The 25th Anniversary of the 9/11 attacks, GOP midterm convention, Iran and Yemen both get spicy again, AfD shocks Germany, Ukraine’s longest drone strike yet, more welfare state fraud, more money for Paxton,
It’s the Friday LinkSwarm!
More information about the murder of my friend Andrew Wimsatt has come out, and some of my original post needs to be corrected. I’m going to put that in a Saturday post, and there will be another for remembering Andrew on Sunday.
On a perfectly clear morning 25 years ago, America changed forever.
At 8:46 a.m. on that day, a team of Islamic terrorists crashed American Airlines Flight 11, carrying 76 passengers and eleven crew members, into the North Tower of the World Trade Center. It was followed 17 minutes later by United Airlines Flight 175, carrying 51 passengers and nine crew members, which terrorists steered into the South Tower. Less than 90 minutes later, both of those towers had collapsed into a massive pile of rubble.
Meanwhile, as Americans’ televisions were tuned to live footage of the burning buildings, American Airlines Flight 77, carrying 53 passengers and six crew members, was slammed into the Pentagon. And shortly after, United Airlines Flight 93, with 33 passengers and seven crew members, crashed in a field in Shanksville, Pa.
Today, we remember the 2,977 innocent victims who were the first casualties in what would become known as the War on Terror. We also remember the extraordinary heroism displayed that day, without which the horrific losses would have been far worse.
One of the most miraculous facts about that day was that at the World Trade Center, which may have had an occupancy of 19,000 people between the two buildings at the time, 99 percent of those who were below the point of impact of the planes survived. This achievement is owed to the extraordinary evacuation efforts of first responders, who ran into burning buildings, no doubt knowing that there was a good chance they wouldn’t make it out. In the end, 441 firefighters, police officers, and paramedics did not.
Then there was the civilian heroism displayed by the passengers on Flight 93, who had heard about what happened at the World Trade Center, overtook the plane, and ensured that it crashed in an empty field rather than into the U.S. Capitol or White House, one of which was believed to be the potential target. Passenger Todd Beamer’s remark to his fellow passengers, “Let’s roll,” overheard from a phone call, became a rallying cry as the nation fought back.
I have no dramatic, notable 9/11 stories to tell. I was driving to my job at Applied Materials when NPR (yes, I sometimes listened to them in the morning, back in the day) broke into regular coverage to report the first tower impact. I heard a rumor that the layoff that came next week (as the depths of the Dotcom Bust were just being felt) was actually scheduled for that day, but they decided to hold off due to the attacks. Ironically, one of the people in one of the planes was an Israeli Applied employee, who survived a country beset by terrorism only to be killed on an American flight.
President Donald Trump delivered the convention’s closing remarks following a keynote address from Vice President J.D. Vance.Before they took the stage, though, Texas Republicans used their appearances to focus on the November elections, public safety, immigration, and the direction of the Democrat Party.
Lt. Gov. Dan Patrick invoked Texas history and the Alamo before turning to the November election, portraying the contest as a broader fight over the country’s values.
“This election coming up is not about politics,” said Patrick. “It’s about darkness, and it’s about light.”
He accused Democrats of embracing socialism and communism and argued that Texas’ economic growth has been driven by conservative policies including low taxes and no state income tax.
He also singled out Democrat Senate nominee James Talarico, saying Republicans would put “the Democratic Party and James Talarico and his ilk on the dust heap of history.”
Patrick closed his remarks by urging Republicans to view the election as a fight for their families and the country. “You started a fight, and the Republicans are going to finish it in November.”
Eric Flores and Tano Tijerina, two Republican candidates challenging Democrats in South Texas, also addressed the convention. Their appearances highlighted Republicans’ continued focus on South Texas, where the president made significant gains in 2024.
U.S. Sen. Ted Cruz used his speech to warn about what he described as an emerging red-green alliance between communists and Islamists. He received one of the strongest reactions from the crowd when he declared that Sharia law is incompatible with the U.S. Constitution.
“Sharia law has no place in America,” said Cruz. “Sharia law is fundamentally inconsistent with the Constitution, and we need to stand together and stop it now.”
Gov. Greg Abbott focused much of his speech on Texas Democrats running statewide in November, contrasting their legislative records with policies he has signed into law.
Abbott pointed to the GOP’s success on a variety of issues including border security, policing, property taxes, oil and gas, election laws, parental rights, and school choice.
“All the Democrats running statewide in the state of Texas, they had a chance to vote on those policies, and they voted against those policies,” said Abbott. “They voted against common sense.”
Abbott highlighted legislation he signed prohibiting cities that reduce police funding from receiving certain state tax revenue, restricting some purchases of Texas property by citizens and entities tied to China, Russia, Iran, and North Korea, and prohibiting gender mutilation procedures for minors.
