by Pepe Escobar with permission – first posted at Asia Times
Let’s cut to the chase: with or without a sanction juggernaut,
China simply won’t be expelled from the global semiconductor market.
The real amount of chip supply Huawei has in stock for their smart phone business may remain an open question.
But the most important point is that in the next few years – remember Made in China 2025 remains in effect – the Chinese will be manufacturing the necessary equipment to produce 5 nm chips of equivalent or even better quality than what’s coming from Taiwan, South Korea and Japan.
Conversations with IT experts from Russia, ASEAN and Huawei reveal the basic contours of the road map ahead.
They explain that what could be described as a limitation of quantum physics is preventing a steady move from 5nm to 3nm chips. This means that the next breakthroughs may come from other semiconductor materials and techniques. So China, in this aspect, is practically at the same level of research as Taiwan, South Korea and Japan.
Additionally, there is no knowledge gap – or a communication problem – between Chinese and Taiwanese engineers. And the predominant modus operandi remains the revolving door.
China’s breakthroughs involve a crucial switch from silicon to carbon. Chinese research is totally invested in it, and is nearly ready to transpose their lab work into industrial production.
In parallel, the Chinese are updating the US-privileged photo-lithography procedure to get nanometer chips to a new, non-photo lithography procedure capable of producing smaller and cheaper chips.
As much as Chinese companies, moving forward, will be buying every possible stage of chip manufacturing business in sight, whatever the cost, this will proceed in parallel to top US semiconductor firms like Qualcomm going no holds barred to skirt sanctions and continue to supply chips to Huawei. That’s already the case with Intel and AMD.
Huawei’s game
Huawei for its part is investing deeply in a very close R&D relationship with Russia, recruiting some of their best tech talent, notoriously strong in math, physics and rigorous design work. An example is Huawei’s purchasing of Russian face recognition company Vocord in 2019.
Some of the best tech brainpower in South Korea happens to be Russian.
Huawei has also established a “5G ecosystem innovation center” in Thailand – the first of its type in ASEAN.
In the medium term, Huawei’s strategy for their top notch smart phones – which use 7nm chips – will be to hand over the business to other Chinese players such as Xiaomi, OPPO and VIVO, collect patent fees, and wait for the inevitable Chinese chip breakthrough while keeping production of 5G equipment, for which it has sufficient chips.
Huawei’s Harmony OS is considered by these IT experts to be a more efficient system than Android. And it runs on less demanding chips.
With the expansion of 5G, most of the work on smart phones can be handled by cloud servers. By the end of 2020, at least 300 cities across China will be covered by 5G.
Huawei will be concentrating on producing desktop computers and digital displays. These desktops will come with a Chinese processor, the Kunpeng 920, and run by a Chinese Unified Operating System (UOS).
UOS is a Linux system developed by China’s Union Tech and commissioned by Beijing to – here’s the clincher – replace Microsoft Windows. These desktops will not be sold to the general public: they will be equipping China’s provincial and national administrations.
It’s no wonder a steady rumor in IT circles is that the best bet ahead would be to put money in a Chinese Chip Investment Fund – expecting to collect big time when major tech breakthroughs happen before 2025.
The East Asian tech core
Whatever the trials and tribulations of the chip war, the inescapable trend ahead is China positioned as the indispensable tech core of East Asia – encompassing ASEAN, Northeast Asia, and Eastern Siberia linked to both Koreas.
This is the hard node of the incoming Regional Comprehensive Economic Partnership (RCEP) – the biggest free trade deal in the world – which is bound to be signed by 2021.
India has opted for self-exclusion from RCEP – which in geoeconomic terms condemns it to a peripheral role as an economic power. Compare it to South Korea, which is boosting its integration with ASEAN and Northeast Asia.
East Asia’s tech core will be at the heart of a global production chain integrating the very best in science and technology conception and the very best production specialists scattered around all nodes of the global supply chain.
That’s a natural consequence, among other factors, of East Asia introducing patent applications at a multiple of 3.46 times the US.
And that brings to the very special Samsung case. Samsung is increasing its R&D drive to in fact bypass US-branded technologies as soon as possible.
