ben_bajarin:
well how do j yeah

jay_goldberg:
ben internet greetings

ben_bajarin:
internet somebody asked me they were like hey are you are you going to have like a standard opening you know for the circuit and i was like you know i think i'm just going to roll with whatever mood i'm in that day you know

jay_goldberg:
oh

ben_bajarin:
it's gone you like the the opening is like a box of chocolates you know you never know you never know what you're going to get

jay_goldberg:
i think we should have them music it should be a battle without honor or humanity

ben_bajarin:
for

jay_goldberg:
which is

ben_bajarin:
humanity

jay_goldberg:
the no it's battle without honor or

ben_bajarin:
without

jay_goldberg:
humanity

ben_bajarin:
honor nice nice

jay_goldberg:
it's yeah

ben_bajarin:
cheering sounds i could add cheering sounds

jay_goldberg:
oh

ben_bajarin:
i see that here on the left maybe an elephant whistle bull horn

jay_goldberg:
yeah

ben_bajarin:
and like

jay_goldberg:
yeah

ben_bajarin:
the creative juices can go when you're trying to produce something thanks everybody listeners for all the positive feedback that that you've given

jay_goldberg:
m

ben_bajarin:
me emails and messages on

jay_goldberg:
did

ben_bajarin:
twitter i also

jay_goldberg:
yes

ben_bajarin:
wanted to mention there is a youtube channel ja and i

jay_goldberg:
oh

ben_bajarin:
are staring at each other right now as we do this in real time um just pointing that out that there's a youtube channel in case you want to watch us maybe some day we'll get sophisticated

jay_goldberg:
yes

ben_bajarin:
enough to throw up some of the visuals that we talk through because i charts and other things that might be interesting so you know

jay_goldberg:
oh

ben_bajarin:
aspirations

jay_goldberg:
i

ben_bajarin:
abound but capitalizing on last week where we talked about what's going on in juries packaging in process

jay_goldberg:
it

ben_bajarin:
i had already been thinking about kind of this topic but a few people hit

jay_goldberg:
oh

ben_bajarin:
me up in a twitter dims and mentioned doing it on really the dglobalization trend you know j and i we've talked about this a little bit on what it looks like when you're trying to bring some some form of the semi industry back your nation there's a lot of implications for this

jay_goldberg:
oh

ben_bajarin:
there's

jay_goldberg:
oh

ben_bajarin:
obviously the geo political side which we sort of danced around and can weave into this and will also necessitate

jay_goldberg:
oh

ben_bajarin:
i think another series of

jay_goldberg:
oh

ben_bajarin:
podcasts but i want to talk sort of broadly about nowdeglobalization and i'll sort of throw my point out there j and then i'll let you let you chime in it's hard to

jay_goldberg:
oh

ben_bajarin:
not appreciate that the semi conductor industry is a global partnership um you know even with talks with senior executives that all the name companies out there you know and

jay_goldberg:
ah

ben_bajarin:
i

jay_goldberg:
oh

ben_bajarin:
talk about you like what when sanctions come down and governments are trying to get you to invest

jay_goldberg:
a

ben_bajarin:
in in in domestic

jay_goldberg:
oh

ben_bajarin:
foundaries or domestic technology you know they

jay_goldberg:
yeah

ben_bajarin:
always keep coming back to yes we're going to do that but you know remember the semi conductor industry

jay_goldberg:
oh

ben_bajarin:
is a global partnership and i think that's

jay_goldberg:
ah

ben_bajarin:
an important framework to remember

jay_goldberg:
ye

ben_bajarin:
we can dive into

jay_goldberg:
ye

ben_bajarin:
what regions have a share of what whether that's lithography or wafer

jay_goldberg:
oh

ben_bajarin:
or memory or foundry but the meta point

jay_goldberg:
yeah

ben_bajarin:
and let you just chime in is just we can't forget this

jay_goldberg:
yeah

ben_bajarin:
is a global partnership and more importantly to satisfy

jay_goldberg:
yeah

ben_bajarin:
the

jay_goldberg:
yeah

ben_bajarin:
needs of the semi conductor industry which is now a little over a trillion semi conductorship every year it will always be

jay_goldberg:
yeah

ben_bajarin:
a global global partnership

jay_goldberg:
yeah yeah

ben_bajarin:
oh

jay_goldberg:
there is so much complexity and there's so many little bits and pieces of it

ben_bajarin:
oh

jay_goldberg:
you know even what i've

ben_bajarin:
oh

jay_goldberg:
been doing this for twenty something years you've been in

ben_bajarin:
yes

jay_goldberg:
at least as long i am always finding some new company that i've never heard of that actually oh they have this critical role to play and mat tats or some random chemical

ben_bajarin:
oh

jay_goldberg:
that's incredibly important nd there's only one vendor for it

ben_bajarin:
eh

jay_goldberg:
there's just a lot going on and it's

ben_bajarin:
eh

jay_goldberg:
it's everywhere as much as the headlines are all about taiwan

ben_bajarin:
oh

jay_goldberg:
there's a whole lot upstream from that

ben_bajarin:
oh

jay_goldberg:
that goes into that all kinds of inputs and

ben_bajarin:
oh

jay_goldberg:
it's a pretty complicated i mean it's part of what makes it fun there's always something interesting to explore and discover in this space

ben_bajarin:
yeah yeah and i

jay_goldberg:
yeah

ben_bajarin:
think you know just just just doubling down on the points of every nation

jay_goldberg:
oh

ben_bajarin:
can be ambitious china can america can europe can

jay_goldberg:
yeah

ben_bajarin:
pan kara can et cetera everybody can be ambitious but they're just they're never going to own the whole stack and so i always just worry like how much if said

jay_goldberg:
oh

ben_bajarin:
nation brings down sanctions and

jay_goldberg:
so

ben_bajarin:
you can't end up and i think you're seeing this right now with some of the tension that's going between what the us is trying to say about a s m l and then europe saying like no we're not going to bide by that because

jay_goldberg:
oh

ben_bajarin:
we need this to be a

jay_goldberg:
oh

ben_bajarin:
global trade scenario is how much do sometimes those regulations may be hurt you more than help you

jay_goldberg:
yes

ben_bajarin:
even if your underlying intentions can be good if that makes sense

jay_goldberg:
there's there's a lot in there there's a lot in there to unpack right there's i don't

ben_bajarin:
oh

jay_goldberg:
not even sure where start i think

ben_bajarin:
yeah oh

jay_goldberg:
once you start talking about nations that levels it gets even

ben_bajarin:
oh

jay_goldberg:
more complicated layered on top of an already

ben_bajarin:
yeah

jay_goldberg:
complicated industry um but it cuts both ways right i mean there's

ben_bajarin:
my

jay_goldberg:
there's lots of reasons why the us put sanctions

ben_bajarin:
yeah

jay_goldberg:
on chimes

ben_bajarin:
a

jay_goldberg:
chip industry and there's some of that that resonates with other countries as well i really i really think

ben_bajarin:
yes

jay_goldberg:
the europeans there's large blocks in you know in europe who

ben_bajarin:
oh

jay_goldberg:
who feel pretty strongly were in line with what the us is doing even if their individual companies are ended is that

