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Rudd/F2
Today's WSJ article discussing the issue more fully.......
China Restricts Exports of Two Minerals Used in High-Performance Chips
Industry executives see export ban on gallium and germanium as retaliation over chip curbs by U.S. and others.
By
James T. Areddy
SINGAPORE—China set export restrictions on two minerals the U.S. says are critical to the production of semiconductors, missile systems and solar cells, a show of force ahead of economic talks between t
he minerals—gallium and germanium—and more than three dozen related metals and other materials will be subject to unspecified export controls starting Aug. 1, Beijing’s Ministry of Commerce said Monday. Its statement referred to safeguarding national security and interests and said some future export applications would require review by the government’s top body, the State Council.
The China-U.S. rivalry increasingly features export restrictions tailored to slow the high-technology industries of the other nation. Trading complaints about such controls, which both sides say are designed to protect national security, have featured in a return to high-level talks between the two governments. More focus on the issue is likely when Treasury Secretary Janet Yellen visits Beijing later this week and if Commerce Secretary Gina Raimondo makes an expected trip in the coming months.
Neodymium is critical to making the wheels of a Tesla spin or creating sound in Apple’s AirPods, and China dominates the mining and processing of this rare-earth element. So the U.S. and its allies are building their own supply chain. Photo illustration: Clément Bürge/WSJ
The U.S. Commerce Department had no immediate comment.
The U.S. in October halted exports to China of equipment used to produce more technically advanced semiconductors and has leaned on allies like South Korea and the Netherlands to do the same. Beijing warned its companies to consider the national-security implications of exports to the U.S. It banned the use of products made by Micron, the U.S.’s biggest memory-chip maker, in its critical information-infrastructure firms, while warning American allies to reject what it terms Cold War-type protectionism peddled by Washington.
Complexities bind the U.S. and China in production of wares such as semiconductors in ways that make it difficult for either side to act too rashly, a kind of technology-sector equivalent of mutually assured destruction. The Biden administration is trying to entice producers such as Samsung and Taiwan Semiconductor Manufacturing Co. to expand in the U.S. but getting them to turn their back on China appears unlikely.
The new restrictions on gallium and germanium affect specialty metals produced and refined primarily in China, giving it leverage in some cutting-edge sectors. Neither gallium or germanium is traded in large quantities. Both nevertheless have uses important to particular industries, especially production of semiconductors that are often designed in and for use in the U.S. even if made in Taiwan and South Korea.
“This measure will have an immediate ripple effect on the semiconductor industry, especially with regards to high-performance chips,” said Alastair Neill, board member of the Critical Mineral Institute who has nearly 30 years of experience with China’s metals industry.
Estimated production of unrefined gallium in 2022
China
540,000 kilograms
Rest of
the world
10,000
Note: Other countries that produce unrefined gallium are Russia, Japan, South Korea and Ukraine.
Source: U.S. Geological Survey
China has smarted at U.S. efforts to slow the advance of its semiconductor manufacturing, which Washington warns is ultimately aimed at strengthening Beijing’s military. The Biden administration has made it difficult for China to buy lithography machines needed to produce high-performance chips, and last week scored a win when the Dutch government said its equipment makers like ASML would need government permission to ship some products abroad.
Chinese chip makers and suppliers who gathered in Shanghai for a recent industry event were in a grim but defiant mood following a Wall Street Journal report that the Biden administration is considering new restrictions on exports of artificial-intelligence chips to China.
Industry analysts see a pattern of tit-for-tat. “If you don’t send high-end chips to China, China will respond by not sending you the high-performance elements you need for those chips,” said Neill, who added that Beijing usually tries to match U.S. trade measures with a countermeasure of equal proportion.
Both gallium and germanium appear among 50 minerals that the U.S. Geological Survey deems “critical,” meaning they are essential to the economic or national security of the U.S. and have a supply chain vulnerable to disruption.
Gallium, a soft, silvery metal at room temperature, is a key ingredient in a fast-growing class of semiconductors used in phone chargers and electric vehicles, among a growing range of commercial and military applications. About 53% of the U.S.’s gallium was imported from China between 2018 and 2021, according to the U.S. Geological Survey, with imports decreasing substantially in 2019 after the U.S. imposed higher tariffs on Chinese gallium. There is no U.S. production of unrefined gallium.
Gallium arsenide—a compound with arsenic—is widely used for high-performance chips because it is more resistant to heat and moisture as well as more conductive than silicon. At the moment, “no effective substitutes exist for GaAs in these applications,” noted the 2023 U.S. Geological Survey on gallium.
The U.S. military relies on gallium nitride, a related product, for its properties for efficiently transmitting power deployed in the most advanced radars under development. It is also being used in the replacement for the Patriot missile-defense system being made by RTX, formerly known as Raytheon Technologies. Beijing previously had said it would seek to prevent a unit of RTX, which didn’t respond to a question about gallium, from using Chinese products in its military technology.
An arm of Raytheon Technologies is on Beijing’s ‘unreliable entities list,’ which prohibits companies from export and import activities related to China. PHOTO: PASCAL ROSSIGNOL/REUTERS
In 2016, the U.S. blocked the proposed purchase by Chinese investors of a controlling stake in an auto and light-emitting diode components business unit of the Dutch electronics company Philips valued at $2.8 billion over concerns of the dual-use potential for gallium nitride.
Sales of chips using gallium nitride were $2.47 billion last year, according to Precedence Research, but are expected to climb to $19.3 billion by 2030. Chips produced with gallium-arsenide are expected to grow from $1.4 billion last year to $3.4 billion in 2030, according to Research and Markets.
Germanium, a lustrous, grayish-white metal, can make silicon a faster conductor and is often used in making fiber-optic systems and solar cells, including those used in space applications.
To trade experts, China’s new export restrictions on the commodities is a reminder of an earlier export-quota system Beijing imposed for rare earths, another group of metals produced mostly in China that have prized qualities for high-technology manufacturers. The U.S. in 2014 won a case at the World Trade Organization that argued China’s export limits on rare earths, as well as tungsten and molybdenum, were inconsistent with international trade rules.
Later, in 2019, Chinese leader Xi Jinping made a visit to one of the country’s key rare-earth production zones. To analysts, the visit appeared to be a warning Beijing could disrupt trade in the minerals, days after the Trump administration made it illegal to supply some U.S. technology to Chinese telecommunications equipment maker Huawei Technologies.
Export controls allow Beijing to target individual companies as well as broader sectors of particular industries and make decisions based on geopolitical considerations, said Paul Triolo, senior vice president for China and technology-policy lead at the Washington-based advisory firm Albright Stonebridge Group.
Chinese exporters of products and materials containing gallium and germanium will need to apply for special licenses as of August. PHOTO: CFOTO/ZUMA PRESS
China has signaled to the U.S. that it is interested in establishing a new bilateral dialogue on export controls, and the latest move could provide Beijing with more leverage in coming discussions with Washington, he said.
The controls announced Monday follow a pattern of quieter restrictions on American access to other commodities produced in China, such as materials known as super-abrasives that also are used in high-technology industries, according to Nazak Nikakhtar, a trade lawyer who formerly held roles related to national security and commodity supply chains at the Commerce Department and is now a partner at Washington law firm Wiley Rein LLP. “It’s really arm-flexing, to remind the U.S. how strong they are and to remind us how much control they have over our supply chains,” she said.
While Nikakhtar said she doesn’t think the gallium and germanium restrictions are designed to be a bargaining chip for the coming talks with American officials, she said they should seize the opportunity to remind their Chinese counterparts that Washington can close loopholes on its current export restrictions and that it has the power to apply economic sanctions.
—Lingling Wei, Asa Fitch and Doug Cameron contributed to this article.
Write to Sha Hua at sha.hua@wsj.com
Corrections & Amplifications
Germanium can make silicon a faster conductor. A previous version of this article incorrectly said that Germanium can make silicon a faster conduit. (Corrected on July 4)
Why is LWLG not on Cathie Wood's radar?
Ark Invest's Cathie Wood Is Betting Big On AI With These 4 Stocks
— Including One That Could Skyrocket 750%
https://www.benzinga.com/markets/23/06/32817111/ark-invests-cathie-wood-is-betting-big-on-ai-with-these-4-stocks-including-one-that-could-skyrocket
I was contacted also
Didn't catch that ...thanks!
