News Analysts warn China's aggressive chip fab expansion could lead to future price war

[ThomasKinsley]

And western countries/companies would sit still? Not even about talking the capacity distribution, the US and many other countries wouldn't allow it due to geopolitics and how closely tied that is to this area of technology.

Should and would are two very different things. But China also has the advantage in manufacturing goods at the lowest prices. Just as they outcompeted for infrastructure deals in Africa, they are set to win big with low cost low-tier chips. It's old technology at this point and it will go in very affordable electronics. The West lost that competition many decades ago.

 

[TCA_ChinChin]

Should and would are two very different things. But China also has the advantage in manufacturing goods at the lowest prices. Just as they outcompeted for infrastructure deals in Africa, they are set to win big with low cost low-tier chips. It's old technology at this point and it will go in very affordable electronics. The West lost that competition many decades ago.

I don't see the problem then? If they can outcompete on prices and consumers accept it, I can't see why its a bad thing. The report from the Trendforce analysts only suggest a possible price war, not dumping or a monopolization of the market. I can only see a price war being good for consumers of said affordable electronics and mature nodes. Whether thats an electronics company in Africa or a random consumer in the EU, or a car manufactorer in the US, price war usually means lower prices I imagine.

 

[ThomasKinsley]

I don't see the problem then? If they can outcompete on prices and consumers accept it, I can't see why its a bad thing. The report from the Trendforce analysts only suggest a possible price war, not dumping or a monopolization of the market. I can only see a price war being good for consumers of said affordable electronics and mature nodes. Whether thats an electronics company in Africa or a random consumer in the EU, or a car manufactorer in the US, price war usually means lower prices I imagine.

The question of whether there is a problem is strictly geopolitical. China will be the cheapest market price and it will reshape the Global South.

 

[TCA_ChinChin]

The question of whether there is a problem is strictly geopolitical. China will be the cheapest market price and it will reshape the Global South.

Whether China will be the cheapest market price is to be seen, not even the analysts are sure, whether they will win the "Global South", as nebulous that term is, is yet to be seen, and whether or not it is strictly geopoitical doesn't distract from the point that it will mean cheaper prices overall.

 

[ThomasKinsley]

Whether China will be the cheapest market price is to be seen, not even the analysts are sure, whether they will win the "Global South", as nebulous that term is, is yet to be seen, and whether or not it is strictly geopoitical doesn't distract from the point that it will mean cheaper prices overall.

Analysts are paid to say things true and false. We can cut through the FUD by looking at actions. The US government is already considering attempts to ban these low-tier chips, which indicates govt analysts believe these chips will outcompete their own counterparts. Time will tell, but there is very little the West can do in terms of direct competition. It would be better if they offered a package deal: sell higher tech chips at a discount to select countries provided they also buy the lower tier chips. That would produce a valid offer that China cannot address.

 

[TCA_ChinChin]

Analysts are paid to say things true and false. We can cut through the FUD by looking at actions. The US government is already considering attempts to ban these low-tier chips, which indicates govt analysts believe these chips will outcompete their own counterparts. Time will tell, but there is very little the West can do in terms of direct competition. It would be better if they offered a package deal: sell higher tech chips at a discount to select countries provided they also buy the lower tier chips. That would produce a valid offer that China cannot address.

Which one is it? I'm gonna have to disagree with you on this one. We can agree to disagree here.

 

[ThomasKinsley]

Which one is it? I'm gonna have to disagree with you on this one. We can agree to disagree here.

In politics actions always speak louder than words. Words are cheap. Actions are everything. If the US follows through with the ban, then it's clear what they genuinely believe. But we can certainly agree to disagree.

 

[bit_user]

But in the real world, the US and many other countries will never allow China to corner the market due to national security concerns. The end result will be increased supply and lower prices regardless of whether China actually dumps, since other countries are gonna subsidize their own production (or reduce Chinese exports) to protect themselves

There are options beyond subsidies: tariffs being chief among them.

Similar to what has already happened with solar panels or what could happen with electric cars, its gonna drive down costs ultimately.

It doesn't inevitably have to follow the same path as solar panels. I hope we learned a valuable lesson from solar panels that you need to actively protect some domestic production capacity, or else you won't have it for long.

 

[bit_user]

That's my point. It's unfair to call for dumping when the fabs are not even online until 2027.

As the allegation has yet to be made, your outrage is similarly premature.

Even with the graphs and data provided in the article, the overall capacity by region for China shifts from only 29% to 33%. Thats still a significant amount, but I don't believe its enough to perform dumping on a global scale

The article said "price war", not dumping and I only suggested that it might be a possibility. It seems like you guys are looking for any excuse to get outraged and stoke a controversy, here.

 

[TCA_ChinChin]

As the allegation has yet to be made, your outrage is similarly premature.


The article said "price war", not dumping and I only suggested that it might be a possibility. It seems like you guys are looking for any excuse to get outraged and stoke a controversy, here.

But the old playbook applies: corner the market and jack up the price. Once the other fabs go out of business, do you really think China won't raise their prices? It's not like they haven't done it before, in other industries, but I guess people keep getting lured in to their trap by short-term greed.

I'm just responding to this comment. You ask if I really think China won't raise their prices? I reply with I don't think China will raise their prices and give reasons why.