When South Korea’s President Moon turbo-charges his appeal for the official end of the Korean War that should be seen in tandem with Samsung eventually reaching a wide-ranging tech cooperation deal with Huawei.
This pincer movement graphically spells out South Korean independence from the American bear hug.
It does not escape the Beijing leadership’s attention that the emergence of South Korea as a stronger and stronger geopolitical and geoeconomic actor in East Asia must be inextricably linked to access by China to the next generation of chips.
So a crucial geopolitical and geoeconomic process to watch in the next few years is how Beijing progressively attracts Seoul to its area of influence as a sort of high-tech tributary power while banking on the future of what would be a Korea Federation.
This is something that has been discussed every year, at the highest level, at the Eastern Economic Forum in Vladivostok.
Wang Huiyao of the Beijing-based Center for China and Globalization notes how China and South Korea already have a free trade agreement and “will start the second phase of negotiations to establish a new mechanism for China-South Korea economic cooperation, which is developing fast.”
The next – immensely difficult – step will be to set up a China-Japan free trade mechanism. And then a closer, interconnected China-Japan-South Korea mechanism. RCEP is just the first step. It will be a long sail all the way to 2049. But everyone knows which way the wind is blowin’.
Another fine article by Pepe while the rest of the world moves on with trade and co-operation, the west is left wondering where the empire went wrong, as its internal problem increase every day and will head after the election with one saying I ain’t going and the other saying oh yes you will.The way of the future lies in the East and if the EU is smart they will join it or be left in the dust as use to be nations.!!!!
Chinese Unified Operating System (UOS) is a based on Deepin, which is a Debian derivative with a lightweight DE based on QT. I’ve used it before and it does have it’s strengths. I hope the project becomes more popular since it’s a very nice distro.
deepin is based on Ubuntu and available on Ubuntu’s website. Its interface (DDE : Deepin Desktop Environment) is an adaptation of the Windows interface so as to ease the transfer from Windows to Linux by Chinese users.
There was an agreement some 5-6 years ago between Ubuntu and the “Institute of Software of the Chinese Academy of Sciences” to port Ubuntu for the Chinese territory and 2 years ago the Institute of Software passed the baton to UnionTech.
Deepin was based on Ubuntu until late 2015 with version 15. The code base is now the Debian Stable Branch. Deepin is also not an adaption of the MS Windows interface, it uses it’s own Window Manager based on the X Window System. Though it shares some visual elements with MS Windows it doesn’t come with all the bloat and overhead. Packages are available for Ubuntu and Arch Linux, so you can install DDE on an existing machine.
The operating system for the Russian Elbrus 8 chip (derived from the Sparc chip) is also a derivative of Debian and in at least some of the government ministries I believe that Russia got rid of Microsoft Windows some years ago. Russia is also building 5G in the Far East using Huawei technology, and so that integration with China will doubtless go further pretty quickly.
When I visited the Computing Centre of the Russian Academy of Sciences in November 1993, they had a graphical user interface that was as good as Windows that could run on Intel 286 chips, whereas Windows required a 386 chip as a minimum in those far-off days. They did not have the application programmes but then Windows did not have much of MS Office either in those days. Self-evidently their programming was much more efficient than Microspft could manage. One private company that was trading with China then had developed its own sopphisticated database using the APL programming language, which the USA had thought was their ‘ace in the hole’ until they discovered in late 1992 that Russia had been using it for some years. The ASCII equivalent programme J was also in use, including for neural networking at that time, and a simplified kind of neural networking (adaptive learning network) was already in use for nuclear safety. AI, anyone?
Good summary, Pepe. I just want to add a few comments.
I think the UOS operating system is part of the “30 50 20” directive to remove all foreign-made products — both the hardware and the software — from computers used by China’s government in three years. It’s called “30 50 20” because the goal is to replace 30% this year, 50% next year, and the remaining 20% in 2022. The Financial Times estimates that the government will need to spend $150 million a year, which will be a rather substantial revenue stream for many small local companies — precisely the kind of companies that the government will want to incubate.
