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Chip bans on countries like China will hurt the U.S. more than they'll help. They won't even Work

blueone

Well-known member
I agree.

The real problem is that the Chinese government does not seem interested in international cooperation, and demonstrates some bad behavior, especially in IP protection. We cannot expect US officials to sit by and look complacent, and it would appear they feel they have no other levers to pull. I can't think of a worthwhile solution so long as the status quo continues.
 
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tooLongInEDA

Moderator
How do you guys think?

Fortune: Chip bans on countries like China will hurt the U.S. more than they’ll help. They won’t even work.
Original article "might not even work" - your version "won't even work". Why ?

Of course the headline clearly states that the measures will hurt China. So I guess that's "working". Certainly making a differene.

We ought to start from a definition of what "working" means before rushing out with self-contradicting statements like the headline. As usual in such articles, it appears to start from a false premise - the idea that the goal here is to both limit the technology and do so at an acceptable cost. I think you could usefully stop at the first goal here.

But isn't the real goal to try and force behavioural change in China so that is gets in line with the rules of the game everyone else is playing by ? i.e. stuff like respecting IP.

Let's also recognise the contradiction in the article's final statement "you can't win a race by trying to trip up your opponent". That essentially what China itself is trying to do by not following accepted international norms (and sometimes laws).

I find the original article weak and unconvincing. Any China-Russia-Iran tech alliance is going nowhere. Fortune is not my go to place for stuff like this.
 

blueone

Well-known member
But isn't the real goal to try and force behavioural change in China so that is gets in line with the rules of the game everyone else is playing by ? i.e. stuff like respecting IP.
What do you think the chance of that happening is? (I think it's near zero for the foreseeable future.)

The only example I can think of where a threat of retribution worked against the Chinese government has been the intent to delist Chinese companies from the US stock exchanges unless they agree to US auditing rules and the open availability of the documents. All of the particulars haven't been worked out or agreed to, but China appears to have blinked first. It should be interesting to see what the end result is, because without an agreement companies like Alibaba will be delisted.

 

hist78

Well-known member
Original article "might not even work" - your version "won't even work". Why ?

Of course the headline clearly states that the measures will hurt China. So I guess that's "working". Certainly making a differene.

We ought to start from a definition of what "working" means before rushing out with self-contradicting statements like the headline. As usual in such articles, it appears to start from a false premise - the idea that the goal here is to both limit the technology and do so at an acceptable cost. I think you could usefully stop at the first goal here.

But isn't the real goal to try and force behavioural change in China so that is gets in line with the rules of the game everyone else is playing by ? i.e. stuff like respecting IP.

Let's also recognise the contradiction in the article's final statement "you can't win a race by trying to trip up your opponent". That essentially what China itself is trying to do by not following accepted international norms (and sometimes laws).

I find the original article weak and unconvincing. Any China-Russia-Iran tech alliance is going nowhere. Fortune is not my go to place for stuff like this.

It's strange. I didn't altere the title and I just copied and pasted it to the Semiwiki.
 

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tooLongInEDA

Moderator
What do you think the chance of that happening is? (I think it's near zero for the foreseeable future.)

The only example I can think of where a threat of retribution worked against the Chinese government has been the intent to delist Chinese companies from the US stock exchanges unless they agree to US auditing rules and the open availability of the documents. All of the particulars haven't been worked out or agreed to, but China appears to have blinked first. It should be interesting to see what the end result is, because without an agreement companies like Alibaba will be delisted.

Honestly, I have no idea what the chances are. It's far more likely if some internal economic crisis in China forces change. But, as with Russia invading Ukraine, there are sometimes things far more important than sort term profit and loss.

I haven't read your Alibaba article, but it seems extraordinary that a US stock exchange would accept a company listing without credible accounts in the first place.
 

tonyget

Active member
but it seems extraordinary that a US stock exchange would accept a company listing without credible accounts in the first place.

What if I tell that NY stock exchange gets millions of dollars listing fee every year from each of those Chinese companies
 

blueone

Well-known member
I haven't read your Alibaba article, but it seems extraordinary that a US stock exchange would accept a company listing without credible accounts in the first place.
All of the US exchanges have requirements for auditing and financial information availability. Such as these for the NYSE:


And these regulations are set by FINRA:


So, you can sign up to have your ADRs (American Depository Receipts) listed on a US exchange, which are certificates representing a foreign share of stock, and promise to meet all of the reporting requirements on an ongoing basis, and then if you don't your ADRs are subject to delisting.

In the case of the Chinese companies, the problem is with credible auditing and reporting, apparently hobbled by Chinese government regulations about data distribution.
 
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blueone

Well-known member
What if I tell that NY stock exchange gets millions of dollars listing fee every year from each of those Chinese companies
I would tell you that millions of dollars to the NYSE per year probably means less than $1000 per year to you. Would you try to break the law for $1000 per year?


Spare us your conspiracy theories.
 

hist78

Well-known member
All of the US exchanges have requirements for auditing and financial information availability. Such as these for the NYSE:


And these regulations are set by FINRA:


So, you can sign up to have your ADRs (American Depository Receipts), which are certificates representing a foreign share of stock, and promise to meet all of the reporting requirements on an ongoing basis, and then if you don't your ADRs are subject to delisting.

In the case of the Chinese companies, the problem is with credible auditing and reporting, apparently hobbled by Chinese government regulations about data distribution.

Luckin Coffee scandal is an example that a public company's behavior can go wrong to the level of self-destruction. It also shows regulation enforcement and accounting audit are so important.

