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Surging supply and softening demand weigh on chipmakers (economist.com)
40 points by samizdis on July 11, 2022 | hide | past | favorite | 85 comments


Independently from each other, two exile Chinese told me that China will go for Taiwan if they face severe economic problems at home.

With that in mind it might be a good idea to stack up some chip supplies.

PS: no clue why anyone would downvote something like that :)


> two exile Chinese told me […]

> PS: no clue why anyone would downvote something like that :)

Because there’s no way of knowing whether these unamed exiles exist or, if they do, there’s any reason to think they would have any insight on the matter? This being the internet, it’s safer to assume you’re making the whole thing up (no offense intended ;) )


Thanks for explaining :) ofc I’m not lying. But hey, you’re right anyone could say anything here!


I think it is much more likely that China will succeed in its chip production self sufficiency efforts, generating oversupply, indirectly contributing to an economic crisis in Taiwan (whos economy is overdependent on semi), and changing the winds back towards peaceful reunification.


commentary from exiles is the least reliable source of information, Iraq should've taught us this. The PRC policy on Taiwan has been consistent since 1949 - one china principle, otherwise renewal of hostilities. Chips have very little to do with it


That's a fair point. I was just dumbstruck how the two said almost exactly the same.


it's the dominant narrative, so no surprise. Most people are generally going to accept consensus, unless there are compelling reasons to do otherwise


If they go for Taiwan, then storing chips will be my last priority.

Potato chips and iodine will be much higher on my list.


I guess it depends very much if it stays a local conflict like Ukraine so far. Or not...


How can it stay local if the US chip manufacturing is at stake? If TSMC goes boom, Apple goes boom. Apple goes boom the US economy goes boom.


Well, after what Russia did anything is possible. But the interesting question here is "why would they do that?".

AFAIK Taiwan doesn't have any resources like Ukraine does. It has an amazing strategic presence militarily, but strengthening their military position in the Pacific doesn't immidiately help with an economic problem unless the US is trying to blockade them by sea.


> the interesting question here is "why would they do that?"

China is not Russia. But Xi is weak. There was no reason to rush on Hong Kong when it was going to, without controversy, revert to Chinese law in a few decades. By being impatient, Xi undermined Chinese interests there, in Taiwan and internationally in favour of his personal political interests. If China invades Taiwan, it will be in recapitulation of Galtieri’s junta in the Falklands.


Instead of letting democracy fester, potentially spreading the sentiment to the mainland, Xi has effectively neutralised the opposition in Hong Kong. Reading this as weakness is wishful thinking.


And militarily, as well as economically, an invasion of Taiwan is a lot less clear cut than it was before the war in Ukraine started. Plus, Taiwn would be an amphibious invasion, against a very well prepared and supported defender.


> the interesting question here is "why would they do that?"

* Unmonitored access to deep ocean waters for submarines.

* Shift world politics in their favor - unseat the US-led de-facto world order and replace it with a Chinese one.

The above are perfectly described in Ray Dalio's "Principles for Dealing with the Changing World Order".

He evaluates the probability of a war with China in the next 5-10 years at 35%.

Moreover, he argues the US itself is in Stage 5 of 6 of its Big Cycle, with stage 6 being insurrection/revolution.


I 100% agree with the outlook of Dalio, but if that is the plan then why provoke the war now? If they wait 5-10 years the US might implode and not even be able to resist them in the Pacific. The US economy is pretty questionable.

It isn't lost on Chinese high command that the longer they wait, the easier it will be to fight the US. All their planners would be saying "lets not start the war with the US now, lets wait a few years".

Now maybe they go in Putin-style anyway, but Russia is being cornered. China isn't under that sort of external pressure. They can afford to drag this out, Russia has been losing vs. the US for more than 40 years.


>then why provoke the war now? If they wait 5-10 years the US might implode and not even be able to resist them in the Pacific. The US economy is pretty questionable.