The hardware will be relatively easy to replace; many Chinese companies are already producing new desktop computers based on the ARM chip. For example, Huawei’s Kunpeng D920S10 looks quite good; it’s only a motherboard, but many Chinese companies can make a full PC from it. The ASA Cavium ThunderX is actually a full PC; it looks rather powerful to me, though rather pricey.
In my opinion, software will be harder. Operating systems like UOS are available already, but the necessary applications will take years to write. Fortunately, the coding of the many applications can proceed in parallel; and the most important ones (like word processors and spreadsheets) have Chinese equivalents already (see WPS Office).
I think the 30-50-20 project is quite practical. Chinese substitutes already exist that can do 80% to 90% of the computing work needed by the government (accounting, word processing, spreadsheets). A total replacement of foreign technology will probably need years, maybe decades — but such systems will constitute only 5% to 10% of the government market.
Most applications are x86 anyway, so they won’t run without emulation or a recompile. I believe traditional desktop applications are going to start being platform agnostic with more companies going the SaaS route. Even Microsoft has been moving towards SaaS. I can’t even get a full version of MS Office though the HUP program, all that’s available is Office 365. LibreOffice is good enough, well at least the word processor, but the other components still need some work.
” but the necessary applications will take years to write.”
I have always had a problem understanding why companies rewrite applications one at a time. It is much easier to write once and once only a tool to transfer the code.
In 1999, I was given the task of modifying many thousands of programs and databases written in a 4GL. It was for one of the biggest oil companies. I wrote a program in Delphi 7 to do everything on my PC. On the night of 31/12/1999, they ran my generated code and they never even phoned me to say how it went. I was no longer in their employ. I was a contractor in any case and I left them months before.
Portuguese translation is at
https://resistir.info/p_escobar/chip_war_29set20.html
Since several commenters are tech savy and expert I wanted to research “silicon to carbon” mentioned by Pepe.
Here’s a recent article:
https://phys.org/news/2019-08-advanced-microprocessor-carbon-nanotubes.html
The key is carbon nanotubes, many decades all tech, but only fairly recently so important to the semiconductor industry and, now, to China and Russia as they break from the US domination and hegemony.
Yes, the next generation of materials is going to be and silicon carbide and gallium nitride. China is heavily investing in the developement phase. SMIC founder Richard Chang believes this will be the equalizer for China in semiconductor manufacturing:
https://cntechpost.com/2020/08/05/smic-founder-next-gen-semiconductors-dont-need-big-investment-talent-is-key/
Chang also describes when the US can’t compete they take an “administrative approach”, which he admits they’re not very good at it.
Financially they are very good at it, this may not be enough in the future though.
You enter the car market not by making a car that’s twice as expensive as a Rolls Royce; you enter the car market by making a car that’s half the price of a Chevrolet. Then you work your way up.
I see the Chinese competing at the low end. Small, cheap ubiquitous processors like the one in your mouse, your keyboard, your remote control, your printer. That is where the meat of the business is; and it is also a market that can be weaned off US products easily.
We are not going to make much money off the Chinese. A few years ago, the West wanted to sell China licenses to make digital tv’s. We asked too much, and the Chinese ended up designing their own digital tv standard. The Chinese digital tv standard has only one feature: there are no licenses to be paid to Western companies.
The chip market is going to be the same. If we are reasonable, the Chinese will continue to use “Designed in the US” chips. If we are not reasonable, the Chinese will pull off the same stunt with ic’s that they pulled off with digital television, and design their own, no U.S. licenses used.
The US is no match to the symbiotic Russia/China relationship.
The more the US threatens and squeezes the more and faster China will race ahead.
The US cannot learn – it’s like a moron that fails then doubles down for the same result.
None of this will change with the election – the US will just race faster into failure.
What can I say Pepe reads the Saker comment section.
