China

[Guest]

I'm pretty confident that a nation of "manly men" would fairly easily defeat a nation of effeminate men. The promotion of effeminate men in the West is highly irrational. 

 

 

[scorpioncapital]

I see no difference in this than what Nietzsche wrote about the 2 types of societies - https://en.wikipedia.org/wiki/Master–slave_morality

 

[Guest]

2 hours ago, scorpioncapital said:

I see no difference in this than what Nietzsche wrote about the 2 types of societies - https://en.wikipedia.org/wiki/Master–slave_morality

 

 

The dude lost his mind. Why value his thoughts on this topic?

[sleepydragon]

There internet rumor today (under Twitter hashtag #CCP) a coup happened in China and xi under arrest. He also didn’t attend the military committee meeting

[formthirteen]

Just now, sleepydragon said:

There internet rumor today (under Twitter hashtag #CCP) a coup happened in China and xi under arrest. He also didn’t attend the military committee meeting

 

Invert, always invert. Xi is testing the loyalty of CCP members. Just kidding. I kind of hope it's true.

[sleepydragon]

1 hour ago, formthirteen said:

 

Invert, always invert. Xi is testing the loyalty of CCP members. Just kidding. I kind of hope it's true.

One aspect of such rumors is that it reflect what many people want to see. If the rumors keeps up like this, it may very well become a reality 

[james22]

One can hope.

[UK]

https://www.economist.com/briefing/2022/09/28/an-investigation-into-what-has-shaped-xi-jinpings-thinking

[Luke]

On 9/10/2022 at 3:31 AM, stahleyp said:

 

The dude lost his mind. Why value his thoughts on this topic?

 

I think he is even more relevant today than ever and was far ahead of his time back then. Wouldnt underestimate Nietzsche. He got ill yes

Edited September 29, 2022 by Luca

[Guest]

15 hours ago, Luca said:

 

I think he is even more relevant today than ever and was far ahead of his time back then. Wouldnt underestimate Nietzsche. He got ill yes

 

I'm not saying all of his ideas are bad. However, I think the "slave/master" morality is more emotional tugging than anything. 

[maplevalue]

The Economist had an article on Xi this week (sorry paywall https://www.economist.com/briefing/2022/09/28/an-investigation-into-what-has-shaped-xi-jinpings-thinking), and I found this part interesting

 

Quote

In 2009 the American embassy in Beijing sent a classified cable to Washington (later published by Wikileaks) about the assessment of one unnamed-but clearly trusted-Chinese academic who had known Mr Xi early in the Chinese leader's career. "Our contact is convinced that Xi has a genuine sense of 'entitlement', believing that members of his generation are the 'legitimate heirs' to the revolutionary achievements of their parents and therefore 'deserve to rule China'," said the dispatch. Mr Xi was not driven by ideology, it quoted the scholar as saying, but had chosen to survive by "becoming redder than red". By cloaking himself in communism, he would be seen by the party elite as a safe pair of hands.

 

Makes one wonder, particularly when viewing China news through a Western lens, how 'truly' Maoist Xi is. I remember when Trump talked about waging war in the Middle East and "taking the oil". Outsized rhetoric for political purposes (nobody could claim they would be tougher on the Middle East than someone who says that). Might Xi be employing the same hyperbole/sabre rattling, in order to defend himself from rivals in order to cement power here? 

[UK]

https://www.ft.com/content/6825bee4-52a7-4c86-b1aa-31c100708c3e

 

“The US has essentially declared war on China’s ability to advance the country’s use of high-performance computing for economic and security gains,” said Triolo. The controls will hit Chinese companies in multiple ways. They will bar US companies from exporting critical chip manufacturing tools to China, which will affect groups such as Semiconductor Manufacturing International Corp, Yangtze Memory Technologies Co and ChangXin Memory. They will also prohibit US citizens and companies from providing any kind of direct or indirect support for semiconductor fabrication plants in China. The US also put YMTC — along with 30 other Chinese entities — on a list of “unverified” companies, paving the way for possible inclusion on a separate blacklist called the “entity list” that would effectively bar US companies from supplying them with technology. “The administration’s strategy is to deny China the capability to indigenise its semiconductor industry. If the US is successful, this causes a huge problem for Beijing’s strategy to be a world-class player,” said Martijn Rasser, a security and technology expert at the Center for a New American Security, a think-tank. Underscoring the scope of the controls, the US is using a far-reaching mechanism called the “foreign direct product rule” to make it harder for China to develop and maintain supercomputers and AI technology. The rule — which was first used by the Trump administration against Chinese technology group Huawei — in effect bars any US or non-US company from supplying targeted Chinese entities with hardware or software that contains, or has been manufactured with, American technology.