Snip.
Vice President J.D. Vance delivered the night’s keynote address, reflecting on the administration’s first 19 months back in office and making the case for Republicans in November.
Vance also paid tribute to Charlie Kirk on the anniversary of his assassination, recalling that Kirk had been in the front row when Vance addressed the Republican National Convention as the party’s vice presidential nominee in 2024.
Turning to Texas politics, Vance took aim at Democrat U.S. Senate nominee James Talarico over his previous comments on gender and Christianity.
“This Talarico guy—he will not shut up about how there are six genders. He will not shut up about how, ‘God is non-binary,’” said Vance.
“I gotta say, a guy that age who is so obsessed and focused on transgender children-I don’t know about you, but I never want to see that guy’s web browser.”
Last night Germany’s much-maligned AfD party won a crushing and historic victory. The victory is already being downplayed by many, owing to the fact that Saxony-Anhalt is technically one of Germany’s smallest and least consequential states. But there is far more to it than sheer numbers, as the win defines a turning point not only in German but European politics, and cements the gradual downfall of the globalist ruling class that has tried desperately for decades to keep populist movements from gaining power, in particular utilizing the “Brandmauer” or “firewall” to suppress the so-called far-right.
The destruction of this firewall is an historic occasion, even if it should come by way of such a seemingly inconsequential state.
Of course, there are other criticisms as well. AfD is seen by many as a kind of Trojan horse, a German “MAGA” party led by a lesbian woman in Alice Weidel. Even so, it represents a striking loss of power for the elites and a turning point which breaks a kind of psychological barrier that will only energize other anti-establishment, “far-right”, or populist parties throughout Europe.
Another secondary effect of the victory is that it has caused the ruling German establishment to go back to the drawing board and review its most unpopular policies, like on immigration, in order to bend with the clearly changing winds.
Merz expressed his “deep shock” at the election result, foreseeing it having major repercussions on Germany as a whole:
The AfD, however, fell just three seats short of an ‘absolute majority’ which would have allowed it to govern the state alone. Some commentators have pointed out some major ‘anomalies’ in regard to mail-in versus in-person votes. Just like in the highly irregular American 2020 election, every party but AfD was allegedly boosted by disproportionate numbers of mail-in votes:
More analysis at the link. Just think if Germany’s elites hadn’t decided to import millions of unassimilated Muslims into their country, they wouldn’t have empowered the AfD. (Hat tip: Director Blue.)
Yemen has also been getting spicy, with the Iranian-backed Houthis driving for the coast, successfully attacking a Saudi pipeline, and the official anti-Houthi government of Yemen making gains in the interior. More from Preston Stewart. If this week hadn’t been so insane, I might have done a separate post on this…
Maybe this is why I’m still unemployed. “Women Filled 98 Percent of Jobs Created in August.”
Women accounted for 158,000, or 98 percent, of the 162,000 nonfarm payroll jobs created in August, according to the Bureau of Labor Statistics’ establishment data. Compared to this time last year, there are 870,000 more women employed in the U.S., according to the Bureau of Labor Statistics, and 1.5 million fewer employed men.
So there were only 4,000 men hired in August.
Accounting for the new data, the gap between male and female employment reached its highest level since 1990, when men were overrepresented in the workforce.
Dramatic month-to-month swings in employment gains between the sexes are relatively common, and labor economists warn that sharp shifts don’t necessarily indicate lasting changes in the market. However, the August jobs report is in keeping with existing trends that have obtained for decades, namely a substantial increase in employment among women and a linear decline in employment among men.
There has been a “multi-decade decline in male labor force participation” and a “multi-decade increase in female labor force participation,” Kirk Doran, a professor specializing in labor economics at Notre Dame University, told National Review.
Part of this shift can be explained by the evolution of American industries. The sectors that grew at the highest rate in August — health care and public education — are female-dominated. Meanwhile, the industries that shrank — computing, data processing, and finance — are male-heavy.
We have every reason to be excited to go to the polls to ensure an ongoing Congressional Republican majority, and to keep the DSA-influenced Democrats away from any levers of power.
The 20 months since President Trump’s inauguration in early 2025 have had the most significant conservative victories of my lifetime, far exceeding President Reagan’s accomplishments. Here are just a few of the things President Trump and his team have done:
Closed the border to illegal invaders.
Deported hundreds of thousands of illegal aliens, and caused millions more to self-deport.
Slashed the federal workforce.
Eliminated DEI and wokeness from the military and federal agencies.
Eliminated EV mandates and green energy subsidies.
Effectively terminated corporate average fuel economy requirements for auto manufacturers.
Engaged the military to eliminate narco-terrorists.
Engaged the DOJ to target corporations engaged in illegal racial discrimination in hiring.
