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America's Chipmakers Go To War vs. China (axios.com)
Chinese raids of U.S. intellectual property have helped China build a solid high-tech economy. But the U.S. semiconductor industry is still far ahead -- and China is desperate to catch up. From a report: Semiconductor manufacturers are fighting to protect IP from the Chinese, fearing that, without coherent action from the Trump administration, Beijing could bulldoze their industries. Three weeks ago, Micron and South Korean chipmakers Samsung and SK Hynix all reported that the Chinese government had launched antitrust probes into their firms, and accused them of setting artificially high prices for memory chips. American companies and the U.S. government have long been suspicious about the link between China's anti-monopoly policies and its industrial goals. "They want access to the intellectual property. They need us to teach them how to do it. Once they have the industry, they want to push us out," an industry source familiar with China's investigation into Micron tells Axios. The price hikes, the source says, are largely due to a boom in demand for memory chips in everything from smartphones to autonomous vehicles. China's investigation is "a clear indication that they're not ready to make [semiconductors] work," says the source. The New York Times has a story which also details the lawsuit of how a Fujian govt-backed chipmaker allegedly stole secrets from Micron. Then Micron got sued for patent infringement in Fujian.
Or as the Times reporter describes it, "This is how you lose a major tech company. First, a Beijing-backed buyout offer. Then friendly Chinese partnership proposals. Then the tech gets stolen. Then when you file a complaint in court, you get hit with investigations in China, your biggest market."
Or as the Times reporter describes it, "This is how you lose a major tech company. First, a Beijing-backed buyout offer. Then friendly Chinese partnership proposals. Then the tech gets stolen. Then when you file a complaint in court, you get hit with investigations in China, your biggest market."
>> Once they have the industry, they want to push us out
This is news? I remember visiting a couple of mid-to-high tech companies doing business in China ten years ago and every company was structured the same way: the one or two foreigners running the plant and the hundreds or thousands of local Chinese doing everything.
If chipmakers don't like the way China works...why not try building elsewhere instead of whining about industry protections aimed at a specific country (that screw up things for lots of other people)?
The US gov like it that way going back to the 1970's when the USA split China from close deals with the Soviet Union.
For that to work China got a lot of US tech for free. US brands got invited into China. Low tax, low wages. Production lines that could make a profit with every generation of tech.
The only trick was the USA would have to transfer the tech production methods so the new factories in China could make the most profit.
To share everything the US brand had created with a local partner in a Communist nation.
No tech transfer, no production line. The US brands opted to invest in 1970-80's China rather that much more secure and pro US nations with the same wages.
Now China understands the US tech it wants to export everything under its own Communist brands at full price to the world.
Domestic spying is now "Benign Information Gathering"
Look at this way, if Tech X takes 1Bil to develop and 0.5Bil to set up facilities to produce, Western firm has to recoup 1.5Bil and Chinese firm has to recoup 0.5Bil. Consequently, selling the same Tech X Chinese firms can undercut Western firms by a great deal. This is not because of cheaper labor, but because IP is essentially free to Chinese.
The CIA and MI6 assured the US government that freedom would spread quickly and fully all over China in the 1980's.
That free trade would change China and that democracy would move into China under the cover of free trade.
The West invested fully and China simply took the tech for free.
Domestic spying is now "Benign Information Gathering"
Re 'Step 2: Outsource all the jobs overseas."
South Korea, Thailand, the Philippines kept US secrets during the Vietnam war.
Nations that helped and supported their friends in the USA.
They would have welcomed and supported all and any new US high tech investment in the late 1970-90's. Low wages, low tax, secure and ready to support the USA.
Educated, english speaking. A good working history with the US mil.
Ireland would have done great tax deals too.
What did the USA do? Invest in Communist China. Give secrets away for free to China with every new US factory opened.
Domestic spying is now "Benign Information Gathering"
1970's? I remember when it was wellknown that all what the Japanese did was copy everything and made bad copies on top of that. Plenty a joke of the Japanese coming to Europe and the US to take pictures of every factory and product but not buy anything.
After that the copies became better and later they where the ones that where being copied. They became the leader in many products, especially electronics.
Don't fight for your country, if your country does not fight for you.
Re 'Step 2: Outsource all the jobs overseas." South Korea, Thailand, the Philippines kept US secrets during the Vietnam war. Nations that helped and supported their friends in the USA. They would have welcomed and supported all and any new US high tech investment in the late 1970-90's. Low wages, low tax, secure and ready to support the USA. Educated, english speaking. A good working history with the US mil. Ireland would have done great tax deals too. What did the USA do? Invest in Communist China. Give secrets away for free to China with every new US factory opened.
That was a political choice made by Nixon/Kissenger in the 1960s. The theory was that engagement with China will liberalize them. Some opportunistic behavior was to be tolerated since it will be offset by the political rewards of a reformed Communist China. Sadly those reforms ended with the Tienaman Square Massacre in 1989 but that 1960s policy of tolerating the opportunistic, now predatory, behavior continued. Trump may be an idiot but he's somehow got it correct that our policy has to change, it has to be reciprocal, free and open and fair in both directions or in neither direction. We can't continue the unidirectional policy, that failed. The modern messenger may be wrong but message is correct.
The average Chinese contract manufacturer makes about a 1% profit selling to the west. They more or less have to cheat and sell additional production in China which gets exported 'informally'.
Full price for cheap knockoffs is already in the market, the Chinese are way behind in moving up the value curve. By this number of years the Japanese already owned the world camera market and were starting to own the car market.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'