 

Analysts said China’s memory chipmakers, including YMTC and ChangXin Memory, would feel the most immediate blow. “They are basically doomed,” said Mark Li, a semiconductor analyst at Bernstein in Hong Kong. “It will be very difficult for them to get the equipment they need. But the ban on the export of semiconductor tools could significantly hurt Chinese chipmakers more broadly because US equipment makers have a stranglehold in a few key niches. Triolo said there would be “many losers”, including US chip design leaders such as Nvidia and AMD, and tool makers including Applied Materials and Lam Research. He said the rules would also hit non-US players, including ASML, the Dutch company that produces the most advanced semiconductor tools, and TSMC, the Taiwanese contract foundry company. One chip industry executive said the US was attacking China “from all angles”. “The stunning thing about this move is that they have assembled a whole array of tools,” the executive said. “They are not just targeting military applications, they are trying to block the development of China’s technology power by any means.”

 

[Spekulatius]

@UK thank you for posting. These restrictions are fairly broad and will significantly impact the semi equipment companies. AMAT, LCRX and the likes had more than 25% of their business in China.

 

Again the fault zone towards the China are getting deeper - a new sort of economical Cold War is developing here.

https://finance.yahoo.com/news/white-house-adds-restrictions-chip-151509945.html

[UK]

More about posible implications: https://www.ft.com/content/e950f58c-0d8f-4121-b4f2-ece71d2cb267

 

Two years after the US hit Huawei with harsh sanctions, the Chinese technology group’s revenue has dropped, it has lost its leadership position in network equipment and smartphones, and its founder has told staff that the company’s survival is at stake. Now, China’s entire chip industry is bracing for similar pain as Washington applies the tools tested on Huawei much more broadly. Under new export controls announced on Friday, semiconductors made with US technology for use in AI, high performance computing and supercomputers can only be sold to China with an export licence — which will be very difficult to obtain. Moreover, Washington is barring US citizens or entities from working with Chinese chip producers except with specific approval. The package also strictly limits the export to China of chip manufacturing tools and technology China could use to develop its own equipment. “To put it mildly, [Chinese companies] are basically going back to the Stone Age,” said Szeho Ng, Managing Director at China Renaissance. Paul Triolo, a China and technology expert at the Albright Stonebridge consultancy, said: “There will be many losers as the tsunami of change unleashed by the new rules washes over the semiconductor and associated industries.” The new controls on semiconductor equipment are also a potent weapon, set to hit mainstream manufacturers and leading-edge chip producers. According to analysts at the Bank of America, the equipment restrictions will affect logic chips designed in the past four to five years, and Dram chips designed after 2017. “It’s their sweet spot right now — they’re a laggard in technology and are relying on older tools and technology,” said Wayne Lam, an analyst at CCS Insight. Chinese chip companies are even more concerned about Washington’s attempts to bar US citizens from supporting them. “That is a bigger bombshell than stopping us from buying equipment,” said a human resources executive at a state-backed semiconductor plant.

 

Since many of Intel’s high-end processors go into Chinese supercomputers, BofA expects that the restrictions could hit up to 10 per cent of Intel’s sales. But some analysts believe that the measures will favour foreign chipmakers. As the US’s main motive was to slow down China’s development in the most advanced semiconductor technology, leading foreign chipmakers such as Taiwan Semiconductor Manufacturing Company (TSMC) or Intel would benefit, said Akira Minamikawa, a semiconductor analyst at research firm Omdia. He said flash memory makers that compete directly with YMTC, such as Japan’s Kioxia, might “get some benefit” from the new US measures, but the gains would probably be small. Kim Young-woo, head of research at SK Securities, said the fact that Washington had not imposed a blanket ban on equipment supplies for foreign chipmakers operating in China would come as a relief for Korean semiconductor companies, but the need for export licences could still be a hassle. The biggest question is how China responds. “We’re in a negative cycle where the US continues to push for restrictions, which pushes the Chinese to strive for technological independence, which in turn pushes the US towards harsher restrictions,” said an industry insider in Beijing. But Beijing’s levers are limited. “This will propel the Chinese to look for alternatives but with the acknowledgment that alternatives to US technology are decades away,” the person said. This dire situation could lead to more intellectual property theft. As some equipment now under export controls is already used in China, Beijing could ignore intellectual property rights and reverse-engineer the machinery to strengthen local equipment makers, said Lam at CCS. He added: “We may be shooting ourselves in the foot.”

