Chinese semiconductor industry

Dark Father said:

The fault is also with the politicians by allowing companies from hostile countries to build up domestic market share in crucial areas like the cloud market and more areas we are not thinking of at the moment.

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Don't be stupid, China allowed AWS and Azure to localize in China on purpose. First, China is open to foreign law abiding business. Second, they create jobs, pay taxes. Third, they increase China's friends in capitalist circles (e.g., Bill Gates), useful for quid pro quo. Fourth, they are useful for catfish effect on domestic cloud providers.

Dark Father said:

The fault is also with the politicians by allowing companies from hostile countries to build up domestic market share in crucial areas like the cloud market and more areas we are not thinking of at the moment.

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Honestly the best analogy I can think of is if an American company built a tolled highway in China and started collecting tolls. And then the company leaves suddenly. Take that China! Now we won't be there to charge you toll on the highway we built in your country! Honestly the entire thing sound so stupid that I wonder what the catch is. If there isn't one then it's probably one of the stupidest thing US had done since trade war started.

EDIT: I think @supersnoop has the catch

Seems to me that this is clear to stop any loopholes from offering nVidia GPUs over cloud to get around export restrictions. The article says as much.

There is no other point for Chinese companies to use American cloud providers other than to service North American customers.

Chinese cloud computing offerings have become very robust the last few years.

The US has got to know that there's a solid chance that China could develop import substitutions for the now banned devices. Thus one sure goal must be to ensure that China commit resources to reinvent the wheel. In this context, China has got to know that things like Gallium and other metals can be produced elsewhere as well, so one sure goal should also be to make the West reinvent the wheel as well.

Of course, both sides would also cause delay of development of applications of the export controlled systems.

The key difference here is that while China will be forced to develop niche but high margin devices, the West will be forced to develop low margin commodities production. Being forced to be more vertically integrated means producing more high value added components for China, while doing so means producing more low value added components for the West.

Dark Father said:

The fault is also with the politicians by allowing companies from hostile countries to build up domestic market share in crucial areas like the cloud market and more areas we are not thinking of at the moment.

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How much business do you think they get, and from whom?

Mentioned before but a couple of the domestic operators are publicly listed (VNET, 300383) so you can generally guess from their financials how lucrative the China regions of AWS and Azure are (i.e., not very). The vast majority of Chinese companies aren't using them, they're mostly there for the MNCs that want to feel more at ease going with a name they recognise

GodRektsNoobs said:

I know that Azure China is managed by 21Vianet and all data are stored in China. Worst case scenario Microsoft spins off a shell company to manage Azure in China, or sells the business to a Chinese competitor. Cloud is a service with plenty of competition, not a singular piece of technology that must be replicated.

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Same for AWS. They are run by local companies. AWS China has two regions. Ningxia region operated by NWCD and Beijing region by Sinnet

supersnoop said:

There is no other point for Chinese companies to use American cloud providers other than to service North American customers.

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North American customers can also be served using Chinese cloud providers. Cloud offerings from companies like Alibaba, Huawei, Tencent are global, they have regions in North America and Europe

Dark Father said:

US to Curb China Access to Cloud Services Like Amazon, WSJ Says​

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Non paywall source:​

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What should we think of this?​

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AWS market share in China is about 4%, with Azure holding even smaller of a market share. 80% of the cloud computing market is controlled by Huawei, Tencent, Alibaba, and Baidu. Presence of US cloud providers in China market is practically non-existent.

Due to Chinese government regulations and controls plus the Great Firewall, AWS/Azure offerings in China are severely handicapped. Services and features in the China regions lag behind global offerings by several years, with many services never made available in the China market. Even without US government restrictions, it is inevitable that foreign cloud providers would eventually exit the Chinese market due to lack of profitability. I really wonder what the motivation is behind the US restrictions. Other than for publicity's sake, perhaps this is just an excuse for the US government to increase control over US tech companies.

guys, let's stop getting off topic

One question for people. Is China just looking to dominate new areas like Gallium nitride

I noticed the huawei whisper writing

镓产量我们占比95%，锗产量我们占比67%，氮化镓部分我们的产量占比42%，要知道我们国家是重要的稀土出口国，我们的稀土产能占据90%以上。

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he said china has 42% market share in GaN which made me look into it


Here is the Chinese Gallium Nitride supply chain. Pretty deep. It makes sense to have this given the extensive use case for charger, EVs & renewables and such.

If China has the choice of having monopoly over Gallium production vs having a dominant position in Gallium Nitride. Which one would it take? It would obviously take the latter since there is more money to be made long term when you are further downstream

Consider Innoscience. It was said to me #3 in the world in GaN back in Q3 2021 (Navitas was #1 with 29% market share)

but became top dog by end of 2022

It's moving so fast, that it got sued by US competitor EPC recently. Guess who won't be getting Gallium anytime soon

thus far, the market in China likes these moves

Gallium occurs in very small concentrations in ores of other metals. Most gallium is produced as a byproduct of processing bauxite and the remainder is produced from zinc-processing residues. The average gallium content of bauxite is 50 parts per million. U.S. bauxite deposits consist mainly of subeconomic resources that are not generally suitable for alumina production owing to their high silica content. Some domestic zinc ores contain up to 50 parts per million gallium and could be a significant resource, although no gallium is currently recovered from domestic ores. Gallium contained in world resources of bauxite is estimated to exceed 1 million tons, and a considerable quantity could be contained in world zinc resources. However, less than 10% of the gallium in bauxite and zinc resources is potentially recoverable.

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This is from US gov't a few years ago. Not that easy to recover Gallium, it looks like More importantly, the technology to recover gallium is not easy.

list of Gallium Arsenide producers. Looks like mostly american ones

Chinese players are relatively small here. They got a chance to increase market share here