Senin, 30 Desember 2024

Biden’s Commerce Secretary:  Sanctioning China Was a ‘Fool’s Errand’

Gilder Guideposts
Technology Report
Tech Report PRO
Moonshots
Private Reserve

Biden's Commerce Secretary:  Sanctioning China Was a 'Fool's Errand'

by George Gilder and Dr. Robert Castellano
12/30/2024

SPONSORED CONTENT

The Biggest Winner of the AI Boom Isn't Nvidia…

Nvidia (NVDA) has soared more than 1,700% over the past 5 years. For investors who missed out on the profits, America's #1 Futurist says AI is converging with a 'miracle material' right now, and one company, leading the way, could see its shares post 10X gains…
Our Oxford English Dictionary informs us that a "Fool's Errand" is "a task or activity that has no hope of success; a fruitless undertaking." We note this because, according to the Wall Street Journal, "fool's errand" is how Joe Biden's outgoing Commerce Secretary Gina Raimondo describes her own administration's four-year effort to hold back China's progress in semiconductors.

Instead of hindering progress, U.S. sanctions on China's semiconductor industry have spurred rapid growth in China's domestic production of chips and semiconductor manufacturing tools:
  • U.S. sanctions have spurred China's production of "legacy" (earlier technology chips) with domestic production surging and integrated circuit (IC) imports dropping, depriving Western chipmakers of tens of billions in revenue.
  • Equipment hoarding by Chinese firms, in anticipation of tighter restrictions, fueled record-high equipment purchases for key suppliers in 2023 and 2024.
  • Sanctions catalyzed the growth of China's domestic equipment industry, which saw a 37.1% year over year (YoY) revenue increase in 2024, compared to just 2.7% growth for non-Chinese competitors.
The White House is reacting predictably. After three rounds of ever- tightening restrictions on the sale of cutting-edge chips or chip-making tools, just in the past week the administration announced a last-minute trade investigation into Chinese-made legacy semiconductors.

No one could describe these devices as cutting-edge, the original national security justification for the anti-China sanctions. Like the ridiculous "the cargo cranes are spying on us" episode or the original Huawei ban, this is pure trade war stuff masquerading as national security.

Chinese companies have been ramping up production of legacy chips, sparking Western firms to complain to Washington that Chinese output will cut their margins. And Chinese output certainly is growing (relative to the market) and its imports declining, according to The Information Network's report "Mainland China's Semiconductor and Equipment Markets: Analysis and Manufacturing Trends."

From overproduction in the pandemic years to the surfeit and slump following, semiconductor sales have been exceptionally volatile, making year-over-year comparisons challenging. In Table 1, below, however, note the sudden large gap in 2023 between percent growth in imports and exports, with imports declining much faster as Chinese producers displace Western chip makers, largely American.
Table 1 – Import-Export Data of China ICs.
Year IC Export Volume (Billion Units) YoY Growth (Export Volume) IC Export Value (Billion USD) IC Import Volume (Billion Units) YoY Growth (Import Volume) IC Import Value (Billion USD)
2021 310.7 19.6% 153.8 635.5 16.9% 432.6
2022 273.4 -12.0% 153.9 538.4 -15.3% 415.6
2023 267.8 -1.8% 136.0 479.6 -10.8% 349.4
Source: The Information Network

Discover the One Company Leading America's Hypersonic Missile Efforts Today 

Hypersonic missiles can travel at 20 times the speed of sound … making them essentially invisible to even the best available radar technology.

Russia, China, and Iran have these terrifying munitions in their arsenals, and Russia and Iran have already launched hypersonic missiles at Ukraine and Israel.

However, there's a nation missing from the list of hypersonic capable militaries… it's us.  The gut-churning reality of warfare today is that America is way, way behind when it comes to hypersonic missile technology, and we're desperate to catch up.

I've discovered one company that is poised and ready to take a big chunk of this spending.

Go here now to watch an exclusive presentation about this company.
Robert, as CEO of the Information Network, has been all over this story. Among other points he has documented how sanctions led Chinese chip manufacturers to hoard equipment from non-Chinese companies for fear of more stringent sanctions.

