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Capitalism: Begun the Trade War has
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  • If the US further pinches Chinese telecommunication giant Huawei by blocking companies such as TSMC from providing chips to the company, China will carry out countermeasures, such as including certain US companies into its list of "unreliable entities," imposing restrictions on or investigating US companies such as Qualcomm, Cisco and Apple, and suspending purchases of Boeing aircraft.

    The environment for China's peaceful development has changed greatly. China's domestic and foreign policies must also adjust. US suppression has become the No.1 challenge to China's development. For quite a long time, we need to release our strength to destroy US bluster.

    China must display its strategic demeanor as a major power. We need to set up the ability and mentality to tangle with the world, during which process China's historical culture can endow us with inspiration.

    We must be clear that coping with US suppression will be the key focus of China's national strategy. We should enhance cooperation with most countries. The US is expected to contain China's international frontlines, and we must knock out this US plot and make China-US rivalry a process of US self-isolation.


    The Trump administration on Friday moved to block shipments of semiconductors to Huawei from global chipmakers. The US Commerce Department said it was amending an export rule and the Entity List to "strategically target Huawei's acquisition of semiconductors that are the direct product of certain US software and technology," according to a statement on its website.

    "China will take forceful countermeasures to protect its own legitimate rights," if the US moves forward with the plan to bar essential suppliers of chips, including Taiwan-based TSMC, from selling chips to the Chinese tech giant, the source told the Global Times in an exclusive interview.

    The measures include adding related US companies to China's "unreliable entity list," imposing restrictions on or launching investigations into US companies like Qualcomm, Cisco and Apple according to Chinese laws and regulations like Cybersecurity Review Measures and Anti-monopoly Law, and suspending airplane purchases from Boeing, said the source.

  • Things already happening fast

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  • Taiwan Semiconductor Manufacturing Co., the world biggest contract chipmaker, has halted new orders from Huawei Technologies in response to tighter U.S. export controls aimed at further limiting the Chinese company's access to crucial chip supplies, multiple sources told the Nikkei Asian Review.

    "TSMC has stopped taking new orders from Huawei after the new rule change was announced to fully comply with the latest export control regulation," a person familiar with the situation said. "But those already in production and those orders which TSMC took before the new ban are not impacted and could continue to proceed if those chips could be shipped before mid-September."

    The U.S. Commerce Department announced on Friday that all non-U. S. chip manufacturers using American chipmaking equipment, intellectual property or design software will have to apply for a license before shipping chips to Huawei.

    "It's a difficult decision for TSMC as Huawei is the company's No. 2 customer, but the chipmaker has to follow the U.S. rules," another person familiar with the matter said.

    Huawei, the world's biggest telecom equipment maker and second biggest smartphone maker, relies heavily on TSMC to manufacture its advanced chip designs -- including all of the mobile processors used in Huawei's flagship smartphones.

    Huawei is TSMC's second-largest client only after Apple, accounting for 15-20% of its annual revenue. Huawei also accounted for up to 20% of SMIC's revenue, according to a Bernstein Research estimate.

    According to the document posted online by the U.S. Commerce Department Bureau of Industry and Security, chip shipments bound for Huawei that went into production before May 15 and will ship before midnight Sept. 14 are not subject to the new rule. A license will be required for all other shipments.

    This is now real war.

    This action is 1:1 mirror of famous oil blockade of Japan.

    Such way US try to keep initiative and be able to dictate date and time of conflict, while reducing time to prepare for growing competitor,

  • Apple has stepped up moving more of its iPhone production to India and Vietnam looking to better diversify manufacturing risks amid the escalating trade US-China tensions, according to supply chain sources.

    My source in Apple told that managers during Zoom-like meetings are all in bad mood.

    Sales in Asia during trade war can plummet 2-3 times. And another 2 times as soon as China will open some facts of Apple working with US authorities and have special holes in security.

  • Decoupling

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  • The Senate passed a bill by unanimous consent on Wednesday to take on Chinese companies listed on U.S. exchanges.

    The legislation would require the companies to submit to a range of stringent provisions to avoid being booted.

    First, they must disclose whether they are owned or controlled by a foreign government. Second, and perhaps most intrusively, they would have to comply with audits from the Public Company Accounting Oversight Board (PCAOB) for three years in a row.

    Things are going faster and faster.