I see this as another example of how U.S. companies are not seriously interested in research and development (R&D). Their focus has always been on sales; i.e. selling the same old stuff to the maximum extent that they can. Afterall, R&D costs money, and that digs into profits. There are many examples of many industries where the U.S.A. took an initial lead, but then never invested to update their products. Perfecct example is the auto industry. Though Ford originiated mass car production in the U.S.A., how many more foreign made autos does one see on U.S. roads nowadays…. I predict the computer electronics and software industries are quickly going in the same direction. Ten years from now, Microsoft will be history.
Corporate America has lived off US government funded research since the fifties. They expect to continue to do so.
The reality is the exact opposite. America has been the center of creativity and invention for a century. It isn’t much of an exaggeration to say that America invented the modern World. The place for copying things has been Asia for at least 50 years. America is in decline at the moment, but you have turned the historical record on its head. It remains to be seen if that will change. When Japan began its rise in the 1960’s I thought … ‘well, soon they will be giving back to humanity, and the new stunning breakthroughs will be coming from Japan’ … it didn’t happen. Maybe it still will, but I have my doubts. Now it is China’s turn. So far, they have simply been going down the copying route. In some sense I think China has a better chance at advancing civilization. They seem to be less imitative than the Japanese.
SK9……………..enjoyed the huge exaggeration,,,,,,,,,,,,,,America invented the modern world, lmao. Which US born citizen exactly………………most US inventions were stolen (see; Tesla) via the patent office, see: Patent Office Clerk, Einstien. By the way, the Modern World started with the invention of the crapper…..i.e. toilet.
Most other ‘inventions’ i.e. jet engine, were taken as spoils of war (german scientist brought to US after WW2), look at all the US wars…………….think of all the stolen prepriatary rights…………like look at TikTok, US can’t come up with own platform so try and steal it illegaly…………….sickness, from a very sick, no exaggeration, country.
Stunning break throughs from Japan? Occupied country, all prepriatory rights defered to Occupying country, that or the US will supply one single screw for any invention then slap sanctions on anyone trying to produce their own…………see: sickness, above.
You’re just trying to refuse the obvious facts here. Japan didn’t have the capacity to surpass the US in terms of economy or technological genius, but China has that capacity.
Just check how much China invests in education, training, and production of tech-related products. They have 4.7 million STEM graduates against 570k in the US. China’s system makes sure that the country receives the max benefit of that knowledge base for the country’s development. To put it a nutshell, China’s administrative system is coherent, well organized, and flawless, and is driven by one goal; to make China the world’s top economic powerhouse.
The subversion, sanctioning and invasive methods that the US trying to use won’t simply work against China. The leaders in the US should give up their gunboat diplomacy and learn to work as partners in a multipolar world.
It isn’t much of an exaggeration to say that Nazi Germany invented the modern world …
“..’ the inescapable trend ahead is China positioned as the indispensable tech core of East-Asia – encompassing ASEAN, Northeast Asia, and Eastern Siberia linked to both Koreas”.
I laid out what is going on the the chip sector in China in my comment of Pepe’s last article “Sinophobia, Lies and Hybrid War”.
Yes. East-Asia is where the Geo-politics, of the new historical era which I call “After-Modernity”, are emerging. While the world does not notice this region is, in fact, fast unifying into a “Regional Economic Block” (REB) centered on the Confucian Area with China at the core :
– ASEAN :
With a combined population of more than 650 million, and China (1400 million) the ASEAN–China Free Trade Area signed in 2002 has been beaten record after record. In the present stage these countries vie to multiply new investments in the new silk roads (OBOR) in order to interconnect their territories by rail, road, sea-ports and telecommunications which will dramatically boost their future commercial and cultural exchanges. Note that ASEAN has surpassed Europe as China’s largest foreign trade partner in 2019…
– North-East Asia : Japan, South-Korea, Taiwan, P.R. China (this is the traditional Confucian area)
China, Japan, South-Korea constitute the bulk of Asia’s GDP and the GDP of the Confucian area is already higher in US$ terms than the US’. In terms of patent applications, the Confucian area is introducing patent applications at a 3.46 multiple vs the USA. (USA: 597K / Confucian area : 2066K = – China : 1,542,000 – Japan : 313,500 – South-Korea : 210,000. See note 1 here under).