Xi is getting old. He may want to be around for the invasion. Also, if the next leader isn't as aggressive, the moment may be missed. China is imploding far ahead of schedule developmentally (probably mostly a one child policy thing), whereas the US population is doing the reverse. By 2030, the tail end cohort of the most aggressive era of population suppression will be nearing 40y.o.


> The US economy is pretty questionable.

Do you mean economy is better somewhere else? There are now more jobs in US than before the pandemic. Isn't that pretty good at least relatively speaking?

https://www.nbcnews.com/business/economy/there-are-now-more-...


https://en.wikipedia.org/wiki/National_debt_of_the_United_St...

https://fred.stlouisfed.org/series/MABMM301USM189S

The US is deeply in debt and printing money has become part of the Plan A response to every crisis.

They can't afford to wage war in Asia against China. Afghanistan against goatherds had them gasping with the exertion, and this proxy war against Russia might easily prove too much if they get overexcited. It is just a matter of time until the US has to pull their head in for financial reasons. If China waits 10 years there is even a chance the US collapses on its own without help. They aren't going to recover from 130% debt:GDP without a political crisis of some sort.


If China waits 10 years, their population will already have gone down in absolute terms, and their population is aging significantly faster than the US'. This is worse than it seems when you factor in the very low retirement ages that China has saddled itself with.


From a new HN link this morning: https://twitter.com/fuxianyi/status/1545668143816839170

Per the post above, China's population has been dropping since 4 years ago but the statistics have been doctored pretty aggressively to hide this fact. The linked tweet alleges a 120million person discrepancy between government reporting and the reality.


Your quote is me quoting grandparent.

Separately, your source is number of unfilled jobs, not number of jobs, which I wouldn't use to attempt proof of the economy's health.


History suggests that countries go to war during economically challenging times. A dictator whose power is slipping also tends towards war. Sovereignty at sea is also a big attraction. Taiwan being a perennial thorn in the side of the Chinese regime is another.

China has been getting more aggressive lately— flying military jets deep into Taiwanese air space. I would not be surprised if China made a move in the next 18 months.


They do go to war, but they usually go to war for a reason. Eg, invading a fertile wheat basket, or an oil-rich area, or somewhere with lots of space.

Invading Taiwan won't help with economic problems, it helps with their strategic issues with accessing the Pacific.


They can direct the attention of the public to the war and deter those who want to oppose them


Sure. So why Taiwan? Why not head north into Russia and Mongolia? There are lots more resources up there, and Russia doesn't have the worlds most violent military looming behind them.


"one China" is a very serious thing to the PRC government, maybe comparable as a rallying cry to manifest destiny for US back in the 19th century.

No one in China is looking around trying to figure out which direction will be the most profitable direction for an invasion that they're gunning for. They're gunning for Taiwan specifically. As far as economic imperialism, China shows low willingness to attempt nation building and high enthusiasm for investing in projects in questionably stable states.


Perhaps not much resources over there and no excuse to start a war? tbh not sure if the US will really interfere with military action if a war is really started


US officials said they would recognize Taiwan, no matter of consequences. For China that is a readline.

If there are sanctions or war with China, we will have much bigger problem. Current regime may even go nuclear.


Nuclear against who? The US?


Against China!


Ok, just to get it right: You think it is possible that the US would go to war against China (in defense of Taiwan). And, that they would go so far to bomb mainland China with nukes?


I think they will bomb the Fabs in Taiwan. After all the Fabs are what they care about.


The US will not be bombing fabs in Taiwan.


If the war starts with Taiwan, everybody will bomb the fabs. The Taiwanese probably have units detailed to do that to prevent their intact capture, just as Switzerland have mined every bridge and tunnel in the country.

China will not capture the fabs.


Everyday tsmc and intel are closer to opening fabs in Arizona. Also Samsung proved they have some chops at producing decently cutting edge silicon with Nvidia’s ampere chips, if China does invade taiwan before the plants in Arizona open.


This is what Putin just tried to do. Failed spectacularly. I'm honestly of better opinion of the CCP. Last time when they fucked up things that badly, was the Great Leap Forward and that was 65 years ago.


