Valuetainment - October 10, 2023


Semiconductor Chip War： America's Edge Over China

Topics
semiconductors semiconductor value chain
Hosted by
Patrick Bet-David
Mentioned
Joe Biden Trump Representative McCaul Doris Matsui John Cornyn Mark Warner Tim Cook Chamorro Fabulous Sudoku Darren Pink
Trillion Dollar Consulting Industry That Rules The World - The McKinsey, BCG & Bain Influence ISRAEL vs PALESTINE： Did WW3 Just Begin？ Everything You Need to Know

Episode Stats


Length

24 minutes

Words per minute

192.01

Word count

4,665

Sentence count

433

Harmful content

Misogyny

3

sentences flagged

Toxicity

1

sentences flagged

Hate speech

23

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Semiconductors are used in almost every aspect of our lives. They run everything from cars to toothbrushes to toothpaste, and they're everywhere. In this episode, we discuss how important it is to know about this industry, and which countries are making the most chips.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Toxicity classifications generated with s-nlp/roberta_toxicity_classifier .
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
Topics generated with Qwen2.5-3B-Instruct.
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.160 Why is everybody talking about semiconductor chips, and why should you know about it?
00:00:04.540 Because your world revolves around semiconductor chips.
00:00:08.620 You want to know why?
00:00:09.380 You know the car you drive?
00:00:10.540 How many semiconductor chips do you think's in your car?
00:00:13.180 You know at the low, you know what that number is?
00:00:15.040 Not 14.
00:00:16.120 Maybe you said 82, 222.
00:00:18.440 What if I told you the least, it's 1,400 chips all the way up to 3,000,
00:00:24.260 and the average chip could be around pennies on a dollar to 50 bucks.
00:00:27.180 And on top of that, because of this challenge you're having,
00:00:30.500 with not enough of these semiconductor chips being made,
00:00:33.040 car manufacturers have changed their lead time from taking three to four months to build a car
00:00:37.580 to 10 to 12 months to build a car.
00:00:39.600 It's such a big issue in that automotive industry that they've said from 2021 to 2023,
00:00:44.340 they're taking 20 million cars off the conveyor belt.
00:00:46.880 They just can't hit the timeline.
00:00:47.940 And by the way, you know how long it takes to build a chip?
00:00:50.100 Anywhere between 10 to 12 weeks, all the way up to 20 weeks for the complicated chips.
00:00:54.580 And in 2021, you want to know how many chips we built?
00:00:56.780 1.141 trillion chips.
00:00:59.780 So look, I don't want to give you information overload just on the intro.
00:01:02.980 All I want you to know is this is something we have to be aware of
00:01:06.160 because our cars don't run without any chips, and a lot of things don't.
00:01:10.200 And today, it's become a political issue between China, Taiwan, U.S., and many different places.
00:01:14.480 We're going to talk about that today.
00:01:16.180 Okay, so if you get value out of this video, give it a thumbs up and subscribe to the channel.
00:01:19.140 Okay, so semiconductors, right?
00:01:21.080 I mean, you've got better things to be thinking about,
00:01:22.620 but this is something we all need to know a lot about.
00:01:24.660 And semiconductors, it's not about everybody.
00:01:26.820 So it's Taiwan.
00:01:28.080 No, no, it's China's the leader.
00:01:29.560 But are they the leader for selling it or buying it?
00:01:32.100 And which chips are they the leaders in?
00:01:33.980 Because there's levels to this game of level of difficulty.
00:01:36.940 You know, you play a game.
00:01:38.240 It's like I'm playing low-level, easy, and then there's difficult, like Sudoku,
00:01:41.720 and then there's very difficult, and then there's, like, diabolical level of difficulty.
00:01:45.420 It's the same thing with chips.
00:01:46.460 So I'll break it down for you where you'll see what products use these chips
00:01:50.940 and then what countries are building the most, who has an edge, who's a non-competitor,
00:01:56.980 and then by the end, we'll give you some feedback on what this is going to impact the world,
00:02:01.200 whether it's politically or economically.
00:02:03.080 So let's first talk about what things we use semiconductor chips in.
00:02:06.000 Number one, computing, desktop computers, laptop servers, tablets, mainframes, supercomputers.
00:02:10.680 When it comes down to communication, smartphones, landline phones, routers, modems,