ben_bajarin:
oh m

jay_goldberg:
re gonna going to object to it like a m is going to feel a lot of pain from these sanctions all right

ben_bajarin:
yeah

jay_goldberg:
but but they're dutch company and the dutch government probably

ben_bajarin:
yeah

jay_goldberg:
feels a pretty different way

ben_bajarin:
sure

jay_goldberg:
and and so let's we'll tackle that as best as we can um i do want to take a step

ben_bajarin:
yeah

jay_goldberg:
back though and talk about how

ben_bajarin:
oh

jay_goldberg:
every country now seems to want to have a semecondctor fab domestic and i think that there is lots of good reasons why

ben_bajarin:
oh

jay_goldberg:
that's not going to happen why it hasn't happened historically in why it shouldn't shouldn't happen because i know like the

ben_bajarin:
yes

jay_goldberg:
big thing i've been earing a lot about recently is

ben_bajarin:
yeah

jay_goldberg:
mexico there's lots of interesting in building up mexico semicanuter

ben_bajarin:
oh

jay_goldberg:
industry

ben_bajarin:
right

jay_goldberg:
i talked to some people in the policy

ben_bajarin:
oh

jay_goldberg:
world about that recently and and they sent me a list of questions beforehand they said you know what are the best fabs in mexico

ben_bajarin:
oh

jay_goldberg:
i don't think mexico has any fabs um they have a couple they have a couple o sat facilities that are

ben_bajarin:
oh

jay_goldberg:
very good they don't have a fab and then i started looking up like if you're going to build

ben_bajarin:
yeah

jay_goldberg:
a center of semi conductor

ben_bajarin:
oh

jay_goldberg:
excellent in mexico were do you even start you like they have some very good universities

ben_bajarin:
yeah

jay_goldberg:
there but i don't think any of them

ben_bajarin:
yeah

jay_goldberg:
have really advanced

ben_bajarin:
yeah

jay_goldberg:
sam's content

ben_bajarin:
yeah

jay_goldberg:
in their electrical engineering department historically for whatever reason it hasn't been an area that specialized in in sonata you suddenly want to grow a whole industry in mexico

ben_bajarin:
oh

jay_goldberg:
from scratch absolutely that is possible there are lots of talented engineers in mexico um but is that really how the government wants to spend

ben_bajarin:
yeah

jay_goldberg:
its energies is it something feasible

ben_bajarin:
oh

jay_goldberg:
i mean it's possible it's going to take twenty years but it's possible so

ben_bajarin:
yeah

jay_goldberg:
i think i mean we sort of started off with this being really complicated and

ben_bajarin:
oh

jay_goldberg:
it is if you want to change that it's going to take a lot of time we didn't just sort of flip the switch and suddenly we're dependent on ty wan it took twenty thirty years

ben_bajarin:
yeah

jay_goldberg:
to get here reversing it is going to take just as long

ben_bajarin:
yeah

jay_goldberg:
oh

ben_bajarin:
and i think you know when

jay_goldberg:
ah

ben_bajarin:
we talked about you know even this this last time right we didn't go deep on um each

jay_goldberg:
yeah

ben_bajarin:
nation's efforts as a foundry and we talked a lot bit about how

jay_goldberg:
ah

ben_bajarin:
in tails trying to be competitive in foundry as

jay_goldberg:
oh

ben_bajarin:
is sam song sam songs

jay_goldberg:
oh

ben_bajarin:
most competitive foundaries in logic or least a good portion

jay_goldberg:
oh

ben_bajarin:
of them are actually here us

jay_goldberg:
oh

ben_bajarin:
right memory i think may may still be in in korea um but you know i think you look at we talked

jay_goldberg:
ah

ben_bajarin:
about t s m c only being able to do a small

jay_goldberg:
yeah

ben_bajarin:
small portion um you know estimates have far less than ten

jay_goldberg:
yes

ben_bajarin:
percent generally i think most analysts on the cell side er four to five per cent of their capacity

jay_goldberg:
yeah

ben_bajarin:
which really just says it's not even in the entirety of their us customers it's some small set i think you had pointed out like defense

jay_goldberg:
oh

ben_bajarin:
and and a few others right

jay_goldberg:
oh

ben_bajarin:
maybe apple lok if the government says you've got to have ex percent of

jay_goldberg:
yeah

ben_bajarin:
content to to to to import to the united states but i think just understanding to your point right

jay_goldberg:
yeah

ben_bajarin:
which is that

jay_goldberg:
yeah

ben_bajarin:
one logic foundaries are big expensive

jay_goldberg:
oh

ben_bajarin:
i mean as far as i know also you know as m l's sales

jay_goldberg:
the

ben_bajarin:
are locked up for

jay_goldberg:
yeah

ben_bajarin:
the next few years it's not like there's just machines coming on the table that somebody can just kind of bud to start a new foundry a limited a limited

jay_goldberg:
oh

ben_bajarin:
resource it is the challenge

jay_goldberg:
oh

ben_bajarin:
but i keep coming back to it's not

jay_goldberg:
yes

ben_bajarin:
just even lithography it's not just the foundry it's it's the wafers

jay_goldberg:
yah

ben_bajarin:
you know it's the

jay_goldberg:
ah

ben_bajarin:
you know it's

jay_goldberg:
yeah

ben_bajarin:
etching it's

jay_goldberg:
oh

ben_bajarin:
everything that becomes a part of that ecosystem that there's only small bits that reside in certain places and everybody relies on each other to get those done

jay_goldberg:
oh

ben_bajarin:
like it just doesn't it doesn't even exist in fact i'd be curious i don't know if such a stat exists

jay_goldberg:
oh

ben_bajarin:
but per the entire needs of the of the

jay_goldberg:
ah

ben_bajarin:
semi conductor ego system what country has

jay_goldberg:
yah

ben_bajarin:
all of all of x per cent

jay_goldberg:
oh

ben_bajarin:
of all of those things because i can't imagine it would be gigantic it would be they

jay_goldberg:
a

ben_bajarin:
have some percent of all of those

jay_goldberg:
oh

ben_bajarin:
things but like somebody doesn't have fifty percent foundry fifty percent way for

jay_goldberg:
oh

ben_bajarin:
fifty per cent lithography you know i mean like there's no majority

jay_goldberg:
oh

ben_bajarin:
in those key categories in any one country

jay_goldberg:
we could spend an hour just talking about the denominator of that fraction

ben_bajarin:
yeah

jay_goldberg:
like hat do you want

ben_bajarin:
for

jay_goldberg:
to put

ben_bajarin:
sure

jay_goldberg:
in there right

ben_bajarin:
right right

jay_goldberg:
i mean the us is probably closest

ben_bajarin:
oh

jay_goldberg:
closest furthest has the biggest

ben_bajarin:
a

jay_goldberg:
share of any of it the biggest share of every single part of that right

ben_bajarin:
yes

jay_goldberg:
but certainly weaken you know

ben_bajarin:
oh

jay_goldberg:
and device manufacture i think that's that's why the u s thinks we can get away with these sanctions is

ben_bajarin:
right

jay_goldberg:
ultimately even for pieces that aren't produced here there are going to be dependencies you can trace back to us companies in u s i p

ben_bajarin:
right

jay_goldberg:
it's certainly the case with a m l but i think it's true for everyone else every other part of it

