![Page 1: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/1.jpg)
RobertMairePresidentSemiconductorAdvisorsLLC
SemiconductorAdvisorsLLC
![Page 2: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/2.jpg)
¡ ChinaInvestments&AspirationsintheSemiconductorIndustry¡ Regulatoryissues-CFIUS¡ Currentadministrationpolicy&direction¡ Taiwan–TSMCandthesemiconductorindustry¡ Tradesecrets,espionage,IPprotection¡ The“DoubleEdgeSword”
SemiconductorAdvisorsLLC
![Page 3: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/3.jpg)
¡ BroadcomacquisitionofQualcomm-Blocked¡ ChinesehandsetmakerZTEbannedfrombuyingUSsemiconductors
¡ LatticeacquisitionbyCanyonBridge–Blocked¡ XcerraacquisitionbyHubeiXinyan–Blocked¡ Aixtron(AGermancompany)acquisitionbyGrandChip–Blocked¡ FoxconntriedtobuyToshiba’sChipbusiness¡ Barrons–“ChipsLoomasaTargetifChinaTradeDisputeExpands”¡ Semiwatch–USSemiequipmentsalestoChinablocked(Aprilfoolsornot)
SemiconductorAdvisorsLLC
![Page 4: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/4.jpg)
¡ Chinaconsumesmorethan60%ofchipsyetproduceslessthan15%
¡ Onefundof$21B–Totalfundsofover$100B§ NationalIntegratedCircuitryInvestmentFund
¡ Goal-TosupplythemajorityofChipsconsumedbyChineseElectronics
¡ TobecomeindependentoftheUSandothercountries§ ConcernsaboutUSleverageoverChinaChipshasskyrocketed§ PresidentXihasdirectlyaddressedtheissue
¡ TobetheleaderinAI,VR&5Getc;Semiconductorsarecrucialingredient
¡ Toincrease&dominateintelligence&defensetechnology§ Largestvideosurveillancesystemintheworld
SemiconductorAdvisorsLLC
![Page 5: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/5.jpg)
SemiconductorAdvisorsLLC
![Page 6: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/6.jpg)
SemiconductorAdvisorsLLC
![Page 7: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/7.jpg)
SemiconductorAdvisorsLLC
![Page 8: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/8.jpg)
¡ Tradehasemergedasthenumberoneinternationalissue(Afterthewall….)
¡ Chinaisatthetopofthelistoftradecomplaints¡ Sanctionsandtariffshavebeenfastandfurious¡ TitforTatincreaseshavebeengoingon-escalatingtensions¡ Chinacan’trespond100%totariffsduetomassivetradeimbalance
§ ChinadidrespondbyblockingQualcommacquisitionofNXP§ ThistriestoreduceUSdominancein5Gtechnology
¡ Thecurrenttradeissuere-doublesChina’sefforttobecomechipindependent
¡ China’sconcernsaboutsemiconductorsareequalpartsstrategic&economic
SemiconductorAdvisorsLLC
![Page 9: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/9.jpg)
¡ Taiwanisviewedasa“Run–Away”provinceofChina§ Seerecentairlinelabelingissue
¡ Re-unificationisviewedasinevitable–PRCsaysbyforceifneeded¡ In1996,whenChinawasshootingmissilesoverTaiwan,wewroteanarticleabouttheimportanceofTaiwantothePCindustry(atthattimethecoreofalltech)asitproduced100%ofallmotherboards
¡ GetTaiwanandyougetTSMC¡ GetTSMCandyoubecomenumberoneinfoundry¡ GetTSMC&youhaveleverageoverApple,Qualcomm&UScompanies
SemiconductorAdvisorsLLC
![Page 10: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/10.jpg)
¡ SMIC,China’slargestfoundryandmostadvancedwasprohibitedfrombuyingthelatestgenerationofUSsemiconductorequipmenttoolsastheUSdefensedepartmentwasconcernedaboutSMICasadualusefacility(commercial&military).ThispermanentlykeptSMICatthetrailingedge.
¡ TheUSdepartmentofdefensehadtheabilitytodo”inspections”onsiteinChina,atSMICtoinsurecompliance
¡ HowwouldpeopleintheUSfeeliftheChinesecould“inspect”Intel’sfabs?
