Bad things always start with the chip.
In September of this year, the US Department of Commerce, in the name of responding to the global chip crisis, required more than 20 chip companies such as TSMC and Samsung to hand over confidential business data. Now, on November 8th, "the deadline has come", 23 companies including TSMC, UMC, Tal Semiconductor, ASE, Global Crystal and other companies took the lead in "handling papers". South Korea's Samsung and SK Hynix also submitted relevant data on the afternoon of the 8th, and the United States Intel , Germany Infineon promises to submit the answer sheet.
Although only part of the data is handed over, the chip makers are still very reluctant. Zhang Zhongmou, the founder of TSMC, the world's number one chip foundry company, said on October 26 that the United States would not succeed in promoting (centralized) semiconductor manufacturing in the country. The United States used to have a share of 42% in the semiconductor manufacturing market, and now only 17% remains. Incomplete supply chains and high manufacturing costs are two major obstacles.
In the past, countries considered "big accounts" in foreign trade and wanted to control the trade deficit; companies considered "small accounts" to make real money back. Now, "big accounts" and "small accounts" are mixed together. The state wants to check the "small accounts" of enterprises, and companies must also count political "big accounts". For example, TSMC has to set up a factory in Arizona, USA, in order to be identified if it does not make money. As "politically reliable." This is actually one of the manifestations of "reverse globalization". The "reverse globalization" in economic and trade investment is the result of the ebb of political globalization, not the cause.
Chips are related to the military industry and naturally have a certain political color. In the case of the United States getting stuck in technology from time to time, the chip, or the integrated circuit it carries, has attracted huge investment in research and development by heroes from all walks of life. It is also the "key core" of the Chinese Academy of Sciences and the Chinese Academy of Engineering. technology".
In addition to politics, the market itself will also amplify the scarcity of certain commodities due to the imbalance between supply and demand, and bring the test of production reduction or even suspension of production to the middle and lower reaches of the factory. Since the beginning of this year, there has been a shortage of integrated circuits and crude oil and natural gas all over the world. And they are the main commodity categories imported by China.
After 40 years of implementing the "export-oriented" policy, China has created an "economic miracle." The current "import crisis" that is pervading not only makes people reflect on the corporate strategy of "importing for export", but also makes people wonder why the global value "chain" suddenly becomes like a long rope.
"Gizmos" in nanometers
In order to cope with the crisis of "core shortage", China's "new car-building forces" have tried various methods. For example, deliver the vehicle first, then replenish the radar.
This is the "ideal ONE delivery plan communication" text released by Ideal Motors: The vehicles originally scheduled to be delivered in October and November this year will only be equipped with 1 front forward millimeter wave radar and 2 rear angle millimeter wave radars, in December this year The remaining two millimeter wave radars will be reinstalled before the Spring Festival next year. Users who mentioned cars in December will not be affected.
The ideal car said that models with only 3 millimeter-wave radars will not open the automatic merging and front crossing vehicle warning functions for the time being, and other ADAS (advanced driving assistance system) functions can be used normally. The later OTA (over-the-air download technology) of NOA (Assisted Driving System) needs to be upgraded after 5 radars have been reinstalled.
As the new crown epidemic in Malaysia soared again in the summer, the locally produced millimeter-wave radar chips were unable to supply China. Ideal cars sold 7,094 units in September, a decrease of 24.8% from the previous month.
Weilai Automobile was also affected by the shortage of chips, and its sales in August fell by 25.9% from the previous month. NIO’s explanation is that the Malaysian epidemic has affected the production of STMicroelectronics. STMicroelectronics is a supplier of Bosch’s ESP (Electronic Body Stability Control System). Therefore, Bosch’s ESP to NIO cannot be delivered on schedule.
The "pursuit" of new energy vehicles for chips began with the hurricaneously advancing Tesla. Since 2016, Musk has been digging experts and designing custom chips, and has begun cooperation with Samsung. Mercedes-Benz started cooperating with Nvidia last year, and it is the same way. Intel CEO Pat Kissinger quoted the prediction of the well-known consulting firm Roland Berger that by 2030, chips will account for 20% of the cost of high-end automotive materials, far higher than 4% in 2019.