ben_bajarin:
yeah yeah and and i wonder too i mean i think you're right i again i don't know i don't i've never seen such a stat i mean you know you look at obviously entails here applied materials

jay_goldberg:
oh

ben_bajarin:
lamb

jay_goldberg:
oh

ben_bajarin:
i just companies that have pieces of that it's not all made here but the there's a lot of american companies in in that

jay_goldberg:
okay

ben_bajarin:
mix

jay_goldberg:
oh

ben_bajarin:
obviously with the exception of lithography but it's interesting to your point like the investments that people are trying to make and i just keep coming back to again

jay_goldberg:
m

ben_bajarin:
the implications of this or the implications to the

jay_goldberg:
oh

ben_bajarin:
rest of the echo system like again just going back to

jay_goldberg:
oh

ben_bajarin:
you know your point about a smell like like

jay_goldberg:
yeah

ben_bajarin:
being possibly hurt by these things and then other countries getting frustrated is how much does this off often

jay_goldberg:
yeah

ben_bajarin:
hurt you hurt your overall ambition you know

jay_goldberg:
oh

ben_bajarin:
versus help it in other countries that might need to return the favor or put sanctions on us companies trying to do those things that's just kind of

jay_goldberg:
a

ben_bajarin:
where my my head keeps just bouncing around

jay_goldberg:
oh

ben_bajarin:
i guess the positive negative impact or or unintended circumstances

jay_goldberg:
yes

ben_bajarin:
of some of this attempt to to delobalize the semi conductor industry

jay_goldberg:
so i actually think there's a few a few things that come out one is i'm a big believer in

ben_bajarin:
i

jay_goldberg:
what do you call it multi lateral ism like working

ben_bajarin:
yeah

jay_goldberg:
with allies like working with partners and i think that's

ben_bajarin:
i had

jay_goldberg:
one of the great successes that the u s has had over the last seventy

ben_bajarin:
oh

jay_goldberg:
years has been its ability to work with allies closely and so in times of need like now when we have concerns about china's military capabilities

ben_bajarin:
yeah

jay_goldberg:
we can call on our allies and get their help and it's it's prettiualy important now because for the last like five

ben_bajarin:
yeah

jay_goldberg:
years china has been going down this really

ben_bajarin:
a

jay_goldberg:
sort of

ben_bajarin:
yeah

jay_goldberg:
very ultra nationalistic wolf warrior diplomacy track

ben_bajarin:
yeah

jay_goldberg:
where there were the almost rude to everybody

ben_bajarin:
yes

jay_goldberg:
else and it's a very very sharp aggressive diplomatic style

ben_bajarin:
oh

jay_goldberg:
and it's it's now coming back to haunt them and they've actually looks like they've sort of

ben_bajarin:
yes

jay_goldberg:
stepped away from it but

ben_bajarin:
ye

jay_goldberg:
they're now in a position where they can't go to the dutch government they can't go to the check government they can't get all the differet european governments because their in country

ben_bajarin:
a

jay_goldberg:
diplomats have been insulting those has countries for the last few years about whatever random things now suddenly the us is actually asking for a favor from those countries

ben_bajarin:
right

jay_goldberg:
i sing no no no don't do that we were kidding you know it's important to have allies and

ben_bajarin:
oh

jay_goldberg:
you know there are lots of people who are goin to argue oh maybe the u s is in such a good ally and we've done all these bad things

ben_bajarin:
oh

jay_goldberg:
okay

ben_bajarin:
yeah

jay_goldberg:
let's not not trying to debate all of history here but

ben_bajarin:
oh

jay_goldberg:
i think there are

ben_bajarin:
ah

jay_goldberg:
lots of countries that have benefited in some ways from being an ally

ben_bajarin:
ye

jay_goldberg:
in the us and we've tried to do right by them

ben_bajarin:
yep

jay_goldberg:
within bounds and

ben_bajarin:
yeah

jay_goldberg:
and so that's why i actually am pretty fairly high degree of confidence that these actions will take place and that we will have

ben_bajarin:
oh

jay_goldberg:
all of our allies sign up to participate in china is going

ben_bajarin:
a

jay_goldberg:
to be very isolated

ben_bajarin:
m

jay_goldberg:
there you know and

ben_bajarin:
m

jay_goldberg:
hopefully

ben_bajarin:
yeah

jay_goldberg:
what that leads to is

ben_bajarin:
yes

jay_goldberg:
its approach to the world and recognizing that there is a there's a better path a more diplomatic path towards being integrated and still being able to get what they want being able t satisfied their development goals without antagonizing the rest of the world picking a

ben_bajarin:
yeah

jay_goldberg:
fight with everybody else

ben_bajarin:
so

jay_goldberg:
oh

ben_bajarin:
i'm curious about this and you lead to a point that i have been thinking about and floated to again said said executives and a number of different sumicnutcomers like do you think that

jay_goldberg:
oh

ben_bajarin:
there would ever be

jay_goldberg:
yeah

ben_bajarin:
an official equivalent

jay_goldberg:
yes

ben_bajarin:
to what we're talking about allies and technology to like technado

jay_goldberg:
m

ben_bajarin:
where

jay_goldberg:
oh

ben_bajarin:
said countries are in agreement with each other against a call it

jay_goldberg:
oh

ben_bajarin:
i hate to say gin is a common enemy but but somebody in which they're they're trying to regulate

jay_goldberg:
oh

ben_bajarin:
and use their leverage with again this in this case components um as a part of i'm saying formally

jay_goldberg:
yeah

ben_bajarin:
obviously they could do this informally

jay_goldberg:
oh

ben_bajarin:
like we we handshake we talk but you never think something like

jay_goldberg:
yeah

ben_bajarin:
that would be possible where they're like hey we recognize we all need each other let's agree on said things but

jay_goldberg:
yeah

ben_bajarin:
this kind juris not in it and so we're going to monitor them in some degree right they're they're not in this this tech note i'm just curious if there's ever like a ever could show

jay_goldberg:
oh

ben_bajarin:
up like a formal partnership in this in this capacity

jay_goldberg:
yeah i mean my initial response is that question is way above my paid grade

ben_bajarin:
yeah

jay_goldberg:
i'm just a i'm

ben_bajarin:
yeah

jay_goldberg:
just a financial annalist

ben_bajarin:
h

jay_goldberg:
investor relations at teas international relations is beyond the

ben_bajarin:
m

jay_goldberg:
the other ir

ben_bajarin:
at the other

jay_goldberg:
um

ben_bajarin:
i re

jay_goldberg:
but

ben_bajarin:
oh

jay_goldberg:
from what i can tell there are attempts

ben_bajarin:
oh

jay_goldberg:
being made at

ben_bajarin:
oh

jay_goldberg:
doing just that right there's the group of four i fear wha it's called there's like us china

ben_bajarin:
yeah

jay_goldberg:
us tian south care of japan are

ben_bajarin:
m

jay_goldberg:
trying to put some something like that together umoenonsty're trying to

ben_bajarin:
yeah

jay_goldberg:
put it together there's been talk about that

ben_bajarin:
yeah

jay_goldberg:
and there

ben_bajarin:
oh

jay_goldberg:
you know there're other other locks the us is trying to do

ben_bajarin:
yeah

jay_goldberg:
put together sort of

ben_bajarin:
oh

jay_goldberg:
could not confront but to sort of deal with china with other allies