There are so many more milestone accomplishments beyond those.
For decades the conservative base has clamored for the above victories. President Trump finally delivered. Amidst all this, there are many “conservative” influencers who are promoting doom. For many of them, that is their job – being paid to blackpill conservative voters to stay home, so as to elect a Democrat Congress. The resumption of Democrat lawfare against the Trump administration is their goal.
Despite razor-thin congressional majorities, Trump47 has delivered numerous policy wins, and conservatives (and anyone else who wants to stop the insane, jihad-friendly, socialism- and social justice-infected Democrats from reclaiming power) should head to the polls in November to ensure Republican control through 2028.
“Ukraine’s Longest Range Drone Strike Yet! Nearly 3,000km! Plus Strikes on Sochi and Dagestan.” “Ukrainian drones carried out their longest range drone strike to date, hitting Russia’s Novy Urengoy and Purovsky gas processing plants in Yamalo-Nenets.” Yamalo-Nenets is an “autonomous okrug” on the Arctic Circle just east of the Urals.
Quality Care Access, LLC was chartered in July 2020 by Jovin Bayingana, and the Portland-based company rapidly became one of the most lucrative new MaineCare businesses in New England.
According to Medicaid payment records obtained via a Freedom of Access Act request, the company billed the Department of Health and Human Services (DHHS) for $1.2 million in 2021, $5.3 million in 2022, $7.4 million in 2023, $6.7 million in 2024, and $7.2 million in 2025 — for a lifetime cost of $27.8 million.
The more detailed federal Medicaid dataset shows that throughout this time frame QCA had fewer than 16 patients in most years.
Finally: “Republican Reinforcements Arrive for Paxton in Senate Race. The Senate Leadership Fund is pouring millions into Texas after questions over whether the Cornyn-aligned group would back Paxton.”
Republican reinforcements are finally arriving for Attorney General Ken Paxton in his U.S. Senate race, months after the party’s biggest Senate-focused outside group backed his primary opponent.
The Senate Leadership Fund, a super PAC aligned with Senate Majority Leader John Thune, has purchased $32 million in television advertisements across Texas and is reportedly preparing to spend more than $50 million to support Paxton against Democrat James Talarico.
The group announced Friday it created a new Texas PAC dedicated to the race, with ads promoting Paxton and contrasting his record with Talarico expected to run continuously through Election Day.
The investment ends months of uncertainty over whether the Senate Leadership Fund would support Paxton after backing Sen. John Cornyn in the Republican primary.
It also comes as other major Republican groups have already begun pouring money into the race.
MAGA Inc., the super PAC aligned with President Donald Trump, recently announced $10 million in advertising supporting Paxton. America PAC, the political group backed by Elon Musk, is also supporting Paxton and has begun door-knocking operations to register and get out the vote.
This is good, if overdue news, but media ad spends are the fools gold of politics. The same group spending zillions for Cornyn didn’t move the needle, so the efficacy of their political efforts seems debatable. But maybe they’re better at convincing squishy moderates than Republican primary voters…
Democrat Texas House candidate Oziel Ochoa’s campaign sponsored a May Day event co-hosted by the Rio Grande Valley chapter of the Democratic Socialists of America.
Ochoa is challenging Republican State Rep. Janie Lopez for House District 37, a South Texas district covering Willacy County and portions of Cameron County.
Campaign finance records show Ochoa’s campaign made three $259 payments to La Union del Pueblo Entero, or LUPE, on May 4. The expenditures, totaling $777, were listed as advertising expenses for the first annual May Day Marcha del Pueblo (March of the People).
May Day, also known as International Workers’ Day, is an annual labor observance that has long been embraced by socialist and communist movements around the world.
The event took place two days earlier, on May 2, in Edinburg.
Organizers included LUPE, Texas Rising, the Rio Grande Valley American Federation of Teachers, the Rio Grande Valley Central Labor Council, South Texans for Reproductive Justice, Poder Latinx, and the Rio Grande Valley Democratic Socialists of America.
Ochoa was publicly recognized for his financial support, while RGV DSA was listed among the event’s organizers.
The former police chief of Hamtramck, Michigan, is in hot water after investigators have dug into allegations against the Muslim chief for how he ran his department.
Court records show that Hamtramck Police Chief Jamiel Altaheri personally engaged in a “pattern” of domestic violence in his own household, and told officers that wife-beating isn’t a “formal” crime.
The primary effects of Democrats importing unassimilated Muslims for political advantage seems to be more wife-beating and more rape.
“Criminal Illegal Alien Arrested in Texas, Ordered Deported 26 Years Ago. A Cuban national who evaded deportation for 26 years is now behind bars.” “According to ICE, Cuban national Emiliano Martinez Perez entered the United States around 1998 and was convicted of cocaine possession shortly afterward. He was ordered to leave the U.S. in early 2000, but remained in the country and was later convicted of drug trafficking in 2007.”
