Tariffs? Coronavirus? China's exports are surging

ZHONGSHAN, China — This was supposed to be the year that China’s export machine began to stall. President Trump had imposed broad tariffs on Chinese goods. Countries like Japan and France pushed companies to shift production from China. The pandemic had crippled China’s factories by the end of January.

Instead, China Inc. has come roaring back.

After reopening in late February and early March, China’s factories began an export blitz that is still gaining steam. Exports soared in July to their second-highest level ever, nearly matching the record-setting Christmas rush last December. The country has grabbed a much larger share of global markets this summer from other manufacturing nations, entrenching a dominance in trade that could last long after the world begins to recover from the pandemic.

China is showing its export machine cannot be stopped — not by the coronavirus and not by the Trump administration. Its resilience lies not only in the country’s low-cost, skilled labor and efficient infrastructure but also in a state-controlled banking system that has been offering small and large businesses extra loans to cope with the pandemic.

The pandemic has also found China better placed than other exporting nations. It is making what the world’s hospitals and housebound families need right now: personal protection gear, home improvement products and lots of consumer electronics.

At the same time, demand has withered for many big-ticket items exported by the United States and Europe, like Boeing and Airbus jets. And with most economies except China’s now mired in recessions, demand has also faltered for the commodities that most developing countries export, particularly oil.

https://www.nytimes.com/2020/08/31/business/trumps-tariffs-coronavirus-china-exports.html

Opportunism of Chinese elites got them where they are now.

They tell that they will be able to reach 5-7nm in very short time, but their own engineers estimates now is 7-9 years at best.

In reality lot of TSMC money came from offshore and HK money that came from government credits and had been stolen by top management of big companies.

The Trump administration is considering whether to add China’s top chipmaker SMIC to a trade blacklist, a Defense Department official said on Friday, as the United States escalates its crackdown on Chinese companies.

A Pentagon spokeswoman said the Defense Department was working with other agencies to determine whether to make the move against Semiconductor Manufacturing International Corporation (0981.HK), which would force U.S. suppliers to seek a difficult-to-obtain license before shipping to the company.

The Pentagon made a proposal to place SMIC on the entity list to the End User Committee, a panel led by the Commerce Department that also includes the State and Energy Departments and makes decisions about entity listings, a person familiar with the matter said. It was not clear whether the other agencies supported the plan.

HiSilicon like sanctions will follow closer to election to fully devastate chips production.

US is very pleased with Huawei sanctions effects

Before elections we can see another round of sanctions now aimed at leading chip design houses in China (largest of them - HiSilicon already fully down) and also at Xiaomi and BBK brands. Damage to the latter can be tremendous, it is big talk now happening between US, UK, Australia and EU countries on synchronized ban of all smartphones and smart products from China due to security issues, Japan can join closer to January.

Lack of good profits on outside market and no access to any modern main LSI can lead to almost total destruction of domestic market also (drop can reach 70% in early March). Huge impact will be also on firms who make sensors and chips for military and security markets.

It is few industry rumors that Z-CAM is related directly to Chinese military by providing them some slightly modified cameras (hence big focus on Ethernet ports) for industrial production inside fully secret facilities. If this is indeed the case Z-CAM products can be blocked from US due to company inclusion in one of further sanctions list.

Huawei reportedly has slashed component orders for its forthcoming Mate 40 series products by 30%, according to sources from Taiwan's handset supply chain makers.

And it is just small initial cuts.

Hollywood issue in China

Kirin 9000 and Kirin 9000E will be last Huawei smartphone LSI's

TSMC will stop making last Kirin chips in few days time and last batches will be sent to Huawei in September already.

Both chips will support 5G and stock can be enough for 3-4 months of limited sales of flagman models.

Different analytics tell about different stock levels that Huawei has now, but best estimates are that it is no more than 3-5 months for all chips except few most important ones made for their infrastructure products and servers.

Taiwanese sites lately went off the rails

Manufacturers are leaving China amid intensifying trade disputes between Beijing and Washingtion, but the Asian giant will continue to dominate manufacturing operations in the next 2-3 years, especially for Taiwanese manufacturers, according to industry sources.