00:02:14.900 satellite communication devices, consumer electronics.
00:02:17.320 We use it in televisions, radios, camera, audio players, game consoles, smart home devices,
00:02:22.300 wearable tech.
00:02:22.960 When it comes down to transportation, cars, airplanes, trains, marine vessels, electric bicycles
00:02:28.300 and scooters, healthcare, medical imaging equipment like MRI, CT, X-ray, etc., hearing
00:02:34.000 gates, pacemaker, insulin pumps, lab analysis equipment.
00:02:37.280 When it comes down to industrial and automation, factory automation equipment, robotics, process
00:02:41.820 control systems.
00:02:42.700 When it comes down to military and defense, missiles, missile control systems, drones,
00:02:46.960 radar, sonar systems, communication equipment.
00:02:49.220 When it comes down to energy, solar panels, wind turbines, smart grids.
00:02:52.980 When it comes down to financial, ATMs, point of sale terminals.
00:02:55.860 When it comes down to agriculture, precision framing equipment, drones for crop monitoring.
00:02:59.800 When it comes down to retail, barcode scanners, inventory management system.
00:03:04.320 To most of us, we thought it's only cars, right?
00:03:06.240 When you look at this, you're like, all of these different things.
00:03:08.120 I'm not even done yet.
00:03:09.180 When it comes down to science and research, particle accelerators, telescopes, space probes.
00:03:13.740 When it comes down to network and data centers, network switches, data storage.
00:03:17.940 When it comes down to other miscellaneous things, watches, digital calculators, GPS devices.
00:03:22.620 I'll stop there.
00:03:23.360 I can continue.
00:03:24.380 But you get the idea.
00:03:25.400 They're used everywhere.
00:03:26.800 There's a reason why it's 1.141 trillion chips built in 2021.
00:03:34.200 So look, I've been in the financial industry since 9-11, the day before 9-11.
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00:05:24.560 So, I want to show you this chart that BCG Consulting firm did during COVID because everybody was worried about semiconductors
00:05:30.680 to show where America was leading the way with semiconductor chips in 1990 versus today.
00:05:36.780 If you look at this chart with me, the baby blue, look at the top left of the screen, the 37%.
00:05:41.900 That used to be U.S.'s market share of building semiconductors.
00:05:47.040 And watch what happened every year.
00:05:48.460 Every year, it got lower.
00:05:49.880 And China was at 0%.
00:05:51.200 But if you look at the charts, China started going higher and higher because they realized they have to compete in this area.
00:05:56.220 And this is projecting that by 2030, China will be at 24% and will be at 10%.
00:06:02.220 But it doesn't really tell the whole story.
00:06:04.360 So, now, when the average person looks at this, they say, oh, my gosh, this is terrible.
00:06:08.960 BCG, you've got to respect them.
00:06:10.860 China's taking over with chips.
00:06:12.160 What are we going to be doing?
00:06:13.140 They have to explain.
00:06:14.360 There is a level of difficulty to chips.
00:06:17.340 So, did China commit to building the easy chips or the hardest chips?
00:06:21.840 We're going to learn that today.
00:06:22.800 By the way, Carly Fiorina, who was a former CEO of Hewlett-Packard and she ran for president, said the following about China.
00:06:30.440 Although the Chinese are a gifted people, innovation and entrepreneurship are not their strong suits. 1.00
00:06:35.240 Their society, as well as their education system, is to homogenize and control to encourage imagination and risk-taking.
00:06:42.280 Because in a communistic society, you don't create things.
00:06:46.120 You can steal other ways of people are doing things, but you don't create it.
00:06:49.400 So, innovation, it doesn't, why should I wake up in the morning and innovate something?
00:06:52.800 There's no incentive for it because that's not the system that they have in China.
00:06:56.580 So, what does all this stuff have to do with America?
00:06:58.340 Here's what it has to do with America.
00:06:59.860 President Trump and Joe Biden, if there's one thing they're both on the same page with, where Biden pursued President Trump's ideas, is semiconductor chips.
00:07:09.560 Let me tell you the back story of this.
00:07:11.040 In 2020, recommendation of President Trump's national security team, Representative McCall, first introduced the Chips for America Act.
