Ian Welsh – Page 110 – The horizon is not so far as we can see, but as far as we can imagine

According to SEMI’s market research group, China isn’t slowing down. SEMI is forecasting China’s capacity to keep growing at a significant rate over the next few years. For 300mm, SEMI expects China to have 29% of the worldwide capacity in 2026, increasing from 21% in 2022 (Figure 2). The 200mm capacity is expected to grow from 16% to 24%. And foundry capacity is expected to reach 42% in 2026 up from 27% in 2022, outpacing the Taiwan foundry capacity expansions.

China has its goal set on being more chip-independent and spending less than $300 billion a year on importing semiconductors. To accomplish these goals, they are spending a lot of money on fabs and equipment, and in some cases forming JVs to get the right chips for their industries. So, will the European and US CHIPS Acts help to increase Europe’s and the US’s capacity? A little, but as Peter Wennink recently commented, the EU chip goal is unrealistic. I’ll add in as is the CHIPS Act in the US. China has a significant head start and it will take significant investment by the EU and US to catch up, and it is unlikely politicians and shareholders will continue to fund the exercise to reach the desired goal of 20%. (my bold)

The chart:

As for the fabricators which chips are manufactured with, well, China bought tons overseas just before the sanctions hit, BUT:

The bad news for equipment companies outside of China is that due to sanctions against foreign companies selling certain types of equipment, as well as China trying to create an independent chip market, Chinese semiconductor equipment companies are seeing above-market growth. Naura Technology, AMEC, and ACM Research at mid-year of 2023 are seeing 68%, 27%, and 47% growth respectively over 2022. Most of this is driven by the China market.

The Chinese, pre-sanctions, were not pushing indigenous chip capacity. Chinese companies preferred American, Taiwanese and US chips, seeing them as more reliable than domestic alternatives.

A chip act might have made sense IF the US was genuinely going to re-shore production, far beyond chips or IF it was going to go to war within the next two to three years.

As it is, all it will accomplish in the end is losing the Western absolute advantage in chips and transferring the market leading position to China.

Which brings us to this beautiful, semi-related bit of news:

This is great news. Daleep has already helped this Administration navigate some tough challenges, and there’s no kinder or more capable colleague. https://t.co/6OiywjPuA9

— Bharat Ramamurti (@BharatRamamurti) February 16, 2024

The effect of anti-Russia sanctions was to make Russia into the world’s fifth largest economy while massively ramping up their weapons production and overall growth rate. Germany has slipped to sixth and Russia is now a firm Chinese ally. It is true that America is making more money by supplying Europe with expensive fossil fuels, but by any rational assessment, anti-Russia sanctions strengthened America’s self-declared enemies, and weakened its allies.

In other words, the policy that Daleep was the architect of was a disaster. Yet he is lauded as capable rather than as a complete fuckup. To be fair, I suppose, he was undoubtedly following orders, but he owns the orders he follows unless he objected to them and predicted their failure.

All of this applies, times ten, to anyone involved in the anti-China sanctions, which have backfired catastrophically.

America, land of the highly paid incompetent fuck up.

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The Truth About Joe Biden, America, And Europe’s Future

By Ian Welsh

On February 15, 2024

14 Comments

Joe Biden is responsible for a genocide in Israel, because Israel couldn’t do it without American support. (And this isn’t his only mass murder. He engineered a famine in Afghanistan.)

Obama said that he and Joe were responsible for making the US the biggest oil and gas producer in the world. Biden has, in office as President, made that brag too, meaning he owns it.

He is also responsible for all the deaths in Ukraine since March of last year, when the US, thru the UK PM Boris Johnson, scuttled a peace deal. As a result, Ukraine will almost certainly wind up losing much more land and hundreds of thousands more dead. Most likely it will wind up a landlocked nation. The IMF and the EU will then loot it to the ground with neoliberal policies.

Never let the US use you as their proxy in a war. They always fuck you over.

