China’s ramping up its chip manufacturing by 2027 as it looks to phase out some of the biggest household names from its network. Yahoo Finance’s Akiko Fujita discussed how Intel (INTC), AMD (AMD), and Huawei are affected. This segment is from April 12, 2024.
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Bring the jobs to the US.
China is the biggest buyer, consumer and importer of chips. China buys, consumes and imports over half of all chips made in the world. If China makes the policy decision: “we are not gonna buy any chips that are made in the USA, and we are not gonna allow US-made chips to be used in our devices,” (which seems to be the direction that China is moving towards based on a series of recent announcements,) then it will be a big blow to making chips in the US: because the setting up chip factories in the US means that they will not be able to sell any chips to the US. Why should any companies make chips if that means they can’t sell their products to the biggest chip market in the world?
“Decoupling” and “derisking” go both ways. You can’t expect the US to decide “we are gonna stop buying and importing from China,” while continue to demand and force China to continue to buy chips, agricultural products and other stuff from the US. The US has this naive ridiculous idea that they can ban and stop selling high-end chips to China, but then China has to and must continue to buy mid-range and low-end chips from the US, and China can’t say no to buying them from the US.
The world does not work that way. China can say no to the US and say, “you know what, we are gonna just stop buying ALL chips from the US altogether and deny the US the biggest chip market in the world… and we are gonna cancel all our agricultural orders from the US and buy our foods from Russia, Brazil and other nations that are friendly and more palatable to us. So American farmers can kiss the world’s biggest agricultural consumer and market goodbye as well.” Because that is exactly what has happened. Not only you’re not getting your manufacturing jobs back, you are gonna start losing agricultural jobs as well.
@@ktchong5800 The US will manage. its not like the US needs the Chip manufacturing to survive. the US can build and replace the losses and since we have other countries that are friendly and can trade for other resources i think it would be difficult be its the US, they have gone through harder times.
@@GundamCreator That’s not how “capitalism” work. Let me lay out the logic for you: China is the biggest chip market — because China uses chips in everything they manufacture: EV, phones, tablets, gadgets, appliances, solar products, etc. Right now, China buys and imports those mid-range and low-end chips from the US. (US ban exports of high-end chips to China.) China pays good money for those mid-range and low-end chips from America. Those US chip companies sell mid-end and low-end to China, and then they use the money from China to put back into R&D, to innovate and develop high-end chips… that China is NOT allowed to buy. So China pays into the system but is not allows to benefit from it.
So now China is starting to ban its Chinese manufacturing from buying mid-range and low-end chips from US companies. That means Chinese manufacturing (EV, phones, computers, appliances, green products) will have to buy mid-range and low-end chips FROM CHINESE CHIP MAKERS. Why? What’s the long-term plan here? Think about it.
When China bans its government, telecom and soon manufacturing from buying ANY and ALL US chips, Chinese manufacturing will start buying replacing US chips with Chinese chips. Chinese manufacturing will have to buy chips from Chinese chip makers… and give their money to Chinese chip makers instead of American chip makers. Chinese chip companies will gain market shares from US companies. They will make more money. They will be able to put more money R&D and innovation. They will be able to spend more money to develop high-end chips.
On the flip side: as US chip companies lose access to the biggest market in the world, they will make less money. Which means they will have less money to spend on R&D and innovation.
That means: in a few years, (I’d have it 5-10,) Chinese chip companies — with all the new market shares, increased profits, more spending in R&D and innovations — will sooner or later catch up and SURPASS America in chip technology. And, the US chip companies will NOT be able to replace the lost Chinese market and revenues.
As an example: Chinese is the biggest EV maker and exporter in the world. Every Chinese EV uses a lots of chips in it, and right now Chinese EV are using US-made chips. In a few years, Chinese EV will be using Chinese-made chips. The US will NEVER be able to beat China in making EV because China is years ahead of the US in battery technology, AND China also has near-monopoly in rare earth mining, production and refinements… which China is DECADE ahead of the US in rare earth production and refinement technology. The EV supply chains and material sourcing HUGELY favor China, which makes it near impossible for the US to catch up to China in making EV.
And that is not just EV. Because the manufacturing eco-system and supply chain HUGELY favors China over the US, China can leverage its position as the biggest chip market (because manufacturing uses lots of chips) to beat the US: China can and should cut off US chip companies from the Chinese markets, and then the US chip companies will make less money and have to cut back on R&D, the money will got to Chinese chip makers that will put the money into more R&D, and in a few years China will overtake the US in advanced and high-end chips. That is how China can completely change the game…. and China has finally taken step to leverage its manufacturing advantage to get ahead in chips.
Smart
Blame it Trump who started using NS as excuses to ban tech to China.
They were going to do it regardless
Good! Screw CCP and everyone who is even remotely associated.
What do you expect, when you have to share your Intel with the government to do business over there…..
While us does the same to China.
They want to corner the market with stolen American tech. Pretty simple
Nice, you don’t allow us to buy your chips. Great,we will just remove it. intel will lose 27% of their revenue and AMD 15%.with reduced revenue, more retrenchment.
Good capitalists, stupid, but good at making money (for awhile). Reverse engineering will give all the knowledge out.
Biden makes money from China. We get screwed again.
This is what was intended? Right? Box in China and don’t sell them technology?