The shortage of "low-end chips" in the past year has broken the entire planet's car supply chain one after another. Automakers in South Korea, Germany, and Brazil shut down production lines all the way. The total number of vehicles delivered by Volkswagen in the third quarter fell by 24.5% year-on-year.
Originally, the gap between high-end chips and low-end chips, exaggeratedly speaking, is similar to the gap between automated agricultural machinery and livestock. The cutting-edge components such as mobile phone chips and FPGA (Field Programmable Logic Gate Array) are manufactured in fabs that use the most advanced technology. Just building such a factory would cost billions or even tens of billions of dollars. The shortage of high-end chips will affect China's high-precision and sophisticated industries, as well as some of the industries' high-precision links such as measurement, control and testing.
However, most of the chips that people use every day are not considered "high-end goods", especially automotive chips-they are all made in the previous generation or previous generations of fabs using old technology. For example, EPB (electronic parking) chip, the normal price is about 6 yuan / piece, but it is not expensive for a bowl of plain noodles on the street at 8 yuan. There are rumors that the recent purchase price of Ideal Auto for the shortage of EPB has reached about 5,000 yuan/piece, which is 800 times more than the normal price; Ideal Auto denies it.
Although the future of automotive chips tends to be "high-end", the shortage of "low-end chips" in the past year has broken the entire planet's automotive supply links one after another. Automakers in South Korea, Germany, and Brazil have closed their production lines all the way. The total number of vehicles delivered by Volkswagen in the third quarter fell by 24.5% year-on-year. In the same period, Mercedes-Benz’s global sales fell by 30.5% year-on-year, and the global sales of BMW, MINI and Rolls-Royce under the BMW Group fell by 12% year-on-year.
Chen Bin, Executive Vice President of the China Machinery Industry Federation, stated at the "2021 China Automotive Supply Chain Conference" that chips that have not attracted enough attention in the automotive supply chain in the past have had a huge impact on China's automotive production and sales. As of September, China's auto production and sales have fallen year-on-year for five consecutive months. Based on this speculation, it is possible to reduce production by nearly 2 million vehicles throughout the year, a drop of nearly 8% from last year.
From the perspective of the import and export status of the entire manufacturing industry, most of the key production equipment relies on imports, which is more prominent in the automotive field; while the electronic information industry focuses on the application of consumer electronics and information industries, resulting in high-end chips and sensors. Basic industrial components and development software are also imported.
In the "2020 China Customs Statistics Summary" published by the General Administration of Customs of China, the top three imports of China's major commodities in 2019 are mechanical and electrical products, high-tech products, and integrated circuits, with a total value of more than US$1.8 trillion.
"Big guy" in tons
Mr. Huang, a supplier of ceramic raw materials, took a break. His current schedule is to swim three times a week, play badminton twice, and think about going to learn billiards again, because his client, several ceramic factories in Guangdong, have stopped work.
On May 21, 2019, the "Beixi-2" submarine natural gas pipeline under construction
Guangdong is the largest exporter of ceramic tiles in China. Among the ceramic export provinces in 2020, Guangdong accounted for 41%. Since the outbreak of the epidemic last year, ceramic tile exports have almost stagnated. This year has improved slightly, but since the second half of the year, the cost of electricity, raw materials and fuel has risen sharply, and the life of ceramic upstream and downstream enterprises is still difficult.
The ceramic industry has high energy consumption and high pollution. Now that the goal of “carbon neutrality” has come out, “changing gas” is an irreversible trend.
The conversion of "coal to gas" first raised the production threshold of ceramic enterprises. The combustion system and operating technology must be re-adjusted, and tuition fees are inevitable. Moreover, only large ceramic brand companies can obtain more favorable "long-term agreement" (long-term supply agreement) prices through gas consumption, but companies, regardless of size, have to study how to improve combustion efficiency. For example, a good quality 1.1 cm thick, 0.64 square meter polished glazed brick weighs about 17 kilograms and requires about 1.1 cubic meters of natural gas for processing. How to further reduce energy consumption?
Fluctuations in gas prices have also greatly increased the cost of "changing gas" for ceramic companies. In the past ten years, the price of gas in ceramic production areas in Fujian Province exceeded 4 yuan/cubic meter. Local manufacturers have repeatedly used gas and coal. Only after 2016, they gradually changed to gas.