As China' manufacturing advantages decline, many supply chain players are seriously mulling moving their production out of the country, with Vietnam, India and Indonesia as popular destinations for relocation.

I love them, they better think how to to not become another Chinese province factually during next 2-3 years.

On March 1, 2018, US President Donald Trump claimed, “Trade wars are good and easy to win.” However, Trump’s decision to wage a trade war against China turned out to be a suicidal move.

The last two and half years have witnessed that trade war significantly hurting the US economy. Besides, the ongoing technology war between the world’s two largest economies is pushing the US economy to the brink amid the Covid-19 pandemic and proving China to be self-reliant and resilient. The trade and technology war has been more pain than gain for the US economy.

Trump’s team looks clueless and mediocre. Trade adviser Peter Navarro, Secretary of State Mike Pompeo, Trade Representative Robert Lighthizer, and Treasury Secretary Steven Mnuchin have been claiming that they have been punishing China. They drove Huawei out of the US and some allied countries successfully. Eventually, they believe, they will win the trade and technology war against China.

However, the contrary is true: They are punishing American producers, consumers, workers, and suppliers. They are abandoning the United States’ core principles that were supposed to be the most influential in the post-World War II world.

The technology war between China and the US has made many US companies losers and forced Chinese companies to find alternative suppliers. As a result, Chinese companies have emerged as a winner. The hawkish US policy is now pushing China to be more resilient and self-sufficient. America’s semiconductor giants will be the biggest losers. Besides, the technology war will make the US less innovative and less inventive in the future.

US companies earn by selling high-priced goods and services based on intellectual property such as software for computers and electronic devices, trademarks, patents, production technologies, and their franchises. But with the technology war, it seems the US is shooting itself in the foot.

Suppose the technology war continues. China successfully develops its own software and operating systems for mobile phones, computers, and other electronic devices and makes them publicly available. In that case, the US companies will lose significant revenue they are receiving now from China’s companies and the rest of the world. No one pays for software if substitutes are available for free.

Besides, the US is losing the market of the world’s largest middle-class country, one that can consume expensive American products.

https://asiatimes.com/2020/09/trade-tech-war-suicidal-for-us-free-market-capitalism/?fbclid=IwAR0-62MtuxcIM3YLkwB1ZhEARpaX8OFSWqp8UGWGhg6-HpNI7Iwn5OPbtak

Based on what I know, Beijing won't approve current agreement between ByteDance, TikTok's parent company, and Oracle, Walmart, because the agreement would endanger China's national security, interests and dignity.

Will be fun.

Executives at Qualcomm have visited Taiwan-based foundries for the purpose of securing capacity support if deliveries from China's Semiconductor Manufacturing International (SMIC) are affected by US trade sanctions, according to a report by Taiwan's TechNews.

Qualcomm is among SMIC's top-3 clients, accounting for about 13% of the foundry's total wafer revenue, the report quoted industry sources as saying. Qualcomm has contracted SMIC to fabricate power management chips using 0.18-micron process technology, and handset application processors and SoCs using 28nm and 14nm processes.

Taiwan's foundries including TSMC, United Microelectronics (UMC) and Vanguard International Semiconductor (VIS) are all being approached by Qualcomm's executives for the potential orders shift.

Seems like disinformation by Taiwan manufacturers.

Next goes SMIC, all Huawei hopes slashed

The United States has imposed restrictions on exports to China’s biggest chip maker SMIC after concluding there is an “unacceptable risk” equipment supplied to it could be used for military purposes.

Suppliers of certain equipment to Semiconductor Manufacturing International Corporation will now have to apply for individual export licenses, according to a letter from the Commerce Department dated Friday and seen by Reuters.

The latest move marks a shift in U.S. policy from earlier this year, when applicants seeking “military end user” licenses to sell to SMIC were told by the Commerce Department that the licenses weren’t necessary, according to three people familiar with the matter.

SMIC said it had not received any official notice of the restrictions and said it has no ties with the Chinese military.

US will tighten grip on SMIC even more within next 2 months.