– Far-East advanced development zone : East-Russia (Russian former Mandchou territories that gradually are expanded to the larger East-Siberia}, Outer-Mongolia, North-Korea.
” Russia’s Far East Investment and Export Support Agency investment manager Vasily Libo revealed on November 1 that China’s foreign investment in the Far East advanced development zone accounted for about 59.1% of foreign investments in the region. This massive investment into the Far East is a strategic move by China as it aims to fully exploit the riches and benefits that this region of Russia can bring”. (2)
In the present context, of a crumbling Western world order, the existing Regional Economic Blocks are the only stable institutions left. The national responses to the corona-virus pandemic showed, for the whole world to see, the shocking contrast between East-Asia’s effective governance and the radical incompetence of the West. East-Asia’s response to the corona-virus will be described, in future history books, as the turning point that started to unify the nations of this earth around the idea of mandating the East-Asia REB to lead the world’s response to the 3 factors of humanity’s predicament in Late-Modernity :
1. the present contradictions of the governance-world
2. the convergence of the multiple side-effects of Modernity ( 1 and 2 form “the great convergence” of Late-Modernity)
2. the interaction, of the multiple factors that are converging in Late-Modernity, portends the end of Modernity and the emergence of a new way of life in After-Modernity…
In this new historical era of After-Modernity the East-Asia REB’s response will inevitably follow China’s motto which is ” to participate in a community of nations that shares a common destiny building a sustainable ecological future for its children”.
If you are interested to find more info on these subjects check my last book at https://laodan.blogspot.com/2020/09/the-ebook-first-societal-blow-in-late.html
_____________
1.
Patent applications for the top 20 offices, 2018. https://wiki2.org/en/World_Intellectual_Property_Indicators+Milds.4%20%20%20%20%20%20Far-East
2.
– “China’s Development of the Russian Far East Can Improve EU-Moscow Relations”
in Global Research by Paul Antonopoulos. 2020-11-06. https://www.globalresearch.ca/china-development-russian-far-east-improve-eu-moscow-relations/5694181?utm_campaign=magnet&utm_source=article_page&utm_medium=related_articles
– “Primorye-2 Transport Corridor’s Cargo Traffic from China Up 65% in 2020 ” in Info
Brics. 2020-05-28. https://www.urdupoint.com/en/world/primorye-2-transport-corridors-cargo-traffic-929523.html
Very positive news, on the chess moves that matter yet escape attention.
Fascinating that Sth Korea is attaining some economic independence.
My understanding, highlighted by the trade spat with Japan last year, is that both countries were entangled in a US-engineered industrial dependence (including semiconductors).
“weaponization of trade” :
https://thediplomat.com/2019/08/trade-dependence-and-politicization-lessons-from-the-japan-korea-conflict/
China being the logical alternative, I cannot see a certain empire sitting idly whilst its vassals start turning.
There will be sanctions and other pressures, similar to what Germany is feeling over Nordstrom.
The East can play Chess, some very well.
But they prefer what we call GO.
South Korean security services, key military etc. remain under the control of The Empire, same as Germany. They will not allow SK to leave quietly.
Nose-nites empire is nearing its resounding splash ;-)
Why can i only see techblabla of an clueless journalist. Did the man has to made his living out of that?
All of this can be read in the news, why do i need a 3rd hand source?
Surely china has to made their own things and sure they will get them (they have the blueprints from others)
But achieving a 5nm process is something i never will discuss with a “traveler”
It is good to see Pepe’s confirmation of things that we have discussed and made pronouncement upon and speculated about for the future a few times now. Its going to be a rocky road for China to become independent in the chip market but with the amounts of R&D and the research structures they are putting together here, I truly expect some kind of leapfrog to come out of this all – watch for a totally new technology.
Brilliant as always :)
Specially because of the nano chips as no big deal. The machine of illusions for delusional people (aka any western media) will never be that clear on the subject.
I am still eager to see if the empire will try to coordinate a nuclear war on China before or right after its safe heaven – Japan – adheres to the new silk road as a collateral effect of Chinese policies.