Russia's "Beixi-2" submarine natural gas pipeline to Western Europe has been filled with gas after its completion in September this year. Germany has high hopes, but the European Union has been slow to approve Germany's acceptance of gas transmission. Germany originally planned to approve the operation of the "Beixi-2" project in January next year, but it may be postponed.
Today, natural gas prices are more volatile. Industrial ceramics companies in Xiangdong District, Pingxiang City, Jiangxi Province found that from early October to October 26, the price of natural gas soared from 2.88 yuan/cubic meter to 5.5 yuan/cubic meter. According to an information from China Ceramics Net on October 19, the cost per square meter of ceramic tiles in Enping, Guangdong, has increased by more than 6 yuan this year (the cost of gas alone has increased by 4.3 yuan), while the price of ceramic tiles has increased by only 1 yuan. Many, production is very uneconomical.
Change back to coal? Coal prices have also risen. At the beginning of this year, the coal price was more than 900 yuan/ton, and after October it was more than 2,000 yuan/ton. The cost structure of the ceramic industry consists of two major pieces: raw materials and fuels. Now fuels have all more than doubled, and ceramic factories cannot raise prices significantly to dealers. After all, the domestic real estate industry is sluggish and overseas logistics costs are high. Therefore, only the suspension of production can reduce the loss.
The impact of soaring energy prices on enterprises and people's livelihood is still gradually emerging. This also highlights the importance of energy imports. In the "2020 China Customs Statistics Abstract", in terms of the value of China's imports in 2019, crude oil imports ranked fourth at 241.8 billion U.S. dollars, natural gas at 41.7 billion U.S. dollars, and coal and lignite at 23.4 billion U.S. dollars. The three items add up to US$306.9 billion, which is a little more than the US$305.5 billion of the third-place integrated circuit.
In the first half of 2021, China's natural gas demand grew rapidly in the context of "carbon neutrality" and "coal-to-gas". The total apparent consumption (production plus net imports) reached 185.1 billion cubic meters, a year-on-year increase of 16%. Among them, LNG (liquefied natural gas, mainly transported by ship) imports increased by 26%. The overall demand is growing rapidly, and the domestic gas volume and pipeline imported gas volume have certain supply rigidity. Therefore, the elastic part can only be supplemented by LNG imports.
The territory of natural gas exporting countries is constantly changing. Russia is the world’s largest natural gas exporter. Russia provides one-third of Europe’s natural gas, and more than half of it has to transit through Ukraine. However, due to political conflicts between Russia and Ukraine, the supply of this route is limited, and Russia has not transited this route for a long time. Segment booking additional air supply.
Russia's "Beixi-2" submarine natural gas pipeline to Western Europe has been filled with gas after its completion in September this year. Germany has high hopes. However, due to geopolitical reasons, the European Union has been slow to approve Germany to accept gas. Germany originally planned to approve the operation of the "Beixi-2" project in January next year, but it may be postponed. Since the beginning of this year, the United States has repeatedly imposed economic sanctions on several Russian entities and ships involved in the project. Biden only promised Germany that no new sanctions will be added.
In addition to Russian pipeline gas, Australia will surpass Qatar in 2020 and become the world's number one LNG exporter, with nearly 40% of its production purchased by China.
Since 2013, Qatar's natural gas production has hardly changed, and more than 95% of its exports are "long-term cooperation" orders. As the pressure of competition from the United States and Australia continues to increase, Qatar has begun to expand production capacity while lowering prices. In March of this year, it signed a "2 million tons/year" long-term agreement with Sinopec, and the supply will start in 2022.
As a major shale gas producer, the United States exports LNG to the third place in the world. However, Biden's "Green New Deal" restricts natural gas exploration and extraction in terms of taxation and drilling permits. In addition, oil and gas prices fluctuate greatly, and most shale gas producers have to repay debts and maintain output, and their capacity to expand production is very limited.
"A world created by trade"
Chips, natural gas, skimming the sky and the ocean every day in the past.
One of the world's top chips, Apple's self-designed A15 Bionic for the iPhone 13 Pro Max, is manufactured using the most advanced 5 nanometer technology in the field of smartphone chips, and the size is close to a sugar cube. They are light and small, and like the finished mobile phones wrapped outside, they "ride" a wide-body Boeing 747 to and from several continents.
