China completes second round of US$29 billion Big Fund aimed at investing in domestic chip industry

S. Korea suffering severe technological brain drain to China in batteries, semiconductors

Major areas of South Korea’s technology sector, including batteries and semiconductors, are experiencing a severe talent drain to China, a report shows. Industry observers are calling for government countermeasures to stanch the losses.

According to the report, China — the country where a large portion of South Korean resources are going — is courting talented South Koreans through tactics that border on “plundering.” Since launching its “Made in China 2025” industry advancement strategy in 2015, the Chinese government has been actively working to attract overseas talent, with companies wooing talented South Koreans with exceptional benefit packages.

The report named batteries, semiconductors, and aviation as areas where the brain drain has been particularly acute.ttp://www.hani.co.kr/arti/english_edition/e_international/919603.html

TAIPEI — Arm China, the Chinese subsidiary of the British chip company owned by Japan’s SoftBank, has become a key player in Beijing’s quest for tech self-sufficiency and, in a move likely to alarm the U.S., has developed codes that enable Chinese semiconductors to run state-approved cryptographic algorithms.

https://asia.nikkei.com/Economy/Trade-war/Beijing-s-latest-tech-ally-in-US-clampdown-Arm-China

TOKYO (Reuters) - Japan’s Tokyo Electron, the world’s No.3 supplier of semiconductor manufacturing equipment, will not supply to Chinese clients blacklisted by Washington, a senior company executive told Reuters.

“We would not do businesses with Chinese clients with whom Applied Materials and Lam Research are barred from doing businesses,” the executive said, referring to the top U.S. chip equipment firms. “It’s crucial for us that the U.S. government and industry see us as a fair company,” he said, citing Tokyo Electron’s long U.S. partnership since the 1960s, when it started off as an importer of U.S. equipment.

U.S. law specifies that any product comprising 25% or more U.S. content is subject to the U.S. export control restrictions.

Tokyo Electron controls nearly 90% of the market for microchip coaters and developers. It competes directly with Applied Materials and Lam Research in some segments.

https://www.reuters.com/article/us-usa-trade-china-semiconductors-exclus/exclusive-top-japanese-chip-gear-firm-to-honor-u-s-blacklist-of-chinese-firms-executive-idUSKCN1TC0H6

Sorry for the error in the link it should be

S. Korea suffering severe technological brain drain to China in batteries, semiconductors

http://www.hani.co.kr/arti/english_edition/e_international/919603.html

One solution for South Korea might be to fix the tax system, the marginal tax is high.
https://home.kpmg/xx/en/home/insights/2011/12/korea-income-tax.html

The Chinese acquisition of western companies continues:

China’s chip designer Goodix Technology has been approved by the country’s antitrust regulator to acquire NXP Semiconductor’s Voice and Audio Solutions for $165 million in cash, the Chinese company announced on the website of the Shanghai Stock Exchange on Thursday.

The deal will enable Goodix to acquire an industry-leading NXP engineering team, employees based in Europe and Asia as well as relevant intellectual properties. The move should help the Chinese firm to increase its position in the mobile and internet of things (IoT) industries and boost its research and development capabilities in audio applications.

Goodix announced an agreement with Eindhoven-headquartered NXP in an August statement, in which the former company’s CEO David Zhang hailed the pending acquisition as “a strategic move in Goodix’s growth plan”. He added that thanks to the deal, Goodix will be able to provide its customers with a more comprehensive portfolio and will have stronger innovation abilities.

https://www.caixinglobal.com/2019-12-05/chinese-chip-design-firm-goodix-given-nod-to-acquire-nxps-voice-and-audio-solutions-business-101491008.html

On December 5, Huawei filed a petition with the Fifth Circuit Court in New Orleans, challenging the decision of the Federal Communications Commission’s (FCC) to bar Huawei from participating in federal subsidy funding projects, claiming that this violates the US Constitution and the Administrative Procedure Act (APA).

“In the course of adopting this decision, the FCC did not allow Huawei to exercise due process or verify relevant facts. Instead, it loudly and publicly determines that Huawei constitutes a national security threat. This decision violates the US Constitution, and we have no choice but to resort to legal actions,” stated Song Liuping, Chief Legal Officer of Huawei during the press conference today.

According to earlier reports, the Federal Communications Commission (FCC) unanimously decided on November 22 that Huawei and ZTE posed national security threats, and US telecom operators would be barred from using the “general service fund” to purchase services and equipment from the two Chinese companies.

