Guideposts: In Tech, China's Success Is Our Gain | | by George Gilder and Richard Vigilante
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An anxiety-ridden article in yesterday's Wall Street Journal lamented in a headline that "Beijing Leads U.S. in Fusion Race."
Apparently, workers in a "national fusion consortium," including some of China's biggest companies, are "completing a massive fusion technology campus" by working "three shifts, essentially around the clock."
The Journal worries on that with "10 times as many Ph.D.'s in fusion science and engineering as the United States," China is spending roughly "$1.5 billion a year on fusion, nearly twice the U.S. government's fusion budget."
Very upsetting to the Journal is that China "appears to be following a program similar to the road map" published as the work of hundreds of U.S. scientists in 2020. The head of the U.S. Energy Department's Office of Fusion Energy Sciences, one JD Allain, comments, the Chinese "are building our long-range plan," and "that's very frustrating."
Okay, here's the deal. If commercial fusion energy is possible, we want the Chinese, or the Germans, or the Senegalese, or the Ugandans or even those poor wistful Canadians huddled at our northern border wrapped in extra mufflers and those funny hats with the big pull down ear flaps, or anyone at all to invent it as soon as possible, so we Americans, along with the rest of the world, can get really, really rich, and then tell the Greens to stop annoying people.
It would be cool if Americans got there first, but aside from the cool factor and a boost to American confidence, it does not matter who "leads" the race for fusion or "dominates" that or any fantastically productive technology. This is especially true for semiconductors, where the United States is going to terrible, destructive lengths to keep the Chinese back.
Keeping China back in semiconductors is the last thing we should want. Just the opposite: we should be cheering them on, helping them, collaborating with them (as U.S. scientists at Georgia Tech collaborated with Chinese scientists from Tianjin University on what may prove the most important discovery of our century, the graphene semiconductor. It promises at least a 1000X increase in computing power producing less heat than the currently most powerful chips.
We should want China's semiconductor industry to flourish because hardly any of the astonishing amounts of wealth enabled by the semiconductor industry goes to that industry. The wealth goes to all the millions of firms and billions of people that use its products.
In 2022, more than 50 years after the invention of the microprocessor, global sales of semiconductors summed to $595 billion. In 2023, that number was a bit smaller, approximately $540 billion.
Meanwhile, also in 2022, the total output of the world economy was on the order of $100 trillion, with U.S. output about $25 trillion of that. Total global net private wealth exceeded $450 trillion. Nearly all that production and nearly all that wealth was enabled in some way by the microchip. Most could not have happened without it. Massive parallel computation pervades and drives any industry you can think of and is about to kick into overdrive.
Yet only 0.6% of that wealth goes to the people who design and build microchips.
By market capitalization Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), Nvidia (NASDAQ: NVDA), Alphabet (NASDAQ: GOOG) and Amazon (NASDAQ: AMZN), in that order, are the biggest companies in the world. Wonderfully, they are all American firms.
Nvidia is, today, the most important firm on the globe. It is doing more than any other to fuel global economic growth and prosperity. For creating the graphical processing unit that enabled the surge in Artificial Intelligence It deserves every penny of its current roughly $3 trillion valuation.
NVDA is also: - the only company on the list whose primary business is making microchips
- and the only company on the list with revenues of under $100 billion. MSFT reaps more than $260 billion and all the others bring in well over $300 billion.
All four of the others are "semiconductor adjacent" and even design some of their own chips. (Part of that circa $600 billion.) Yet all four are primarily users of chips.
Meanwhile, of the 10 largest companies by revenue, only Apple and Amazon make the list, though all 10 owe their fortunes to silicon.
Number 1 Walmart (NYSE: WMT) is, along with number 2 Amazon, the most technically proficient large retailer on earth. Both are primarily consumers of silicon, not producers. As for the actual physical chips they use, nearly all are made by Taiwanese or Korean companies.
Moreover, if all the chips these firms buy were designed and produced in China, neither Walmart nor Amazon would lose a step.
The same goes for every company on the list and nearly every company in the Fortune 500 largest U.S. companies by revenue.
| | Millionaires Will Be Minted OVERNIGHT Legendary tech futurist who predicted the rise of Amazon, Netflix, and Apple YEARS in advance now says:
"The biggest, most profitable technological advances in the future will ALL stem from this single breakthrough. Millionaires will be minted overnight."
