News Zombie fabs plague China's chipmaking ambitions, failures burning tens of billions of dollars

[Admin]

China has made progress in advanced chipmaking, but many ambitious fab projects failed due to lack of expertise, poor planning, and U.S. export restrictions — leaving behind numerous costly but unused 'zombie fabs' across the country.

Zombie fabs plague China's chipmaking ambitions, failures burning tens of billions of dollars : Read more

 

[Constellar]

This is how the PRC operates with respect to developing new and competitive industries: the local government throws a lot of money at any business that claims they have a business plan in the relevant sector, the businesses use the money to grow their businesses, then the government steps aside to allow the businesses to compete with each other including engaging in bankruptcy-inducing price wars, then, at the very end of the process, about two or three world-class companies remain--typically out of hundreds of starters.
In the United States, the process is usually handled by the venture capitalist and financial underwriter.
The positive with China's system is you really do end up with world-class businesses in the end, but the problem is expense--it costs a fortune to bring those world-class businesses into being...

 

[coder0xff]

There's also the issue of IP. It takes a lot more than a good fab to make modern AI accelerators.

 

[tanon]

This is how the PRC operates with respect to developing new and competitive industries: the local government throws a lot of money at any business that claims they have a business plan in the relevant sector, the businesses use the money to grow their businesses, then the government steps aside to allow the businesses to compete with each other including engaging in bankruptcy-inducing price wars, then, at the very end of the process, about two or three world-class companies remain--typically out of hundreds of starters.
In the United States, the process is usually handled by the venture capitalist and financial underwriter.
The positive with China's system is you really do end up with world-class businesses in the end, but the problem is expense--it costs a fortune to bring those world-class businesses into being...

You say it costs them a fortune, but what are you comparing that to? And does that take into account the downstream effects of creating world-leading industries in their economy?

I think the thing they unambiguously get right is competition. You can't achieve achieve world class results, in a short time frame (if at all) without intense, frenetic competition - and that inevitably means some level of waste, duplication of effort, bankruptcies and later consolidation of the market.

Pretending otherwise is like saying that you can pan a pound of gold from a river in a single sitting, as long as you're efficient and diligent enough about picking the location, the time, the equipment etc.

Complex problems, like the best way to develop a technologically advanced economy, sometime aren't amenable to careful, targeted investment and the best means to do so ends up being simple free market competition.

What's ironic, is the fact that the nominally Communist Party of China understands that fact better than most governments in the West.