Priceless! Power of the Semiconductor “Bargaining CHIP”

Imagine the power to remotely control a giant robot. Or a rocket and drone from a device in your watch! A Japanese boy did. Daisaku Kusama or as the Americans refer to him, “Johnny Sokko and His Flying Robot.” As radiation activates the robot, so too batteries electronic devices.

“Batteries Not Included.” Every kid’s toy package has it. Didn’t take long for me to figure out that by having batteries I’d have the “bargaining chip.”

You see, when I was a kid, I didn’t get many presents. So as I watched the other kids on the block show off their toys I started thinking. Hmm, electric toy train, remote controlled airplane or “hot wheels” cars, or talking dolls. You name it! I knew these toys were powerless without that special energy “chip.” So I stocked up.

And when my two brothers griped because their toys were “broken,” toys they wouldn’t share with me, Papa turned to me. Yep, he knew I’d removed their new batteries and put ones ‘low in juice’ – powerless. “Ain’t I a stinker!” 

Now, think of the Spring of 2020 – Duracell, Berkshire Hathaway, Barrick Gold and Dominion Energy. Yep, Besides US, Singapore is home to Energizer. PERIOD!

Big things come in small packages, or so they say. Are semiconductor chips the new precious ‘diamonds in the rough’? To hear companies still whine of less profitability tells me X-Mas wasn’t so merry. Seems Joe’s billion dollar presents weren’t enough to bring a smile to these greedy bastards. Or, was it?

The Semiconductor industry is by its very nature, a dynamic global collective. Decentralization best describes its corporate structure – Headquarters and all operations are not necessarily in the same building or location.

Multi-faceted, the industry by design is not a one stop shopping platform. You see, while there are countless semiconductor companies across the globe, they all fall under one or more of four categories: Pure-play foundry, IDMs (integrated device manufacturers), Fabless manufacturing, and OSAT (outsourced semiconductor assembly and testing).

How and why has the semi industry flourished? Who ‘called it’ and will it come to a halt?

Measurement and discovery is made which would astound even the great Enrico Fermi. Moore’s law, assigning a time constant on forecast based on observation of the accrued effect of tech advancements, appears to finally be toppled by Murphy’s law of conceivable bad odds and at the worst possible time.

Moore’s Law appears to be exhibiting a “Reversal of Fortune.”  

Picture a Casino – House and the Gambler. House sees her profits exponentially increasing as more and more modernized play tables and slot machines are brought into the Casino bringing more and more people. Gambler, after spending time in the House may win, but given enough time his good luck will run out and at the worst possible time, playing his last chip.

CASINO? It can House only so many.   

Delusion of Onshoring and Decoupling

Outsourcing became a dirty word for the offshoring of services. India strategically positioned itself nicely. But such a “dirty” scheme wouldn’t ride with chips’ OSAT. Gotta keep it clean.

According to Milind Kumar Sharma, who teaches in the Department of Production and Industrial Engineering, MBM University, Jodhpur, “Despite several claims of India being a strong candidate for fabless design market, several supply-side constraints such as inadequate availability of ultra-pure and clean water and clean sand used for growing wafers…” Now that’s a shame.

However, Sharma notes the “approval of the Production Linked Incentive scheme.” But could it do for the US what it can do for India?  “The PLI for this sector will reduce global dependence and leverage India’s skilled IT workforce.” 

Self-reliance and jobs. Sounds good. So what’s keeping the Yankees? “Interestingly semiconductor assembly and testing is a high volume and labour intensive business, though less attractive in terms of profitability.” Hmm, offshoring to India is starting once again to look attractive.

Israel, see what I see? Heard your “high-tech companies hit with wave of layoffs.”  If Israel is anything like the US, and it is, corporate profits supersede patriotism. In spite of the fervor to defend the State.

Kind David could not have accepted such odds for his people. Numbers speak for themselves. “The tech sector accounts for nearly 25 percent of Israel’s total tax revenue and for about 10 percent of the labor force.”

And America wants to onshore and bring back jobs? Sure about that? US, face it. You cannot bring back what never was. Joe signed CHIP checks companies can’t cash for STEM jobs.

