I often hear that the semiconductor industry is highly globalized in terms of content source and that it is impossible for any single country to have the entire content of the supply chain domestically? To this I ask, says who?
To me, that's sounds just economic liberal orthodoxy, very much in line with the theory if comparative advantage, which is an extremely flawed theory, which if adhere to, keeps a country technologically backward, never allowing that country to progress towards more value added and more sophisticated technologies and manufacturing industries. Granted that when it comes to raw costs, it is economically more advantageous, in many industries, including the semiconductor industry (from silicon smelting all the way to EUV lithographic, vapour deposition, and photoresist production) to have certain industries more concentrated or more specialized in certain countries, that doesn't mean that there cannot be any country that cannot locate the entire spectrum of the value chain of manufacturing of IC chips and IC chip manufacturing equipment domestically.
If there is any country that can actually do so and indeed has a big incentive to do so, it would be China (Russia also has a HUGE incentive to do so). China has a huge population, a huge market, it has the skilled labour force and it can train much of the incoming labour force towards developing the necessary skills and knowhow in semiconductor manufacturing. It has the financial wherewithal to undertake the investment.
With regards to the logic of the least commercial cost that would be argued for China not to focus on developing and concentrating to a significant extent the entire value chain domestically, that sort of argument goes entirely out of the way when China is threatened with security of obtaining such goods by a powerful country that is hell-bent on ensuring that China does not get the supplies of equipment and particular chips and materials from manufacturers and suppliers from other foreign countries that the powerful foreign country in question goes out its way to persuade them in different ways not to supply China what it does not want China to be supplied with.
Hence China should not follow and listen to the orthodoxy that it can't and shouldn't locate the entire spectrum of the value chain of semiconductor industry within China. China should in particular aim to eventually void itself of any semiconductor chips or equipment that possesses any content whatsoever from that particular powerful foreign country. That can be extended to other items of technology as well. The hostility that that country has shown to China warrants such an aim.
To me, that's sounds just economic liberal orthodoxy, very much in line with the theory if comparative advantage, which is an extremely flawed theory, which if adhere to, keeps a country technologically backward, never allowing that country to progress towards more value added and more sophisticated technologies and manufacturing industries. Granted that when it comes to raw costs, it is economically more advantageous, in many industries, including the semiconductor industry (from silicon smelting all the way to EUV lithographic, vapour deposition, and photoresist production) to have certain industries more concentrated or more specialized in certain countries, that doesn't mean that there cannot be any country that cannot locate the entire spectrum of the value chain of manufacturing of IC chips and IC chip manufacturing equipment domestically.
If there is any country that can actually do so and indeed has a big incentive to do so, it would be China (Russia also has a HUGE incentive to do so). China has a huge population, a huge market, it has the skilled labour force and it can train much of the incoming labour force towards developing the necessary skills and knowhow in semiconductor manufacturing. It has the financial wherewithal to undertake the investment.
With regards to the logic of the least commercial cost that would be argued for China not to focus on developing and concentrating to a significant extent the entire value chain domestically, that sort of argument goes entirely out of the way when China is threatened with security of obtaining such goods by a powerful country that is hell-bent on ensuring that China does not get the supplies of equipment and particular chips and materials from manufacturers and suppliers from other foreign countries that the powerful foreign country in question goes out its way to persuade them in different ways not to supply China what it does not want China to be supplied with.
Hence China should not follow and listen to the orthodoxy that it can't and shouldn't locate the entire spectrum of the value chain of semiconductor industry within China. China should in particular aim to eventually void itself of any semiconductor chips or equipment that possesses any content whatsoever from that particular powerful foreign country. That can be extended to other items of technology as well. The hostility that that country has shown to China warrants such an aim.