00:07:19.400 Again, in 2020, alongside Representative Doris Matsui, a Democrat from California, Senators John Corrin, Republican from Texas, and Mark Warner, another Democrat from Virginia.
00:07:30.480 This bill was signed into law August of 2022 under Joe Biden.
00:07:35.100 So, it started under Trump, but got into law under Joe Biden.
00:07:38.440 This has nothing to do with Democrat or Republican.
00:07:41.120 They both realize we have to compete in this space.
00:07:43.360 So, the whole idea behind it is that it makes nearly a $53 billion investment in U.S. semiconductor manufacturing, research, and development, and workforce.
00:07:50.980 The law also creates a 25% tax credit for capital investments in semiconductor manufacturing.
00:07:57.160 Okay, so let me give you the timeline of what happens from October 2022 till today.
00:08:01.040 First, the U.S. imposed new export restrictions on advanced semiconductors and chip manufacturing equipment to prevent American technology from advancing China's military powers.
00:08:11.000 Okay, export, we're not committed to that because we're making them stronger.
00:08:14.840 Two, the rules require U.S. chip makers to obtain a license from the Commerce Department to export certain chips used in advanced artificial intelligence calculations and supercomputing technologies for modern weapon systems.
00:08:27.480 Then, restrictions were designed to slow China's military advance and prevent it from developing advanced technologies that could be used for military purposes.
00:08:34.540 The rules will also allow the U.S. to block foreign-made chips that are manufactured with U.S. technology.
00:08:40.380 This prohibits U.S. citizens from supporting China's advanced chip development.
00:08:44.460 The Commerce Department defines U.S. persons to include U.S. citizens, permanent residents, people who live in the U.S., and American companies.
00:08:51.000 Dane Chamorro, Washington, D.C.-based head of global risk and intelligence at business consulting firm Control Risk, said,
00:08:57.100 The technology is nothing without the people there to make it work.
00:09:00.680 For many senior executives at Chinese companies, the rule will likely force them to decide between their jobs and their U.S. citizenship or permanent resident status.
00:09:08.800 Obviously, you're kind of cornering them to make a decision. It's a power play here.
00:09:12.460 The restrictions have had a significant impact on China's semiconductor industry.
00:09:16.900 China is the world's largest consumer of semiconductors, but it produces only about 15% of semiconductors it uses.
00:09:22.760 The U.S. restrictions have made it more difficult and expensive for Chinese companies to get semiconductors they need.
00:09:28.460 The restrictions have also slowed China's development of advanced technologies.
00:09:31.820 For example, China is developing its own AI industry, but advancing chips are critical for AI development, and the U.S. restrictions, again, have made it more difficult for Chinese companies to get the chips they need.
00:09:43.040 This is why the restrictions have had a significant impact on China's semiconductor industry and its development of advanced technologies.
00:09:49.400 So, in other words, four different things this had an impact on China.
00:09:53.360 Number one, slowed China's military advances.
00:09:55.600 Number two, slowed China's development of advanced technologies such as AI.
00:09:59.200 Number three, increased the cost of semiconductors for Chinese companies.
00:10:02.440 And number four, disrupted supply chain and caused semiconductor prices to increase.
00:10:08.160 So, now that brings us to May of 2023.
00:10:10.900 Here's what happens.
00:10:11.720 U.S., Mexico, and Canada gathered in D.C. for the North American Semiconductor Conference called the NASC.
00:10:18.180 Then, in June, the Netherlands implements export restrictions on advanced semiconductor equipment amid U.S. pressure to cut China off from key chip-making tools.
00:10:27.360 The Netherlands, which is the home to one of the most important semiconductor companies in the world, called ASML, Advanced Semiconductor Materials Lithography.
00:10:36.080 ASML makes machinery that is required to produce the most advanced chips.
00:10:40.500 Remember earlier we talked about there's levels to the chips?
00:10:43.060 This is a part where Netherlands has an edge because they know how to produce some of the most advanced chips in the world.
00:10:48.680 China doesn't have this.
00:10:49.760 So, while China is amongst the top semiconductor producers, it is not capable of producing the most advanced chips.