> Failed spectacularly.

Do people really still believe this?

Look at the actual facts on the ground: land-bridge to Crimea, Luhansk 100% under Russian control, Donetsk most probably getting there, also some chunks of Kharkiv province, about 7 million Ukrainian refugees, Ukrainian's army potential drastically reduced (i.e. "demilitarisation" that seemed to have worked), how is all this "failing spectacularly"?


Original objective of a decapitation strike in Kyiv failed. All the forces committed to the north of the country have been destroyed or retreated.

Ukrainians have slowly been driven out of the south, but have generally held the Russians at the Siverskyi Donets river. Spectacular footage exists of the failed attempt to cross it with two BTGs which were entirely destroyed.

And the big failure is political: Sweden and Finland have been driven to immediately join NATO. Attacking Ukraine has moved NATO's border eastwards. Countries adjoining Russia and Ukraine and Belarus have decided they need to arm themselves rapidly. Russia has been cut off from replacement supplies of Western goods, and can no longer e.g. make cars.

The war will continue for the forseeable future, like the war in Syria, but with gradually reducing intensity and slow pushing back by the Ukranians.


From the same facts I have the completely opposite reading that you have. Despite the constant propaganda telling you otherwise in the USA, Ukraine has been a major defeat for NATO.

Economic sanctions on Russia were useless. China didn’t budge nor did India nor did most of Africa and South America highlighting the new irrelevance of the USA. Ukraine failed to properly negotiate after stopping the Kiev advance when it would have been advantageous to do so because the USA was a poor steward and is now sure to lose significant territories in the south. The war will not be allowed to keep going for long because it has a significant impact on Ukraine allies economies and these allies are already significantly pushing for new negotiations to take place. Sweden and Finland joined NATO at significant cost to them in their negotiations with Turkey. It’s not far from a complete debacle honestly.


> Economic sanctions on Russia were useless

The sanctions on Russia have caused them to be unable to wage war in a way that they could have previously, which was the point.

On top of the number of people living below the poverty line in Russia in the first quarter of 2022 rose by 69%. Probably not all the sanctions, but given the amount of jobs that just up and left its likely related.

> China didn’t budge nor did India nor did most of Africa and South America highlighting the new irrelevance of the USA

China, Russias 'closest' ally with a 'unlimited friendship' isn't doing anything outside of providing humanitarian aid to Russia. They clearly want no part of it.

> Ukraine failed to properly negotiate after stopping the Kiev advance when it would have been advantageous to do so because the USA was a poor steward and is now sure to lose significant territories in the south

Ukraine will now likely retake Crimea if things keep going how they have been the past two weeks, if Russia never invaded they would of ironically kept more land. I await the day that Russia loses their black sea fleet.

> The war will not be allowed to keep going for long because it has a significant impact on Ukraine allies economies and these allies are already significantly pushing for new negotiations to take place. Sweden and Finland joined NATO at significant cost to them in their negotiations with Turkey. It’s not far from a complete debacle honestly.

Ukraines allies have repeatedly said that any negotiations are up to Ukraine, I think that a lot of the allies (especially eastern European states that have felt the thumb of Russia before) know that this war is about a lot more than Ukraine and Russia.


You are deluded.

To quickly reply to you (at that point a long answer would be a waste of my time), sanctions didn’t meaningfully impact Russia revenue which raised with gaz and oil prices. China is actually importing things from Russia. Ukraine has no chance of retaking Crimea - which doesn’t want to be retaken anyway - and is currently losing territories, infrastructures and seeing a very real erosion of its available manpower not winning them. Negotiations have to be made by Ukraine obviously but allies have a lot of sway there. Ukraine couldn’t wage this war without the support of NATO countries and these countries are first and foremost serving their own interests as usual.


The statistics of the number of people under the poverty line come from the Russian government so theirs no delusion there.

Ukraine will retake all of its territory in time.

If Russia is winning so much why are they rolling out units that are compromised of volunteers that are nearly geriatric?.

