Recent posts

Cheap Republic of China threatens the World?

May 16, 2024

»Cheap Republic of China threatens the World? Does it?«
Georg Steinberger, Chairman of the Board of FBDi e.V.

Does it?

Just a few weeks ago, I received a huge cross-reference list of Chinese semiconductors, matching the devices of Western companies.

40.000 parts matched with global (US and Europe) brands, anything from Analog, Power Management, Sensors, Protection Devices, Standard Logic, Small Signal, Power Discrete, Interface ICs. Anything from drop-in replacement and pin-to-pin-compatible to functional replacement. The goal is to make customers here more competitive.

According to many posts I read on social media, China has giant capacities (if not overcapacities) to feed the world with cheap “legacy” semiconductors and basically outprice Western competition. Where legacy starts, depends on the viewpoint and the technology, I would say, anything you can produce with more than 25 nanometers could fall into this category, provided it is not protected by any IP right.

Also a few weeks ago, I saw this giant automobile freighter from BYD landing in Germany and off-boarding 3000 EVs, presumably for a competitive price. BYD plans 200 of these freighters, each capable of transporting up to 7500 cars, and intends to bring the advantages of Chinese engineering skills to the entire world. They also have plans to build the infrastructure that does not exist in many countries.

We already know how China has beat up the markets for PV panels and how it has become a leader in wind power, how it is crashing the competitive landscape for heat pumps. On the non-tech side, Temu or Shein are swamping the world with any sort of fast fashion or fast crap that very often does not even pass customs control for missing declarations or severe safety risks.

All of this from a country that has accumulated massive economic challenges, giant overcapacities, but at the same time control over many sought-for raw materials and resources. You could argue that almost every shortage or disruption of supply chains starts in China. The country has accumulated a lot of control power over the global economy.

The Chinese did not achieve this on their own.

For over 30 years, China has been a welcome partner for cheap labour, cheap and nearly burden-free production of everything and anything, ridding the Western economies of many risks (environment, strikes) and of many jobs. Many people and many corporations have become extremely rich by partnering with China.

The last couple of years, starting way before CoVID, have seen the tensions between China and the West, more particularly the United States, rising. China demands to be recognized as what it is – a global power, if not THE global power. The US wants to maintain its leadership of the free world, a.k.a. maintain its position as THE global economic and military power. Forget all the bs around human rights and freedom, the reality is simple and brutal - as we currently see with the rising of antidemocratic dynamics everywhere, including Europe, which claims the luxury of constant denial.

What does that have to do with cheap products?

A lot! China wields its economic and competitive power wherever it can to dominate and control. Why can it do that? Because it caters to our weaknesses. Our economic system at the company and the individual level demands instant gratification – the newest, fastest, greatest at the lowest price. We are consumption junkies.
Our system is based on short-term profit: less cost, more profit. At the individual level: less cost, more consumption (unless you are rich, then cost does not matter). Everything else is a vehicle or a narrative for this simple truth.

Blaming China for doing what it does is hypocrisy.

The West did the same for many years: wielding economic and innovative power to dominate and control – only at higher price levels. If you ask anyone in the Global South, if they believe in Western values today, they laugh in your face, with palpable disappointment. West Africa? South America? Lost, probably for a long time.

If economic leaders today still say, economy has nothing to do with politics, it’s either stupid or a blatant lie.

Economy IS politics.

In the current systemic conflict that is unfolding, technology plays a significant role, as it has the potential to contain even a super-power like China to a certain point. The question is: does it make sense?

Without China, European efforts to achieve CO² neutrality won’t be possible. The German Renewable energy “wunder” is driven by cheap Chinese solar panels, wind power, heat pumps and could eventually by Chinese EVs, who are more affordable to the masses than European EVs.

If you think beyond Europe (again the Global South), reduction of hunger, poverty, inequality (unfairness?) can only work with access to competitive resources that the West has NOT provided in 200 years, but China does or attempts to do (carrot first, stick later, which has to be kept in mind).

Die Billigrepublik China bedroht die Welt!

Do I like a Chinese-dominated world? Hell, no!

Do I like autocracies? Not either. Which means not only to step up for democracy in our idyllic Europe, but everywhere, and it also means to provide fairness to developing countries and economies, when it comes to trade, exchange, cooperation etc. I know, a dream …

Coming back finally to the list of competitive semiconductors from Chinese manufacturers: you can get almost everything that you today buy from European or US companies. The carrot (low price) is already there, the stick (dominance and dependency) is visible. Your alternative is to pay more for solutions and products that you feel are based on the right values and have no-built-in risks associated (good luck for finding them). And to stay competitive in markets which do not care. Irony off.

All of this in a poly-crisis world.
I guess it is about time that mankind comes clean about almost everything that defines our daily lives. The first thing that must go overboard, are egos.

© Copyrights Prompt, SMD

Go back