The article had a line chart that did not copy and paste comparing the mountain peaks of the Navidia and AMD stock performance to the much lower flat line of Intel.
From today's WSJ
Gelsinger thinks Intel is in a "mudhole"
Some good industry discussion in the article for those more astute than me who could probably connect quite a few dots....
Once Mighty Intel Struggles to Escape ‘Mud Hole’
Rivals such as Nvidia have left the chip company far behind. CEO Pat Gelsinger aims to reverse firm’s fortunes by vastly expanding its factories.
By Asa Fitch
May 30, 2023 8:58 am ET
Pat Gelsinger is keenly aware he must act fast to stop Intel INTC 6.59%increase; green up pointing trianglefrom becoming yet another storied American technology company left in the dust by nimbler competitors.
Over the past decade, graphics-chip maker Nvidia leapfrogged Intel to become America’s most valuable semiconductor company, rivals overtook Intel in making the most advanced chips, and perennial also-ran Advanced Micro Devices has been stealing market share. Intel, by contrast, has faced repeated delays introducing new chips and frustration from would-be customers.
“We didn’t get into this mud hole because everything was going great,” said Gelsinger, who took over as CEO in 2021. “We had some serious issues in terms of leadership, people, methodology, et cetera that we needed to attack.”
As he sees it, Intel’s problems stem largely from how it botched a transition in how chips are made. Intel came to prominence by both designing circuits and making them in its own factories. Now, chip companies tend to specialize either in circuit design or manufacturing, and Intel hasn’t been able to pick up much business making chips designed by other people.
So far, the turnaround has been rough. Gelsinger, 62 years old and a devout Christian, said he takes inspiration from the biblical story of Nehemiah, who rebuilt the walls of Jerusalem under attack from his enemies. Last year, he told a Christian group in Singapore: “You’ll have your bad days, and you need to have a deep passion to rebuild.”
Gelsinger’s plan is to invest as much as hundreds of billions of dollars into new factories that would make semiconductors for other companies alongside Intel’s own chips. Two years in, that contract-manufacturing operation, called a “foundry” business, is bogged down with problems.
Mobile-phone chip giant Qualcomm and carmaker Tesla have explored having Intel produce chips for them, then backed off, according to executives involved in the discussions. Elon Musk’s Tesla passed because Intel couldn’t provide extensive chip-design services that other major foundries offer, one of those people said. Qualcomm dialed back after technical missteps by Intel, according to some of those involved in the interaction. Gelsinger declined to comment on Intel’s relationships with Qualcomm and Tesla.
“Foundry is a service business,” Gelsinger said in an interview. “That isn’t the culture that Intel’s had.”
Whether he succeeds will help determine whether Intel will have to settle for a role as just one chip maker among many, akin to what happened to International Business Machines in the personal-computing business. It also has ramifications beyond the company. Taiwan Semiconductor Manufacturing Co., or TSMC, and South Korea’s Samsung Electronics are now the world’s most advanced chip makers, and Chinese companies have been gaining ground. The U.S. has been trying to bolster the domestic chip-making industry after Covid interfered with Asian supply chains and U.S.-China political tensions grew.
Intel became a Silicon Valley colossus in the 1980s and 1990s by making the central processing units that powered the PC revolution. Under Gelsinger’s mentor, former CEO Andy Grove, Intel chips ran Microsoft’s operating-system software, and IBM used Intel-branded processors in the machines that became ubiquitous in homes and offices.
In the 2000s, Intel tried and failed to make inroads into producing chips for cellphones and high-end computer graphics. In recent years, TSMC and Samsung surpassed Intel in the high-stakes race to make chips with the smallest, fastest transistors.
The global chip market is expected to surpass $1 trillion by the end of the decade. Becoming a world-leading contract chip maker, Gelsinger said, is “not optional.”
Gelsinger grew up in a small farming community in southeastern Pennsylvania, tinkering with televisions and radio and attending a nearby technical school. At 18, he moved to California to work for Intel. He worked his way up Intel’s chip-design ranks, becoming the company’s first chief technology officer in 2001. He was ousted later that decade amid the failure of a computer-graphics chip project. He eventually landed at datacenter-software company VMware, where he was CEO for eight years.
He returned to Intel in February 2021 knowing a turnaround wouldn’t be easy. His plan included vastly expanding Intel’s factories and creating a foundry business to boost orders. Before taking the CEO job, he spoke to each board member via Zoom about his plan. They voiced their support.
His return coincided with a chip shortage induced by a pandemic-era boom in PC sales. Industry profits temporarily soared, before an easing of the pandemic and office reopenings led to a glut in the chip market. That has complicated Gelsinger’s plans.
On April 27, Intel posted the worst quarterly loss in its history, and it has projected another loss in the current quarter. It cut its dividend, began a new round of cost-cutting that could include layoffs, trimmed executive pay and is aiming to slash up to $10 billion in annual costs by 2025.
It is slowing installation of multimillion-dollar chip-making equipment in new factories to match chip demand. A $200 million research center in Haifa, Israel—the first major project Gelsinger announced after taking over—was scrapped. So was a $700 million lab planned in Oregon. A jet service that shuttled employees between manufacturing hubs in Oregon and Arizona and Intel headquarters in Silicon Valley was put on hold.
Intel’s stock is down about 30% since Gelsinger was named CEO, underperforming the PHLX Semiconductor index, which has advanced about 10%. TSMC’s market value is more than four times Intel’s, and Nvidia’s is about eight times.
Gelsinger has said he is confident Intel can deliver on his pledge to achieve five advances in chip technology within four years, and that it will be making the most advanced processors in the world within the next couple of years.
“There are a lot of challenges and a lot of execution risk, and it’s going to take a long time to roll out that multiyear strategy,” said Andrew Boyd, a portfolio manager at Gibraltar Capital Management in Tulsa, Okla. He said his firm decided to liquidate nearly its entire position in Intel in January after roughly 15 years of having it as a core holding.
Gelsinger said he is bullish that Intel can become one of the world’s two biggest contract chip makers. “Is TSMC going to keep growing between now and the end of the decade?” he asked. “Yes. Will Samsung grow? Yes. Will Intel grow? I hope a lot faster than either of those two.”
Intel executives have set a goal of becoming No. 2 by 2030, after Taiwan’s TSMC. Luring a few flagship customers could bring in between $20 billion and $25 billion in sales a year by the end of the decade, according to internal Intel estimates.
An image of a semiconductor wafer produced by Taiwan’s TSMC, one of the Intel competitors now making the world’s most
Before each meeting of the board of directors, Gelsinger takes its members to dinner and asks them to reaffirm their support. “Are we still aligned? Is the strategy still good? Are you all still on board?” he said about the discussions. “It is a challenging journey that we’re on, and we need to be on it together.”
Board Chairman Frank Yeary said that the board is closely aligned with Gelsinger and that “real progress is happening,” but that there is plenty of work left to do.
To jump-start the contract chip-making business, Intel agreed last year to buy an Israeli foundry, Tower Semiconductor, in a deal valued at around $6 billion, although that deal faces problems in China. Gelsinger traveled to Beijing in April to meet with Intel’s local staff and try to salvage the transaction. Intel earlier this year pushed back its expectation for the timing of the deal’s closing, though it still expects it to go through.
Qualcomm, which designs chips and outsources manufacturing, wanted to work with Intel, and assigned a team of engineers to work toward making mobile-phone chips at Intel’s factories. It was particularly interested in a cutting-edge chip-making technology that Intel hopes will be the most advanced in the world by late next year.
Intel agreed last year to buy Israeli chip maker Tower Semiconductor. Technicians at that company test a semiconductor wafer.
In early 2022, Intel’s foundry arm sent a delegation to Qualcomm’s San Diego headquarters, where they met with CEO Cristiano Amon. Then Intel missed a June performance milestone toward producing those chips commercially. It missed another in December.
Qualcomm executives concluded Intel would struggle making the kind of cellphone chips they wanted, even if it succeeded in making high-performance processors. Qualcomm told Intel it was pausing work while it waits for Intel to show progress, according to people involved in the discussions.