  • Its latest initiative has been to tighten the screws on the Chinese technology firm, Huawei. Last week, the administration announced sanctions against any firms using U.S.-made equipment that supply the Chinese tech giant. The chief victim of these new restrictions will be the Taiwanese firm TSMC, which supplies 90 percent of Huawei’s smartphone chips.

    In other words, the Trump administration is committed not only to severing U.S. economic connections with China. It wants to put as much pressure on other countries as well to disentangle themselves from Chinese manufacturing. Taiwan, of course, has no particular love for Mainland China. It battles Beijing on a daily basis to get international recognition — from other countries and from global organizations like the World Health Organization.

    But the Taiwanese economy is also heavily dependent on its cross-strait neighbor. As Eleanor Albert points out:"China is Taiwan’s largest trading partner, accounting for nearly 30 percent of the island’s total trade, and trade between the two reached $150.5 billion in 2018 (up from $35 billion in 1999). China and Taiwan have also agreed to allow banks, insurers, and other financial service providers to work in both markets."

    And it probably won’t be Huawei but Taiwan that suffers from the U.S. move. As Michael Reilly notes, “Huawei’s size in the global market means its Taiwanese suppliers cannot easily find an alternative customer of comparable standing to replace it.” China, meanwhile, will either find another source of chips outside the U.S. sphere, or it will do what the United States has been threatening to do: bring production of critical components back closer to home.
  • Another mystery relates to an announcement made just as the new American measures against Huawei were being unveiled. On May 15th tsmc confirmed it would build a $12bn chip factory in Arizona, to be up and running by 2024. Why would the Taiwanese firm, which gets 15% of its revenue from Huawei, agree to pour billions into America just as its new host in effect deprived it of a big customer? It may be currying favour with the administration, hoping to avert sanctions against more Chinese customers. Observers point to another possibility. tsmc could equip the Arizona foundry with American gear from its existing factories, freeing space in its Taiwanese operations for brand new non-American kit that can freely serve Chinese customers. tmsc did not respond to a request for comment.

    Even if that is not tsmc’s intention, workarounds are bound to proliferate. On May 18th the boss of Samsung Electronics toured his company’s new chip factory in Xian, a city in central China. The South Korean firm, which plans to invest $115bn in its chipmaking business over the next decade, has made it clear that it will not ignore China. America’s export controls may prompt it to kit out its foundries with equipment that will not fall foul of Sino-American geopolitics.

    Chip-industry insiders report that semiconductor equipment is already being marketed inside China as “ear free”—meaning Chinese buyers need not worry about the “export administration regulations” that the Trump administration is using to attack Huawei. A person close to American toolmakers says some of them are thinking about moving their patents abroad to rebuild operations from scratch away from America’s jurisdiction, in order to circumvent present and future anti-Chinese restrictions. Mr Trump’s attempt to de-Sinify the semiconductor industry may do more to de-Americanise it instead.
  • IC market is weak part of Chinese strategy

    IC production in China represented 15.7% of its US$125 billion IC market in 2019, up only slightly from 15.1% five years earlier in 2014, according to IC Insights. The share is forecast to increase by 5pp to 20.7% in 2024, said the research firm.

    Although China has been the largest consuming market for ICs since 2005, it does not necessarily mean that large increases in IC production within China would immediately follow or ever follow.

    Of the US$19.5 billion worth of ICs manufactured in China during 2019, China-headquartered companies produced only US$7.6 billion (38.7%), accounting for only 6.1% of the country's US$124.6 billion IC market, IC Insights noted. TSMC, SK Hynix, Samsung, Intel and other foreign companies that have IC wafer fabs located in China produced the rest.

    Of the US$7.6 billion in ICs manufactured by China-based companies last year, about US$1.8 billion was from IDMs and US$5.8 billion was from foundries like SMIC

    If China-based IC manufacturing rises to US$43.0 billion in 2024, China-based IC production would still represent only 8.5% of the total forecast 2024 worldwide IC market of US$507.5 billion,

    Note that now around 85-90% of profits in electronic industry are located in the prices of complex LSI and CPu chips. Usually all fo this firms are owned by US, Israel, Japan and EU firms. ANd japan and EU are falling in this market.

  • NY Democrats try to block Arizona TSMC plant. Schumer is basically asking why it's not built in the state of NY instead of Arizona.

    Senators Seek Suspension of TSMC US Fab Project

    TAIPEI – U.S. Senate Minority Leader Chuck Schumer and two other Democratic Party senators have called for a suspension of a planned project by Taiwan Semiconductor Manufacturing Co. (TSMC) to build a chip plant in the state of Arizona.