ben_bajarin:
yeah

jay_goldberg:
in other areas right bring india into some security arrangement with debt and i won't say never that's never

ben_bajarin:
m

jay_goldberg:
going to happen but it's hard to

ben_bajarin:
yeah

jay_goldberg:
do especially because

ben_bajarin:
very

jay_goldberg:
so much of wat we're talking about is commercial right we're talking about companies

ben_bajarin:
yeah

jay_goldberg:
and companies are all

ben_bajarin:
oh

jay_goldberg:
going to have interests in their

ben_bajarin:
oh

jay_goldberg:
own interests at heart which are going to conflict with the government and interest

ben_bajarin:
m

jay_goldberg:
right when it's when it's a military block that's fairly easy to governmen controls the military and the military does what you know everybody gets an get some gear

ben_bajarin:
oh

jay_goldberg:
but when it's commercial to you have entities that are capable of

ben_bajarin:
dame

jay_goldberg:
pushing back and resisting

ben_bajarin:
oh

jay_goldberg:
and i think that makes it much harder to coble one of those things together unless there's a clear

ben_bajarin:
oh

jay_goldberg:
i'm really really clear

ben_bajarin:
oh

jay_goldberg:
benefit to them which i think i think we were tarting to reach that point with china and semi right it's gotten so much harder for

ben_bajarin:
oh

jay_goldberg:
tech companies to do business in china over

ben_bajarin:
oh

jay_goldberg:
the last ten years that when the trump

ben_bajarin:
oh

jay_goldberg:
sanctions when the trump trade war started and now these later sanctions

ben_bajarin:
m

jay_goldberg:
there's some some push back from the from the ship companies but they're they're not fighting it

ben_bajarin:
oh

jay_goldberg:
at a broad policy level they're not local about it and not public about it

ben_bajarin:
yeah

jay_goldberg:
and yeah i mean i think it'd

ben_bajarin:
yeah

jay_goldberg:
be interesting to sort of flip it around and think about

ben_bajarin:
oh

jay_goldberg:
could chin of respond in some constructive way and

ben_bajarin:
right

jay_goldberg:
i've published on this like they don't actually have an easy response to the us

ben_bajarin:
oh

jay_goldberg:
actions

ben_bajarin:
right

jay_goldberg:
and you look at their their response since october

ben_bajarin:
oh

jay_goldberg:
to the china ships sanctions they've been very muted

ben_bajarin:
what

jay_goldberg:
because they don't ant to make a big deal about it because there's no obvious

ben_bajarin:
yeah

jay_goldberg:
counter for them

ben_bajarin:
oh

jay_goldberg:
and so i wonder if how that will

ben_bajarin:
oh

jay_goldberg:
change as time does economy continues to advance

ben_bajarin:
oh

jay_goldberg:
and develop are there going to be areas where they do find some leverage

ben_bajarin:
oh

jay_goldberg:
and and the one that sort of leaps to mind first and foremost is batteries like they had some really really big battery companies could they

ben_bajarin:
oh

jay_goldberg:
compel together i don't even know where other batters are made south korea

ben_bajarin:
south career

jay_goldberg:
japan like uh probably some minerals and

ben_bajarin:
no

jay_goldberg:
places where they actually have friends that they couple together and it's very hard for them to do that so

ben_bajarin:
so that was that was what i actually wanted to to get your perspective on to just to define because i know you you're much closer

jay_goldberg:
yeah

ben_bajarin:
to the to the chinese side um so just just for everybody listening looking at this and in logic

jay_goldberg:
yeah

ben_bajarin:
china is basically seventy seventeen percent of capacity and in memory twenty percent now the capacity the logic is mostly

jay_goldberg:
yeah

ben_bajarin:
mostly lagging

jay_goldberg:
oh

ben_bajarin:
and

jay_goldberg:
yeah

ben_bajarin:
far nowhere near leading edge basically super legacy clearly no no advantage or levers there in proprietary ip other than the fact that it's cost effective similar to memory

jay_goldberg:
oh

ben_bajarin:
you and i know a big company who is using some memory from them because it's cheap that may not always be the case if if the united states

jay_goldberg:
not

ben_bajarin:
doesn't want

jay_goldberg:
not

ben_bajarin:
you

jay_goldberg:
any

ben_bajarin:
to

jay_goldberg:
more they're not not any more they're not

ben_bajarin:
okay

jay_goldberg:
yeah

ben_bajarin:
dropped in said products but

jay_goldberg:
yes

ben_bajarin:
we're using said memory but again

jay_goldberg:
oh

ben_bajarin:
no no competitive advantage just kind of so i am curious again to your point on that so like you mentioned the levers

jay_goldberg:
that's

ben_bajarin:
maybe

jay_goldberg:
good

ben_bajarin:
is battery

jay_goldberg:
yeah

ben_bajarin:
um but does i don't think we

jay_goldberg:
m

ben_bajarin:
i think we need i think most companies still

jay_goldberg:
a

ben_bajarin:
need them for trailing

jay_goldberg:
oh

ben_bajarin:
edge like i'm not sure

jay_goldberg:
oh

ben_bajarin:
m that we other foundaries have enough capacity trailing edge to meet the man i kind of feel like that is

jay_goldberg:
oh

ben_bajarin:
there so again not that that's

jay_goldberg:
yea

ben_bajarin:
their advantage is they have a lot of capacity in trailing it not that there's anything unique there but i don't know global

jay_goldberg:
yes

ben_bajarin:
foundaries i don't think has enough to satisfy the needs of the industry until definitely doesn't i'm just curious to perspect like is

jay_goldberg:
oh

ben_bajarin:
it is it does it come back to that basic fundamental point well we've

jay_goldberg:
m

ben_bajarin:
got all the capacity nobody else does

jay_goldberg:
yea i think that argument

ben_bajarin:
oh

jay_goldberg:
has lost a lot of its team in the last six months because

ben_bajarin:
oh

jay_goldberg:
there aren't a lot of segments that are seeing tight capacity any more right even

ben_bajarin:
well

jay_goldberg:
in trailing

ben_bajarin:
in the

jay_goldberg:
edge like trailing she was going to be the last to come off and i think for

ben_bajarin:
yeah

jay_goldberg:
the most part we started to see a

ben_bajarin:
oh

jay_goldberg:
lot significant loosening in legacy capacity just in the last few months

ben_bajarin:
yes

jay_goldberg:
and

ben_bajarin:
yes

jay_goldberg:
the china fabsfelt

ben_bajarin:
yeah

jay_goldberg:
it two months before that

ben_bajarin:
yeah oh

jay_goldberg:
quotes quotes getting from china fas now for you know two hundred millimeter

ben_bajarin:
oh

jay_goldberg:
wafers and sixty whatever enemy sixty five the nemyrnup a hundred eighty nnimeter i mean those prices those prices are down fifty percent this year at least because they're just desperate

ben_bajarin:
yeah

jay_goldberg:
to fill fill their lines so yes they have capacity but i don't think that's a that's that's not a scarce resource and is certainly not a reliable one because i think there's a lot of still a lot of plans in the u s to add capacity