Pledges and plans were made for mega fabs and semi plants to be built in a decade or so.  It’s only been five months since the passage of the CHIPS Act and companies are starting to choke on chips laying off thousands with more to come. You see, they operate quarter to quarter as workers live paycheck to paycheck.

Senator Bernie Sanders makes a good point, “You might want to worry about the deficit when you’re giving huge amounts of corporate welfare to very large and profitable corporations.”

Micron, case in point. Of the $15 billion reportedly made possible thanks to Joe, there were “17,000 expected jobs…” But three months later and four days before X-mas, Micron says it’s gonna have to let several go (10%). What’s up? Gadgets and cars not in demand?

So, what ya gonna do with the money? Sure explains why Micron’s plan was that out of the 17,000 only “2,000 will be employed directly by Micron…” Hmm, I wonder who are these outside contractors or companies that will be filling the remainder 15,000 jobs.  

What say the DOD? It appears that as long as it’s made on US land, don’t matter who the fuck makes it. In Stimson, a “Request for Solutions,” highlights “The United States currently has no onshore access to foundry technology capable of meeting the Department of Defense’s (DoD) long-term leading-edge microelectronics manufacturing needs.” 

Could this explain the ‘Affair in Taiwan’ In the Year of the Rasky Rabbit!

Richard Cronin points out that the request seeks“to establish a relationship with a U.S.- located foundry…” He adds, “Importantly, the project requires that the work is done within the U.S. borders, not that the company be American.”

Will semi’s hook up? “Qualcomm and GlobalFoundries are announcing a new partnership…. Qualcomm, the leading fabless semiconductor company in the world, announced plans to increase semiconductor production in the U.S. by up to 50 percent over the next five years.”

FIRST, fabless is not a PURE PLAY. Qualcomm, if you were chances are you wouldn’t need to hook up with anyone in the world. Ask Taiwan.

SECOND, “UP TO” means any number 1% – 50%. By the way, I hear that “US firms Qualcomm, Broadcom, and Micron see more than 50 percent of their profits come from China.”

THIRD, to put into context, the “next five years” is how long Los Angeles new mayor plans to house the homeless in a building once used as a hospital. Regulated by all agencies? Good luck!

Joe throwing money at the problem is simply following Obama’s act of a decade ago. Decoupling from China? Good luck! Corporations sold out for bargain prices.

My guess, it will be a long time before you see that vessel change its compass. That ship has sailed. The horizon will only appear to get closer.

Best you prepare. Country is crying for DECOLONIZING. January 6^th marked the nations’ turning point. No worries. As citizens disembark, tourists board.

America, Chip Ahoy!  

PATENTS: Chips ‘Open Source’ Blueprint or Secret Formula?

Pretty, isn’t it? But there comes a time when chips lose their luster and nobody wants them. So where do they go? Semiconductor Chips Graveyards: Where “Innovation” Goes to Die

“A very high percentage of the world’s population exists without purchasing any products embodying patents simply because they are too poor to afford innovative technology.”

According to Bruce Lehman, President, International Intellectual Property Institute, “in most of the world, governments bear the cost of purchasing inventions that relate directly to sanitation, public health, national defense, public order and security, public transportation and education. For these inventions, the market is primarily a market of governments, not individuals.”

CHINA 40th Anniversary – 18 December 2018: President Xi Jinping’s speech highlighted, “Made in China 2025.” I pointed out a time may come when China’s Blueprint may include strategic plans to absorb global tech giants who capitalize on mobile engineering amassing data from a service and electronics economy.  Tik Tok, Tik Tok, Tik Tok, …

Semiconductor chips, from design to fabrication to finished product, is costly and time consuming (few weeks to three or more months).

“Designing a chip is a very expensive process, and high-end electronic design automation (EDA) software is also expensive to buy… a major obstacle to startups or systems companies that want to invest more in chip design…”

PDK and importance?  “A PDK is a set of files that a foundry shares with its customers to describe the building blocks of a specific production process…Engineers use a PDK to design, simulate, and verify a chip design before sharing the blueprint with the foundry to build prototypes or ramp up production.”

There’s no question that the power of obtaining a patent for advanced chip designs is priceless. Still, obtaining powerful investors or partnering up in open-source chip design may be ideal.

Heard the news? Just “Google it.” “The Silicon Valley giant said that it is partnering with U.S. contract chip maker GlobalFoundries to roll out a new open-source process design kit (PDK).”