"The SEC’s complaint alleges that, from at least April 2019 through January 2020, Luckin intentionally fabricated more than $300 million in retail sales by using related parties to create false sales transactions through three separate purchasing schemes. According to the complaint, certain Luckin employees attempted to conceal the fraud by inflating the company’s expenses by more than $190 million, creating a fake operations database, and altering accounting and bank records to reflect the false sales.

The complaint further alleges that the company intentionally and materially overstated its reported revenue and expenses and materially understated its net loss in its publicly disclosed financial statements in 2019. For example, Luckin allegedly materially overstated its reported revenue by approximately 28% for the period ending June 30, 2019, and by 45% for the period ending Sept. 30, 2019, in its publicly disclosed financial statements. The complaint alleges that during the period of the fraud, Luckin raised more than $864 million from debt and equity investors. After Luckin’s misconduct was discovered in the course of the annual external audit of the company’s financial statements, Luckin reported the matter to and cooperated with SEC staff, initiated an internal investigation, terminated certain personnel, and added internal accounting controls."

 

Paul2

Active member
As bans on Iran show, you can never physically deny chips being smuggled into the country, but systemic effects from legal industry being strangled are all visible.
 

Jozo035

Member
As bans on Iran show, you can never physically deny chips being smuggled into the country, but systemic effects from legal industry being strangled are all visible.
Good You mention it.

Iran got most of chips trough china. Actually Huawei made lot of money by reselling western tech to Iran.
 

tonyget

Active member
Good You mention it.

Iran got most of chips trough china. Actually Huawei made lot of money by reselling western tech to Iran.

Not sure about that,as you can see from this report. Russia got most of these chips from the US not China,I believe Iran is the same


As far as I know,Chinese military has dedicated fabs and chip suppliers. They don't use off the shelf chips,nor do they buy from those big name Chinese semiconductor companies. And I don't think they sell those chips to Russia or Iran.
 

Jozo035

Member
Not sure about that,as you can see from this report. Russia got most of these chips from the US not China,I believe Iran is the same


As far as I know,Chinese military has dedicated fabs and chip suppliers. They don't use off the shelf chips,nor do they buy from those big name Chinese semiconductor companies. And I don't think they sell those chips to Russia or Iran.

And it's not only Huawei. There is countless low-profile ccp-owned companies buying western parts and selling them to embargoed counties with huge profits...

Regarding dedicated fabs for chinese military: This is very interesting. Do You have name/location? What node? Type of technology?

My understanding was that ccp had "military-civil fusion" policy.
 

hist78

Well-known member
I think for some reasons this Fortune Magazine Commentary's author Professor Rakesh Kumar does not have time to read news, especially those important news that may not be related to semiconductor directly.

When Chairman Xi and CCP keep harassing South Korea, Japan, Taiwan, Philippines, and Vietnam for the past 10 years and getting worse day by day, what can people expect?

When CCP threatened to shoot down the US Air Force jet that carried Nancy Pelosi for her trip to Taiwan, there is no any chance for US government and Congress to play nice with PRC/CCP anymore.
 

hist78

Well-known member
I agree with this perspective from JPMorgan:


"Treves said investors should look for companies that will succeed in spite of geopolitical tensions."

"“Geopolitics are here to stay, so get used to it, just accept that,” he told CNBC."

These words came from JP Morgan is not surprising but it's irresponsible to its clients. Probably it's because the money and the potential loss are neither his or JP Morgan's.

Those same advisors and companies probably also downplayed the seriousness of geopolitics before Russia invasion of Ukraine.
 
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kvas

New member
What do you think the chance of that happening is? (I think it's near zero for the foreseeable future.)

The only example I can think of where a threat of retribution worked against the Chinese government has been the intent to delist Chinese companies from the US stock exchanges unless they agree to US auditing rules and the open availability of the documents. All of the particulars haven't been worked out or agreed to, but China appears to have blinked first. It should be interesting to see what the end result is, because without an agreement companies like Alibaba will be delisted.

I suppose the idea is that either China changes behavior or they fall behind in chips (and consequently some other tech). The former doesn't seem very likely these days but the latter is also better than nothing.
 

M. Y. Zuo

New member
Original article "might not even work" - your version "won't even work". Why ?

Of course the headline clearly states that the measures will hurt China. So I guess that's "working". Certainly making a differene.

We ought to start from a definition of what "working" means before rushing out with self-contradicting statements like the headline. As usual in such articles, it appears to start from a false premise - the idea that the goal here is to both limit the technology and do so at an acceptable cost. I think you could usefully stop at the first goal here.

But isn't the real goal to try and force behavioural change in China so that is gets in line with the rules of the game everyone else is playing by ? i.e. stuff like respecting IP.

Let's also recognise the contradiction in the article's final statement "you can't win a race by trying to trip up your opponent". That essentially what China itself is trying to do by not following accepted international norms (and sometimes laws).

I find the original article weak and unconvincing. Any China-Russia-Iran tech alliance is going nowhere. Fortune is not my go to place for stuff like this.
I'm seeing 'won't even work' on my computer. Maybe Fortune changed the title back and forth for some unknown reason?
 

hist78

Well-known member
I'm seeing 'won't even work' on my computer. Maybe Fortune changed the title back and forth for some unknown reason?
@tooLongInEDA and @M. Y. Zuo ,

I think I know why now. The editor at Fortune Magazine did put "They might not even work" in one of the article's embedded HTML tag fields that will be displayed in some situations when people posted the URL link.

But when readers use Chrome, Firefox, or Edge to read this article, they will see the regular text title "They won't even work", not the embedded HTML tag's.
 
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