ben_bajarin:
oh

jay_goldberg:
and i think that's one of the big changes at stake places the u s industrial base especially automotive has woken up to the fact that

ben_bajarin:
yeah

jay_goldberg:
they're very dependent on china and that they're at the end of the q when it comes to capacity and they are very likely to take some steps in the next few years to address that and you know actually i'm more worried that the u s is going to have over capacity and trailing edge a year or two just based on some of the plans people has in place so

ben_bajarin:
m

jay_goldberg:
i don't think that

ben_bajarin:
m

jay_goldberg:
really that

ben_bajarin:
so

jay_goldberg:
capacity

ben_bajarin:
and then

jay_goldberg:
is long advantage

ben_bajarin:
so okay so that's a good point i think and i've sort of

jay_goldberg:
oh

ben_bajarin:
pointed this out to some things i've said on twitter like like the one area that i think it is constrained is

jay_goldberg:
yes

ben_bajarin:
is the lead edge and call that seven five ninimeter beyond obviously three dintimeteris going to be super constrained from t s m c um

jay_goldberg:
oh

ben_bajarin:
but before i make a broader

jay_goldberg:
yeah

ben_bajarin:
point about that everybody is also trying to you know call it on

jay_goldberg:
oh

ben_bajarin:
shore some manufacturing i again think this is going

jay_goldberg:
m

ben_bajarin:
to be really hard so so i guess the question is how much maybe

jay_goldberg:
yes

ben_bajarin:
leverage would china have on the manufacturing front where

jay_goldberg:
yeah

ben_bajarin:
enough companies still have to go there to have

jay_goldberg:
yeah

ben_bajarin:
some form of assembly um do you think that could still be an area maybe their lever is just going to be where we could still just pull on something that we have some leverage

jay_goldberg:
yes

ben_bajarin:
with assembly because you might not always be able to cut us out or at least everybody may not be able to cut them out

jay_goldberg:
so if i was a us company and i decided i want to stop any reliance on china

ben_bajarin:
yah

jay_goldberg:
today

ben_bajarin:
h

jay_goldberg:
where would where would i be stuck right and i think in semi it's it's maybe it's

ben_bajarin:
ye

jay_goldberg:
it's packaging and test i'm probably pretty relying on china for that at this point even if i'm getting

ben_bajarin:
yeah

jay_goldberg:
it from a us or a

ben_bajarin:
m

jay_goldberg:
south east egan company

ben_bajarin:
m

jay_goldberg:
chance our facilities in china then there's final assembly

ben_bajarin:
m oh

jay_goldberg:
um m

ben_bajarin:
ah yeah

jay_goldberg:
everything else i can probably source somewhere else but

ben_bajarin:
yeah

jay_goldberg:
that being said

ben_bajarin:
m

jay_goldberg:
those alone are a pretty significant piece of

ben_bajarin:
oh

jay_goldberg:
the pie hair right and

ben_bajarin:
yes

jay_goldberg:
it's not something it's easily easily fixed um i couldn't shut off my

ben_bajarin:
yah

jay_goldberg:
back end flows

ben_bajarin:
h

jay_goldberg:
quickly

ben_bajarin:
a

jay_goldberg:
i would be really really scary to do that

ben_bajarin:
yeah well

jay_goldberg:
so i

ben_bajarin:
and

jay_goldberg:
want

ben_bajarin:
i

jay_goldberg:
to

ben_bajarin:
think

jay_goldberg:
spend a few

ben_bajarin:
it

jay_goldberg:
years to move it

ben_bajarin:
i think it airs to

jay_goldberg:
oh

ben_bajarin:
at least where you're seeing some successful moving out of china for for those parts of assembly

jay_goldberg:
oh

ben_bajarin:
um

jay_goldberg:
oh

ben_bajarin:
is not terribly high volume areas you know p cs are doing this now every major p t o m is moving into some version of tion actually on that on that point i'm not sure if you

jay_goldberg:
yeah

ben_bajarin:
browsed the halls at c s

jay_goldberg:
yeah

ben_bajarin:
if you had time but it was in and you know i tweeted this you know years ago we should have hit you up when you were there because that would have been fun for the three of us to do this but years

jay_goldberg:
oh

ben_bajarin:
ago benedict evans and i would

jay_goldberg:
yeah

ben_bajarin:
just go in the shenzn halls and just look at like every that they were making at scale you know it went from like ea cigarettes

jay_goldberg:
yeah

ben_bajarin:
to vapors to self sticks like just stuff that was going on like all contract manufacturing

jay_goldberg:
oh

ben_bajarin:
and it was interesting because this year there was a lot less from shenzen but partially that was probably because a lot of covid i don't think they could all get out of the country but there was a lot more from you know mlasia

jay_goldberg:
yeah

ben_bajarin:
and vitnamumindia even france like other countries had shown up with contract manufacturing boots and again not that they can do that scale it was just several years ago those

jay_goldberg:
oh

ben_bajarin:
companies were never there showing contract manufacturing now they were and i just thought that was interesting

jay_goldberg:
yeah but i think that that scale part is the key right

ben_bajarin:
yeah

jay_goldberg:
you know you and you and

ben_bajarin:
yeah

jay_goldberg:
i could go out and mill up on an

ben_bajarin:
yes

jay_goldberg:
i phone and we could spend you know that could be our hobby take a year building

ben_bajarin:
well

jay_goldberg:
our own phone but that's you know that's not the hard part the hard part is doing you know four hundred million

ben_bajarin:
yeah

jay_goldberg:
of them a year

ben_bajarin:
right

jay_goldberg:
and there's no place else in the world that can do that in china so

ben_bajarin:
right

jay_goldberg:
i was working with a company two two years ago and

ben_bajarin:
oh

jay_goldberg:
it was the middle of

ben_bajarin:
oh

jay_goldberg:
covid so that was a little bit of a factor but we just couldn't get to china so we

ben_bajarin:
oh

jay_goldberg:
we wanted to manufacture our little io

ben_bajarin:
oh

jay_goldberg:
t device and we were trying to get it built

ben_bajarin:
m

jay_goldberg:
in the us and

ben_bajarin:
m oh

jay_goldberg:
it was so painful it was just so painful

ben_bajarin:
yep

jay_goldberg:
right every step of the way we had to we had

ben_bajarin:
yes

jay_goldberg:
a contract manufacturer but they could

ben_bajarin:
oh

jay_goldberg:
they just they didn't know how to do things right oh what's that we've never seen that machine before like we had

ben_bajarin:
ye

jay_goldberg:
to literally

ben_bajarin:
yes

jay_goldberg:
rent a machine for them ship

ben_bajarin:
oh

jay_goldberg:
it to their floor ourselves and then go out and train their employes how to use it and every every time there was a change it was a hassle like in shanjan none of that exists like oh you need a new machine all right i'm gonna call up the guide down the block he's got

ben_bajarin:
oh

jay_goldberg:
five at least them to me for three months it and he has a team of people who just do that just work on that machine and well you know we'll contract them out for that time

ben_bajarin:
yeah

jay_goldberg:
the depth of manufacturing experts in china

ben_bajarin:
yeah

jay_goldberg:
is immense and i think i mean i've

ben_bajarin:
ye

jay_goldberg:
been thinking about this a lot lately is just like manufacturing as a

