China could face more semiconductor export curbs from the likes of the U.S. and the Netherlands to contain the Asian powerhouse's chip tech, analysts say.
That's likely the rationale behind the move, but the problem is that we already see US based companies starting to lose money because of it. This was a really good of the problems. Basically, chip development has very low margins and profitability relies entirely on selling large volumes. China used to be one of the biggest consumers for chips, and now US companies aren't allowed to export newer chips there. So, their market has shrunk and now it's not profitable for them to even bother developing new chips. What's worse is that they're now becoming worried that China will be flooding the world with older chips now that they've spun up their own foundries. Most of the chips being sold aren't bleeding edge ones, but older variants that are still good enough for most applications.
US has also been struggling with trying to get domestic foundries going, and at the rate things are going I expect China will end up leapfrogging the US in terms of bleeding edge chip production as well within a couple of years.
The only play US really has here is to force their vassals to decouple from China entirely and then force them to buy chips and other tech from US. However, we're already seeing anti-US sentiment growing in Europe, and pro US governments might end up getting kicked out of power in the near future.
Overall, I think this is a really poor strategy all around, and it's not going to produce the results that US is hoping for. It's the same level of delusion that resulted in the debacle in Ukraine.
Interesting ideas but it doesn't take into account the extremelly expensive AI chips, and the new AI designed chips as well to a lesser extent I guess.
If they can make enough money with the AI chips, or if the government invests heavily, they could keep their position for longer, but if it doesn't make them enough or if they just distribute this to the shareholders they could indeed face a lack of sales leading to falling income and possible crashes.
Meanwhile, China is already making domestic 7nm chips for AI https://www.digitimes.com/news/a20230717PD210/china-7nm-ai-chips.html
and has a huge domestic market https://asiatimes.com/2023/12/china-to-meet-ai-market-demand-with-local-chips/
My expectation is that China will rapidly catch up and will start outpacing western chip companies. It's also worth noting that as western chip market slumps, China will be able to poach a lot of the people. This has already been happening with TSMC and Samsung researchers and engineers moving to China because they got really attractive job offers.
Truly specialized chips for AI have yet to be fully explored. And China will surely be one of the countries to invent them, with the sanctions in place meaning the government will have to prioritize designing new chips.
That's likely the rationale behind the move, but the problem is that we already see US based companies starting to lose money because of it. This was a really good of the problems. Basically, chip development has very low margins and profitability relies entirely on selling large volumes. China used to be one of the biggest consumers for chips, and now US companies aren't allowed to export newer chips there. So, their market has shrunk and now it's not profitable for them to even bother developing new chips. What's worse is that they're now becoming worried that China will be flooding the world with older chips now that they've spun up their own foundries. Most of the chips being sold aren't bleeding edge ones, but older variants that are still good enough for most applications.
US has also been struggling with trying to get domestic foundries going, and at the rate things are going I expect China will end up leapfrogging the US in terms of bleeding edge chip production as well within a couple of years.
The only play US really has here is to force their vassals to decouple from China entirely and then force them to buy chips and other tech from US. However, we're already seeing anti-US sentiment growing in Europe, and pro US governments might end up getting kicked out of power in the near future.
Overall, I think this is a really poor strategy all around, and it's not going to produce the results that US is hoping for. It's the same level of delusion that resulted in the debacle in Ukraine.
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I definitely agree with your assessment of the logic behind this move.
There's only so much you can do when you're whole approach is 'do as we say or else' but the threats stop working.
Interesting ideas but it doesn't take into account the extremelly expensive AI chips, and the new AI designed chips as well to a lesser extent I guess.
If they can make enough money with the AI chips, or if the government invests heavily, they could keep their position for longer, but if it doesn't make them enough or if they just distribute this to the shareholders they could indeed face a lack of sales leading to falling income and possible crashes.
It looks like US hasn't really been doing much of an investment into subsidizing domestic fabs
Meanwhile, China is already making domestic 7nm chips for AI https://www.digitimes.com/news/a20230717PD210/china-7nm-ai-chips.html
and has a huge domestic market https://asiatimes.com/2023/12/china-to-meet-ai-market-demand-with-local-chips/
My expectation is that China will rapidly catch up and will start outpacing western chip companies. It's also worth noting that as western chip market slumps, China will be able to poach a lot of the people. This has already been happening with TSMC and Samsung researchers and engineers moving to China because they got really attractive job offers.
Truly specialized chips for AI have yet to be fully explored. And China will surely be one of the countries to invent them, with the sanctions in place meaning the government will have to prioritize designing new chips.