Biden also has overseen the institutionalization of a permanent pandemic without instituting proper mitigations. The official numbers are a vast under-count, since they only count reported deaths and most jurisdictions no longer report Covid deaths. This before we get to Long Covid. Joe now owns that, and that will be tens of millions disabled Americans and early deaths and hundreds of millions. I’ll do a post on some numbers on how many children are getting it soon. It always amuses me how Americans and Europeans go on and on about how much they love their children, when every piece of evidence indicates the exact opposite. (Regular readers will recall how I wrote, again and again, not to send children back to school till proper ventilation and filtering was put in place. Billions for weapons, none for protecting your kids.)

As for the US economic numbers, they are fake, because inflation is vastly understated and anyone who pretends otherwise is an economist, an idiot, or on the payroll—and often all three, since being an economist or believing in economic models is the equivalent of being hit repeatedly in the head by Muhammad Ali in his prime.

Joe accelerated the trade war with China started by Trump. As a result, China will become the world leader in microchips, which they were not pursuing before the sanctions. Within 2 to 3 years they will cause a microchip glut on everything the but high end chips They will, within 10 years, be the world leaders in auto production and within 15 years, the world leaders in civic aviation.

Sanctions against Russia have failed and Russia’s economy is growing fast. It is now larger than Germany’s and far healthier in the ways that will matter as things get worse.

Joe’s policies in Ukraine and Europe are leading to German de-industrializing. Europe is doomed, in so many ways. When AMOC goes, and models are showing that could happen as soon as next year (though I don’t expect it quite that soon), well, European agriculture will collapse, and there will be famine and a huge wave of refugees out of Europe. The irony will be deep. I wonder if Russia and Africa will accept many European refugees.

(The industrial movement makes no real difference to climate change, it’s just moving production from place to place but it is going to hurt almost every country which is an ally of America.)

And humans wonder why they live in Hell.

It’s because we deserve it, at least as a species.

Many readers and hundreds of millions to billions of people are going to lose everything due to the effects of climate change and ecological collapse. When that happens remember that many voted for it again and again and made excuse after excuse for the people accelerating it, the worst of whom definitely includes Democrats as well as Republicans

As for the US, the sooner it collapses, the better it will be for humanity as a whole. The empire was the global hegemon during the time when everyone knew about climate change, and it not only didn’t stop it, it put the pedal to the metal.

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Why Voting For The Lesser Evil Is Strategic Imbecility

By Ian Welsh

On February 14, 2024

14 Comments

If a party can get your vote by being slightly less evil than the other party (and this applies to both the Republicans and Democrats to many voters), then they have no incentive to be good.

If you live in a society where parties are tending more and more evil, voting for less evil simply ensures that the trend will continue. Since “evil” in this case means “bad for ordinary people but great for me and people who bribe me”, there’s no reason for politicians enmeshed in the system, who rose under the system to do anything for the majority unless it benefits the rich and powerful more.

However politicians do sometimes change their votes or actions when in power based on needing to be elected.

The key thing here is that you should always vote. Someone who votes is taken more seriously by politicians than non-voters, because it’s easier to get a vote to switch than to convince someone to start voting. Go in, and vote for a third party, or a few down ballot candidates or even spoil your ballot.

Of course, as a single voter, your power is limited. So we’ll talk about political leverage next time. The basic principle under all government types is this: you may sometimes luck into good times, but most of the time you only get what you have the power to enforce, and you never keep anything without power and a willingness to use it.

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Is Lesser Evilism Failing In America

By Ian Welsh

On February 13, 2024

14 Comments

So, this tweet from Stancil, a particularly deranged Democratic partisan:

Hard to express my contempt for people who engage in the “I’m not voting for president” routine, a rejection of the basic civic reality that sometimes all the options aren’t going to be custom-built for you but democracy doesn’t work if you throw a sulk and refuse to participate

Refusal to choose between two genocidal maniacs is “anti-democratic”, rather than an acknowledgment that the Democratic system in the US is broken if it only offers Cheeto-Hitler and GenocideJoe.

Look, Trump has been very clear that he’d support the genocide too. He says he’ll federalize Red State militias and cops and send them into blue states to hunt down immigrants, presumably door to door, which makes the fugitive slave act that was one of the main causes of the civil war look reasonable and sane.. He’s a fool, deeply stupid, a rapist multiple times over, a man who cheats people who work for him and so on. He’s lower than pond scum. Any decent person wouldn’t spit on him to put out a fire.