    The latest move by the senators is a further evidence that politics continues to haunt TSMC, as EE Times surmised.

    In a May 19 letter addressed to U.S Commerce Secretary Wilbur Ross and Defense Secretary Mark Esper, the senators requested the two Trump administration cabinet members to “cease any such negotiations or discussions” until the relevant authorization and appropriations committees have been briefed on plans, including any commitments the two departments have made to funding, tax breaks, licenses, or other incentives.

    The announcement by TSMC last week was very likely motivated by a number of political factors, according to people who spoke to EE Times.

    https://www.eetimes.com/senators-seek-suspension-of-tsmc-us-fab-project/#

  • @jleo

    I propose to start new civil war to finally decide where to place it best :-)

  • Civil War already started, they are waiting for delivery of replica civil war cannons ordered on Aliexpress :)

  • The company alleged that Amazon and Google are providing web services for Dahua Technology and Hikvision, two Chinese blacklisted companies. Meanwhile, Microsoft’s services are reportedly being used by SenseTime and Megvii, two of China’s most valuable artificial intelligence start-ups.

    A number of other U.S. technology companies were named, including website authentication and encryption companies Digicert, Lets Encrypt, Entrust and GeoTrust. Domain name hosting firm GoDaddy was on the list as well as cybersecurity company Symantec, which is now known as NortonLifeLock. Stackpath, which works on the delivery of internet content, was also named.

    Twitter and Facebook were also named as providing content delivery network services to Hikvision.

    CNBC has reached out to all the American firms that were named to request for comment on the report. Symantec declined to comment, and CNBC did not hear back from the rest of the companies.

    China’s surveillance firms have been caught up in the tensions between the world’s two largest economies. The administration of President Donald Trump has carried out a campaign against Chinese firms, with Huawei being the most high profile target, that aims to cut off their access to American technology.

    But Top10VPN’s Migliano claimed the company’s report shows a relationship still remains between the U.S. and China’s firms.

    "Despite the Trump administration’s efforts to decouple the American and Chinese technology sectors, the continued presence of American companies in more discreet settings shows that cooperation between the two remains," Migliano said.

    US is on dangerous path here.

  • How Restricting Trade with China Could End US Semiconductor Leadership

    Over the next three to five years, US semiconductor companies could lose 8 percentage points of global share and 16% of their revenues if the US maintains the restrictions that are already in force on access to products containing US technology by Chinese companies included on the current Entity List. (The Entity List specifies which organizations are subject to such restrictions.)

    US companies could lose 18 percentage points of global share and 37% of their revenues over the same period if the US completely bans semiconductor companies from selling to Chinese customers, effectively causing a technology decoupling from China.

    These drops in revenue would inevitably lead US semiconductor companies to make severe cuts in R&D and capital expenditures, resulting in the loss of 15,000 to 40,000 highly skilled direct jobs in the US semiconductor industry.

    https://www.bcg.com/publications/2020/restricting-trade-with-china-could-end-united-states-semiconductor-leadership.aspx?fbclid=IwAR3HsoOPRvNRf5qQ-tsvEij5gLj370f7B7v7H8csetNXEVNXOfPNfLlavkE&redir=true

  • @jleo

    Current US plan is to use constantly printed money to finance their semoconductor industry, as well as TSMC and all friendly companies. No need to sell anything.

  • Taiwan-based IT firms have come under pressue to move production out of China in the wake of the US-China trade war and coronavirus pandemic, but they have claimed relocation is not easy mainly because of the high cost incurred.

    If it is necessary to move production lines out of China, the top destinations will be Vietnam, Thailand, the Philippines or other Southeast Asian countries, with Taiwan being among possible choices, Taiwanese supply chain sources said, adding for most of the makers, North America and Europe would be impractical choices.

    According to Kinpo Electronics, which has set up factories in Thailand and the Philippines for years, makers trying to establish factories in Southeast Asia face various local problems. For example, there has been short supply of labor in Vietnam, Kinpo indicated.

  • Pompeo : Today, I reported to Congress that Hong Kong is no longer autonomous from China, given facts on the ground. The United States stands with the people of Hong Kong.

    First time clear open confession that US is standing behind protests and other things with only goal - make life of HK citizens much worse and try to introduce instability.

    Without special banks related and similar preferences HK has no value. And note - it is US and not China who wants to cut them.