Why is Russia using weapons that where designed to take out America aircraft carriers against Ukrainian shopping malls? (kh-22).

Why is Russia using tanks that where made in the 1960's (T-62).

Ukraine already has weapons that far outstrip anything that Russia has deployed against them so far (HIMARS, m777's, CESARS, KRABS and Panzerhaubitze 2000) and they are getting more as time goes (NASAMS and M270's).

Multiple Russian ammo depots explode nearly every day from HIMARS, and Russia has no effective counter to them, because of the way that Russian logistics work this will be devastating if it's kept up.

Russia is and always has been a paper tiger, never forget they lost in Chechnya and they lost in Afghanistan.


> Ukraine has been a major defeat for NATO.

In a war everybody loses. Blowing up buildings and killing people how could that not be a defeat for everybody. The question is who started it? Who is the aggressor?


I remain a Clausewitzian at heart. War is the continuation of politics. When the dust will settle, the situation between both side will have been altered in way which couldn’t be reached diplomatically and at this point I think the end result seems more favorable to Russia than the west.


Politics is ok. Starting politics is ok. Starting a war is not ok. It is a crime to start a war.


Countries start wars all the time. The USA started four since I was born including one outside of the international framework which would have given it a thin veneer of legitimacy.

I dislike wars as much as anyone else. They are a waste of resources especially when they drag for no reason. But they are more or less a fact of life. What matter is understanding whose interests they serve and why they are waged so we can build the conditions of a stable peace. Ideals are not going to get you far in international politics but they certainly are an easy string to tug on for propaganda purpose.


> Ukrainian's army potential drastically reduced (i.e. "demilitarisation" that seemed to have worked)

Ukraine’s army is being modernised by backers that eclipse Russia’s industrial capacity many times over. This is a war of attrition Russia is spending decades-old back catalog on to fuel a domestic narrative.


It is very much a war of attrition, but I'm not sure it is necessarily a war that Russia is going to lose. So far Russia is slowly progressing on their primary objective. They have had significant losses but they have a huge amount of dumb rockets and artillery that they can throw at the problem. They have have failed in most blitz actions with highly mobile forces, but the slow grind seem to work for them, although obviously with high costs for both sides.

They lack manpower but, unfortunately for their victims, they seem to be managing by conscripting the occupied population.

The key will be on whether the West will lose interest in supporting Ukraine before Russia runs out of resources.


Maybe Russia can win the war of attrition. It certainly cannot win the long term guerrilla war with an occupied Ukraine.

They will never be able to unify the region in their favor, so I really don’t get what is the point in their operation anymore.


Well, thing is they might not care. As long as they can leave dealing with insurgency mostly to the new "independent" government and not have to report the losses at home, while still controlling the resources and enjoying the buffer zone they might be ok to returning to the previous lower intensity warfare of the last decade.

Obviously toppling the government proved to be well beyond Russia's means, but I wouldn't be surprised if they might try to take advantage of the post war hardships for a coup. It will be important for the West to help Ukraine with reconstruction to avoid this.


> while still controlling the resources

Except they’re not. And they won’t be able to. For the time being, light insurgency and the threat of shelling all but foreclose resource development in eastern Ukraine for years to come.

This is Russia’s Afghanistan. Except unlike the U.S. or USSR, Russia is not a superpower. (Its economy is eclipsed by California’s. And its military struggles even miles off its border.)


Well Afghanistan is Russa's Afghanistan.

And Russia did manage to integrate Crimea.


However, it is on their border. This might mean gorilla warfare wherein IEDs are going off in Moscow…


It is unlikely that a large ape will be able to go around Moscow without setting all kind of alerts, so it won't be effective.

Kidding aside, Ukraine has nothing to gain with attacking the Russian population with terror attacks as that might be the excuse Putin needs for forced conscription and further escalation (even nuclear).

Non conventional attacks on military assets in the occupied areas are to be expected though and are in fact already happening.


