Well, this is practically nail in the coffin news:
Meanwhile Intel is laying off 15,000 workers, slightly over 15% of its workforce and announced yield issues with its new “Meteor Lake” semiconductors. Its last two generations of chips have hardware problems which cause and crashes and have no software fix. (Buy AMD for your next computer.)
The CHIPS act was supposed to cause a rebirth of US chip manufacturing, but so far this seems unlikely. The US no longer has the necessary skills. Meanwhile, China is roaring on chips, taking over the legacy end of the market and pushing hard on the rest of it.
The end result of semiconductor sanctions is going to be that China will become the dominant player in semiconductors, a field which American allies dominate.
This wasn’t necessary. Chinese companies preferred foreign semiconductors before the sanctions: they sneered at domestic made ones and felt the quality was inferior, which it was. But what was done to Huawei told every Chinese company and China’s leadership that they couldn’t rely on foreign suppliers under Washington’s thumb.
A little history, because sanctions and CHIPS were aimed just at China.
Back in 1986 the US dollar was very high due to Volckers high interest rates. The great powers of the time got together and agreed to intervene to depreciate the dollar. The great loser was Japan, and the great winner in Semiconductors were Intel and Micron: Japan had previously been clearly in the lead. The Plaza accord later contributed to Japan’s crash, and the real end of its post war golden age. Doing so may have helped America, but it weakened the American alliance system’s overall power significantly.
CHIPS and sanctions can be seen as an attempt to return the lead from Taiwan and South Korea to America, but this is failing and it will also lead to American allies losing the lead.
As Kissinger once said, It may be dangerous to be America’s enemy, but to be America’s friend is fatal. This is especially true as American hegemony ends. America is cannibalizing or trying to cannibalize its allies: much of German industry crushed by anti-Russia sanctions, for example, has moved to America.
But America no longer has the real engineers (not software engineers) and factory know-how to scoop up cutting edge semiconductor production.
We’ll see if China, which is now more powerful than the US in every way that matters except deployed military, is better to its allies.
Smart nations will cut deals with the Chinese and re-align towards it if they can get anything close to a good deal. The West is going down and the decline will not be halted any time soon.