In Q1-Q2 2023, the average portion of sales to China from the top six makers of semiconductor manufacturing as a percentage of global sales was below 30%. As U.S. sanctions were only gradually tightened in three rounds--2022, 2023, and 2024--and signaled in advance, Chinese semiconductor companies took advantage of their "lead time." The Chinese portion of revenue to these equipment companies leapt from 22% in Q1 2023 to 48% for Q3 2023 and has remained above 40% ever since. That involved Chinese companies hoarding equipment to sustain future growth in chip production.

Confirming the point, Chart 1 below contrasts semiconductor equipment purchases by country for the first three quarters of 2024 versus the same period in 2023. Only equipment purchases in China grew YoY for this period, while six countries/regions shrank.


Chart 1.  Source: The Information Network

U.S sanctions put limits on capabilities of foreign equipment sold to China, attempting to block Chinese companies from producing leading-edge chips. The Chinese responded by piling up equipment to make legacy chips and proceeded to do so big time, prompting the extra rapid decline in Chinese imports.

U.S. sanctions seeking to prevent China making advanced chips are actually promoting Chinese production of legacy chips.

U.S. sanctions have also catalyzed China's own semiconductor manufacturing equipment industry. Chart 2 shows the equipment revenues for the top Non-Chinese and Chinese companies. For Chinese companies, the mean growth for 3Qs 2024 / 3Qs 2023 was 37.1% compared to just 2.7% for non-Chinese companies.

Revenues for non-Chinese companies came from global sales, including sales to China, while those of Chinese companies came primarily from China. Chinese equipment sales started from a tiny base, but the direction of growth is clear. Most of the equipment made in China is for legacy chips, not advanced nodes, predicting continued increases in the production of legacy chips.

Chart 2: Growth for Chinese Equipment Companies Outpacing Non-Chinese Competitors

Source: The Information Network

Why the 'Elon Effect' matters

With Musk already increasing his influence in government, the markets are feeling the tremors — and the opportunities are massive.

I've pinpointed three stocks shaping the future of trading — and one that savvy traders are steering clear of.

December's volatility is packed with opportunities, and these artificial intelligence forecasts could transform your trading strategy.
U.S. sanctions aimed at limiting China's access to advanced semiconductor technology have only accelerated the growth of its legacy chip production and fostered self-reliance in semiconductor manufacturing. By focusing on mature nodes, Chinese firms have capitalized on global demand for legacy chips, crucial for applications ranging from automotive to IoT devices.

Should we care if China dominates the production of legacy chips? Yes, for two reasons:
  • Revenue from legacy chips has helped sustain Western chipmakers and equipment makers, including their R&D budgets.
  • More importantly in the long run, expanded production of legacy chips moves Chinese producers along the learning curve. TSMC, now the greatest chip manufacturer in the world, started out as a lowly second source for legacy chips. By cutting prices and boosting volume, it rode the learning curve to the top of the heap.
Like so many government programs, U.S. sanctions are falling victim to the Law of Unintended Consequences, achieving the opposite of their goal. Thank you, Secretary Raimondo, for noticing--four years too late.

Sincerely,
The Editors
George Gilder, Richard Vigilante, Steve Waite, and John Schroeter
Editors, Gilder's GuidepostsTechnology ReportTechnology Report Pro, Moonshots, and Private Reserve

About George Gilder:


George GilderGeorge Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.  George and his team are the editors of Gilder Technology Report, Gilder Technology Report Pro, Moonshots and Private Reserve.
About Us:
 
Eagle Financial Publications is located in Rosslyn, VA. – Blocks from the Capitol. Our products have been helping investors build their wealth for several decades. Whether you’re a long-term investor or short-term trader, you’ll find the right strategy for you, including how to earn more steady income to spend now, preserve and grow your capital to enjoy later, and whatever other investment goals you have.
Visit Our Websites:
To ensure future delivery of Eagle Financial Publications emails please add financial@info2.eaglefinancialpublications.com to your address book or contact list.  View this email in your web browser.

This email was sent to indra21poetra@gmail.com because you are subscribed to George Gilder's Guideposts. To unsubscribe please click here.

If you have questions, please send them to Customer Service.

Legal Disclaimer: Any and all communications from Eagle Products, LLC. employees should not be considered advice on finances. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized advice on finances.

Salem Media Group - Eagle Financial Publications | 1735 N Lynn St, Suite 500, Arlington, VA 22209-2016
Link

Tidak ada komentar:

Posting Komentar