ben_bajarin:
yes

jay_goldberg:
a competitive advantage manufacturing is a skill is something

ben_bajarin:
yep

jay_goldberg:
i don't wan to say we lost it in the us but certainly china has an immense immense advantage and we definitely don't have it for consumer lecronics

ben_bajarin:
yeah

jay_goldberg:
the way that china have

ben_bajarin:
not not

jay_goldberg:
yeah

ben_bajarin:
even close and it's tricky too

jay_goldberg:
yeah

ben_bajarin:
because a lot of organizations

jay_goldberg:
yeah yeah

ben_bajarin:
who did you know work with china for mass manufacturing at scale you know they imparted a lot

jay_goldberg:
right

ben_bajarin:
of their own proprietary

jay_goldberg:
ye

ben_bajarin:
manufacturing knowledge to aid in that efficient

jay_goldberg:
yeah

ben_bajarin:
efficiency um you know i think you ben thompson

jay_goldberg:
oh

ben_bajarin:
pointed this out in a note you know i go about

jay_goldberg:
oh

ben_bajarin:
how much apple has also invested in knowledge in to their foundaries and that collaboration has led to a situation they

jay_goldberg:
sure

ben_bajarin:
just can't get out of because they have created in some cases

jay_goldberg:
ah

ben_bajarin:
like manufacturing process that the said companies couldn't do on their own to help them scale their products and that's not going to get get moved out but apple is not the only one that done that and so you kind of again come back to this what can i do at scale what can i can't and that's why i again i start just come back to

jay_goldberg:
yeah

ben_bajarin:
what leverage could they

jay_goldberg:
oh

ben_bajarin:
could they pull in this again if

jay_goldberg:
oh

ben_bajarin:
something like an unofficial technado happened and tries to hit them with sanctions like what levers

jay_goldberg:
oh

ben_bajarin:
can they pull and i i still feel

jay_goldberg:
yeah

ben_bajarin:
like this element of manufacturing

jay_goldberg:
a

ben_bajarin:
could get really tricky

jay_goldberg:
oh

ben_bajarin:
if they wanted it i mean again they could just hoot themselves in the foot and so your argument could be well

jay_goldberg:
oh

ben_bajarin:
they won't do that there's

jay_goldberg:
yeah

ben_bajarin:
i on't know you've seen this stat but somebody gave this to me i

jay_goldberg:
yeah

ben_bajarin:
can't say who but that

jay_goldberg:
yeah

ben_bajarin:
in some regions apple is almost two percent of g d p so like if if they just were like hey we're not going to like they would shoot themselves economically in the foot to cut out cut apple off from something like that right so you could argue there's an

jay_goldberg:
yeah

ben_bajarin:
economic reason that they don't but i just keep coming back to if everything hits the fan

jay_goldberg:
yeah

ben_bajarin:
and it just gets really ugly what could they pull and i just you know at scale manufacturing is one of those things they could get really difficult with if they wanted to

jay_goldberg:
yeah i saw a staff that there

ben_bajarin:
oh

jay_goldberg:
are five million people five million people in china employed

ben_bajarin:
oh

jay_goldberg:
apple not directly but through moth players of contractors and sub contractors and so putting five million people out of work even you

ben_bajarin:
oh

jay_goldberg:
know even in china that's a big number

ben_bajarin:
yeah

jay_goldberg:
you just didn't want ess with that

ben_bajarin:
oh

jay_goldberg:
you know i've been watching i was watching this video on tik tok

ben_bajarin:
oh

jay_goldberg:
recently about this guy is a captain of a giant suez max containership he he he's in dry dock now somewhere

ben_bajarin:
yeah

jay_goldberg:
in east china

ben_bajarin:
oh

jay_goldberg:
it's just like this incredible it's basically a manufacturing there you know they're you know

ben_bajarin:
yes

jay_goldberg:
cleaning up the ship and overhauling it right so it's basically

ben_bajarin:
yeah

jay_goldberg:
a manufacturing process of refurbing a ship it's just like it's the staggeringly complicated like lasar guided everything and like hundreds

ben_bajarin:
yeah

jay_goldberg:
of people and just like just this year amount of capital invested in that and having all these skilled workers

ben_bajarin:
yea

jay_goldberg:
on site able to do the job it's you know

ben_bajarin:
yep

jay_goldberg:
and there's you know three ships

ben_bajarin:
yeah

jay_goldberg:
just like his sitting in the next and the next two dry docks over like

ben_bajarin:
yep

jay_goldberg:
that that scale of things and that's you know

ben_bajarin:
i

jay_goldberg:
that's not ships that's just very straight forward metal bending and

ben_bajarin:
yep yep

jay_goldberg:
right and you you see that too i mean wan to get really alarmed as we can look at production

ben_bajarin:
oh

jay_goldberg:
of naval ships trying to verse the u s it's just off the charts

ben_bajarin:
yeah

jay_goldberg:
ahead of us i mean our

ben_bajarin:
yeah

jay_goldberg:
speed is much bigger but there's is growing ridiculously fast because of huge huge

ben_bajarin:
yeah

jay_goldberg:
capacity to build ships in china

ben_bajarin:
yep

jay_goldberg:
so

ben_bajarin:
yep

jay_goldberg:
and so you

ben_bajarin:
well

jay_goldberg:
sort of apply the same logic applies to manufacturing

ben_bajarin:
oh

jay_goldberg:
of electronics like you know you think about it from hong kong

ben_bajarin:
oh

jay_goldberg:
to gang joe's about a hundred miles

ben_bajarin:
oh

jay_goldberg:
and there's thousands of companies and millions tens of millions of people employed and they're all doing some part of electronic manufacturing it's just

ben_bajarin:
yeah

jay_goldberg:
like it's so deep and so evolved complicated and

ben_bajarin:
yeah

jay_goldberg:
i do i just want to i want to give a shout out to patrick meg at the financial times

ben_bajarin:
yeah his

jay_goldberg:
actually

ben_bajarin:
article

jay_goldberg:
just

ben_bajarin:
is good

jay_goldberg:
published he just published on this and you know i did some he quoted me a couple times and i did some background work with him but like he really really dug into the subject an amazingly source piece just looking

ben_bajarin:
oh

jay_goldberg:
at like how china

ben_bajarin:
oh

jay_goldberg:
got so deep how apple got so deep into china and talking

ben_bajarin:
oh

jay_goldberg:
on those topics you were just mentioning like how they

ben_bajarin:
oh

jay_goldberg:
really helped

ben_bajarin:
yes

jay_goldberg:
fox

ben_bajarin:
oh

jay_goldberg:
can and it and it's some contractors

ben_bajarin:
oh

jay_goldberg:
learn how to do this

ben_bajarin:
oh

jay_goldberg:
um an apple apple special like they're clearly in a cast class of their own when it comes to these things but you think about all the other companies that aren't apple

ben_bajarin:
yeah

jay_goldberg:
who taught their chinese j v partner how to do these things and then said

ben_bajarin:
yeah

jay_goldberg:
all right you know we're

ben_bajarin:
exactly

jay_goldberg:
not do this at home we'll just let you

ben_bajarin:
yeah

jay_goldberg:
do it

ben_bajarin:
yeah now and there's plenty of

jay_goldberg:
oh

ben_bajarin:
those and you bring up this there's a other excellent point is that they're there economy at large