He said Intel has been more focused on chip-making technology that works in high-performance processors like those used in PCs. Making chips for mobile phones with limited battery lives requires new skills and new circuit designs. Intel said recently it is collaborating with Arm, a chip-design company that specializes in cellphone circuits.
Tesla in late 2021 began considering Intel for making chips to process data and images that help cars drive autonomously. Tesla has long been a customer of Samsung’s foundry business, and also has begun using TSMC. Tesla designs the chips, but needs foundries to help get them ready for production—something Intel wasn’t able to offer.
Gelsinger declined to discuss talks with Tesla. He said handling such work is a new area for Intel, which isn’t “naive about the challenges.”
Gelsinger has said the foundry business has landed more than $4 billion of potential business. Thus far, its flagship customer has been Taiwanese mobile-phone chip company MediaTek, for which Intel will produce less-advanced chips for smart TVs and Wi-Fi modules. It also signed up Seagate, a hard-drive maker, to produce more-sophisticated chips.
Intel has yet to sign any of the world’s largest foundry customers, such as Apple, Nvidia and Qualcomm, although Nvidia is testing having Intel make its chips as part of a government-funded program. Many potential customers have supply agreements with TSMC and Samsung and are wary of working with an unproven foundry, industry officials said.
Last year, Intel reported $895 million in revenue for the foundry business, less than 2% of its total sales.
In meetings last year, Gelsinger told the chip-production staff that he had staked his career on the foundry succeeding and would stop at nothing to make it work, according to some of those in attendance.
The U.S. government, too, wants to revive domestic chip making after much of the business migrated to Asia, which offered lower labor costs and generous incentives.
Gelsinger has pushed for greater government investment in chip production. At one point, he complained to government representatives that it looked as though Intel would get euros to build plants overseas before receiving dollars to build in the U.S.
Washington later enacted the so-called Chips Act, which allocated $53 billion worth of funding, loan guarantees and other incentives for domestic chip making.
Afterward, President Biden visited a site in Licking County, Ohio, where Intel is building what could become one of the world’s biggest chip-manufacturing facilities. Intel also is building a new plant in Arizona and has plans to build in Germany and other locations around the world, costing potentially hundreds of billions of dollars if fully built out.
Gelsinger’s growth plan is rooted in the expectation that chip demand will come roaring back. When Intel disclosed quarterly results in late April, he predicted the rebound would start before year-end.
While he acknowledges that some of the chip plants Intel is building now have no committed customers other than Intel itself, that’s a gamble he’s ready to take.
“If you don’t have a little bit of boldness,” he said, “you shouldn’t be in the semi industry.”
Write to Asa Fitch at asa.fitch@wsj.com
WSJ columnist excerpt Andy Kessler - former Morgan Stanley exec
There still seems to be excess to wring out of the system—in stocks, crypto, real estate and banks. As credit tightens and the economy slows or recedes, the next phase will be earnings disappointments. Drip, drip, drip, every day another miss, another round of layoffs (this month more Amazon and Facebook workers were let go). It could take six months, a year or, with policy failures, 10 to 15 years. Despite some ups and downs, the Dow Jones Industrial Average effectively went sideways from 1966 until 1982.
It’s often darkest before dawn. One night in January 1991, I was dreading Morgan Stanley’s morning meeting because I had a buy on Intel’s stock and the company completely missed its earnings estimates. The world economy was frozen after Iraq’s invasion of Kuwait. But Operation Desert Storm began that night—we all watched on CNN. By morning, Intel was up huge, launching a 19-year bull run.
The more 500-point market drops due to bank-failure fears, recessions, Russia and China, or concern over our pending AI overlords, the closer we are to wringing all the positive sentiment out of investors. No one rings a bell at the bottom (or top) of markets. When the news is bad, people capitulate and swear off stocks forever.
Then, get your butterfly net ready to scoop up the next wave of innovative companies that got thrown out with the bath water—a stock picker’s paradise.
Beats leaving your money in a bank.
Write to kessler@wsj.com.
Today's WSJ
SOS for the US Electrical Grid
I am long and strong LWLG approaching 6 figures....only posted it as info for the the techies to address their claims.
POET Technologies to Demonstrate 800G Optical Engines and Light Source Products at OFC 2023
Tue, February 14, 2023 at 7:00 AM EST
Technology Demonstrations of Optical Engines for Pluggable Transceivers, Co-packaged Optics and AI-ML GPUs
TORONTO, Feb. 14, 2023 (GLOBE NEWSWIRE) -- POET Technologies Inc. , the designer and developer of the POET Optical Interposer™ and Photonic Integrated Circuits (PICs) for the data center, telecommunication and artificial intelligence markets, today announced that it will be hosting live demonstrations of its advanced optical engine and light source products at the 2023 Optical Fiber Communication Conference and Exhibition (OFC).
POET's executive leadership will be at OFC, March 7– March 9, to showcase the Company’s latest technology in Booth #5311. Customers and attendees can view mechanical samples and live demonstrations of the following products:
800G 2xFR4 receive optical engines with integrated DMUX, photodiodes and trans-impedance amplifier;
100G LR4 transmit and receive optical engines for 10km transmission applications;
O-Band LightBar™ products with high-power CW lasers for co-packaged optics and artificial intelligence/machine learning (AI-ML) GPUs;
Mechanical demo of 800G 2xFR4 QSFP-DD transceiver showcasing the simplicity of a transceiver design utilizing POET's optical engines.
“We have several advanced products to demonstrate at OFC 2023 that we expect to attract substantial customer interest,” said Raju Kankipati, Senior Vice President and USA GM at POET Technologies. “All of POET’s integrated optical engines are based on POET’s Optical Interposer with hybrid integration of best of breed components and monolithic integration of passive elements, resulting in an extremely small chiplet architecture enabling the production of 800G, 1.6T and even 3.2T transceivers in standard pluggable form-factors. We will also be demonstrating and showing mechanical samples of our innovative LightBar products, an essential component for AI-ML accelerator GPUs, an emerging but potentially huge market. As one of the optoelectronics industry’s premier events, OFC is the perfect place to highlight our newly released products and to continue growing our network of potential partners and customers.”
Members of POET’s executive management team will also be available to meet with journalists and industry analysts during OFC 2023. Those who wish to request a meeting with the Company should send an email to POET-PR@sheltongroup.com.
A recorded interview with POET’s Chairman & CEO, Dr. Suresh Venkatesan, Update on POET’s 800G Transmit Engine, can be found on the Company’s YouTube channel using this link:
From Wall Street Journal
Very comprehensive and informative....learned a lot....
Chips Are the New Oil and America Is Spending Billions to Safeguard Its Supply
Recent shortages and fears of China’s ambitions to dominate the industry have led to a frenetic effort to rev up U.S. production
https://www.wsj.com/articles/chips-semiconductors-manufacturing-china-taiwan-11673650917
The U.S. share of global chip manufacturing has fallen to 12% in 2020 from 37% in 1990. CAITLIN OCHS FOR WALL STREET JOURNAL
By Asa Fitch
Jan. 14, 2023
Only in the past two years has the U.S. fully grasped that semiconductors are now as central to modern economies as oil.
In the digitizing world, power tools commonly come with Bluetooth chips that track their locations. Appliances have added chips to manage electricity use. In 2021, the average car contained about 1,200 chips worth $600, twice as many as in 2010.
The supply-chain crunch that created a chip shortage brought the lesson home. Auto makers lost $210 billion of sales last year because of missing chips, according to consulting firm AlixPartners. Competition with China has stoked concerns that it could dominate key chip sectors, for either civilian or military uses, or even block U.S. access to components.
Now the government and companies are spending billions on a frenetic effort to build up domestic manufacturing and safeguard the supply of chips. Since 2020, semiconductor companies have proposed more than 40 projects across the country worth nearly $200 billion that would create 40,000 jobs, according to the Semiconductor Industry Association.
It’s a big bet on an industry that is defining the contours of international economic competition and determining countries’ political, technological and military advantage.