In response, Geng Shuang, spokesman for China’s Ministry of Foreign Affairs, said at a regular press conference on November 25: “The United States is accustomed to abusing state power and suppressing specific countries and enterprises on false charges without providing any evidence. It has previously collapsed Alstom and today it wants to squeeze Chinese enterprises. This kind of economic bullying by the United States is a blatant denial of the market economy principles that it has always advocated.”

Meanwhile, Huawei is arguing that this decision actually hurts US interests, as Song commented, “Operators in rural areas in the United States, including small towns in Montana and Kentucky, and farms in Wyoming, choose to cooperate with Huawei because they recognize the quality and safety of Huawei equipment. They also respect our services, because other equipment manufacturers do not care about their needs. These operators are often ignored by large manufacturers, because providing services in rural areas does not bring considerable benefits.”

https://pandaily.com/huawei-files-lawsuit-against-us-federal-communications-commission/

First they acquire small research companies in the West, then they invest back home to build up the industry with state capital.

50% of ChiCom chip efforts will be based on stolen tech from Intel, Samsung, Qualcomm and so on. Western companies leak like a sieve for the ChiComs. There are so many Chinese working at these major corporations and they steal tech. ChiComs are stealing tech from Taiwanese too. The world's largest chip foundry is Taiwanese owned. This company manufactures chips for numerous companies that do the design but farm out the manufacturing

True, and apart from Taiwanese main owners for https://en.wikipedia.org/wiki/TSMC i.e ADR-Taiwan Semiconductor Manufacturing Company, Ltd. 20.60%, and
National Development Fund, Executive Yuan 6.38%,
the third largest owner is the Government of Singapore 2.67% then
JPMorgan Chase Bank N.A. Taipei Branch in Custody for EuroPacific Growth Fund 1.40%,
Norway: Norges Bank 1.30%,
JPMorgan Chase Bank N.A. Taipei Branch in Custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds 1.26%,
Cathay Life Insurance Co., Ltd. Taiwan, 1.16%,
JPMorgan Chase Bank N.A. Taipei Branch in Custody for Oppenheimer Developing Markets Funds, managed by Oppenheimer Funds, Inc. 1.08%,
Vanguard Emerging Markets Stock Index Fund, a series of Vanguard International Equity Index Funds 0.87%,
New Labor Pension Fund Taiwan, 0.85% etc.
This means that there is an ocean of shareholders with the two largest calling the shots.

https://www.tsmc.com/download/ir/annualReports/2018/english/pdf/e_all.pdf

However, the Taiwanese government is nowadays worried about the risk of the transfer of money and knowledge to the mainland, so we can expect positive decisions from Taipei.

Huawei is not, as Beijing would have us believe, just another telecommunications firm. It is a signal intelligence service in waiting and an integral part of Xi Jinping’s global strategy to establish economic, political, and security hegemony.

To be clear, Huawei poses a serious threat to U.S. national security. The Trump administration is absolutely right to restrain the company’s access to Western telecommunications networks. I note this in light of Huawei’s new U.S. legal action, announced on Thursday.

https://www.washingtonexaminer.com/opinion/espionage-and-europe-inside-huaweis-doomed-us-legal-challenge

TSMC is an amazing manufacturing company. I was reading about it and it's CEO. Amazing because they manufacture the chip that your people engineer and design. They have loads of tech the Chicoms salivate over. __________________________________ When Globalfoundries Inc., the California chipmaker, filed patent lawsuits against rival Taiwan Semiconductor Manufacturing Co. this August, it was tapping into growing fears that the war for the future of silicon will be fought along stark geopolitical lines. The concern is that TSMC’s dominance has placed control of critical components for the world’s electronics in the hands of one company, in one region, outside the U.S. TSMC has 74% of the market for making chips designed by other companies, according to Bloomberg Intelligence data; Globalfoundries has said TSMC’s share of the most advanced products is more like 90%. “There’s a lot of concern for chip production being so concentrated, and it’s only becoming more important for everything from aerospace and defense to smartphones and the internet of things,” says Sam Azar, senior vice president for corporate development and legal affairs at Globalfoundries, which has called for the U.S. to ban a range of TSMC imports. “A lot of that production comes from one area in Greater China. A lightbulb should go off saying, ‘Wow, that may not be good for the world.’ ” A spokeswoman for TSMC, which has countersued, says that Globalfoundries’......

Yes, TSMC is a very skilled company, and there is a risk that in the future there will be problem with the concentration of chip manufacturing in a few countries.
In the article that you are referring to https://www.bloomberg.com/news/features/2019-10-21/the-chipmaker-industry-is-headed-for-a-global-unwinding they state that about a third of China’s electronics manufacturing capacity will move out of the country to Vietnam, India, and elsewhere in Asia.

