The below article discusses Palantir's lead in discreet data transfer and isn't the reason I bring it up. Rather, within is information relevant to our discussion about China and how the criticism by some of its communist government's over reach actually is just as applicable to the US.
https://seekingalpha.com/article/44...&utm_source=seeking_alpha&utm_term=must_reads
"(The chip shortage) crisis has been exacerbated by the fact that Intel (
INTC),
which once unequivocally dominated the industry with the help of Microsoft (
MSFT), has fallen significantly behind TSMC (NYSE:
TSM) and Samsung (
OTC:SSNLF) in semiconductor manufacturing technology....
The result has been a disaster for Intel, but a windfall for TSMC...
This has prompted calls for government intervention. If 'data is the new oil', then semiconductors are the refineries. This crisis stretches into a geopolitical dimension, as the U.S. and China compete technologically. Should China invade Taiwan, a strategic priority for the CCP, they would take control of TSMC and capture the world's most advanced manufacturing technology in the process.
Government Intervention
Behind the headlines, an important development has taken place. In response to the crisis, the U.S. Department of Commerce requested that industry firms voluntarily submit data that would give the DoC deep insight into the industry supply chain. This request not only solicited data from U.S. firms, but TSMC and Samsung as well, the world's largest fabs. TSMC was heavily pressured by the CCP not to comply.
DoC head Gina Raimondo threatened to invoke the Defense Production Act if industry firms did not respond.
While most of this data will be kept in confidence by the Department of Commerce, some commentary was aptly made public. Intel, which has begged the government for a bailout while
raising its dividend (
and then threatening to open up a new facility in China), received
scathing criticism:
Among the SIA corporate signatories of a letter to President Biden in February 2021, the five largest stock repurchasers—Intel, IBM, Qualcomm, Texas Instruments, and Broadcom—did a combined $249 billion in buybacks over the decade 2011-2020, equal to 71 percent of their profits and almost five times the subsidies over the next decade for which the SIA is lobbying. In addition, among the members of the Semiconductors in America Coalition (SIAC), formed specifically in May 2021 to lobby Congress for the passage of the CHIPS for America Act, are Apple, Microsoft, Cisco, and Google. These firms spent a combined $633 billion on buybacks during 2011-2020. That is about 12 times the government subsidies provided under the CHIPS for America Act to support semiconductor fabrication in the United States in the upcoming decade.
On June 8, 2021, the Senate approved $52 billion for the CHIPS for America Act, dedicated to supporting the U.S. semiconductor industry over the next decade. But this request for major new public funds is paradoxical, almost self-defeating from a public interest standpoint. As we document in this Working Paper, most of the SIA corporate members now lobbying for the CHIPS for America Act have squandered the support that the U.S. semiconductor industry has received from the U.S. government for decades by using their corporate cash to do buybacks for the purpose of boosting their own companies’ stock prices.
-
Institute for New Economic Thinking (working paper here)
It's worth noting that TSMC's founder Morris Chang recently described Intel's new CEO Pat Gelsinger as '
very discourteous' and furthermore that U.S. efforts to rebuild domestic semiconductor manufacturing
won't succeed."
The bold emphasis is mine and the article was heavily redacted to focus on the point I want to make.
The world's leading countries will do what they can to maintain their leadership. It has nothing to do with what political system runs them, it has to do with hegemony, basically acting like the bully in the schoolyard to maintain superiority.
While China steals and copies to attain parity or superiority, the US "requests" or threatens (carrot and stick diplomacy). And as the article points out, the US government heavily subsidizes its chip industry while Intel and Co. spend their resources on buybacks to benefit their stock price and thus the bonuses of their leadership teams.
The US is its own worse enemy. The level of selfish corruption (strategies to benefit C levels is corruption in my book) and our inability to compete against later entrants (Taiwan, Korea) is the problem, not China.