“Where the oil reserves are located has defined geopolitics for the last five decades,” Intel Corp. INTC -0.59%decrease; red down pointing triangle Chief Executive Pat Gelsinger declared at a Wall Street Journal conference in October. “Where the chip factories are for the next five decades is more important.”
President Biden at the groundbreaking ceremony for a new Intel semiconductor manufacturing facility in Ohio in
As oil became a linchpin of industrial economies in the 1900s, the U.S. became one of the world’s largest producers. Securing the semiconductor supply is more complicated. While one barrel of oil is much like another, semiconductors come in a bewildering range of types, capabilities and costs and depend on a multilayered supply chain spanning thousands of inputs and numerous countries. Given the economies of scale, the U.S. can’t produce all of these itself.
“There’s zero leading-edge production in the U.S.,” said Mike Schmidt, who heads the Department of Commerce office overseeing the implementation of the Chips and Science Act, signed into law by President Biden in August, which directs $52 billion in subsidies to semiconductor manufacturing and research. “We are talking about making the U.S. a global leader in leading-edge production and creating self-sustaining dynamics going forward. There’s no doubt it’s a very ambitious set of objectives.”
The recent shortages that hurt the most didn’t necessarily involve the most expensive chips.
Jim Farley, Ford Motor Co.’s chief executive, told a gathering of chip executives in San Jose, Calif., in November that factory workers, meaning workers in North America, had worked a full week only three times since the beginning of that year because of chip shortages. A lack of simple chips, including 40-cent parts needed for windshield-wiper motors in F-150 pickup trucks, left it 40,000 vehicles short of production targets.
Until 2014, machines that treat sleep apnea made by San Diego-based ResMed Inc. each contained just one chip, to handle air pressure and humidity. Then ResMed started putting cellular chips into the devices that beamed nightly report cards on users’ sleep patterns to their smartphones and to their doctors.
As a result, regular usage by users climbed from just over half to about 87%. Because mortality is lower for sleep-apnea sufferers who consistently use their devices, a relatively simple chip could help save lives.
ResMed's sleep apnea devices are assembled in Singapore.ORE HUIYING FOR THE WALL STREET JOURNAL
ResMed couldn’t get enough of the cellular chips during the chip shortage when demand for its machines went up, in part because a competitor’s devices were recalled. Some suppliers reneged on supply agreements. Patients faced monthslong waits.
Chief Executive Mick Farrell said he implored longstanding suppliers to give priority to his equipment, though his orders were relatively small. “I asked for more, more and more, and to please prioritize us,” he said. “This is a case of life and death—we’re not just asking for something that makes you feel better.”
The company redesigned its machines, which are assembled in Singapore and Sydney, to replace the chips in short supply with others more readily available. It sought out new chip suppliers. It even rolled back the clock and released a version of a device without the cellular chip.
Though the chip shortage has abated somewhat and the company’s newest breathing devices have the cellular chip back, Mr. Farrell worries chip supply could be a bottleneck.
In May, he was one of a group of medical-technology CEOs who pleaded with Commerce Secretary Gina Raimondo on a conference call for help. Ms. Raimondo’s staff asked other federal agencies to designate medical equipment as essential and helped connect buyers directly to manufacturers to bypass distributors.
Such pleas also lent urgency to the Biden administration’s efforts, led by Ms. Raimondo, to pass the Chips and Science Act. The U.S. has long been leery of industrial policy, under which the government rather than the market steers resources to particular industries. Many economists criticize industrial policy as picking winners. But many Republican and Democratic legislators argue that semiconductors should be an exception because, like oil, they have vital civilian and military uses.
Soon after the act passed, Intel, which had pushed Congress to pass the legislation for two years, broke ground on a $20 billion project in Ohio. The Commerce Department will announce guidelines next month for how the law’s manufacturing subsidies will be awarded.
American scientists and engineers invented and commercialized semiconductors starting in the 1940s, and today U.S. companies still dominate the most lucrative links in the semiconductor supply chain: the design of chips, software tools that translate those designs into actual semiconductors, and, with competitors in Japan and the Netherlands, the multimillion-dollar machines that etch chip designs onto wafers inside fabrication plants, or fabs.
But the actual fabrication of semiconductors has been increasingly outsourced to Asia. The U.S. share of global chip manufacturing has eroded, from 37% in 1990 to 12% in 2020, while mainland China’s share has gone from around zero to about 15%, according to Boston Consulting Group and SIA. Taiwan and South Korea each accounted for a little over 20%.
The most cutting-edge manufacturers of advanced logic chips, the brains of computers, smartphones and servers, are Taiwan Semiconductor Manufacturing Co.—a foundry that makes chips designed by others—and South Korea-based Samsung Electronics Co. Intel comes in third. Memory chips are primarily made in Asia by U.S.- and Asian-headquartered companies. Lower-end analog chips, which often perform just a few tasks in consumer and industrial products, are produced around the world.
Supply Side
While the U.S. is a leader in areas that are heavy in research and development, it lags behind in manufacturing.
The concentration of so much chip production in three hot spots—China, Taiwan and South Korea—unsettles U.S. military and political leaders. They worry that if China achieved dominance in leading-edge semiconductors, on its own or by invading Taiwan, it would threaten the U.S. economy and national security in a way Japan, an ally, didn’t when it briefly dominated semiconductor manufacturing in the 1980s.
Starting around 2016, U.S. officials began blocking Chinese efforts to procure front-line chip companies and technology. Many in Washington were blindsided last July when a Canadian research firm reported that China’s largest chip maker, Semiconductor Manufacturing International Corp., had begun to manufacture 7-nanometer chips—a level of sophistication thought beyond its ability.
With little warning, on Oct. 7, the U.S. government installed the broadest-ever restrictions on chip-related exports to China. The U.S. had long been willing to let Chinese semiconductor capabilities advance, as long as the U.S. maintained a lead. The new controls go much further, seeking to hold China in place while the U.S. and its allies race ahead.
A ceremony marked the beginning of bulk production of 3-nanometer chips at a Taiwan Semiconductor Manufacturing Co. facility in Taiwan on Dec. 29, left. A circuit board on display at Macronix International Co. in Taiwan, right.LAM YIK FEI/BLOOMBERG NEWS; ANNABELLE CHIH/GETTY IMAGES
Meanwhile, U.S. officials hope federal subsidies will lead to factories that are sufficiently large and advanced to remain competitive and profitable long into the future. “We have got to figure out a way through every piece of leverage we have…to push these companies to go bigger,” Ms. Raimondo said in an interview. “I need Intel to think about taking that $20 billion facility in Ohio and making it a $100 billion facility. We’ve got to convince TSMC or Samsung that they can go from 20,000 wafers a month to 100,000 and be successful and profitable in the United States. That’s the whole game here.”
That ambition comes at a delicate time for chip makers, many of whom have seen a sharp drop in demand for electronics that were hot during the early days of the pandemic. Intel is paring capital spending amid the slump, and TSMC said this week that weak demand could lead it to cut capital expenditures this year.
To defray the chip companies’ investment needs, Ms. Raimondo has approached private infrastructure investors about participating in chip projects, modeled on Brookfield Asset Management Inc.’s co-investment in Intel’s Arizona fabs. Last November she pitched the idea to 700 money managers at an investment conference in Singapore organized by Barclays Bank.
She also approached chip customers including Apple Inc. about buying chips these fabs produce. “We will need big customers to give commitments to purchase [the fabs’ output], which will help de-risk deals and show there is a market for these chips,” she said.
Those efforts appeared to pay off in December when TSMC announced it would up its investment to $40 billion in leading-edge chips at a facility already being built on a vast scrubby area north of Phoenix. Formerly home to wild burros and coyotes, it now teems with construction cranes and takes delivery of some of the most advanced manufacturing equipment in the world.
At a ceremony that month attended by Mr. Biden and top administration officials, including Ms. Raimondo, Apple Chief Executive Tim Cook and Advanced Micro Devices Inc. chief Lisa Su pledged to buy some of the facility’s output.
Still, TSMC told the Commerce Department in a public letter that despite excitement about its plans and local, state and potentially federal subsidies, costs were higher than if a similar operation were built at home. Morris Chang, TSMC’s founder, said in November that the differential could be 50%. TSMC said it sent more than 600 American engineers to Taiwan for training.