jay_goldberg:
oh

ben_bajarin:
relate to this is not just the manufacturing they're also very good at exporting those goods

jay_goldberg:
yeah

ben_bajarin:
from town to town on two ships on two packages at

jay_goldberg:
m

ben_bajarin:
a scale

jay_goldberg:
oh

ben_bajarin:
that no other country could do and i didn't know

jay_goldberg:
a

ben_bajarin:
this you probably know this

jay_goldberg:
eh

ben_bajarin:
but i bought you know one of those

jay_goldberg:
oh

ben_bajarin:
shipping containers for for storage in the backside of of my yard

jay_goldberg:
oh

ben_bajarin:
you know for people who don't no i have a small

jay_goldberg:
oh

ben_bajarin:
many farm and animals and i needed something to put like my tractor and a whole host of other stuff and i was like why how are we able to buy you know these

jay_goldberg:
m

ben_bajarin:
shipping

jay_goldberg:
oh

ben_bajarin:
containers for you know three s and dollars and they're

jay_goldberg:
yes

ben_bajarin:
like oh you know trying to just make some ship them over here and leave them they don't

jay_goldberg:
oh

ben_bajarin:
want them back because it just cost too much they just keep making new ones on their grounds new shipping containers on a regular basis like so there's people out just mask producing shipping containers

jay_goldberg:
yeah

ben_bajarin:
and

jay_goldberg:
oh

ben_bajarin:
all there there one time disposable usage

jay_goldberg:
oh

ben_bajarin:
i was like that's insane china doesn't want them back so we can sort

jay_goldberg:
oh

ben_bajarin:
of sell them because it just it's cheaper for them to make a new one and i was like that that's crazy

jay_goldberg:
yeah

ben_bajarin:
uh

jay_goldberg:
yeah

ben_bajarin:
h oh

jay_goldberg:
hopefully some of that will ease up now the shipping industry is rationalizing but

ben_bajarin:
m oh

jay_goldberg:
probably also means you can get them for even less now

ben_bajarin:
yeah

jay_goldberg:
yeah

ben_bajarin:
believe me there's there's there's there's there's the point is there's just so many parts of that

jay_goldberg:
right

ben_bajarin:
of their machine

jay_goldberg:
oh

ben_bajarin:
that you just you just can't do especially at the costs right i mean as long as they i would i would be curious to like this is absolute hypothetical but if china was to ever

jay_goldberg:
yeah

ben_bajarin:
become democratic would

jay_goldberg:
yeah

ben_bajarin:
that drastic but it would have to have some impact on econeconomics like they would start charging a little bit more

jay_goldberg:
let's take the politics

ben_bajarin:
oh

jay_goldberg:
out of it like a the issue of democracy or any kind

ben_bajarin:
yea

jay_goldberg:
of government change in china i think just the law of economics and demography are going to dictate

ben_bajarin:
yeah

jay_goldberg:
as in this model and we've already seen it china is no longer the low cost labor hot spot right

ben_bajarin:
ye

jay_goldberg:
china labor has gotten fairly expensive

ben_bajarin:
oh

jay_goldberg:
right certainly if you want to hire like a semi conductor engineer that's super expensive and

ben_bajarin:
yeah

jay_goldberg:
we saw that in over the last year there have been multiple

ben_bajarin:
oh

jay_goldberg:
uh labor actions strikes or what not at fox

ben_bajarin:
i

jay_goldberg:
and other plants

ben_bajarin:
yeah

jay_goldberg:
and that and that you know there's there's lots of reasons behind that but a big part

ben_bajarin:
yes

jay_goldberg:
of it is just your economics those

ben_bajarin:
yeah

jay_goldberg:
those employes want to get paid more

ben_bajarin:
oh

jay_goldberg:
and so and you

ben_bajarin:
oh

jay_goldberg:
you know add that to the fact that china's labor force is probably at the point it's shrinking now

ben_bajarin:
oh

jay_goldberg:
labor in china has gotten expensive but their advantage

ben_bajarin:
right

jay_goldberg:
is not low cost labor any more that's why

ben_bajarin:
yes

jay_goldberg:
textiles are moving to bung dash it in places like that

ben_bajarin:
right

jay_goldberg:
because it's lower it's much lower cost labor so

ben_bajarin:
oh

jay_goldberg:
i think we're heading to that point now where where yes china's i mean i think that's the root of all this is china is looking for its next

ben_bajarin:
oh

jay_goldberg:
leg in development

ben_bajarin:
oh

jay_goldberg:
they've done really well on thirty forty years being low cost labor

ben_bajarin:
uh

jay_goldberg:
they make that out and now

ben_bajarin:
oh

jay_goldberg:
they need to find new sources of fundamental

ben_bajarin:
yeah

jay_goldberg:
economic

ben_bajarin:
right

jay_goldberg:
growth and they have to move up the value chain let's sort of right but the problem once you get to a certain point in that it becomes much harder

ben_bajarin:
right

jay_goldberg:
and i think to some degree they're a little bit stuck

ben_bajarin:
yeah no i agree with that so i want to i want to end

jay_goldberg:
oh

ben_bajarin:
on this this topic because it's something i've thought about and i'm sort of curious your take um you know i wrote

jay_goldberg:
yeah

ben_bajarin:
this article a while back called

jay_goldberg:
yeah

ben_bajarin:
the great tech wall of china and it was really just me pointing out

jay_goldberg:
oh

ben_bajarin:
you know that they are continually

jay_goldberg:
yeah oh

ben_bajarin:
trying to keep themselves in a box

jay_goldberg:
oh

ben_bajarin:
or at lea do a lot of stuff locally keep people out

jay_goldberg:
she

ben_bajarin:
but to some degree

jay_goldberg:
oh oh

ben_bajarin:
they're having or just not having the same success taking their

jay_goldberg:
ye

ben_bajarin:
whatever they're i p is or product or solutions as global as possible

jay_goldberg:
oh

ben_bajarin:
and so i always thought about this so what what's the broad

jay_goldberg:
oh

ben_bajarin:
how dependent would the chinese ecosystem on like let's just assume

jay_goldberg:
m

ben_bajarin:
they figure out cenis

jay_goldberg:
yah

ben_bajarin:
they figure

jay_goldberg:
yes

ben_bajarin:
out you know

jay_goldberg:
oh

ben_bajarin:
more in memory and there's completely

jay_goldberg:
oh

ben_bajarin:
self sustainable well for from an economic standpoint how critical is it that they take those technologies have global success or are they totally fine just being self sufficient to their own their own content

jay_goldberg:
no their whole economic model is premised on

ben_bajarin:
yeah

jay_goldberg:
exports and so if

ben_bajarin:
oh

jay_goldberg:
they move to self

ben_bajarin:
yeah

jay_goldberg:
entire self sufficiency with assuming the other side of that trade agreement reacts to