Of course, there was a time that Google was reportedly on GlobalFoundries shitlist.

Big Tech and Semi Chip FACEOFF!

Funny, just three years ago, Google was reportedly listed among defendants of the likes of Apple, Broadcom, Nvidia, Qualcomm, Cisco etc. According to WCCF Tech, “GlobalFoundries Sues TSMC & 19 Others For Alleged Patent Infringement.”

So what happened boys, US President make you all play nice? Sure, given the “coming China wars,” like good musketeers, it was “one for all, and all for one.”

But today a new faceoff is on! In a recent EE Times article referencing YMTC, Samsung, and Micron, Jim Handy, an analyst with Objective Analysis points out “I anticipate a patent law faceoff sometime between the U.S. and China.”

What’s important about this now? It shows the “Taiwan Affair” is not as “red, white and blue” as the US paints it. Consider that “since Apple and other companies are the ones that import products with TSMC’s products, they’re also in GlobalFoundries’ crosshairs.”

Joe’s CHIP Act comes across as a simple “cut and dry” solution to the chip and semiconductor job shortage in the US – Buy American. What about Europe?

In the alleged lawsuit, GlobalFoundries v. TSMC et al (2019), “defendants in the case is 20…[and] divided into four categories covering foundry, chip designers, distributors and consumer product sellers.” If GlobalFoundries is reportedly the only foundry operating in the US, how the fuck are they going to get these chips designed, manufactures, fabed and distributed at a mass level ASAP?

Face it Yanks, you conveniently passed the chip baton to China, along with everything else you could in the “sell-out seventies” and the decades that followed.

So to hear the West, primarily the US, bemoan China appropriating Intellectual Property (IP) is ludicrous when they facilitated it. Of course, there are some like Stephen Case, former chief executive officer and chairman of America Online (AOL) who disagree with the criticism that the Chinese are only “good in making stuff not creating stuff.”  

Microsoft and Apple, after decades of profiting in the billions from selling this “stuff” what do you think? Google and Facebook, if the “stuff” sold on your platforms is data, then one would say it’s not about making or creating, but about getting stuff.   

Venues have been in place for countless opportunities of “IP theft” – Working Visas, Technology Transfer, etc. Take for example, Skyworks Solutions, Inc.

According to their website, Intellectual Property “is the legally recognized exclusive rights to creations of the mind: inventions and literary and artistic works. In our industry, this includes patents for inventions, designs, trade secrets and trademarks, for example.” Reportedly they hold “~4,600 patents.”

Future candidates, what can you expect? “Skyworks requires all candidates to sign an Interview Non-disclosure Statement prior to proceeding through our interview process, in order to ensure that you do not share any information that is obtained during the process.”

Of course, sanctity of IP being what it is today, some may argue that the notions of propriety and fair competition went out the window with so called AntiTrust and Microsoft.

As investors once gravitated towards the open free plains of the U.S. relishing in “strong patent protection with a market free of price controls,” it was only a matter of time before the UK and EU among others were finally forced to follow suit.

Chinese owned Nexperia factory in “Newport Wafer Fab, which employs more than 500 people, was bought out by the subsidiary of Shanghai’s Wingtech in July 2021.” But now it appears there will be a ‘reversal of fortune’ by the British claiming national security.

I’m not sure what is more thwarting: UK’s government not barring the sale beforehand, OR reacting shockingly to security alert “When a Chinese company or a subsidiary goes and tries to buy a company that makes specific technology and holds specific intellectual property, that’s a concern.”

Come on Brits! Intel runs between the lines and borders. Being one step behind the Americans, it should come as no surprise. Then again, being indignant does become you.

Masters and Students

When speaking of IP, the US fails to note the Masters behind the 1963 invention of CMOS (complementary MOS) integral to semiconductor devices:  Chih-Tang “Tom” Sah, (Chinese-American electronics engineer and physicist) and Frank Wanlass.

Taiwan’s confidence in the face of China’s bravado on the oceanfront stems from what they brazenly report to possess: human capital, manufacturing and of course a secret recipe. 

However, we live in a time when the student no longer wishes to learn from the master.  Taiwan’s technology transfer appears to have come to a halt. In recent decades, so called institutions of higher education have failed younger generations.