Outside the U.S., Europe has its own plans to double its share of global production over about 10 years, while authorities in Taiwan, China and other Asian nations are pouring money into the sector. TSMC, in addition to its Arizona project, is building a chip plant in Japan and is looking at potential investments in Europe.
The high cost and scarcity of qualified labor in the U.S. has hampered previous efforts to reshore electronics manufacturing. Mung Chiang, president of Purdue University in Indiana, said computer and engineering students are drawn to chip design or software, areas where American companies are leaders, rather than manufacturing.
“Even if they say, ‘Yes, semiconductor manufacturing sounds really good, I want to do it,’ well, where can they learn the real, live experience?”
In response, Purdue has created a dedicated semiconductor program it hopes will award more than 1,000 certificates and degrees annually by 2030 in person and online. In July, SkyWater Technology, a Bloomington, Minn.-based foundry, said it would build a $1.8 billion fab on Purdue’s campus, prospectively supported by Chips funding.
Developing a domestic supply of talent is only half the battle. The U.S. also depends on foreign countries for many key inputs to semiconductors.
The lasers that imprint tiny circuit blueprints on silicon wafers use purified neon gas, made from raw neon typically harvested from large air-separation units attached to steel plants. Those facilities produce the neon when they separate oxygen from the air for use in steel furnaces.
There Aren’t Enough Chips—Why Are They So Hard to Make?
Since the steel industry largely moved out of the U.S. over the past half-century, there is currently very little neon gas being produced domestically. Most has come from Ukraine, Russia and China, but Russia’s invasion of Ukraine has left China as the world’s main source.
“Is this a risk for the U.S.? Absolutely,” said Matthew Adams, an executive vice president at Electronic Fluorocarbons LLC, a Massachusetts-based company that imports, purifies and sells neon and other gases. “A prolonged ban of neon exports from China to the U.S. would shut down a significant portion of semiconductor production after inventories are exhausted.”
A handful of other raw materials used in chip making, such as tungsten, which is transformed into tungsten hexafluoride and used to build parts of transistors on chips, are similarly sourced primarily from China. To truly untie the U.S. chip industry from China would entail undoing several decades of globalization, something industry leaders say isn’t practical.
After working for years to catch up on U.S. technology, China has developed a chip that can rival Nvidia’s powerful A100. WSJ unpacks the processors’ design and capability as the two superpowers race for dominance in artificial intelligence. Illustration: Sharon Shi
Even if the U.S. doesn’t succeed in securing the entire semiconductor supply chain, it does have a chance to reverse the recent historical pattern of losing leadership in one manufacturing sector after another, including passenger cars, railroad equipment, machine tools, consumer electronics and solar panels.
“I don’t think we’ve ever done this before: Try in a conscious, targeted way to regain market share in an industry where we were once the leader, but then lost it,” said Rob Atkinson, president of the Information Technology and Innovation Foundation, which advocates government support of manufacturing.
Liza Lin contributed to this article.
Write to Asa Fitch at asa.fitch@wsj.com and Greg Ip at greg.ip@wsj.com
Both my wife and I never had regular IRAs due to employment restrictions. I retired in 2000 but still work 2 days a week to make the required $14,000+??? to contribute to the our Roths every year since....starting at about 5000? then rising to $7500 this year. My $14000+? qualifies my wife to contribute $7500 to her Roth even though she doesn't have any work related income.
So I've been selling LWLG in our taxable accounts Jan 2021and buying in our Roths but come close but never get the same amount of shares as they have to be limit orders to stay under the $7,500 threshold.
InterDigital, Inc.
InterDigital, Inc.
WILMINGTON, Del., Jan. 03, 2023 (GLOBE NEWSWIRE) -- InterDigital, Inc. (NASDAQ:IDCC), a mobile and video technology research and development company today announced that it has agreed to renew its patent license agreement with Samsung Electronics. The parties will enter into binding arbitration to determine the final terms, including the amount payable by Samsung under the new agreement.
Samsung’s previous license to InterDigital’s portfolio of cellular wireless and video technologies expired on December 31st 2022. The new license will be effective from January 1st 2023.
“While we always prefer to conclude our license agreements through amicable good faith negotiation, independent binding arbitration provides an effective mechanism for resolving licensing disputes,” commented Liren Chen, CEO and President, InterDigital. “I welcome Samsung’s willingness to enter into a new license with us and their commitment to work through the remaining issues in arbitration.”
About InterDigital®
InterDigital develops mobile and video technologies that are at the core of devices, networks, and services worldwide. We solve many of the industry’s most critical and complex technical challenges, inventing solutions for more efficient broadband networks, better video delivery, and richer multimedia experiences years ahead of market deployment. InterDigital has licenses and strategic relationships with many of the world’s leading technology companies. Founded in 1972, InterDigital is listed on NASDAQ. InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
InterDigital Contact:
Richard Lloyd
Email: richard.lloyd@interdigital.com
+1 (202) 349-1716
InterDigital signs patent license with LG Electronics
InterDigital, Inc.
Tue, January 3, 2023 at 6:30 AM EST
In this article:
IDCC
-1.63%
InterDigital, Inc.
InterDigital, Inc.
WILMINGTON, Del., Jan. 03, 2023 (GLOBE NEWSWIRE) -- InterDigital, Inc. (NASDAQ:IDCC), a mobile and video technology research and development company, today announced that the company has signed an HEVC and VVC patent license with LG Electronics, a leading Korean-based manufacturer of various consumer electronics products. The license covers a range of LG products such as TVs and PCs.
“I am very pleased that LG Electronics, one of the leading manufacturers of consumer electronics products, has taken a license to InterDigital´s video coding portfolio and I look forward to a continued, mutually beneficial business relationship with the company,” said Eeva Hakoranta, Chief Licensing Officer, InterDigital.
About InterDigital®
InterDigital develops mobile and video technologies that are at the core of devices, networks, and services worldwide. We solve many of the industry’s most critical and complex technical challenges, inventing solutions for more efficient broadband networks, better video delivery, and richer multimedia experiences years ahead of market deployment. InterDigital has licenses and strategic relationships with many of the world’s leading technology companies. Founded in 1972, InterDigital is listed on NASDAQ. InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
InterDigital Contact:
Richard Lloyd
Email: richard.lloyd@interdigital.com
InterDigital signs digital television and video patent licenses with Panasonic Entertainment & Communication Co., Ltd.
InterDigital, Inc.
Tue, January 3, 2023 at 6:30 AM EST
In this article:
IDCC
-1.63%
InterDigital, Inc.
InterDigital, Inc.
WILMINGTON, Del., Jan. 03, 2023 (GLOBE NEWSWIRE) -- InterDigital, Inc. (NASDAQ:IDCC), a mobile and video technology research and development company, today announced that the company has renewed two patent licenses with Panasonic Entertainment & Communication Co., Ltd., a Japan-based manufacturer of digital televisions.
“We are delighted to continue our longstanding business relationship with Panasonic,” commented Eeva Hakoranta, Chief Licensing Officer, InterDigital. “These licenses, which cover our DTV and HEVC patents, were signed under our HEVC program, and under our joint digital TV licensing program which continues to deliver considerable value to InterDigital, our partner Sony, and to our licensees.”
About InterDigital®
InterDigital develops mobile and video technologies that are at the core of devices, networks, and services worldwide. We solve many of the industry’s most critical and complex technical challenges, inventing solutions for more efficient broadband networks, better video delivery, and richer multimedia experiences years ahead of market deployment. InterDigital has licenses and strategic relationships with many of the world’s leading technology companies. Founded in 1972, InterDigital is listed on NASDAQ. InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
InterDigital Contact:
Richard Lloyd
Email: richard.lloyd@interdigital.com
+1 (202) 349-1716
Picked up 1095 shs at 4.48+
Happen to be searching for something else on Google and ran across this question and clicked on it:
Who is leading in silicon photonics?
Cisco Systems, Inc., Intel Corporation, IBM Corporation, NeoPhotonics Corporation, Hamamatsu Photonics, and STMicroelectronics, among others, are the key players in the global silicon photonics market. The global silicon photonics market is expected to grow at a CAGR of 25% in the forecast period of 2022-2027.
