Abandoned Chip Plants 树上开花

Semiconductors are key to China’s ambitious plans. Last year, the Chinese government announced to great fanfare that it was giving broad support to develop so-called 3rd generation semiconductors for the five years through 2025, Bloomberg News reported.

The move came as an apparent retaliatory response to the Trump administration’s threats to cut off China’s supplies from abroad. The US government had blacklisted dozens of China’s tech firms to prevent them from buying American parts. It has also instituted bans on ByteDance Ltd.’s TikTok and Tencent Holdings Ltd.’s WeChat and has sanctioned Huawei Technologies Co. Who’s side were investors on? Well, China, China, China.

In September 2020, the Philadelphia Semiconductor Index plummeted as much as 6.2%. This translated into the belief that China might be able to manufacture its own chips. Not only would they be unfazed by the moves from the Trump Administration, they might even give US chip makers a run for their money. Even big boys like Goldman Sachs had more trust and confidence in China than in America under Trump.

Indeed, if China’s chip makers were successful (a very popular belief back then), US and other manufacturers currently dominating the world market have their market share eroded or even put out of business. The following are currently the largest chip makers/sellers in the world.

2SamsungSouth Korea
4SK HynixSouth Korea

The trouble with journalists is that they often rely on official sources of information. Very often in a place like China, the truth lies beneath the surface. You’ll need insiders to get to the bottom. It doesn’t matter if they are amateurs. I wouldn’t put my money on this.

The principle behind the Dirty Trick No. 29 树上开花 is “借局布势,力小势大。”. In other words, you take advantage of prevailing circumstances to create an illusion that you’re bigger than you actually are. China’s economy is undoubtedly big, but a lot of this greatness arises from acts of 树上开花.