“HEIs are not preparing people for work in many of Taiwan’s most important industries. High technology companies have close to 100,000 employees in semiconductor manufacturing, image display, digital life, biotechnology, communications, and the information service industry, but universities will supply only about 2,000 new employees to those six key industries in Taiwan over the next six years.”

Moreover, we live in a world of sabotage and well financed head hunters. “Many private HEIs…have found themselves confronted with a serious shortage of student recruits…” Brain drain or brains drawn to China?  

Reports like “Taiwan loses 3,000 chip engineers to ‘Made in China 2025’” appear to have been overshadowed with world events. Not even the mighty was immune to China’s charm. “Taiwan Semiconductor Manufacturing Co. is among the companies losing talent to mainland China.” Recall President Xi Jinping’s words four years ago, “talent is our most important resource.”  

Working with faculty and international students at the University of California, Irvine, in the schools of technology, bioengineering and business, I saw technology transfer in action. Majority of actual talented STEMers are international students from Asia, India and the Middle East.

I am reminded of India’s wise man:

“Metaphor of three wise men walking in corporate corridors. Wiseman walking in the corridor on its right side is Adam Smith emphasizing the importance of efficiency, bottom line. Wiseman walking on the left side is Karl Marx, emphasizing the importance of the equity. These two wise men are following the third wise man viz, Gandhi who is emphasizing importance of ethics with focus on means.”

It was a “win win” for US corporations (specialized skills), academia (higher tuitions) and foreign country recruits (intellectual knowledge).

However, unlike past tech industry of engineers and computer scientists, today’s social media sector is made up of online platforms with human and algorithmic monitors. Twitter? I think Elon got. These are not essential jobs.

Getting Schooled by DemocRATS : Act I and Act II

During his term in office, Obama administration came up with The STEM Education Act of 2015 or “Stem for All.” But instead of keeping to the principle of “America Competes,” the Democrats stressed “addressing bias and expanding opportunities for underrepresented students.” So how’s that worked for you?

Failing in their stated goal to “inspire and recognize young inventors, discoverers, and makers” they got instead “liberal bleeding hearts,” pot makers, and influencers. Did your “after-school programs” provide visits to museums and libraries or public funded baby sitters?

Now, Joe put out the “The CHIPS and Science Act” or “The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS Act).” Both Obama’s and Biden’s proposed Acts are said to address the STEM drain in the US.

BUT, Commerce Secretary along with Presidents Obama and Biden confuse the US “brain drain” of three decades ago with migrants at their southern border serving a physical labor shortage. Madame Secretary, could it be because you stand to gain? “Department of Commerce will oversee $50 billion in investments.”

Moreover, the idea for this CHIPS Act is said to have originated from the “Start-Up Visa.” That is, rewarding foreign college students with talent in STEM working visas. Foreign NOT domestic.

Problem goes back to Clinton, when in the dawn of commercialization of the internet, digital literacy was excluded. As with the world time zone, from coding to chips, the US has always been lagging behind.

Let’s face it. Few Americans care to toy around with their gadgets to know what makes them tick. Funny, China sure knows what makes you tick. Get it? Tik, Tok, Tik Tok!

Seems apparent, that Act II is simply a scheme to shell out money to the tech sector to “invest $280 billion to bolster US semiconductor capacity.” All in the name of Consumerism or as they call it “scientific R&D and commercialization.”

Face it Joe, “The chips are down” because US firms grew dependent on cheap chips made abroad. As to the oxymoronic banner of “Buy American,” what part of the finished “American” product was made by Americans in the US with ONLY US components/ingredients?

Recall Apple’s CEOs statement, “Here’s what we do today. The iPhone is really not made anywhere. It’s made everywhere. That’s the truth.”

Da Node “Big Kahuna”?

So who is the “Big Kahuna?”

She who holds advanced chip patents holds the power. And who has held the most? No, not Taiwan. As my Sensei reminds me, Japan has held this honor for almost a century. Did the US take possession? Maybe. Before the power of the chip, there was the power of the atom.

You see my toy and game friends, inventions the US calls ‘IP’ are powerless without “juice” or a special chip. Now, others are more than happy to carry the “chip on their shoulder.”