Because of our NDAs, the uninformed don't know the mother lode of value is our little gem supplying the foundries.
Also here!
How LWLG is manipulated....from the WSJ...Susquehanna International Group cited...
Biotech Company Says Citadel Securities, Other Big Traders Manipulated Its Stock Price
In a new lawsuit, Northwest Biotherapeutics accuses market makers of illicit ‘spoofing’ orders.
In the modern stock market, high-speed trading firms such as Citadel Securities provide stock quotes throughout the day.
By Justin BaerFollow
Updated Dec. 1, 2022
A biotechnology company accused Citadel Securities LLC,[color=red] Susquehanna International Group LLP[/b][/color] and other Wall Street firms of driving down its stock price through a series of illicit trading tactics.
In a lawsuit filed Thursday in Manhattan federal court, Northwest Biotherapeutics Inc. NWBO 5.12%increase; green up pointing triangle alleged the market makers had repeatedly engaged in “spoofing,“ where traders place orders with an intent to fool other investors about a stock’s demand and manipulate the price.
Northwest, whose shares trade over the counter, also sued Canaccord Genuity Inc., CF 5.16%increase; green up pointing triangle G1 Execution Services LLC, GTS Securities LLC, Instinet LLC, Lime Trading Corp. and Virtu Americas LLC.
“This frivolous lawsuit appears to be nothing more than an attempt by Northwest Biotherapeutics to divert attention away from its long history of governance and management failures, SEC charges for financial reporting lapses, and lawsuits from its own shareholders,” a Citadel Securities spokesman said. “We intend to pursue any and all legal action against Northwest Biotherapeutics for making these false and baseless allegations, which only undermine the integrity of our capital markets.”
Northwest’s shares trade at about 83 cents. In 2019, the company settled allegations by the U.S. Securities and Exchange Commission that it failed to maintain internal control over its financial reporting.
A spokesman for Nomura, which owns Instinet, declined to comment. A spokesman for Virtu had no immediate comment. The other firms didn’t immediately respond to requests for comment.
“We have the hard data,” said Laura Posner, a partner with Cohen Milstein Sellers & Toll who is representing Northwest. “It’s hard to dispute actual transactions and patterns.”
Spoofing, which was outlawed in 2010, has been at the center of a yearslong campaign by U.S. authorities to root out market manipulation. In August, a federal jury in Chicago convicted two former JPMorgan Chase & Co. traders who had been charged with spoofing in the gold market.
In the modern stock market, high-speed trading firms such as Citadel Securities and Susquehanna provide stock quotes throughout the day, executing orders from other investors while collecting a thin spread between the buying and selling price of the shares.
It is unclear from the data cited in the suit whether the alleged spoofing orders were placed on behalf of other investors, or by the firms themselves.
But Northwest argued that these market makers knew it was unlawful to execute the alleged trading tactics and should have had procedures in place to detect and prevent them.
The market makers, Northwest wrote, “deliberately engaged in repeated spoofing that interfered with the natural forces of supply and demand and drove (the company’s) share price downward over the course of the relevant period.”
Northwest said the alleged spoofing orders, which occurred between December 2017 and August 2022, battered the stock price even as the company released positive results from the trial of its lead product, a brain cancer treatment. In its suit, the company wrote that it had sold more than 49 million shares to raise money “at artificially depressed prices.”
“One of the telltale signs of a manipulative spoofer is a rapid reversal of trading direction—a lot of sell orders, followed by buy orders, followed by the cancellation of sell orders—which suggest the original sell orders were not intended to be executed, but were merely a ploy to drive the price down to ‘buy low,’” Northwest said in its complaint.
The company said it found thousands of spoofing episodes involving tens of millions of “baiting orders” over a five-year span, and was able to identify the market participants using trading data.
Write to Justin Baer at justin.baer@wsj.com
All truth passes thru 3 stages……
• First- it is ridiculed
• Second- it is violently opposed
• Third- it accepted as being self-evident
Frob-
Had my rt hip replaced at 75(now 84)and traveled to Europe 4 wks later -no pain or problems -never think about it.
Cut trees and chopped wood for many years when we started building our house on a 4 acre wooded lot in1980 and got crushed by Fed Chief "too tall" Paul Volker's fight (rightfully IMO) against inflation. Prime rate went to 20% and had to pay 22% on my open construction loan- within a year converted to 15% mortgage. Raising 5 kids, it's been 42 years of hard road to the finish line. Counting on LWLG to put on the finishing touches and provide security to maybe age in place...the Good Lord willing.
Don't chop much anymore-no wood stove but 3 great fireplaces.
Still very active- I think the key is to wear out.... not rust out!!
China's Threat to Taiwan's Semiconductor's
From today's WSJ
https://www.wsj.com/articles/investing-silicon-semiconductors-chips-taiwan-invasion-tsmc-china-intel-blackrock-asset-manager-11665408814
May help LWLG in Europe & US
Also some interesting comments about INTEL and Blackrock's role in China
Thanks to all who responded to my post....
Help.....
I know this question was addressed by a couple of posts but couldn't find them. This from my son's friend who has bought in.....
"...I have one question after doing more research.
This company has been in existence since the 1990's and they haven't made any money.
If their technology can do everything they say it can, why hasn't Intel or IBM bought the technology or worked in partnership to develop it further?"
Dan
Thanks in advance...
InterDigital Announces Patent License Agreement
InterDigital, Inc.
Mon, October 3, 2022 at 6:00 AM
I
InterDigital, Inc.
WILMINGTON, Del., Oct. 03, 2022 (GLOBE NEWSWIRE) -- InterDigital, Inc. (NASDAQ:IDCC), a mobile and video technology research and development company, today announced it has entered into a patent license agreement with a major technology company.
About InterDigital®
InterDigital develops mobile and video technologies that are at the core of devices, networks, and services worldwide. We solve many of the industry’s most critical and complex technical challenges, inventing solutions for more efficient broadband networks, better video delivery, and richer multimedia experiences years ahead of market deployment. InterDigital has licenses and strategic relationships with many of the world’s leading technology companies. Founded in 1972, InterDigital is listed on NASDAQ.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
I googled the top 10 investors as of 6/30 in LWLG and tried to paste on the board but the format turns out all funky. Try it.....It is much easier to read than going through the fintec report.
Many thanks!
Z dog- don't know....I' not the best person to ask.
understood.......just curious....
Steve- thanks for all that you do for us. I know your time is at a premium and if it's not too much trouble, could you identify those you know at the dinner table?I don't even know which one is you.
Thanks in advance,
Cap
Schwab asking to borrow shares on 3 of our accounts and 4 of our son's accounts....pressure continues to build!
After an announcement and when Dr Lebby thinks the time is appropriate for dividends, I would like to see him consider stock dividends in his basket of options.
In the 1960’s, Archer Daniels Midland (ADM) was an adolescent company and issued periodic stock dividends (5% if I remember correctly). The advantage is they are not taxable when distributed and each stockholder can decide when to cash them in according to their personal situation. Today, ADM has a 568M share float.
5%(or some other %)of the 110m outstanding shares would increase the float by 5,500,000 shs.
Some of the better brains could construct some optimal timing and combination of stock dividends, cash dividends and stock splits that works best for the company’s cash needs as well as stock holders.
Current shareholders would still own the same % of the LWLG pie.
Long and strong….
3 emails from Schwab to lend on 3 of our accounts......no dice! Our son heard also.....not lending!
From today's WSJ.....very insightful info in this article .... at least to me.
The Semiconductor Boondoggle
The Chips+ Act is simply swing-state pork for lackluster tech companies.(INTEL)
By Andy Kessler
Aug. 14, 2022 12:37 pm ET
President Biden last week signed the $280 billion Chips and Science Act, or Chips+, to subsidize domestic semiconductor production and ease shortages. Big mistake. This comes on the heels of China’s banning exports of natural sand to Taiwan in retaliation for Speaker Nancy Pelosi’s visit. Sand!
There should never be a shortage of semiconductors. Semiconductor chips are made by melting sand and slicing it into thin wafers for processing. Shortages? Just go to the beach. Yet shortages still happen, though the current one is almost over.