00:10:56.440 So, this brings us to July 2023, where Japan aligns with U.S. restricting 23 types of equipment, machines that deposit films on silicon wafers to devices that etch out the microscopic circuits of chips that could have military uses.
00:11:12.360 And in August of 2023, President Biden banned U.S. investment into certain China tech sectors that develop or produce semiconductor manufacturing, AI, machine learning, and quantum computing.
00:11:25.780 This ban prohibits private equity and venture capital investment flowing into sectors that President Biden said helped Beijing gain a military advantage.
00:11:34.900 The development of more sophisticated weapon systems, breaking up cryptographic codes, and other applications that could provide these countries with military advantages.
00:11:44.020 The Biden administration argues that China is using U.S. technology to develop its military capabilities and to undermine U.S. national security.
00:11:51.740 So, this is very important because for the longest time, you would hear these big, you know, private equity guys or investment bankers or hedge fund managers talking about,
00:12:00.460 we're making investments into China because China is the future.
00:12:02.880 All these economists would talk about China and how much foreign money was being invested into China.
00:12:07.380 So, if you look at this chart, look what it shows us.
00:12:09.900 This is China's state administration of foreign exchange.
00:12:12.960 So, look at the black bar that represents the net foreign direct investment into China.
00:12:18.540 This is from 1998.
00:12:19.760 Pink is the outbound.
00:12:21.340 So, outbound, money they're sending out.
00:12:23.860 Yellow is inbound, money they're receiving.
00:12:26.440 Look what it's looking like.
00:12:27.640 It goes all the way up.
00:12:28.920 It peaks in around 2013.
00:12:31.520 And then all of a sudden, if you come to today, look at the black bar, you'll notice it is the lowest it's been since 1998.
00:12:39.660 You know what this means?
00:12:40.920 People are no longer investing in China the way they used to because they don't trust the government anymore.
00:12:46.340 This is very, very big news because it's not just America against China.
00:12:50.780 It's the world against China because they're learning about their motives. 0.93
00:12:55.620 So, now, the reason why that's important because if people don't want to collaborate with them and they don't make the expensive types of chips,
00:13:03.100 where are they going to get it from if no one wants to give it to you because they're worried about you?
00:13:05.980 That's a very problematic foreign policy they're going to be struggling with here very soon.
00:13:10.060 So, let's take a look at what chips they make.
00:13:12.280 A little complicated, but stay with me.
00:13:13.740 We're going to learn through this together.
00:13:15.520 But you'll see where China leads and lacks on this chart.
00:13:19.000 So, this chart here is from the percent of global supply.
00:13:22.680 This is from Bloomberg 2021.
00:13:24.620 It's the market share of global semiconductor supply by subsector and country in 2020.
00:13:30.640 So, if you look at the colors at the top, you'll see U.S. in blue, Taiwan is yellow, Korea is orange, Japan is red, China is burgundy, and Europe is green.
00:13:40.740 So, now, then you see the charts.
00:13:42.340 See to the left where it says subsector tech level.
00:13:44.880 This is the level of difficulty.
00:13:47.180 Okay?
00:13:47.640 So, OSAT, which is an outsourced semiconductor assembly and test.
00:13:52.040 It's a manufacturing vendor, provides third-party IC packaging and test services.
00:13:56.160 Guess what?
00:13:56.800 Lowest level of test.
00:13:57.940 It's not that difficult.
00:13:58.980 Anybody can do it.
00:13:59.760 China spend their time building what is the easiest thing to build. 0.97
00:14:04.840 So, what are Fabulous chip makers?
00:14:06.160 These are companies that produce semiconductors for use in various electronics.
00:14:09.800 Digital cameras, smartphones, new technology, sophisticated smart cars.
00:14:13.640 Fabulous means that the company designs and sells the hardware and semiconductor chip, but does not manufacture the silicon wafers or chips used in its product.
00:14:23.640 Instead, it outsources the fabrication to a manufacturing plant or foundry.
00:14:30.240 Examples of companies that do this, Qualcomm, Nvidia, AMD, and others.
00:14:35.180 If you look there, US is leading the way more than 50%, more than 60%, then it's Taiwan, then it's China, and nobody else.
