China’s Chip Scheme

A new technology appeared on the horizon but at an infant state: extreme ultraviolet lithography (EUV). The U.S. government thought this was going to be the key technology for microchip production, and the Department of Energy sponsored development of it in a working group with Intel, AMD, and Motorola. In 1999, a small Dutch company joined the eff

China doesn’t have a competitive market system in which only the best competitors survive, and governments are notoriously bad at picking winners. Lithography development and setting up foundries are both extremely expensive programs, and just throwing money at random companies is going to produce a lot of waste.

Too good to be true

Western companies had long been so enthralled by China’s huge markets and cheap labor that they missed some red flags. China invited and allowed foreign companies to build factories typically under a setup of joint ventures, which required investors to partner with Chinese companies. It may sound like a fair request – after all

The main weakness of China isn’t the money or talent, but the ideological underpinning. The strategy of internal self-sufficiency for food, raw materials, energy, and now technology, coupled with a focus on exports to push other countries into dependency is essentially mercantilism, a 17th century doctrine which failed both practically and theoreti