    China need to act fast and swift, going into fast open fight with US and keep it up. Issue is with Chinese elites.

  • The United States stands with the people of Hong Kong.

    There are many places around the world where people suffer from extreme poverty, human rights abuses and unimaginable hardships.

    Hong Kong is not one of them. Yet, the Western world, its politicians and media, choose to focus on our every development, setback and struggle, and claim “to stand with Hong Kong people”. If that’s not cringeworthy, I don’t know what is.

    But why the intense interest of the West, especially the United States? Because we have entered into an epochal struggle for supremacy between China and the US. Hong Kong people, with no sense of history and tragedy, have naively let themselves be dragged into this geopolitical vortex from which there is no escape.

    https://www.scmp.com/comment/opinion/article/3086203/why-west-so-focused-hong-kong

  • @jleo

    US always cared about human right abuses only in places where it is lot of resources or they are on the territory of their economic or idealogic opponents. In all other cases you can have open drugs sales, children prostitution and evey other shit imaginable and will be best and nicest US friend :-)

  • Mike Pompeo:

    “China’s been ruled by a brutal, authoritarian regime, a communist regime since 1949. For several decades, we thought the regime would become more like us through trade, scientific exchanges, diplomatic outreach … (but) that didn’t happen.

    “We greatly underestimated the degree to which Beijing is ideologically and politically hostile to free nations. The whole world is waking up to that fact.”

    Historical Materialism illustration :-)

    And more free trade and any more access to TSMC and other suppliers and it won't be Apple and later Google. They'll be all gone like fart, or like HTC and LG in mobile space.

  • A group of bipartisan, bicameral US politicians have drafted a bill that would “dramatically” increase investment in tech research and development. The Endless Frontiers Act would commit $100 billion over five years toward research in artificial intelligence, high-performance computing, robotics, automation and more. Another $10 billion would go towards creating regional technology hubs across the US.

    Bad for free market, return to dark ages of US. :-)

  • H.R.6948 - To authorize the President to recognize the Tibet Autonomous Region of the People's Republic of China as a separate, independent country, and for other purposes.

    More trolling.

  • South Korea has told Washington that restrictions on semiconductor sales to Huawei and other Chinese companies are “unacceptable,” according to industry sources.

    Seoul is trying to mediate between Beijing and Washington following the US Commerce Department’s May 18 announcement that sales of computer chips to companies on its “entity list” will require a license if they are produced with US technology, even if they are produced overseas by foreign companies.

    South Korea may be the odd man out in Washington’s strategy. Industry analysts say that a deal is possible under which Huawei would spin off its smartphone division, a major consumer of chips fabricated by TSMC, leaving a much larger market share to Samsung.

    Samsung sold 59 million handsets in the first quarter of 2020, compared to 49 million for Huawei, 40 million for Apple, and 30 million for Xioami. In return, Samsung would continue to provide memory chips for China as well as fabricate Chinese-designed logic chips that are now produced in Taiwan.

    Huawei executives say that the smartphone division has low margins compared to its core telecommunications equipment business.

    Fear of retaliation

    South Korea fears Chinese retaliation if the US compels Samsung to stop selling chips to Huawei and other “entity list” companies. Samsung is a major supplier of memory chips to China, but it has the capability to fabricate the custom-designed logic chips that power smartphones and AI servers.

    South Korea relies on Beijing to keep North Korea in check, and the consequences of a rupture in relations with China would be dire.

    https://asiatimes.com/2020/05/south-korea-is-the-pivot-in-the-huawei-wars/

  • @jleo

    It is just time to make united communist Korea, and all problems will be gone.

  • ASEAN is now a bigger trading partner for China than the

    China’s trade focus is pivoting. Due to its trade war with the US and the fast growing economies of its southern neighbors, China now trades more with Southeast Asia than with the US.

    ===

    Yet as the US’s importance to China declines, the member countries of the Association of Southeast Asian Nations (ASEAN) have stepped in. The ten members of the ASEAN trade bloc include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. These countries, many of which have rapidly growing economies, accounted for nearly 16% of Chinese exports in first quarter of 2020, the first time on record that the trade bloc accounted for a larger share of exports than the US.

    Among ASEAN countries, Chinese exports have risen most quickly to Vietnam. As its economy industrialized, the country went from importing just $1 billion in goods from China in all of 2001 to over $60 billion in 2019.

    https://qz.com/1861047/asean-is-now-a-bigger-trading-partner-for-china-than-the-us/amp/