Biden is actively assisting Israel in an active genocide. He deliberately caused a famine in Afghanistan after withdrawal, showing his one unique genius: the ability to kill more people without troops than with them.

Both of these men are profoundly evil. They’re also old and incompetent, though if you’re going to have evil as President, I suppose incompetent evil is better.

The American electoral system is broken in multiple ways, but one is that it doesn’t offer up even remotely acceptable Presidential candidates (or much in the way of acceptable candidates for lower offices.) This has been true for a long time, but it is getting worse and worse.

“I won’t vote for either genocidal maniac and refuse the system the legitimacy of my vote” isn’t an insane or stupid thing to do in this situation. If you can’t find anyone actually good on your ballot does voting make sense? There are arguments that it does, but it’s not obviously wrong.

Fundamentally the problem is that there is no significant resevoir of sanity among the American elites, and ballot access is very difficult for anyone else. In a country where most people think of themselves as consumers rather than producers of politics, surmounting that barrier and offering up candidates that enough Americans will vote for seems essentially impossible.

Anyway, Stancil’s just a deranged democratic partisan “even genocide should not be a bar to electing Democrats.”

Lovely country. And not the only one.

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The Ant

By Ian Welsh

On February 12, 2024

5 Comments

Once Upon A Time there was an ant. She spent all her days carrying food and building supplies to the nest, following scent trails laid down by other worker ants.

Nothing she did was different from what other worker ants did.

One day she looked to the sky and screamed, “I matter.”

Every day after she would look at the sky for a few moments. She never again said “I matter.”

Once, when she was looking at the sky, another worker ant came up to her and gently touched her antennas.

She followed that ant when it left, and together they foraged food and picked up leaves.

One summer eve, some earth crumbled and the other ant, tumbled down and fell on her back. It took a lot of pushing to help her back to her feet, but when it was done the ant felt a great rush of relief and happiness, like nothing she had felt before.

Again, they touched antennas. A warmth suffused the ant, she realized this ant was special, even though it did nothing that any other ant did, and for over a year, they always worked together.

Then a large object came from the sky, barely missing the ant and landing on many other ants, then withdrawing back to the sky. The ants it had hit were all crushed.

The ant approached its friend, and gently touched her antennas to the paste which was all that remained of its friend.

She looked to the sky, and screamed, “she mattered!”

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Open Thread

By Ian Welsh

On February 12, 2024

7 Comments

Use to discuss topics unrelated to recent posts.

Week-end Wrap – Political Economy – February 11, 2024

By Tony Wikrent

On February 11, 2024

4 Comments

Week-end Wrap – Political Economy – February 11, 2024

by Tony Wikrent

Gaza / Palestine / Israel

Israel’s Relentless Bombing Erases Gaza’s Heritage Sites

[Wide Walls, via Naked Capitalism 02-09-2024]

The war in Gaza is wiping out Palestine’s education and knowledge systems

[The Conversation, via Naked Capitalism 02-09-2024]

In the past four months, all or parts of Gaza’s 12 universities have been bombed and mostly destroyed.

Approximately 378 schools have been destroyed or damaged. The Palestinian Ministry of Education has reported the deaths of over 4,327 students, 231 teachers and 94 professors.

Numerous cultural heritage sites, including libraries, archives and museums, have also been destroyed, damaged and plundered.

Oligarchs’ war on the experiment of republican self-government

The Republican Party and Their Billionaire Backers’ Plot Against America

Thom Hartmann, February 8, 2024 [Common Dreams]

…The most appealing thing about a dictator is that he can “get things done.”

Dictators don’t have to worry about bureaucracies hindering them, or pesky laws and regulations. They don’t care about local opposition to their projects, or their impact on the environment.

From making the trains run on time to building an autobahn and a car company to go with it, dictators famously “get things done.”

The corollary to that old nostrum is that when things are going well, when things are working smoothly, when the people are getting what they want from their government, there is little interest in putting a dictator into office.

You have to break government pretty badly before people are willing to trade in a normal democracy for a dictatorship, but it’s sure happened before.

Germany wouldn’t have embraced Hitler if it weren’t for the depression the country had slid into because they lost World War I and were hit with fierce sanctions in the Treaty of Versailles.…

One of the most successful ways the forces of autocracy and authoritarianism have risen to power throughout history is by creating or stepping into a crisis and promising to be the “strongman” who will fix things and fix them now.