He's revealing EVERYTHING here. | | | Imagine two future states of the world.
In the first state of the world, the Chinese semiconductor industry stumbles badly, whether because of U.S. sanctions or Chairman Xi's socialist revanche or for some other reason. Far from rivaling the United States, Chinese innovation slumbers. The Chinese are outcompeted at every turn by the United States. The U.S. industry continues to innovate and dominate but the Chinese make little or no contribution.
In the second state, China becomes a semiconductor powerhouse, rivaling the United States in innovation, as often as not beating America to the next breakthrough. The semiconductor state of the art leaps forward much faster thanks to the sometime competition, sometime collaboration between Chinese and U.S. companies.
The biggest difference between these two states of the world would not be the gap between the U.S. and Chinese semiconductor industries but how much wealthier American companies and the American people would be under the second state, with China rivaling or even leading the United States in advancing computational power.
Economists call the excess of wealth created by some innovation but not captured by the innovator "consumer surplus" because it is the users of the innovation that capture its bounty. The microchip created hundreds of trillions in such surplus, with the United States taking the largest share, a share that would hardly be diminished if every chip used by American companies was marked "made in China." Graphene-based wafer-scale electronics will double and redouble the wealth of the world. And if China leads the way, we will owe her a tremendous debt of gratitude.
Our regular readers know how much we love FreedomFest, "The World's Largest Gathering of Free Minds" hosted every year by Mark Skousen, a great economist and great friend.
Guess what, even though it starts today (Wednesday), its not too late to join Mark, me and 2,000 more lovers of freedom in Vegas for three great days. July 10-13, 2024, Caesars Forum, Las Vegas. www.freedomfest.com
Just to remind you it's not too late, here is Mark's latest (last?) word on this year's shindig. | | [Important] Read Before Markets Open Do you feel like you could be better informed about upcoming market trends?
Heading straight towards the next Fed meeting, anything could happen.
So, it's crucial that you plan now and weigh the best decisions for your future.
This next complimentary class will help you do that.
We'll cover the biggest movers in the market, and also… - S&P and major indices forecasts
- NVDA tracker
- Options strategies
- Who's poised to break out next
Don't miss this next session.
This market is about to present some enormous opportunities, so be sure to attend this live market forecasting session. | | | Dear liberty lovers,
I can't wait for this week's FreedomFest. I'm especially excited to meet the two top public intellectuals in the United States (Steven Pinker from Harvard) and in the United Kingdom (Lord Matt Ridley)... two of their books are listed below.
Here are 11 books I've been reading in preparation for the big FreedomFest event this week in Vegas.
FreedomFest is all about "great books, great ideas, and great thinkers." Authors of all these books will be there, including Robert F. Kennedy Jr., who just confirmed. The only exceptions are Aldous Huxley, author of "Brave New World" (our theme for this year)... and NBA great Bill Walton. Before Walton passed away, he said in his book memoirs:
"And now I'm going off in search of a new life. I want to become a student again in this great game. I want to read a book. I want to go to lectures and conferences. I want to watch a movie. I want to listen to great speakers and learn. I want to go back to a life of substance and depth —and get away from the shallow sound bites and snippets. I want to pay honor and tribute to my fallen heroes, mentors, and role models."
If Bill were alive today, he would love FreedomFest, because it has all those things and more: great speakers, authors, films, and topics of substance and depth.
For me, July 10-13 in Vegas is four days of an intellectual Renaissance feast in learning new ideas, meeting influencers, and debating about philosophy, history, science and technology, healthy living, investing, religion, and politics. Here is our full agenda: Agenda - FreedomFest
There's still time to join 2,000 of us. Fly there, drive there, bike there, be there!
Yours for peace, prosperity, and liberty,
AEIOU,
Mark Skousen
"America's Economist"
Sincerely,
George Gilder, Richard Vigilante, Steve Waite, and John Schroeter
Editors, Gilder's Guideposts, Technology Report, Technology Report Pro, Moonshots, and Private Reserve | | About George Gilder:
 George 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. | | | | | |
Visit our YouTube Channel - Eagle Investing Network
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