00:14:43.000 But if you go to IDM, notice China's not on that list.
00:14:46.940 And IDM, you ready?
00:14:48.040 This is the difficult type of chips to make that companies like Intel, Samsung, and Texas Instruments produce.
00:14:54.640 This is an integrated device manufacturer, IDM, a semiconductor company which designs, manufactures, and sells circuit IC products.
00:15:05.000 Look what China's there, non-existent.
00:15:07.540 US, pretty much 50%.
00:15:09.400 Taiwan, very small.
00:15:11.220 Korea comes in here, South Korea. 0.99
00:15:13.160 And then Europe shows up with the green.
00:15:14.860 Remember earlier we talked about Netherlands?
00:15:16.760 This is where you see the green?
00:15:18.080 Europe.
00:15:18.680 Then we go to foundry.
00:15:20.300 Foundry model is a microelectronics engineering and manufacturing business model consisting of a semiconductor fabrication plant.
00:15:29.140 So, for example, foundries are global foundries, TSMC, UMC.
00:15:34.700 These are the types of companies that specialize in foundry model.
00:15:38.020 If you look at US, this is the least area that US doesn't remember.
00:15:41.760 The level of difficulty for this is very high.
00:15:44.400 Then yellow is Taiwan.
00:15:46.040 This is where Taiwan dominates in this section.
00:15:49.640 Then you have Korea. 0.52
00:15:50.960 Then again, China, small.
00:15:52.820 Europe, non-existent.
00:15:53.940 And then when it comes down to the materials, you'll notice materials here.
00:15:56.680 It's pretty much evenly through.
00:15:58.100 In this area, Japan leads the way. 0.97
00:16:00.120 Then you have US.
00:16:01.280 Then it's a bunch of different companies.
00:16:03.280 And then for equipment, US is leading the way.
00:16:05.920 Then you go to Japan.
00:16:07.040 Then you go slightly China.
00:16:08.680 Then Europe here is doing what they're doing.
00:16:10.920 So, if you look at this, listen, we're all learning new words here.
00:16:13.840 I'm not in the semiconductor business.
00:16:15.300 I'm just realizing this is happening.
00:16:16.660 We need to learn together.
00:16:17.760 Here's what you'll notice.
00:16:19.300 Everybody here on this list, except for China, they're all allies.
00:16:24.900 Remember, enemy of an enemy is a friend.
00:16:30.140 There's a lot of guys here that are allies to us.
00:16:32.680 They're not even enemies.
00:16:33.720 They're all allies.
00:16:34.380 But for China, none of these guys want to do business with them.
00:16:38.060 They're pulling money out.
00:16:39.500 This is catastrophic for China. 0.96
00:16:41.340 This is not good for them.
00:16:42.460 So now, let's talk about sales to see where sales rank with US and other countries when
00:16:46.660 it comes down to semiconductors.
00:16:47.880 If you look at this chart from CSIS, they did this study in 2022.
00:16:52.240 This shows semiconductor sales by country in billions in 2021.
00:16:56.900 Here's what you'll notice.
00:16:58.520 US, number one in the blue, 46% of it all is with US.
00:17:05.200 Then it goes second, South Korea, 21%.
00:17:08.900 Then it goes to Japan, 9%. 0.94
00:17:12.660 Taiwan, 8%.
00:17:15.020 And if you even put the rest of the world at 9%, last place here, China, 7%. 0.98
00:17:20.780 So it's important to know and remember, remember during COVID where we're like all freaking
00:17:24.320 out over chips.
00:17:24.960 Oh my God, we need China for semiconductors.
00:17:27.040 And everybody went to China and then kind of we realized China was using that as a way
00:17:31.180 to bully everybody.
00:17:32.300 It's kind of like not a good feeling.
00:17:33.600 And if you treat customers like that, like they desperately need you, they're not going
00:17:37.460 to forget that when they no longer need you.
00:17:39.320 Look at this chart here.
00:17:40.820 Okay.
00:17:41.340 This is from Federal Reserve Bank of Dallas.
00:17:43.520 Okay.
00:17:44.080 US Census Bureau shows the share of total US trade.
00:17:47.600 If you look at the colors, blue is Canada, green is Mexico, red is China.
00:17:53.200 Obviously, if you go back to the 90s, China was last, then it was Mexico green, then it's
00:17:56.780 Canada at the top.
00:17:57.700 Come all the way down to 2020 when COVID happens.
00:18:00.040 China drops once US tariffs on China exports announced during Trump.
00:18:05.140 If you remember when Trump put those tariffs on exports, boom, they took a hit.
00:18:09.220 It went all the way down.
00:18:10.440 Then COVID happens.
00:18:11.640 The US is like, oh my God, even with these tariffs, we need China.
