China is asserting itself on the world stage and in advanced technologies like space, renewable energy and semiconductors. As we all know, semiconductors are one of the key building blocks in the modern world, controlling artificial intelligence, quantum technology, and consumer products like smartphones, electric vehicles and virtual reality. This book is a first hand account and primer on Chinese culture and how this related to the semiconductor business in China. The author has been involved with this industry for over 30 years, including more than 10 years in China. Some of the key chapters cover topics like the rise of semiconductors in Asia and specifically China. The long history of China and its relationships with neighbouring countries gives the current geopolitical situation some context. Imperial expansion centuries ago is now being used to justify threats to Taiwan, India, Russia, as well as in the East and South China Sea and the Korean peninsula. These regions play a dominant role in the semiconductor industry and military conflict or blockades in any of them could trigger a global depression. Business practices in China are discussed including the cultural differences the author lived through while working there. These include amusing dining and drinking etiquette but also intellectual property theft and the protection of IP. The impact of corruption on China’s attempt to develop its own semiconductor supply chain is covered. Both Big Fund 1 & 2, the Little Giants program as well as numerous wafer fab and IC product launches were plagued by scams, insider trading, money laundering and nepotism. Central planning and provincial mandates which emphasis primarily construction have resulted in wafer fab over capacity and numerous zombie fabs and companies, wasting billions on this semiconductor self-sufficiency push. In some cases, this corruption has led to arrests and purges. It was interesting to hear industry and government leaders gossip at business dinners across the country about who got arrested and interrogated the past week. These observations may explain why the billions spent in China have not produced the same results in semiconductors as they have in much smaller countries with smaller budgets like Taiwan and South Korea.
Another chapter discusses the Chinese surveillance state and how semiconductors, AI, sensors and MEMS have created a truly 1984-type dystopian environment of fear and censorship. This is an area that our semiconductor and sensor industry need some self-reflection worldwide, not just in China. The government push for personal tracking was amplified by COVID-19 lockdowns, smartphone tracking and AI monitoring of citizens initially to prevent infectious spreading of the virus but are now being used for censorship and to monitor dissent.
Like it or not geopolitics plays a role in our industry. In one chapter the fall of Chimerica is discussed which began in earnest in 2017. The rise of expansionist nationalism, anti-American propaganda and wolf warrior diplomacy, coupled with the COVID-19 semiconductor supply chain shock resulted in the US taking the lead in global near and friend shoring activities. We saw the dispersing of new TSMC, SK Hynix and Samsung fabs and facilities in the US, Japan, EU and Singapore to get away for the Chinese sphere of influence. Just a few years ago this would have been unthinkable due to higher costs. Apple and others are now moving electronic assembly out of China to India, Vietnam, Mexico and elsewhere. Finally, a few alternate futures related to China in semiconductors are put forward including the industry and economic impact of possibilities like an invasion of Taiwan, South Korea and maybe even Siberia. https://a.co/d/3ExnOVE
Doug Sparks Published Nov 2024