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Technology Stocks : Semi Equipment Analysis

SOXX 291.39

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Nov 26 4:00 PM EST

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To: Sam who wrote (85532)	8/24/2020 10:17:38 PM
From: Sun Tzu	1 Recommendation Read Replies (1) of 95484

Actually, it was Google that originally made that case to the White House. I just extended it from Android and App Store to the Semis. Manufacturing learning curves and supply chain management are not trivial and take a lot of trial and error, as Intel has been discovering. So just moving your plant to Mexico or India is not going to solve the problem. I will not be surprised if many of these plans get cancelled if Biden is elected and reverses Trump's policies on China. But even if he doesn't, it will be quite a while before plants outside of China can come to par to China. On the flip side, China is not standing idle and has a 7 years head start on the US in the supply chain diversification plan. The Belt and Road initiative was always meant to make China a central hub for the region. It should not be too hard to extend that with investments in codependent plants. SCO will likely see a greater vigor going forward, adding political clout to the economic one. Thirdly, China has been working on making rare earth be for them what oil is to the middle east. A lot of electronics are dependent on the rare earths. Finally, China is well ahead of the US on digital currencies. From the past discussions you may remember that I predicted that by 2027 digital currencies will be viable and that by 2035 you will see real global revolutions because of them. In general a host of smaller banana republics and dictatorships will fall apart as they become unable to enforce currency controls and their people will stop using the local currency. But the US will also be hurt greatly as the USD loses its reserve status. China just added more resources to their digital currency initiatives. So it may happen a lot sooner than 2035. But even if not, 2035 is closer to us than the dot-com era. It is always easy to "decide" what you want to do. It is considerably harder to figure out what your opponent will do. A US-China de-linking is neither practical nor desirable. Even the main proponents of it who lobbied for it in DC wrote articles in FP explaining that they advocated it only for few key strategic items and not for the entire economy. But the shortsighted pursuit of this goal in order to win an election brings about a chain reaction that will be hard to undo.

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