00:18:14.840 Look at what happens to red with China. 0.74
00:18:16.380 Boom, skyrockets.
00:18:17.700 But then even after COVID disappears, we gradually move away from China and we start going to Mexico
00:18:23.080 out of all the places.
00:18:24.880 Mexico?
00:18:25.680 Yep, Mexico.
00:18:26.780 This was, again, not a good look for China.
00:18:30.220 So this next part is going to get a little bit more complicated, but I'm going to simplify
00:18:33.560 it.
00:18:33.820 If you want to read all of it, we'll put the link below for you to study the research that
00:18:37.400 they did.
00:18:37.780 But here's what it is, the value chain, the process of building a semiconductor, right?
00:18:41.220 So some may do one part, but not all the other parts, and they kind of work together.
00:18:44.820 So let me break this down for you.
00:18:45.940 So to simplify the depiction of the semiconductor value chain, first you have design.
00:18:50.400 This is microprocessor design, which underneath it, you'll see design software, electronic
00:18:54.860 design automation, and then you see intellectual property, right?
00:18:58.140 License arm architecture.
00:18:59.440 That's number one.
00:19:00.220 Number two, you have fabrication.
00:19:01.880 This is process wafers.
00:19:03.340 That's when you need materials and chemicals, raw silicon wafers, and neon.
00:19:07.500 And by the way, a lot of neon.
00:19:08.580 You know where most of neon is produced?
00:19:10.040 In Ukraine.
00:19:11.020 Believe it or not, Ukraine has a lot of neon, right? 0.69
00:19:13.480 And manufacturing equipment, lithography tools.
00:19:16.380 Remember earlier we talked about that company in Netherlands, lithography.
00:19:19.700 Netherlands, that's kind of when this is being produced.
00:19:21.660 And last but not least, you have assembly and test, which is package microprocessor unit.
00:19:26.620 So forget about having to learn all this stuff.
00:19:28.860 What we want to do is, who are the biggest sellers and buyers of all of this?
00:19:33.900 Whoever is the biggest seller has the most control.
00:19:36.540 Whoever is the biggest buyer relies on everybody else.
00:19:40.180 Guess if you were to guess who's the biggest buyer and who's the smallest seller.
00:19:44.440 Wait till you see this chart.
00:19:45.420 Let's take a look.
00:19:45.960 All right, so let's take a look at the total semiconductor manufacturing equipment sales
00:19:49.920 and purchases 2021 in billions.
00:19:52.540 Look at the seller's color.
00:19:54.600 China is green. 0.91
00:19:56.440 North America is blue.
00:19:58.940 Japan is baby blue. 0.66
00:20:01.020 The rest of the world is purple.
00:20:03.240 South Korea is yellow.
00:20:04.800 You see the smallest color there, green?
00:20:06.560 What is it for sellers?
00:20:07.700 The smallest one is China. 0.98
00:20:09.480 Look how small they are in sellers, but look how big they are when it comes down to buyers.
00:20:14.440 They need it, but they don't know how to sell it because they don't know how to produce it.
00:20:18.880 The biggest seller is U.S.
00:20:20.520 Great.
00:20:21.380 Then it's rest of the world and Japan tied for second.
00:20:24.820 And obviously, you know, second to the last is South Korea.
00:20:27.980 Then China is last. 0.79
00:20:29.060 Biggest buyer, China.
00:20:30.660 Then it's Taiwan.
00:20:31.860 Then it's South Korea.
00:20:33.200 Then it's Japan, rest of the world, and North America.
00:20:35.320 Okay, so now let's break it down.
00:20:36.500 If we go to wafer fabrication equipment sales and purchases, here's what you'll see again.
00:20:41.040 Smallest seller, China.
00:20:42.300 Look how small it is.
00:20:43.080 Again, they don't have leverage here.
00:20:45.520 Then it's South Korea.
00:20:46.760 Then it's Japan.
00:20:47.500 Then rest of the world.
00:20:48.200 Then U.S. dominates in the area of selling.
00:20:51.300 Biggest buyer, China.
00:20:52.880 Then South Korea.
00:20:53.800 Then Taiwan.
00:20:54.780 Then it's everybody else.
00:20:55.640 Then if we look at assembly equipment sales and purchases, again, different categories.
00:20:59.540 If you look at the biggest seller here, it's the rest of the world.
00:21:03.520 Look how small China is.
00:21:04.940 Zero, pretty much.
00:21:06.400 Then you got Japan as the second largest and everybody else. 0.96
00:21:09.120 And by the way, U.S. is not big here.
00:21:10.980 They're small when you look at this.
00:21:12.620 But they're a very small seller and they're a very small buyer here.