To build a good semiconductor foundry you only have to have money and skilled persons plus a favorable tax system. South Korea has high taxes and that is driving engineers to China, see posts above. It is not to late to have another surge in research funding and a better tax system.

Check these graphs

China’s Import: Diode & Similar Semiconductor data was reported at 1.682 USD bn in Nov 2019. This records an increase from the previous number of 1.565 USD bn for Oct 2019.

https://www.ceicdata.com/en/china/usd-import-by-major-commodity-value/import-diode—similar-semiconductor

Check as well other items at the site

Solar Frontier and Triumph sign MoU for feasibility study into developing CIS-based building-integrated photovoltaics for China

Tokyo-based Solar Frontier – the largest manufacturer of CIS (copper indium selenium) thin-film photovoltaic (PV) solar modules – has signed a memorandum of understanding (MoU) with China National Building Material Group subsidiary Triumph Science and Technology Group (a multi-functional platform for the management, industrialization, financing, investment and acquisition of high-end technology) for a joint feasibility study.

Together with Solar Frontier’s parent company Idemitsu Kosan, Triumph Science and Technology Group and Solar Frontier will look into developing building-integrated photovoltaics (BIPV) using CIS thin-film technology, with the aim of expanding photovoltaic power generation in China.

Developments from the feasibility study will be announced depending on the results of the joint initiative.

http://www.semiconductor-today.com/news_items/2019/dec/solar-frontier-091219.shtml

Beijing has ordered all government offices and public institutions to remove foreign computer equipment and software within three years, in a potential blow to the likes of HP, Dell and Microsoft.

The move is part of a broader campaign to increase China’s reliance on home-made technologies, and is likely to fuel concerns of “decoupling”, with supply chains between the US and China being severed.

Analysts at China Securities, a broker, estimate that 20m to 30m pieces of hardware will need to be swapped out as a result of the Chinese directive, with large-scale replacement beginning next year. They added that the substitutions would take place at a pace of 30 per cent in 2020, 50 per cent in 2021 and 20 per cent the year after, earning the policy the nickname “3-5-2”.

The analysts noted that the order had come from the Chinese Communist party’s Central Office earlier this year.

https://www.ft.com/content/b55fc6ee-1787-11ea-8d73-6303645ac406

Maintaining the AI Chip Competitive Advantage of the United States and its Allies CSET Issue Brief

Semiconductor industry sectors have localized in different regions based on the comparative advantages of those regions. Key sectors include:
(1) basic research;
(2) electronic design automation software used to design chips;
(3) chip design;
(4) semiconductor manufacturing equipment (SME);
(5) materials providers;
(6) semiconductor fabrication plants (fabs) that manufacture chips based on chip designs using SME and materials;
(7) assembly, testing, and packaging of manufactured chips; and
(8) distribution of chips.
The SME and fab sectors for leading node chips have consolidated into just a few companies in a small number of countries because of significant technical challenges and high costs limiting new competitors, combined with significant economies of scale.

http://cset.georgetown.edu/wp-content/uploads/CSET-Maintaining-the-AI-Chip-Competitive-Advantage-of-the-United-States-and-its-Allies-20191206.pdf

10DEC2019 An ambitious semiconductor project in eastern China's Nanjing with planned investment of about $2.8 billion is stalled amid failures to attract investors, spotlighting a bursting bubble of local government forays into computer chips.

The project, led by Tacoma (Nanjing) Semiconductor Technology Co. Ltd., was launched in the capital city of Jiangsu Province in 2016 and designated a major local investment project. The plan included creation of a complex covering the entire business chain of chip production.

According to public information, the Tacoma project planned initial investment of $800 million to build production capacity of 40,000 chips a month. A second stage of investment could involve $2 billion.

But construction of the massive project has been halted since late March because of a capital crunch, according to Li Rui, chairman of Tacoma Nanjing. The Nanjing city government has invested 400 million yuan in the project, but the lack of other investors has made the project unable to continue, according to Li.

Li said he is still making efforts to seek investment from the private sector. The troubles of Tacoma Nanjing signal a warning for other local authorities that engaged in an investment spree in chip making over the past few years. The growth of the semiconductor industry requires heavy capital investment, high technology capacity and a long time period, said one industry investor.

Many local governments have rushed into the chip-making industry without careful preparation, leading the projects to fail, said an executive at a state-backed chip company.

https://www.caixinglobal.com/2019-12-10/ambitious-nanjing-chip-project-faces-capital-strain-101492337.html
add another component: knowledge.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.