    We are letting perfect be the enemy of progress. Yes China does Suck in a lot of ways, They have the resources to dominate US in all areas, however their government is too controlling to allow for risker actions that causes more progress. As well their Human Rights issues are really bad too, making people afraid to do risks. But they are still big and strong, and we don't necessarily need a fight with them, because otherwise both will lose. China may Lose more, however they will get satisfaction on getting their punches in, and even if the US loses less, we are still losing.

  • Military uses (Score:4, Insightful)

    by cygnusvis ( 6168614 ) on Tuesday September 29, 2020 @02:07PM (#60554688)
    Any company in china is at the mercy of the party and could be subject to military use at any point. Same as in America
  • SMIC is well known to scrupulously adhere to the laws prohibiting the military use of semiconductors. All their orders are disclosed to the US government so they do NOT accept orders for anything that might have military value. I know that because one of our partners had an issue ordering chips from SMIC for infrared cameras (for drones doing solar panel inspections).

    And now the US is stabbing them. So much for the US being the country of laws where a legal business can be safe from capricious and arbitra
  • The old "diversion to a military end use." trick. Let's see who wins

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