Natural gas must be transported below minus 163°C, because it can be compressed into a liquid state at minus 162°C. The "Marguerite" manufactured by Daewoo is an icebreaker with a volume of more than 170,000 cubic meters and a load of more than 80,000 tons. It can transport enough natural gas to be used in Sweden for a month. The "gas storage tank" is large and heavy. It takes a special LNG vessel to ride the wind and waves at sea for several months.
Like gold, silver, spices, and wood, chips and natural gas with huge differences in size are also rapidly moving on the earth along with the migration of population. Historically, slaves sold on the Greek island of Delos, miners digging in American mines, women workers working in Roman brothels, merchants in Venice, compradors of the East India Company, and emerging industrial leaders on the Atlantic coast of the Americas have all worked in technology and energy. Looking for dreams under the "protection" of China, and digging for wealth in the new territory of trade.
Trade breaks people's imagination and does not always happen according to a pattern.
China’s “export miracle”, in the past, academia had the judgment of “import for export”: importing advanced manufacturing equipment for production to meet the consumer goods needs of major international buyers. A phenomenon worth thinking about is that in the "2020 China Customs Statistics Abstract", the "top two" and the "top two" of the import value of major commodities in 2019 are the same, namely "mechanical and electronic products" and "high-tech products". Technology products".
The WTO recently predicted that after five or six years of sluggishness (except 2018), global trade in goods is expected to increase by 10.8% this year. This is not the only good news. Regional free trade agreements such as CPTPP and RCEP and DEPA in the digital economy are testing the waters to reduce tariffs and non-tariff barriers.
This means that after entering the customs, mechanical and electrical products and high-tech products will complete the "intermediate goods" link in China and then export them to high-income countries or regions. These intermediate links are often labor-intensive links in high-tech products. Fortunately, not all export categories are "intermediate links." In the data for 2019, the value of exports is US$600 billion more than the value of imports, which is at least twice the value of imports of integrated circuits, showing that China's independent innovation and foreign exchange earning capabilities are steadily improving.
However, imports and exports often do not follow the principle of "equivalent exchange", which is also the difference between "calculating large accounts" and "calculating small accounts". "Unequal exchange" may not be completely detrimental to the trade party, because the scope of mutual benefit is relatively wide, and some benefits can only be seen by "calculating large accounts." The United States has a permanent foreign trade deficit of US$560 billion, but it has also gained a lot from its status as "the world's largest importer."
This year's shortage of chips and natural gas has exposed the fragility of the global value chain. Of course, it is to blame for the repeated occurrence of the new crown epidemic, as well as the lack of preparations or poor logistics of most companies pursuing "lean production" to reduce inventories, but the root lies in the fact that the international division of labor has been basically finalized, and the marginal difficulty of further deepening has increased. Chip companies such as TSMC and Samsung set up factories in the United States, which is more of a kind of "political insurance."
The development of communication technology will eventually encounter insurmountable bottlenecks; the dividends of the open border system are increasingly being offset by the accompanying negative effects. The technological and institutional changes in this area have almost come to an end in the last round of globalization. The WTO, which was born 27 years ago, predicted that the global trade in goods is expected to grow by 10.8% this year after a downturn for five or six years (except 2018). This is not the only good news. Regional free trade agreements such as CPTPP and RCEP and DEPA in the digital economy are testing the waters to reduce tariffs and non-tariff barriers.
Sometimes, the real world of trade can be abstracted into a simulated game. Take the board game "Island of Catan" that the author played a while ago as an example. Players collect natural resources by throwing dice, and then use the resources to build roads and settlements on an empty island; everyone has limited access to natural resources , Players have to trade resources with each other; as the game progresses, their own "sphere of influence" becomes larger and larger, developing their own power or grabbing other people's resources have a chance to win, but any conflict is limited to the economic level.
In "Catan Island", the player's role is like a country and a company-no one has "everything", and everything he wants has to rack his brains to trade. When you tend to trade frequently with your brother, your classmates are likely to join another camp. Unlike Silicon Valley giants who can frantically speculate on the "meta universe" to create demand, traditional industrialization and urbanization are the only ways for players to "bigger" in this game.
In the world of trade, no factory is an island, and Catan is well aware of this.