You can’t just throw money at the problem. Yes, to process those wafers companies spend billions on fabrication facilities, or fabs, and expensive ultraprecise machines that stay state-of-the-art for maybe five years. They spend constantly on lithography, implanting, annealing, sputtering and polishing, with constant tinkering to improve yields. In semiconductor manufacturing, a tiny fleck of dust is like an asteroid hitting a city. One speck can ruin months of work. Intel founder Andy Grove once told me the story of someone who accidentally spilled ink into a fab’s distilled-water supply. Engineers freaked out, but bizarrely yields went up. Making chips is more art than science. It isn’t only sand plus capital; brains play a huge role.
I once visited a fabrication plant in Dayton, Ohio, where General Motors had decided to make its own chips. GM was shocked when the plant couldn’t produce any usable chips. Nothing worked. It turned out the tweezers that employees used to hold and move wafers were kicking up contaminants.
In the early 1990s in Taipei, I met with Morris Chang, founder of the new fab-for-hire Taiwan Semiconductor Manufacturing Co. He proudly showed me enclosed carriers for their wafers, no tweezers needed. That’s really how TSMC got its start.
A new “fabless” semiconductor model emerged. Rather than own fabs, companies could design chips in California and have them made in Taiwan and assembled in the Philippines or Indonesia. Of course, those with expensive facilities protested. Advanced Micro Devices founder Jerry Sanders declared “real men have fabs.” Yet today, AMD is fabless—its processors are made by TSMC in Taiwan—and AMD is worth more than Intel. Amazing.
Intel, with huge profit margins on its Pentium microprocessors, could spend more than its competitors on state-of-the-art fabs, but innovation eventually was pushed aside for predictability. Intel would get one fab working and then “copy exactly” new cookie-cutter fabs. For smaller feature sizes, Intel looked at the new Extreme Ultraviolet technology from Dutch equipment company ASML and thought it too expensive and risky to use. TSMC embraced ExtremeUV and won, especially for lower-power chips for mobile devices. TSMC can now spend more than anyone else on fabs.
With the Chips+ Act chock full of $52 billion in subsidies and tax credits for chip makers, Congress is saying that real countries have fabs. The act also authorizes $1 billion for carbon removal—weird, because chips are made from silicon. Worse, the U.S. is rewarding Intel, which just announced a disastrous quarter, for coming in third place behind TSMC and Samsung.
Nothing is free. Even Commerce Secretary Gina Raimondo admitted “there’s a lot of strings attached” in the 1,054-page law. National Economic Council director Brian Deese endorsed command-and-control industrial policy: “The question should move from ‘Why should we pursue an industrial strategy?’ to ‘How do we pursue one successfully?’ ” This is as wrong as Soviet or Chinese five-year plans. Industrial policy eventually leads to disaster. Japan’s Ministry of International Trade and Industry micromanaged the country’s domestic semiconductor industry and ended up presiding over its decline. Today no Japanese semiconductor company sits in the global top 10. Because China doesn’t have access to ASML ExtremeUV equipment, it has made little progress in advanced chips.
Yes, we need domestic supplies of advanced chips in case China invades Taiwan. But subsidies are the wrong approach. Handouts are almost always allocated based on what’s good for politicians rather than on sound economics. Money often ends up in swing states. Lo and behold, that’s where Intel is building its new fabs, Ohio and Arizona. Concerning subsidies, Elon Musk told the Journal’s CEO Council Summit (yes, hypocritically): “Just delete ’em all.”
Instead, the U.S. could enable suppliers to place large orders for chips for the military, intelligence agencies, whatever. They could even prepay. Silicon Valley was originally built on orders for transistors for intercontinental missiles and the space program. Ask nicely and maybe Apple and Alphabet would prepay for domestic-made processors and machine-learning chips as well.
Don’t let lobbyists allocate capital, because Wall Street always views handouts as a huge negative, resulting in lower valuations and higher costs of private capital. Last week I noted that chips were the magic beans that fed the stampeding 40-year super-bull market. They don’t work as pork and beans. It’s a mistake we make again and again. Don’t “copy exactly” bad policy.
Write to kessler@wsj.com.
WSJ
According to this article from today's WSJ, we shouldn't have to worry about competition from China.
https://www.wsj.com/articles/chinas-chips-are-down-semiconductors-subsidies-xi-jinping-joe-biden-11660163646?mod=opinion_lead_pos1
China’s Computer Chips Are Down
Xi Jinping is said to be unhappy with the results of state subsidies for semiconductors.
By The Editorial Board
Aug. 11, 2022 6:51 pm ET
President Joe Biden signs the CHIPS and Science Act of 2022 on the South Lawn of the White House on Aug. 9.
America’s industrial-policy advocates see China as a technological juggernaut whose government direction the U.S. must imitate or become a declining power. Yet that’s not how it looks from Beijing, which is frustrated by its second-string semiconductor industry.
President Biden on Tuesday invoked the hobgoblin of Chinese technological superiority as he signed Congress’s $280 billion computer-chip subsidy bill. China has leapfrogged the U.S. in research and development, he claimed, and “is trying to move way ahead of us in manufacturing these sophisticated chips.” Beijing may be trying but it is struggling mightily despite spending enormous sums.
Bloomberg this week reports that Beijing is launching corruption investigations into government ministers and business leaders involved in its semiconductor initiative, which is a cornerstone of President Xi Jinping’s Made in China 2025 plan to achieve manufacturing self-sufficiency. Corruption crackdowns are Mr. Xi’s modus operandi when things don’t go according to Communist plan.
When senior government officials last month reviewed the country’s chip-making progress, they reportedly grew dismayed that advances may have been overstated and investments weren’t paying off. Mr. Xi’s plan to throw money at the semiconductor industry, as with others, has resulted in many unproductive companies chasing government subsidies.
About 15,700 new semiconductor companies registered in the first five months of last year. As it turns out, government is a poor allocator of capital, and semiconductor handouts have spawned cronyism and graft. These problems are intrinsic to industrial policy. But Mr. Xi is blaming China’s industrialists, rather than his planning model.
Bloomberg says the government is investigating the head of its National Integrated Circuit Industry Investment Fund and has dispatched an investigation team to the Ministry of Industry and Information Technology. Also under investigation is Tsinghua Unigroup, a chip-making national champion that collapsed last year and was forced into receivership.
U.S. politicians note that Beijing’s industrial policy has helped drive down manufacturing costs of technologies that have become commodities such as solar panels and rudimentary chips. But China still badly trails the West in advanced semiconductor design and equipment despite spending more than $100 billion to catch up.
Meantime, U.S. technology export controls are making it even harder for China to catch up with Western computer-chip technology. This may be one reason for Beijing’s stepped up militarism with Taiwan, which manufactures many of the most advanced chips. What U.S business and political leaders don’t seem to understand is that the world, including China and Taiwan, still relies on U.S. innovation, which is a product of our capitalist system.
Mr. Biden said Tuesday that “federal research and development brought down the cost of making [chips] and built a market and an entire industry.” That’s wrong. Business consolidation, economies of scale and off-shoring reduced manufacturing costs. But the main U.S. comparative advantage continues to be technological innovation, which is driven by business research and development.
R&D spending made up 3.5% of U.S. GDP in 2020 compared to 2.4% in China, according to the OECD. Business investment accounts for about three-quarters of U.S. R&D. Today’s fixation with Chinese government planning is reminiscent of the overbaked worries in the 1980s that Japan’s bureaucracies were the secret to its economic success.
China’s assets are formidable, but its politically directed economic policy isn’t one of them. The U.S. doesn’t need politicians and bureaucrats picking winners and losers. It needs economic policies that unleash the creativity and investment of people and private firms.
Appeared in the August 12, 2022, print edition as 'China’s Chips Are Down'.
Schwab-
Am at the beach with the family and was not able to check my email till now. Both my wife and I have received requests yesterday(a Saturday) from Schwab asking to lend our Roth LWLG shares. We have never lent out our shares, at least willingly. Their request below does contain the phrase" with your permission". Our son and daughter also received requests.
Charles Schwab
Securities lending
July 30, 2022 | your account ending: 574
Learn about Schwab's Securities Lending Fully Paid (SLFP) program, which may allow you to earn monthly income for lending securities to Schwab that are in high demand by other investors. Your account currently holds securities that may qualify for the SLFP program.