Which guerilla? Russia is mostly taking part of Ukraine with low support for the federal government. It’s not to the point of Crimea which had been trying to be independent since 1991 but they definitely have a good chance of actually annexing the parts they are occupying without to much resistance from the inside.


The guerillas that keep killing the leaders of the occupied areas of Ukraine with car bombs.

The guerillas that killed two soldiers at a cafe in Kherson.

The guerillas that exploded a bomb at a cafe with soldiers in Mariupol

Russia appears to be incapable of securing the areas they have captured.


But the war is still ongoing. That’s the regular army using guerilla tactics. If what happened in 2014 happens again (big if as Crimea had a very poor relationship with Ukraine while the rest had a slightly better one), Russia should hold.


Why do you think the army will disappear if kyiv gets captured? its clear from the start of the war that they where planning for an insurgency.

The only thing that happens if they lost is the army takes off their uniforms and the molotovs come out.

If Russia cannot secure what they have now what makes you think they can secure the entire of Ukraine?.


> It certainly cannot win the long term guerrilla war with an occupied Ukraine.

Does Crimea count as occupied Ukraine? Russia has had no problems whatsoever in fully integrating the peninsula or building infrastructure.


If it's working so great, why are 100s of thousands (maybe millions) of educated Russians leaving for other countries?

Russia is now set up for long-time decline, with even worse demographics than it had before the war.


People leaving russia is not an indication that they are definitely losing the war in ukraine.

Russia may be in demographic decline - but there's still tonnes of time before that problem becomes insurmountable. The regime doesn't care about that anyway.


Originally there were many predictions about how Ukraine would fall in 2-3 weeks at most (Putin even said a few years ago he could take Kiev in 14 days). With respect to that goal it has been a miserable failure, but I think most people expect Russia to still 'win' at least in some sense even if not 100% of Ukraine.


Failure against expectations is what people mean.

A lot of commentators thought the Russians would be in Kyiv after a few days. Putin might well have thought so as well.

Now a quick knockout punch has turned into a long grappling match, that's failure.


A grappling match one of the opponents is better prepared for and working of a well rehearsed game plan.


And Russia is relatively self sufficient. No way could China follow this path.


They will definitely follow that path if China can depend on Russia for mineral resources, and at this point it seems like it can depend. You don't need to control the seaways to bring iron, coal, gas or oil from Siberia and the Russian Far East into China. Mongolia next door has some of the biggest copper mines in the world that has just opened. [1]

[1] https://en.wikipedia.org/wiki/Oyu_Tolgoi_mine


How self sufficient is Russia? I heard that they have plenty of natural resources, but not enough engineering to exploit them effectively without importing the necessary technology.


Sounds like China and Russia are a match made in heaven, then.


China also imports expertise at the high end.

Real value that Russia can bring to table for China is wheat production.


I don't think that's true anymore.


Ir raw materials perhaps, but they can no longer build cars.


Good luck with that invasion! Say goodbye to anything resembling a Chinese state if that happens.


Eeeh. I think there’s a decent chance that TSM is destroyed early in any campaign, and that the West gives Xi a stern letter saying, “You better not attack Japan.”


yeah, I bet Ukraine had something like that in mind too



I still can't buy Raspberry Pis.


Just spend 5X the price on eBay and you can have one.


Is this true? Pihut says they have them in stock, ready to ship.

I've already got enough of them so I won't try ordering it.


They're sold out on PiHut.

>More boards are on order with our suppliers - select 'Notify Me' below and we'll email you as soon as stock is available.


One of the downsides of having a large "community" and a great mindhsare around a single SBC manufacturer.


This has been the headline the past week. Why are prices lagging? There's been a modest decrease, but far from a crash. More critically: availability and lead times are still historically awful. I can't make business strategies on vaporware.


The prices will fall and Jevon's paradox will kick in swiftly. If anything, world will see even more microcontrollers, memory, and CPUs used everywhere for decades to come.


This is good for everything relying on chips, hopefully it will help slow down costs.


So we’re finally through the chip shortage?




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