00:21:15.940 And last one, remember the whole test equipment and that whole process we looked at?
00:21:19.400 This is the third step.
00:21:20.380 Testing equipment sales and purchases.
00:21:22.400 Biggest seller is Japan.
00:21:24.640 North America is second.
00:21:26.000 Rest of the world, South Korea. 0.96
00:21:27.480 You can't even see China there.
00:21:29.260 Look at China. 0.88
00:21:30.320 Can't even see them.
00:21:31.340 By the way, biggest purchasers here is Taiwan.
00:21:33.960 Then China.
00:21:34.760 So a few takeaways when we're going through these numbers together.
00:21:37.220 You're going to have your own thoughts.
00:21:37.920 I'll give you mine.
00:21:38.900 China's in trouble here.
00:21:41.000 So one, I sit there and I realize, okay, things are not as bad as the rest of the world thought
00:21:45.660 when it comes down to this.
00:21:47.020 Two, China has to be friendly.
00:21:49.800 China has to come and be nice to you because they don't have leverage. 1.00
00:21:52.560 If you look at the game of leverage, China does not have it here.
00:21:55.700 The rest of the world does.
00:21:57.060 So China has to be nicer.
00:21:58.740 But it's kind of confusing when it comes down to China because China just a couple weeks ago
00:22:02.520 said, hey, Apple, no more iPhone, government employees can't use iPhone, they're banned
00:22:07.580 from using iPhone, to the point where Tim Cook had to go meet with them and say, guys,
00:22:10.920 what are we doing? 0.73
00:22:11.660 We've been partners for a while, but China's not dumb. 0.99
00:22:14.580 China's saying, yeah, we're really partners, really partners, yet you started producing
00:22:18.620 your phones in India and you're making your phones over there.
00:22:21.380 Hey, what happened with the phones you're building in India?
00:22:23.440 I hear they're warming up and they're getting too hot, these iPhone 15s.
00:22:26.700 So remember, this is our leverage game.
00:22:28.420 China's going to use that. 0.97
00:22:29.320 So China's also not playing, oh my God, we need help.
00:22:33.660 They're acting like they're totally fine, under control.
00:22:35.880 Why?
00:22:36.540 Maybe because they're thinking what Russia did with Ukraine.
00:22:40.960 Maybe they can invade Taiwan. 0.98
00:22:43.160 And if they take Taiwan over, this is not going to be a problem for them.
00:22:46.920 They'll show up on the leader's bulletin like this if Taiwan's under their regime and
00:22:50.700 this is one of their strategies.
00:22:52.040 But it's not as easy as you think it is.
00:22:53.660 It's very complicated for that to take place.
00:22:56.060 A lot of people think it's going to be just as easy as what Russia's trying to do with 0.72
00:22:58.760 Ukraine is not. 0.89
00:22:59.440 It's more complicated than that.
00:23:00.540 We'll do a video on it.
00:23:01.500 But the best thing about this whole thing is the world really learned a lot about China
00:23:08.140 during COVID.
00:23:09.120 When we learned what they do with power, they bully people.
00:23:13.000 And partners, when you negotiate with them, I learned this a long time ago.
00:23:17.100 You can negotiate hardcore with somebody and win 90-10, but they'll never do business with
00:23:22.440 you again.
00:23:22.880 Or you can negotiate with a partner and say, listen, you got to make money.
00:23:26.880 I got to make money.
00:23:28.040 But you'll do business with them forever.
00:23:29.840 China showed during COVID that their style of negotiating is bully style of negotiating. 0.93
00:23:35.000 And the world says, we don't like your style.
00:23:37.960 So they're in a rough place.
00:23:39.480 Maybe they get rid of Xi.
00:23:40.560 Do not be surprised because they need to bring a fresh face to say, hey, I'm about diplomacy.
00:23:45.560 Let's make this work.
00:23:46.700 Let's build some relationships that sometimes what companies do when the CEO is a little
00:23:51.920 too powerful and strong, they got to bring a new one to say, it's a fresh face.
00:23:55.020 Let's make this work.
00:23:55.780 So anyways, we don't know if any of this stuff will be taking place.
00:23:58.540 But all I know is when you look at these numbers, it doesn't favor China.
00:24:02.320 By the way, if you got value out of this video, give it a thumbs up and subscribe to the channel.
00:24:05.780 There's another video we did on China called the China's Economic Apocalyptic Situation.
00:24:12.340 Darren, if you've never seen it, click over here to watch it.
00:24:14.840 Take care, everybody.
00:24:15.500 Bye-bye, bye-bye.
00:24:16.700 Bye-bye.