¡ Theconcernoverselfsufficiencyinsemiconductorsislikelyjustified
SemiconductorAdvisorsLLC
![Page 11: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/11.jpg)
SemiconductorAdvisorsLLC
![Page 12: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/12.jpg)
¡ TherehasbeenlongstandingconcernsaboutKoreancopiesofUStools
¡ SamsunghasfosteredlocalcompetitorstoUScompanieswithsimilartools
¡ IssueswillbemanytimesworseinChinaasittriestorapidlygrow¡ Veeco&AMECisthetextbookexampleofwhatwillhappeninChina
§ VeecosoldMOCVDtoolsprimarilytoChinesecustomers§ AMECcopiedsomeaspectsofthetool&Veecosued,haltingsales§ AMECcountersued,stoppedVeeco&ChinesecourtssupportedAMEC§ Veecoisina“nowin”situation&willloseitsbiggestmarket
¡ TheUSslowingtechnologysalestoChinawillresultintheaccelerationofIPtheft,muchworsethanexperiencedinanyothermarket
SemiconductorAdvisorsLLC
![Page 13: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/13.jpg)
¡ SamuelSlater,“thefatheroftheAmericanindustrialrevolution”copiedBritishcottonmillsandstartedtheUSindustrialrevolutiononcopiedBritishtechnology
¡ Wascalled“SlatertheTraitor”
SemiconductorAdvisorsLLC
![Page 14: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/14.jpg)
¡ HeadedbytheUSTreasurysecretary¡ Representativesfrom16agencies–Defense,Commerce,State,Homeland
¡ EstablishedbyPresidentFordin1975¡ Reviewfor30daysormore-Canaskfor“resolutions”toissues¡ SendsrecommendationtoPresidentforfinalyeaornay
SemiconductorAdvisorsLLC
![Page 15: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/15.jpg)
¡ WascreatedduringtheCarteradministrationtodealwiththeIranianhostagesituation
¡ TheIEEPAauthorizesthepresidenttodeclaretheexistenceofan"unusualandextraordinarythreat...tothenationalsecurity,foreignpolicy,oreconomyoftheUnitedStates"thatoriginates"inwholeorsubstantialpartoutsidetheUnitedStates."Itfurtherauthorizesthepresident,aftersuchadeclaration,toblocktransactionsandfreezeassetstodealwiththethreat.IntheeventofanactualattackontheUnitedStates,thepresidentcanalsoconfiscatepropertyconnectedwithacountry,group,orpersonthataidedintheattack
¡ TheIEEPAcanbeusedtoblockthesaleoftechnology
¡ ZTEcomponentsaleswereblockedbythecommercedepartmentafterZTEviolatedtradesanctionsonIranandNorthKoreaaswellasallegationsoftrojanhorsesoftware
SemiconductorAdvisorsLLC
![Page 16: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/16.jpg)
¡ AftermakingZTEtheposterchildasa“badactor”Chinesecompany,theadministrationhasdonea180,“tosaveChinesejobs”andwillapparentlynullifytheblockadeofchipsales
¡ UScompaniesprovideapproximately60%bydollarvolumeofsemiconductorcontentintheirlatestphones
¡ MostUScompaniesandagenciesstillwillnotselloruseZTEphones
SemiconductorAdvisorsLLC
![Page 17: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/17.jpg)
¡ Googlehasbeenfrustrated¡ Uberhasbeenshutoutandgaveupandsoldout¡ AppleisbeingforcedtogiveupIPandcontrol¡ IntelbuiltafabinChinaasa“QuidproQuo”¡ UScompaniescan’towna51%stakeinoperationsinChina¡ Chinahassomeofthestrongestprotectionistpoliciesandlegislation
¡ Report:“MadeinChina2025”byUSChamberofCommerce
SemiconductorAdvisorsLLC
![Page 18: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/18.jpg)
¡ SemiconductorandsemiconductorequipmentmakerscanillaffordtoignoreorstayoutoftheChinamarket
¡ OneoutofthreeIphonessoldareinChina¡ LastyearChinawas20%ofApplerevenueat$45B¡ 65%ofQualcommsbusinesswasChina¡ Chinawas23%ofIntelsbusiness¡ MostoftheupsideinthesemiconductorequipmentindustryisthebuildupofdomesticfabcapacityinChina
SemiconductorAdvisorsLLC
![Page 19: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/19.jpg)
SemiconductorAdvisorsLLC
![Page 20: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/20.jpg)
SemiconductorAdvisorsLLC
![Page 21: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/21.jpg)
¡ BoththeLEDandsolarpanelindustriesweredestroyedbyChina’sentranceintotherespectivemarkets.
¡ Thesemiconductormarketissignificantlydifferentasmostlogicsemiconductordevicesarenot“commodities”likeLED&solarpanels
¡ ThebiggerriskistothememorymarketofbothNANDandDRAM,whicharecommoditiesmuchlikeLED&solar
¡ ItismoredifficultforChinatorun“ataloss”inmemorygiventheveryhighcapitalcostsascomparedtolowcapitalcostsforsolarandLED§ $50Mversus$7B
SemiconductorAdvisorsLLC
![Page 22: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/22.jpg)
¡ MuchlikeJapan,Taiwan&Koreabeforethem,Chinaenteringthesemiconductorindustryisanormalprogressionofmodernization
¡ TheUSwillalsoneedalternativesupplierslikeMicron&GloFo¡ TheUScanparticipateandprofitinChina–Ahuuuugemarket¡ Everyonemustparticipatewitheyeswideopentorisks¡ TheUSgovernmentcanhelpleveltheplayingfieldoftrade&IPconcerns
¡ ChinawilllikelybefasterthanJapan,KoreaorTaiwaninbuildup¡ USmustpromote&protect&investinnewtech–AI,VR,IOTetc;¡ Chinaremainsaverysharpdoubleedgeswordthatcutsbothways
SemiconductorAdvisorsLLC
![Page 23: Robert Maire President Semiconductor Advisors LLCfiles.constantcontact.com/331385a5301/d8995f2b-0711-4012... · 2018-05-23 · ¡ After making ZTE the poster child as a “bad actor”](https://reader033.vdocument.in/reader033/viewer/2022060401/5f0e10c97e708231d43d7232/html5/thumbnails/23.jpg)
¡ Q&A
SemiconductorAdvisorsLLC