Okay, I think you’re right about some things. Coordinating a market economy is not straightforward. Individual participants will buy what is optimal for them.
By embargoing them we provided a coordination mechanism. Chinese semiconductor manufacturers now had a captive market to sell into and the state was able to incentivize production without too much waste.
But the thing that strikes me is that China was already trying to do this. SMIC et al were already funded by the Big Fund. And they generally succeed in industrial policy. It’s true that a GPU can’t be torn apart and replicated like a car factory can. But they were already trying and they were already attracting sufficient numbers.
I suspect we couldn’t have stopped them. DUV tech like this has been already explored deeply. And the loss is in power and scale - both of which China can compensate for elsewhere. We are power constrained. They are not. If they want to run 3x DCs for every one of ours they can do it.
It’s not like we don’t rent them GPUs. My friends do that. It’s entirely legal and Chinese companies don’t balk at needing to rent B300s. The whole thing isn’t resting on whether they want to capex it or opex it. It’s that they want domestic capability and we needed to trade off building them a coordination mechanism vs slowing them down. And we did this thing and it did that.
In a world where we sell them top of the line GPUs and allow ASML to sell them EUV do we think that the geolock on those devices stops China when they decide to replicate it? Or do you think they succeed at industrial espionage, that their local techs get as good at using the machines as TSMC does, and that they eventually transfer whatever learnings they have to what they can produce?