 

Edited October 9, 2022 by UK

[Spekulatius]

The semi equipment companies like LRCX, AMAT, KLAC and others should see a huge hit from this.

Revenue % From China per 2022 10-K

LRCX: 31.4%

AMAT:33%

KLAC: 29%

TER: 17%

 

Even worse, the percentage of revenues from China has been rising for years. I don’t know how much of thee revenues is directly at risk, but I think it’s substantial. I am guess we will see double digit drops in these stocks.

 

[RadMan24]

On 10/9/2022 at 9:09 AM, Spekulatius said:

The semi equipment companies like LRCX, AMAT, KLAC and others should see a huge hit from this.

Revenue % From China per 2022 10-K

LRCX: 31.4%

AMAT:33%

KLAC: 29%

TER: 17%

 

Even worse, the percentage of revenues from China has been rising for years. I don’t know how much of thee revenues is directly at risk, but I think it’s substantial. I am guess we will see double digit drops in these stocks.

 

This is based on where customer facilities are located. South Korean firms with facilities in China have been exempt, for example, so what the impact will be is unknown, but likely much smaller than that those percentages indicate. 

[Spekulatius]

5 hours ago, RadMan24 said:

This is based on where customer facilities are located. South Korean firms with facilities in China have been exempt, for example, so what the impact will be is unknown, but likely much smaller than that those percentages indicate. 

This is correct, I just wanted to point out the magnitude of risk here. Semi equipment sales to China won’t entirely go to zero. For example, the equipment to produce trailing edge nodes for analog semis won’t be affected as I understand it.

 

I think the beneficiaries are MU and even TSM in the long run , because any competition from China is going to get kneecapped. TSM also sells into China (~10%) but I think that entails some re-exports as well, so likely impact is lower. In the long run, their strategic position has become more significant, I think.

[Spekulatius]

First victim - chips are down for Yangtse Semi:

https://www.wsj.com/articles/u-s-suppliers-halt-operations-at-top-chinese-memory-chip-maker-11665573761?mod=hp_lead_pos7

RIP.

[Castanza]

 

[Spekulatius]

Looks like the impact is about $7B with the biggest losers being AMAT and LRCX ( not surprisingly)

https://finance.yahoo.com/news/applied-materials-cuts-forecast-blaming-202509425.html

 

[mcliu]

https://www.wsj.com/articles/american-universities-continue-to-falter-in-world-rankings-china-rising-11665535646?mod=trending_now_news_5

The risk to decoupling is that over time, China might surpass us in science & technology..

[Spekulatius]

13 minutes ago, mcliu said:

https://www.wsj.com/articles/american-universities-continue-to-falter-in-world-rankings-china-rising-11665535646?mod=trending_now_news_5

The risk to decoupling is that over time, China might surpass us in science & technology..

That has nothing to do with coupling or decoupling with China though.

 

The US needs to keep an open door policy for able emigrants from China and elsewhere.

 

Oddlots podcast has a good episode about China:

 

https://www.bloomberg.com/news/articles/2022-10-13/dan-wang-on-the-extraordinary-moment-for-china-s-party-congress?srnd=oddlots-podcast#xj4y7vzkg

 

1) doesn't expect much change to zero COVID-19 policy after the big congress on Oct 16

2) Whack a mole everywhere (Property, gaming, Alibaba / ecommerce, education and now even booze !)

3) Trade war started by trump now continues with Biden (semi's etc.)

Edited October 13, 2022 by Spekulatius

[Ulti]

https://podcasts.apple.com/us/podcast/odd-lots/id1056200096?i=1000582505498
 

excellent podcast on what’s happening in China… is China relations/ chips and more

[Xerxes]

The Economist Podcasts: Introducing The Prince on Apple Podcasts

[Spekulatius]

What is the best way to get a summary of the Chine communist party congress that is starting today:

https://www.scmp.com/20th-party-congress

 

Arguably the most important event when investing in China.