ben_bajarin:
yeah

jay_goldberg:
that and cuts them off

ben_bajarin:
yeah

jay_goldberg:
china's

ben_bajarin:
hm

jay_goldberg:
economy would be a big mess like this is this is a very

ben_bajarin:
m

jay_goldberg:
serious problem

ben_bajarin:
oh

jay_goldberg:
with with chinese economy right now is incredibly

ben_bajarin:
oh

jay_goldberg:
export dependent

ben_bajarin:
m

jay_goldberg:
if you look at like the domestic

ben_bajarin:
m

jay_goldberg:
chinese economy is in some ways dominated

ben_bajarin:
yeah

jay_goldberg:
by the big state own firms even and the

ben_bajarin:
of course

jay_goldberg:
not so big ones too right

ben_bajarin:
sure

jay_goldberg:
but

ben_bajarin:
sure oh

jay_goldberg:
but they're they're all losing money hand

ben_bajarin:
oh

jay_goldberg:
over fist

ben_bajarin:
yeah oh

jay_goldberg:
none of them are profitable

ben_bajarin:
yeah

jay_goldberg:
and they make their they make their it's viable because they get cheap loans from the banks

ben_bajarin:
yeah oh

jay_goldberg:
and the banks are propped up because they have

ben_bajarin:
m

jay_goldberg:
huge pools of us ollers

ben_bajarin:
m

jay_goldberg:
but they've gotten from the export economy

ben_bajarin:
yeah

jay_goldberg:
and so if if china export engine stalls

ben_bajarin:
yeah

jay_goldberg:
they have to sort of re define their woe economy they're probably on a have to do it anyway

ben_bajarin:
i

jay_goldberg:
but as it stands now they're it's all about exports

ben_bajarin:
yeah

jay_goldberg:
yeah

ben_bajarin:
so so in this case like like so again come back to like semi so a part of for this investment to make sense

jay_goldberg:
yeah

ben_bajarin:
or for them to onshoresemis it can't just be for local prod they need other other people in the world buy those products which means they have

jay_goldberg:
ye

ben_bajarin:
to be competitive or

jay_goldberg:
oh

ben_bajarin:
or this this model is

jay_goldberg:
yeah

ben_bajarin:
not going to work

jay_goldberg:
yeah that's right that's right i mean i think

ben_bajarin:
you

jay_goldberg:
most economists in china and a lot of

ben_bajarin:
no

jay_goldberg:
serious economists outside china recognized

ben_bajarin:
eh

jay_goldberg:
that china has to shift its economy from a very investment driven place where it is

ben_bajarin:
m

jay_goldberg:
today to a consumer

ben_bajarin:
m

jay_goldberg:
driven one so i would argue china is better off not worrying about self self reliance on semi and

ben_bajarin:
yeah

jay_goldberg:
instead focus on growing its

ben_bajarin:
oh

jay_goldberg:
domestic demand growing in domestic assumption because because that ultimately we'll be the big the best way to save their domestic companies a prop up their domestic economy because once you once you start to see a big domestic market supporting local companies that will that will shift these all these trade equations

ben_bajarin:
yeah

jay_goldberg:
incredibly

ben_bajarin:
right

jay_goldberg:
and and you know there's some serious structural changes that that will entail but i think to make it

ben_bajarin:
yes

jay_goldberg:
again let's bring it back to sami's one place where starting to see that a little bit is around electric vehicles this is this is my big big topic of the year is

ben_bajarin:
m

jay_goldberg:
chinese electric vehicle makers are

ben_bajarin:
oh

jay_goldberg:
on fire they're all growing twenty

ben_bajarin:
oh

jay_goldberg:
fifty hundred per cent a

ben_bajarin:
yeah

jay_goldberg:
year

ben_bajarin:
oh

jay_goldberg:
um and they need a lot of semi and i think there's a lot of china semi industry today domestic parts are going into china's

ben_bajarin:
h

jay_goldberg:
auto industry

ben_bajarin:
m

jay_goldberg:
and if you know it's

ben_bajarin:
yes

jay_goldberg:
only eves are probably twenty percent of china's cars if they get to

ben_bajarin:
yeah

jay_goldberg:
eighty per cent and that's enough to support a pretty pretty healthy robust fantisimican fair industry

ben_bajarin:
that's a good point

jay_goldberg:
oh

ben_bajarin:
oh interesting so do you do you think there will ever come another scenario like we saw

jay_goldberg:
ah

ben_bajarin:
with with a where

jay_goldberg:
m oh

ben_bajarin:
are product companies there just get cut off from the rest of the world

jay_goldberg:
oh

ben_bajarin:
products because because i mean again

jay_goldberg:
a

ben_bajarin:
i intend to agree with you right if they don't don't worry about on sharing semi as long as

jay_goldberg:
oh

ben_bajarin:
you can get it from other places what happens

jay_goldberg:
oh

ben_bajarin:
if they can't get it from other places and that completely destroys their consumer lecture ex industry as a whole outside of a few pockets like you point out so that's why i kind of go back to how much of this is an attempt at a defensive you know we need to do this just in case versus the reality of could they truly get cut off from from from components from the rest of the world

jay_goldberg:
i think that's the big the big question i still have about the us government's intentions are they are they just try do cut off china's military and it's advanced compute capacities or are they trying to stifle the entire chinese economy

ben_bajarin:
right

jay_goldberg:
and if you talk to most us government people to say don't know it's just the milit but no one in china

ben_bajarin:
yeah

jay_goldberg:
believes that every one in china assumes that

ben_bajarin:
oh

jay_goldberg:
it's whole chinese economy and cars are one of those places where it's going to become very very clear very soon what's going to happen because you know the us

ben_bajarin:
oh

jay_goldberg:
government has this sanctions weapons and you listen to those policy people talk they're pretty excited about this shiny new toy they have and

ben_bajarin:
oh

jay_goldberg:
so i'm i

ben_bajarin:
oh

jay_goldberg:
think it's very reasonable to assume that here

ben_bajarin:
m

jay_goldberg:
on to be a lot more companies added to the energy

ben_bajarin:
m

jay_goldberg:
list or whatever stub list that you know leads into that and very

ben_bajarin:
yeah

jay_goldberg:
likely that some of those will you really

ben_bajarin:
ye

jay_goldberg:
crimp you do that enough times you can really crimp

ben_bajarin:
oh

jay_goldberg:
lots of other parts of china's economy not just

ben_bajarin:
exactly

jay_goldberg:
the export electronic stuff but the automotive stuff

ben_bajarin:
exactly

jay_goldberg:
i mean what if if the world has autonomy somebody

ben_bajarin:
yes

jay_goldberg:
really have autonomous vehicles in china

ben_bajarin:
yes

jay_goldberg:
cannot get access to advance semi conductors for any of

ben_bajarin:
exactly

jay_goldberg:
its autonomous vehicle companies that's it they're done

ben_bajarin:
yeah

jay_goldberg:
and so

ben_bajarin:
i mean and that's the thing is like you know us us companies who would have dependent on that revenue don't want that to happen but i agree with you that that's that's the risk this i'm sure is a topic will revisit multiple times

jay_goldberg:
yeah

ben_bajarin:
even though it it stresses me out and just makes me want to accelerate digging a bunker in my back yard

jay_goldberg:
really it's very stressful it really is stressful

ben_bajarin:
all right well good chat in this episode

jay_goldberg:
oh

ben_bajarin:
thanks everybody for listening and can continue to give us your thoughts and feedback and we'll talk to you next time

jay_goldberg:
oh by