Russians as “notoriously strong in math, physics and rigorous design work.” People would pay top dollar for legitimate translations of Russian Math and Engineering books. It is just a completely different approach.
You mean _some_certain_people_ “would pay top dollar for legitimate translations”. However, they won’t learn to read Russian to learn the different approaches directly.
As an American I could not care less. My quality of life, in every sense of that phrase, and that of my children, depends on what happens in America. And, the exact same is true for the Chinese and the Russians. Internationalists like Pepe just don’t get that. America’s industrial vigor did not decline because of China, but because its leaders decided they don’t care about America, and decided it would be better for them to ship production overseas. That is true in every field. American civilization may be in decline, it certainly seems so, but that has nothing to do with Huawei or anything else happening in China.
SteveK9 says: “America’s industrial vigor did not decline because of China, but because its leaders decided they don’t care about America, and decided it would be better for them to ship production overseas. ”
Yes, blame the leaders when it is the ordinary Americans that are responsible for electing the leaders. Reagan, Clinton, Bush II, Obama all served two terms (Trump may be too? LOL), while 90% of congress persons have been re-elected for decades – elections after elections. The same at state levels. US has a “democracy” and China doesn’t – so why complain?
SteveK9 says: “American civilization may be in decline, it certainly seems so, but that has nothing to do with Huawei or anything else happening in China.”
I give you credit for seeing through the usual lies that the leaders (Trump included) are throwing up. But that is probably too late too little. Sad. I wish the people can start a true revolution to reboot the country – but I doubt the ordinary fat lazy stupid guys are interested.
Yes, I blame the people, not the leaders.
” I doubt the ordinary fat lazy stupid guys are interested.”
Perhaps you should consider Mr. Donne’s observation that no man is an island; although the “Americas” are an island in the area from Alaska to Chile.
I love the stock photo that master Escobar appears with his articles: You may not know, but it appears to me that the excavation behind his face is of the temple that was the temporary adobe for Senate meetings when Juius Cæsar was assassinated there at portico of the Theatre of Pompey,during the Ides of March — or is it the nearby 50-seat classical anticity collective public privy? Both would be very appropriate to symbolize the good works Pepe provides us with!
China is entering the post modernized world and the West is entering the de-modernized world. Many people in the west either don’t understand the differences, or don’t like what they see, or both.
If I understand Pepe correctly, he’s saying everyone manufacturing chips has hit a wall at 5 nm. That gives China a chance to leapfrog over the 5 nm hurdle by going to carbon to reach 3 nm?
Not asking for financial advice, but does anyone know of any Chinese chip investment funds that are worth some due diligence? Thanks
Haha … I wish I did know. But I don’t. If I did, it would cost you :-)
The issue of 5nm to 3nm is not as simple so more due diligence is necessary there.
If I really wanted to seek out an investment fund with what I know now, I would probably start here to ask some questions … https://triviumchina.com/
Please do not take it as a recommendation at all – it is just the only starting space that I know of :-) and if I was serious, I would knock on their door to find where to go next.
Bear in mind that cutting edge technology while in the innovation phase rarely makes anyone any money.
The profits come when the technology is about to go mainstream and and for some time after that on the way to becoming commodity.
The dialects on both sides of the Taiwan Straits are similar. Companies in Taiwan and companies in mainland China are linked, usually through family ties. Telling Taiwanese companies they can no longer sell to China is like telling someone he can no longer sell to his cousin; when that cousing accounts for half his sales.
Until now there was no reason to avoid US made components or software. That’s changed now. Just about every electronics company in South-East Asia has gotten the message. Both state and industry now see developing “Made in Asia” alternatives as necessary. It’ll get done.
Meanwhile, I read that German arms manufacturers want new arms without “Made in USA” parts, because ITAR rules are messing with their sales. (‘ITAR free – So will sich Europas Militär vom US-Diktat befreien’,’Die Welt’).
It is as if a US politician wakes up every day, and asks himself: “What can I do to irritate another customer?”
China is playing around the world and has rights in other countries on their lands by giving them funds and acquiring their lands like yowhatsapp latest version and this
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