In Silicon Valley, three of the 21 Semiconductor Companies in California caught my eye as each is based in South Korea, United Kingdom, and Israel: Samsung Semiconductor Inc.; Dialog Semiconductor; and Tower Semiconductor.

But not all that is “siliconed” comes from the valley.

GlobalFoundries, reportedly arose from an American company, incorporated in the Cayman Islands, and Middle Eastern owned before going public.    

Nexperia, for example, is owned by China and headquartered in the Netherland. Its manufacturing plants are in England and Germany.

US companies are typically either IDMs or Fabless.  So, is the US to invest in Pure-play foundries or continue with IDMs, Fabless or OSATs?

Mergers and Acquisitions (M&A) are ideal in deadly cut-throat competition, especially “when the chips are down.” Recall the proposed merger of Freescale with NXP in 2015?

It came a year after the news of “20 Freescale staff on vanished Malaysia Airlines flight MH370.” Then in 2016, Qualcomm attempted to “take a crack at it” but the Chinese powers that be interfered. It appears NXP is up for grabs. Anyone interested in a Dutch company?

Europe is wide open to offers from the US. “Intel  announced plans to invest €80 billion in European chip production facilities back in 2021.” But let’s not overlook the countless US based companies with global offices.

Remember Skyworks Solutions, Inc.?  The public company is an American semiconductor company headquartered in Irvine, California. Skyworks locations are in the Americas, Europe, and Asia (including China and Taiwan).

If US companies are indeed either IDMs or Fabless, which of the two does Skyworks fall under? More importantly, is semiconductor fabrication processing done in the US or out of the country? If so, are there risk management systems in place?

According to the semiconductor industry, when it comes to sales, Taiwan and US have ranked first followed by China and Japan. However, the real “big kahuna,” is he who holds the special foundry of chipmakers, the power of pure-play. As it stands, Taiwan and China have the lead.

But keep your eye on Korea! “By 2021 Samsung expects to be a year ahead of foundry rivals TSMC, in terms of advanced process production, and two or three years ahead of technology rivals, Intel…potentially mopping up the big chip-making contracts with its new design.”

‘House of the Dragon.’ Under whose Rule, Korea or China?

US, are you prepared to incur the wrath of the DPRK as you have the PRC?

Know the Web and World You…  

“The Western democracies, for example, are out after money and the Eastern Communists are out after power; otherwise they share an identical view of life, and [such] ideologies which accompany identical acts can only be described as a cruel hoax.” – John Wilkinson, The Technological Society, 1964

As a spider’s cobweb, the global zig-zag of some company formations is by design and necessity. Hollywood and China know this well.

In films like James Bond or Mission: Impossible or Fast & Furious 9, all aspects of production tend to be international. From the “Red Carpet,” as Erich Schwartzel’s book describes, to the “Big Screen” and the “Big Park,” Eastern and Western leaders’ ideas and influence is projected for all their peoples’ captive view.

It is the nature of the beast. So know the web you lie in and the world you live in.

Silicon Valley, cradle of electronics in the North Pacific, was long superseded by China’s square and its inner Triangle, Japan–Korea–Taiwan. West shifting services to India may have been cost-effective. But outsourcing chips to Asia may have proven to be dangerous.

The notion of training a foreigner for your job seems counterintuitive. What of inserting questionable key components needed in the production key sectors of data, electronics and communication? Now imagine their use in weapons and aircraft.

Much has changed in the world in the last two decades. That is, China has changed the world. And in doing so, shaken the spheres of its Triangle. Four years ago, President Xi Jinping stated, “In just a few decades we have completed an industrialization process that took developed countries several hundred years.” 

How long will it take the U.S. to have its newly built semiconductor chip manufacturing plants up and running? How, with US and its Allies economic dependence on China and their command and control of supply chains? How, with China’s influence over Africa’s key Technology-Critical Elements (TCEs) needed for chips the West has grown dependent on?

Empires rise and fall. “Know the world you live in,” said a Roman to a Jew. World changes, and with it ‘Rules of Engagement.’

As the US flirts with Taiwan, China grows jealous. One will fail and the other claim victory holding the power of the “bargaining CHIP.”

“Render unto Caesar the things that are Caesar’s, and unto God the things that are God’s.”