Please note that income paid on a loaned security can fluctuate with changes in demand in the securities lending market.
Why does Schwab want to borrow your securities?
With your permission, Schwab can lend your securities to other clients or financial institutions to facilitate their trading strategies, which typically involve a short sale. While participating in SLFP, you still own your shares and retain the right to sell or remove the shares from the program at any time.
Other benefits of the SLFP program:
Income accrues daily and is paid monthly.
You'll receive 100% collateral for loaned securities.
You can participate at no cost to you.
What are some of the potential risks and important considerations of participating?
Security price. There is the potential for downward pressure on the price of a security if the security is borrowed to facilitate a short sale.
Dividends. If you have a security on loan to Schwab when it's scheduled to pay a dividend, you will either receive the dividend or a substitute payment in lieu (PIL) of dividend. You may have to pay a higher tax rate on a PIL, but Schwab currently issues a discretionary payment to help compensate for additional taxes.1
Voting rights. Upon lending a security to Schwab, you will lose the right to vote on corporate actions by the issuer.
Loss of SIPC protection. Because borrowed securities may not be covered under the programs of the Securities Investor Protection Corporation (SIPC), loans are secured by collateral provided by Schwab.
To learn more about the program:
Visit schwab.com/securitieslending
call us at 877-793-8872, Monday through Friday, 8:30 a.m. to 4:00 p.m. ET.
Thank you for investing with Schwab.
Chips Act.....
From Today's WSJ....
Heard on TV that Shumer put the China exemption back in ....
Semiconductor Subsidy Strings Attached
Biden makes clear he’ll be telling CEOs how to invest the federal money.
By The Editorial Board
July 26, 2022 6:59 pm ET
The Senate on Tuesday voted 64-32 to advance a $280 billion “chips plus” subsidy bill, and as ever in politics there’s a lot of plus. Money from Washington always comes with strings attached, and we hope the semiconductor CEOs know what they’ve signed up for.
That message couldn’t have been clearer from President Biden on Tuesday when he told business and labor leaders on a conference call that the bill’s $52 billion in grants for Intel and other chip makers would not be “a blank check to companies.” The President said he will “personally have to sign off on the biggest grants.”
Hint to companies applying for money: Locate that new factory in a swing state with more than a handful of electoral votes. Mr. Biden or the Vice President may want to swing by during the 2024 election campaign.
The President also underscored that the law requires companies to pay union prevailing wages to build the semiconductor fabrication facilities funded by the bill. Communications Workers of America president Chris Shelton said this will ensure “there isn’t a race to the bottom.” Translation: Construction will be more expensive, and non-union contractors won’t benefit.
Some companies that lobbied for the bill have nonetheless expressed frustration that it forbids recipients of federal largesse from expanding advanced-chip production in China. But what did they expect? The politicians are selling the bill as a national-security necessity to compete with China to make sure that more chips are made in the U.S. in case of conflict with Beijing.
Mr. Biden also made clear his Administration will impose its own conditions on the money. For instance, “we’re not going to allow companies to use these funds to buy back stock or issue dividends.” Mr. Biden threatened to claw back subsidies from those that do. This means companies that take federal money won’t be allowed to reward shareholders if the investments succeed.
The President also noted that companies whose future innovations derive in part from the bill’s $200 billion in authorized spending on research and development in areas like green energy and artificial intelligence will be required “to deploy that technology” and invest “in a facility here in America.” This requirement will make CEOs add a political calculation to their investment choices.
Industrial policy and the political allocation of capital invariably distort investment. Don’t be surprised if the conditions that Congress and the Administration impose on these companies make the firms and the United States less competitive with China.
https://www.wsj.com/articles/semiconductor-subsidy-strings-attached-senate-bill-chips-president-biden-11658873210?mod=opinion_lead_pos2
From today's Wall Street Journal.......informative article
Congress Goes All in for Computer Chip Subsidies
Competing with China is the new excuse for corporate welfare.
By The Editorial Board
Updated July 19, 2022 7:14 am ET
Industrial policy is back in fashion in Washington, or as it ought to be called, corporate welfare. The semiconductor industry is first in the queue, but it won’t be the last. Taxpayers should at least know they’ll be subsidizing highly profitable companies that don’t need the help and might end up regretting the political handcuffs they’re acquiring.
The bill that will head to the Senate floor as early as Tuesday includes $52.2 billion in grants to the computer chip industry. But wait, there’s more. Congress is also offering a 25% tax credit for semiconductor fabrication, which is estimated to cost about $24 billion over five years. That’s $76 billion for one industry.
Republicans on the House Ways and Means Committee point out that for the same money Congress could double the research and development tax credit for all companies through 2025. It could also throw in 100% expensing for companies and allow immediate R&D deductions through 2025. But that would mean the politicians aren’t picking favorites, which is what they prefer to do.
The impetus for the bill was a severe pandemic chip shortage that disrupted supply chains and raised the cost of autos and many other products. But the shortage is easing as global demand and the economy slow. South Korea, the world’s top producer of memory chips, last month said its national chip stockpile has increased by more than 50% over the past year as demand for electronics ebbs.
Intel, the giant U.S. firm, froze hiring in its PC-chip division in June. Micron Technology CEO Sanjay Mehrotra warned a few weeks ago that “the industry demand environment has weakened” and it would cut back investment. Nvidia is scaling back hiring due to declining demand for its chips that are used in crypto mining and videogames.
As often happens, yesterday’s shortage may be tomorrow’s glut, as chip firms have expanded production without subsidies. Taiwan Semiconductor Manufacturing Co. (TSMC) tripled capital spending between 2019 and 2022. Intel nearly doubled capital spending during the pandemic, and Samsung last year increased its 10-year investment plan by more than 30%.
Global semiconductor capacity increased 6.7% in 2020 and 8.6% in 2021 and is expected to grow another 8.7% this year. The risk of over-capacity is growing as China heaps subsidies on its semiconductor industry as part of its Made in China 2025 initiative, and the U.S. and Europe race to compete.
Some 15,000 new semiconductor firms registered in China in 2020. Some have drawn investment from U.S. venture-capital firms. Intel has backed Chinese startups even as CEO Pat Gelsinger lobbies Congress for subsidies to counter Beijing. Intel has threatened to delay a planned Ohio factory unless Congress passes the subsidy bill.
The other claim for the bill is that the U.S. must subsidize domestic chip-making to compete with China, but this also isn’t persuasive. The companies like to point out that the U.S. share of the world’s chips has fallen to 12% from 37% in 1990. They don’t mention that the U.S. leads in chip design (52%) and chip-making equipment (50%). Seven of the world’s 10 largest semiconductor companies are based in the U.S. China trails American companies by years in semiconductor technology.
Chip fabrication has moved to South Korea and Taiwan because many chips are commodities with low margins. But chip makers are working to diversify their manufacturing bases to avoid future supply disruptions and have announced $80 billion in new U.S. investments through 2025. Samsung plans to build a $17 billion factory in Texas. TSMC has a $12 billion plant under construction in Arizona.
One unfortunate impetus behind this bill is that, for all their talk of competing with China, many politicians believe that Beijing’s economic planning is superior to the U.S. free-market system. It reminds us of the 1980s when legendary Intel CEO Andrew Grove warned that Japan was going to dominate the chip industry and the future of global technology.
As former Cypress Semiconductor CEO T.J. Rodgers explained on these pages last year, the government set up the Sematech chip consortium that “was obsolescent when it opened.” But Intel innovated with more advanced chips, and no one is talking now about Tokyo’s central-planning genius.
History shows that easy government money can undermine competitiveness. It often leads to inefficient spending and investment. The politicians will also attach their own strings, perhaps with limits on stock buybacks and dividends. Wait until Bernie Sanders is heard from on the Senate floor.
The chip bill isn’t needed to compete with China, and it will set a precedent that other industries will follow. Anybody who can throw up a China competition angle will ask for money. Why Republicans want to sign up for this is a mystery, especially when they might control both houses of Congress in six months.
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Your news is much better than even LWLG breaking thru the 200DMA!