Which, of course, is why right-wing billionaires and the Republicans they own have been working so hard in the decades since the Reagan Revolution to break our government.

They want a series of terrible crises. And if they don’t happen organically, right wingers are more than happy to create them, as we saw this week when Republicans in the House of Representatives refused to do anything about our southern border or to fund aid to Ukraine and the Palestinians….

Warn Voters About the Radicalism Beyond Trump

Nancy MacLean, February 8, 2024 [The New Republic]

…Promoters have been methodically lining up authorizations from the states since the 2012 election showed them that most Americans reject the kind of society they seek, even Mitt Romney’s mild version. So strategists concluded that the only way to permanently entrench minority rule by plutocrats and theocrats is to encase it in a dramatically altered Constitution….

Read More

The Competition Between West And The Rest Is Already Over

By Ian Welsh

On February 10, 2024

7 Comments

This is what people refuse to get: the West has already lost. It’s over. It’s done. There’ll be some shooting, but it doesn’t matter.

China has the world’s largest economy by all statistics that matter. It has by far and away the most manufacturing. It has way more shipbuilding capacity than the entire West.

China is the premier trade power. Most of the global “South” would rather trade with it: it gives better deals and it interferes less with internal politics. This will continue. Western analysts are already talking about the coming semiconductor flood, as China catches up there. In ten years or so they’ll have more reliable planes at better prices than Boeing. They lead in about two-thirds of all major tech areas and surging in the rest. They are crushing it in the auto-industry and soon will produce better cars for cheaper, if they don’t already.

They have a real economy: “China speed” is a phrase. They get things done, and fast.

Russia is now the world’s fifth largest economy and over-took Germany, which is crashing out due to high energy prices with the cut-off from Russia oil and gas. Europe barely registers on new patents. They have advanced weaponry, their economy is booming thanks to sanctions forcing them to invest in their own country, they have plenty of food, resources and water and they’re on of the few countries who will benefit for the early to mid parts of climate change and global warming.

Changes in weapon systems have made cheap weapons much more effective, especially drones and missiles. The tech has spread widely, to the point where a backwards country like Yemen has enough to shut down a key trade route. The US military can’t meet its enlistment goals, and US weapons are much more expensive and far slower to produce than their enemies. The West can’t even supply Ukraine with enough artillery shells, drones and ammunition: but China, North Korea, Iran and Russia together have been able to keep Russia armed to the teet.

The US navy still has the largest tonnage, but can’t fully man all its ships, and as noted early, China has far more shipbuilding capacity, and it now has as many ships as the US. They are pushing in on technology which will allow them to detect submarines at great distances.

The US no longer has bigfoot capacity: it can’t easily occupy foreign countries any more and it can’t hit them while not being hit in return, as the multiple strikes on US bases and the closing of the Red Sea show.

It’s over. The world economy is re-orienting to China. They will have first dibs on resources because they offer a better deal on almost everything. Soon there will be nothing important one can’t buy from China or Russia, and for less than the West can sell it for.

The US and Europe need the global south—they need those resources, but the South will have little reason to sell to us, and will prefer China and Russia and so on. (France is being kicked out Africa, right now, in exchange for Russia and China.)

Military might will continue to tend to China and Russia, it is a lagging indicator on industrial power and technological lead, and we have already lost both of those.

It’s over. We lost without most of us even realizing we’d lost. When we decided to send our industry to China in exchange for some of our elites getting richer faster for three decades, we decided to give up our centuries old hegemony.

This isn’t to say all is woe, or that Western countries who are smart can’t maintain good standards of living. But we can only do so if we stop pretending we’re #1, the hegemonic civilization and everyone else has to kiss our asses or else.

The Euro-American centuries are OVER. We had a good run, but all runs end. We could have eked it out for a few more generations, but decay always begins at home. We gave our lead away, deliberately and as policy.

And a lot of countries, with good reason, hate our guts. They will get their kicks in as we go down.

We’d better learn humbleness, contrition and cooperation, we’re going to need them. And our elites need to be defenestrated as a class if the rest of us are to have any chance at decent lives.

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