today we talk about the chips bill
the majority leader Schumer
hopes that
it can be sent to US president Joe Biden for signature
so it can take effect
but the problem is it is not so easy
is not that simple. the bill is to curb China's rise
in chip industry
it wants the US government to spend 52 billion US dollars
as the bonus to stop chip manufacturers from
investing more money in China's market
the purpose of the bill is to help US
companies to out-compete Chinese manufacturers
in the semiconductor industry
it does not allow companies that have
received subsidies from the US
to invest more in China semiconductor industry
especially in the in the advanced processes like the 5nm
and 7nm technologies
in march 2022
the US also proposed “four party alliance”
to curb China's development in the semi-conductor industry
it wants the United States
China's Taiwan province
Japan and South Korea
join hands to stop the Chinese chip industry
to get rid of
their dependence on the Chinese
industrial supply chain
it is not an easy thing
it is not easy
because China is now the biggest market
it's not only the biggest consumer market
it is also the biggest industrial market
So, asking companies like Intel and TSMC
Samsung, SK
to leave China
is impossible
So, 50 billion US dollars is
nothing compared to those companies’
revenue from the Chinese market
take the whole country of South Korea as an example
in 2021 it exported 128
billion US dollars worth of chips to the world
and 60% of those exports
were
for Chinese market
we can see
asking those companies not to expand their operation in the
world's biggest market
is just
to stop those companies from making more money
out of the biggest market
it is China
not the United States that is the world's biggest market
even for a lot of American companies
the biggest market is China, not the US
the US is still powerful for its design
and research, but the market is in China
even you have advanced technology
you have super research
and you have great designs
you have the best brands, whatever
if you do not have the market
all those things mean nothing to the capital
So, the capital is interested in profit
where is the profit from? it is from China
So, using
52 billion US dollars as a bonus to
discourage those companies from investing more money in the
Chinese market
it's merely a joke
even if the house of representatives
finally approves the bill
America competes act of 2022
and us president Joe Biden
signs it into law
and it takes effect
we believe a lot of companies
in the US
will try their best to circumvent the act
they can find other ways
to invest more money in the Chinese market
So, money is clever
money is smart
even if politicians want to stop the capital from
flowing into the most profitable market
China
they can find any
possible vent
to flow into that market
So, nothing can stop it
In 2021
we published
several videos about China's chip industry
and specifically in one video
“do not force China to fry chips”
we mention that if the Chinese manufacturers can produce
high end
chips like the 3nm
5nm and 7nm products
they can reduce the price
to a level unbelievable to most
manufacturers in the world
maybe someday, we can find silicon tips
can be less expensive
than potato chips
so even MacDonald can sell chips at a higher price
than Intel and TSMC
if that day comes,
the western hegemony in the
semiconductor industry
will come to an end
and that day
is not far away, and that day is coming
and it will come shortly
if the US
Congress and the US government want to
go against the law of the market
and stop their companies from investing more money
in the Chinese market
the purpose of the bill
is to help US companies out-compete their Chinese counterparts
but the problem is
it will do nothing to help US companies, instead
it helps China's local manufacturers out-compete
their counterparts in the US
in Japan, in South Korea
and in China's Taiwan province
the US is forcing
China's local manufacturers
to make chips
using their own technology,
using their own equipment,
using their own resources centers, everything,
everything will be made in China, designed in China,
and if that day comes
the US will become
a tier two country
if the US cannot
compete with China in the semi-conductor industry
the chip manufacturing sector
how can the US compete with China
in the long run
it is impossible
for quite a long time, China wants to co-exist with the US
So, the US can
design
can do research
and can produce high end products
while China focuses on
the middle end
production
but the problem is the US wants to
make China as a low-cost manufacturer
a low-cost supplier for the US companies
it does not want China to develop its high-end market
if that's the case, then China
will have to invent the wheel from the very beginning
China wants to cooperate with the US
So, both countries can survive and thrive
but the growth, the development of China
is a crime to some US politicians
they cannot tolerate a powerful China
a potent China
as America's rival
in the past decades
the US has defeated Japan
Germany, Russia
and other European Union countries
because they threaten America's hegemony in technology
now they want to do the same thing to China
However, China is different
China is not Japan
China is not Germany
China is not France
China is not only the world's biggest market
but also it's the biggest
manufacturing site
for the whole world
it has
a complete supply chain
for example, the US
and other
western countries move low-end production from China to
Vietnam 187 00:10:41,100 --> 00:10:43,500 but they cannot move
the supply chain from China to Vietnam
if a plant in Vietnam
wants one component
they may have to import it from the United States
Japan
other western countries
and most likely, China
from China's Guangdong province
Zhejiang province
when the component arrives
in Vietnam 199 00:11:15,700 --> 00:11:17,933 two or three months already passed
if the production is in China
like in Zhejiang province
it will be totally a different situation
if a plant in Zhejiang
finds it needs a component
to finish
a product, he just picks up the phone and calls his friend
in another village
and the component will be there in half an hour
the production will not be stopped at all
if you are the buyer
which one will you choose from?
also
other countries like Vietnam
their labor cost
is also increasing
and their labor cost
used to be a big
factor for moving China’s low end production to Vietnam, India
and so on, but their labor cost also is increasing
the US competes act
of 2022 will eventually become a joke to
make us companies suffer instead of stopping China's rise