Wafers and Chips – Best of Both Worlds

The drive back home to Subang Jaya after dropping my wife, Jeannie; off to work this morning, was as usual, pleasant. I had BFM 89.9 – the business station, tuned in on radio – my usual catch up on what’s happening in and around the region. The traffic on the road was heavy but moving smoothly. Enjoyable drive, really.

The topic in the 15 minute slot just before the 8.00am news was about a new law passed in the US; prohibiting US chip and wafer semiconductor businesses from selling their products to China, well; at least those that seem or may seem to be a security threat to the U.S.. This law encompasses the transfer of knowledge as well. It now looks that U.S. and non-U.S. companies, together with Chinese companies are impacted with this ruling. The U.S. and non-U.S. companies will then probably re-locate out of China. Natural thing to do.

Many companies, most of which are smaller businesses that supply component parts and other products to these large companies, may have to close. These large companies are those that build on and around technologies which may seem a threat; All this is fine, but…

The tone or the underlying tone that seemed to be portrayed from the radio presenters was that the move is not fair to China. Really? When companies moved out of Malaysia 20 – 25 – 30 years ago and relocated to China due to cheaper cost offerings, were sentiments the same for companies in Malaysia that had to close due to the move?

The radio presenters went on to say that China will then find resolve to create and come up with their own. Who says that China has not already come up with their own by now? Let’s say that they have but they aren’t telling. They, become the one-stop mega center for this technology and the whole world would have to depend on them.

What happens if they get cranky, and cut off or starve supply? Do we want to be in a situation where they say, “Jump!”. We ask, “how high, master?”

China, is currently believed to be in a lockdown due to the Covid-19 “0” tolerance level policy in place. News, on BFM 89.9 ” the business station” radio a few days ago, stated that the LRT public transportation system in Kuala Lumpur was fast becoming unreliable due to constant train breakdowns. The operator was reported as saying that they are unable to get replacement parts and trains from the Chinese manufacturer.

During the 2020 – 2021 Covid-19 pandemic, the whole world, including Mars, Jupiter and Saturn (just kidding 😉), went into lockdown. All but China, which seemed to have found the answer – a cure or way of handling the situation; that left it nearly unscathed.

Is China now playing coy and masking themselves with a Covid-19 mask? (I want to use another rephrased question but I will skip it.) Many countries whose supply chains are dependent on raw, semi-produced or finished goods from China, are hugely affected.

Coming back to the statement made by the radio presenters: China will find resolve or create a “China + 1”, meaning Chinese companies will re-locate to countries like Malaysia, Indonesia, Thailand and others. Great for countries like Malaysia that will benefit from a move like this.

I think this is a short term move because the new U.S. law could extend to include prohibiting US chip and wafer businesses from selling their products to China or Chinese linked corporations in and outside of China.

The way forward for China is for them to come up with their own products systems. And, China is more than capable of doing so. They are a technological marvel in may fields.

The U.S. knows that China is more than capable of coming up with their own systems and products. The U.S. is a very competitive nation. They welcome competition and the challenge.

And we, the rest of the world; will benefit from the best of “both worlds”.

“Chips” worth craving for.

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