I have read about the semiconductor industry in Shanghai and the massive market value they have captured. But given the current geopolitics and every nation trying to get out of China, and establish their own manufacturing hubs, I thought long-term we may see China lose its dominance.
But code red documents putting freaking potentially a trillion is just genius. Probably that's how you turn U.S. pressure into an advantage. Do you think the US can take any action to continue its semiconductor dominance?
Can you explain a bit ore on this specifically: "For American companies, this isn't just competition, but an existential threat. If China captures even 30% of global semiconductor production, it would devastate U.S. market share, eliminate hundreds of thousands of American jobs, and end the innovation ecosystem that has driven Silicon Valley for decades."
Thank you for asking about this! The 30% figure is crucial because it represents the point where China shifts from being a competitor to controlling the market. Right now, China only has 7% of global semiconductor manufacturing while the US holds 48% Semiconductor industry in China, but analysts at Yole Group predict China will hit 30% by 2030 (China’s semiconductor industry: A bumpy way to self-sufficiency). Here's why that's terrifying: China already buys more than half of all chips made worldwide (China's Semiconductor Industry: The Path to Self-Sufficiency), so if they also control 30% of production, they essentially get to decide prices and who gets chips when supply gets tight. These figures would be exacerbated if Taiwan were to lose its ability to manufacture chips as well. Also, the job losses would be massive since the US semiconductor industry currently supports over 1.85 million jobs when you count all the indirect employment (2024 State of the U.S. Semiconductor Industry), and every manufacturing job that disappears takes 4-6 other jobs with it. But here's the deeper problem: the venture capital community has been obsessed with software for decades while the old hardware guys are retiring, so all the up-and-comers are going into software. Venture investment in US semiconductor startups reached $2.6 billion invested across 75 companies in 2022 (https://www.svb.com/industry-insights/hardware-frontier-technology/Shortages-drive-record-investment-in-semiconductor-startups/), which sounds like a lot until you realize that's pocket change compared to software deals, and China is pouring trillions into this space. Since designing cutting-edge chips requires working hand-in-hand with the people making them, losing that manufacturing base would gut America's ability to innovate, essentially killing the tech ecosystem that's made Silicon Valley the envy of the world.
I have read about the semiconductor industry in Shanghai and the massive market value they have captured. But given the current geopolitics and every nation trying to get out of China, and establish their own manufacturing hubs, I thought long-term we may see China lose its dominance.
But code red documents putting freaking potentially a trillion is just genius. Probably that's how you turn U.S. pressure into an advantage. Do you think the US can take any action to continue its semiconductor dominance?
This is a really interesting read !
Can you explain a bit ore on this specifically: "For American companies, this isn't just competition, but an existential threat. If China captures even 30% of global semiconductor production, it would devastate U.S. market share, eliminate hundreds of thousands of American jobs, and end the innovation ecosystem that has driven Silicon Valley for decades."
Thank you for asking about this! The 30% figure is crucial because it represents the point where China shifts from being a competitor to controlling the market. Right now, China only has 7% of global semiconductor manufacturing while the US holds 48% Semiconductor industry in China, but analysts at Yole Group predict China will hit 30% by 2030 (China’s semiconductor industry: A bumpy way to self-sufficiency). Here's why that's terrifying: China already buys more than half of all chips made worldwide (China's Semiconductor Industry: The Path to Self-Sufficiency), so if they also control 30% of production, they essentially get to decide prices and who gets chips when supply gets tight. These figures would be exacerbated if Taiwan were to lose its ability to manufacture chips as well. Also, the job losses would be massive since the US semiconductor industry currently supports over 1.85 million jobs when you count all the indirect employment (2024 State of the U.S. Semiconductor Industry), and every manufacturing job that disappears takes 4-6 other jobs with it. But here's the deeper problem: the venture capital community has been obsessed with software for decades while the old hardware guys are retiring, so all the up-and-comers are going into software. Venture investment in US semiconductor startups reached $2.6 billion invested across 75 companies in 2022 (https://www.svb.com/industry-insights/hardware-frontier-technology/Shortages-drive-record-investment-in-semiconductor-startups/), which sounds like a lot until you realize that's pocket change compared to software deals, and China is pouring trillions into this space. Since designing cutting-edge chips requires working hand-in-hand with the people making them, losing that manufacturing base would gut America's ability to innovate, essentially killing the tech ecosystem that's made Silicon Valley the envy of the world.
That's super interesting - thank you for answering so thoroughly !