Beijing boasted that the final total investment in the GlobalFoundries plant could be US$10 billion. The plant was intended to produce 300mm wafers, a key material in making chips, but production never started at the 65,000 square metre facility, which was completed mid-2018. Photo: Weibo

Beijing boasted that the final total investment in the GlobalFoundries plant could be US$10 billion. The plant was intended to produce 300mm wafers, a key material in making chips, but production never started at the 65,000 square meter facility, which was completed mid-2018.

US chip giant GlobalFoundries has halted operations at a joint venture factory in China, the company has confirmed, dealing a potential blow to China’s bid to own a bigger slice of the global semiconductor market. They will be moving on Рmaking a CHEXIT. GlobalFoundries laid off all of their Chinese workers.

The flight of American companies begins.

Beijing Reads the Tea Leaves

The Two Sessions in the Worker’s Paradise begins its second week. “Two Sessions” refers to China’s annual parliamentary meetings, where the two main political bodies of China – the National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) – reveal plans for China’s policies involving the economy, military, trade, diplomacy, the environment, etc.

By all accounts, the People’s Republic of China is looking at producing for its domestic economy as the outside markets for its wares will be drying up. Looking inward allows China to keep tighter control on the population, which they expect will be discontent with the “new conditions” in China, moving into this decade. Higher unemployment, higher food prices, higher prices on imported goods, lower productivity in the industrial sector.

The People’s Liberation Army (including the Army’s Navy and the Army’s Air Force) is looking at a reduction in new systems acquisitions and a smaller budget from the Central Government and a reduction in revenue from its narcotics production (for export) business and its money laundering businesses on Saipan.

Blog commenter Jonathan wrote (on the recent PLA Blog)

One thing many people don’t realize is that while China trumpets loudly new weapons systems, most of their military is very basic – they typically buy at most a handful of units of a new system; like the Russians, it enables them to claim it is in military service. Unlike the Russians, it isn’t an issue of affording the equipment – it is an issue of operating and maintaining it. Young Chinese men, especially those smart enough to run and service high tech equipment, are avoiding military service, so there are few service members who can use it.

The Two Sessions will not be kind to the Army, the Army’s Navy and the Army’s Air Force. The military mission will be increasingly focused on internal population control and surveillance of the Public Security Police (BSB).

As usual, you can trust that Virtual Mirage will bring you the information that the mainstream media does not.

13 COMMENTS

  1. ” a reduction in revenue from its narcotics production (for export) business and its money laundering businesses on Saipan.”

    Isn’t Saipan a US Commonwealth country? If so, we should be able to shut down money laundering.

    • The local government is owned by Communist China, and a lot of grease has been spread from there to Tinian. The FBI under Obama looked the other way but FINCEN and FBI are now taking a closer look and the laundering activity is moving to Tinian. Where it will go from here is anybody’s guess, but the shrill and hysterical reaction of US scrutiny means that we’re on the right track.

  2. Kind of curious about the quality of Chinese military equipment. Someone I used to work with has a daughter-in-law in the Canadian Navy. She and some other were allowed to tour one of their ships. She was amazed at the shoddy construction.

    I had read a book about Mao a few years ago and there was a few pages about the Chinese Navy in the 1970’s. I believe that they rarely put out to sea because there was fear that the ships were of such poor construction that they might break down or come apart.

    Would like to hear your thoughts.

    • I have never set foot on a Chinese warship, but I have set food on Soviet Era (still in commission) Udaloy Class and Sovereminy Class Russian ships. They’re essentially new, thirty year old ships. Discussions with Soviet Era officers were remarkably candid. They felt that if they were fighting the US, they’d be sunk. Their water tight doors had no seals and weren’t water tight. They didn’t practice damage control because – why bother? I got their point. They’d fire their main batteries (missiles), turn and flee, in a combat setting.

      The People’s Liberation Army’s Navy has a different, but not so different approach. They plan/planned to overwhelm the US Navy in the WESTPAC with numbers, in the hopes that they could make up in quantity what they lacked in quality, supported by land based aviation and land based anti-ship ballistic missiles.

      The Chinese submarines deployed, would likely not last out the first day or two of a conflict, but they, likewise, would fire long range torpedoes (wake homing) in the direction of a carrier battle group in the hopes that the torpedoes would cross a wake, would home in and damage a US ship. The strategy is not without merit if that’s all you have.

  3. I simply do not understand what would prompt a technology company to set up manufacturing in China. I can see a plant that makes flatware, or blenders, or of course rubber dogshit, but tech? BAD idea. Growing up in Michigan shortly after Nixon “opened” China, we saw the idiot hype and excitement, with companies drooling, if we make just ONE DOLLAR profit off of each Chinese! The other bit of excitement was “They’re naive to capitalism. They will fall for our advertising like a fat woman is drawn to ice cream!” Little did they realize that a people accustomed to decades of lies from their government was full of skepticism and cynicism.

    No few of my parents’ Chinese friends jumped on the bandwagon. The academics found themselves consulting contracts [1]. The ones working for Ford and GM as engineers got official blessing to become liaisons for joint ventures. I remember my parents dourly saying, “The communists will steal their technology and process, and leave them with nothing in the end. Idiots!” I also remember my mother speaking contemptuously of the Chinese with American citizenship who flocked to “help” communist China as “either incredibly naive or traitors.”

    [1] It wasn’t just China. The father of one of my best friends was aggressively Taiwanese (as in Taiwanese “Liberation Front”). A large portion of those people were actually pro-Japanese and anti-Chinese (never mind the history of Japanese atrocities done unto their people). Anyway, this man’s “consulting services” was basically decades of funneling American tech and process know-how to the Japanese.

    • I’m in a consulting relationship with a Dutch tech company. The PRC needs what they are making and proposed a joint venture, through a friend of mine (earlier today), on the ground in Shanghai. He’s a caucasian American who married a local lady. The Dutch were considering it. I said, “No joint venture, no small sale.” They can buy in sufficient numbers that everyone makes a profit or not at all. The IP theft and the immediate reverse engineering will inevitably take place, but if they sell enough, then that works.

      My friend was offended until I explained to him that joint ventures wouldn’t be happening again ever if I had my way. We’ll see how it works out. The Dutch have a whole world to sell their tech to.

      • When the Soviet Union closed its doors many other doors become open. Businessmen went east to make money. Some created Joint Ventures with locals and others did differently. They stayed in control, had their own management, and did their best to follow the guidelines from authorities. Years later it was time to summarize the experiences. Short lesson. Local culture, traditions, work ethics (or lack of), and skillsets (what they had experienced from communism) were not completely understood nor were the consequences. The JVs were more or less in deep shit and never made it. The locals benefit themselves and the investors paid for it with no return. The other strategy was more successful but experienced problems. Since they managed to follow regulations to the details the bureaucracy and tax authorities controlling them all the time did not manage to shut them down. The management learned a new style being so rud and brutal that they will never be practicing in a civilized part of the world. The key lesson from eastern Europe was that it altogether was not so profitable at all to do business in old soviet countries.

        On the other side Mckinsey did a survey of European companies trying to enter the US market. That was a different story. Here the ones being successful were the one partnering and hiring local business skills knowing the competition and what to do.

        I guess these days it is risky just to suggest there are different cultural behavior and aspects to tale into consideration in doing business in China due to the allegation of being a xenophobe and racists.

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