Speaking of immigration fraud: “Houston Immigration Attorney Arrested for Fraud. Nowowiejski allegedly committed mail fraud and made false statements related to immigration cases.”
A Houston immigration attorney was arrested Wednesday after a federal grand jury indicted her on charges of mail fraud and making false statements related to her work on behalf of immigrants seeking work-related legal status in the United States.
Alla Nowowiejski is a naturalized citizen from Russia and has practiced law in Texas since 2009 and specialized in business immigration assistance, but she allegedly never submitted, or only partially submitted, paperwork for clients seeking to obtain work status or work visas.
The indictment also alleges that Nowowiejski provided clients with false documents or reference numbers tied to active immigration cases unrelated to her own clients to make them believe their applications were being processed.
In 2023, Audubon Engineering Operations sued Nowowiejski for gross negligence and legal malpractice in Harris County. The company alleged that although she had charged them more than $109,000 for immigration work on behalf of five employees, she never filed paperwork with federal immigration agencies.
“Chaos ensues in Democratic Party after Arab reporter calls black congressman ‘AIPAC monkey.'” Arab reporter is Rula Jebreal (who, I guess, is most famous for dating Roger Waters) and the black congressman is Hakeem Jeffries. Hakeem Jeffries should never be called a monkey, only “TEMU Obama.”
The deal would mark the first chunk of change the nation will provide to the U.S. under South Korea’s new $350 billion commitment.
Last year, tariff talks between the U.S. and South Korea led to a 10 percent decrease in tariffs imposed on South Korea — a drop from 25 to 15 percent — provided the country invests $350 billion in the U.S. in exchange.
The power project would be set in Encinal, Texas, a small city in La Salle County.
According to The Korea Herald, talks initially began with South Korea proposing $19.8 billion for the project, and the U.S. countering with $25 billion. Negotiations will now proceed in the $22.6 billion range, although the exact amount will not be determined until the project is finalized.
The proposed gas combined-cycle project plant would total 6.3 gigawatts (GW) of power, built in stages. The first stage will consist of a 1.4-GW gas turbine power facility. Once the first stage passes inspection, the second stage, a 4.9-GW combined-cycle facility, will be built.
Though unconfirmed, the plant is expected to help meet the state’s booming demands for artificial intelligence (AI) computing capacity, data center development, and semiconductor development.
Microsoft Corp. today issued updates to plug at least 974 security holes in its Windows operating systems and other software, by far its biggest single patch batch ever. Microsoft says artificial intelligence is helping to speed the discovery of vulnerabilities, but security experts warn that many organizations already are struggling to prioritize the more human-intensive endeavor of testing and deploying so many fixes each month.
This month’s patch bundle obliterates the software giant’s previous record set in July, when it released updates for at least 570 security vulnerabilities. September’s Patch Tuesday brings this year’s total to more than 2,600, more than twice Microsoft’s previous record-setting patch year in 2020 (1,245) and with three more months to go.
There are two “zero-day” flaws fixed this month that are being actively exploited: both CVE-2026-81963 and CVE-2026-85880 allow an attacker to elevate their privileges on Windows system.
Fully 113 of the bugs addressed today earned Microsoft’s “critical” rating, meaning they could be abused by malware or miscreants to seize control over a vulnerable Windows machine with little or no help from the user.
Among the more serious critical flaws this month is CVE-2026-69730, a DNS weakness present in Windows Server 2012 onward and on Windows 10. Microsoft warns that an unauthenticated attacker could leverage this weakness simply by sending a specially crafted packet to an affected system, and that it is likely to be exploited.
Also scary is CVE-2026-69829, a critical, remote code execution flaw in the Windows Shell. This vulnerability has a CVSS base score of 9.8 (10 is the most severe), and can be exploited with low attack complexity, no privileges, and no user interaction.
Whatever else AI is or isn’t good at, it seems to be great at finding security flaws in Microsoft products…
It’s incredibly important to own physical media, because you do not know what people are going to do that work for these massive tech companies. Once they get a hold of the data and they put it into those AI [slop] machines, because that’s what they are, they can change anything. Half the stuff that people, when they Google things or whatever, that just comes out with some AI thing that’s based on something that somebody wrote on Reddit six years ago that’s probably not even true. Maybe it is, maybe it isn’t. Who actually knows whether it’s true? It’s kind of like if you listen to a record on Spotify that says remastered in 2018, remastered in 2022, remastered in 2012, that’s not the original version. What they’ve done is they’ve either taken the original version, the mastered version, and just remastered it and made it sound worse, or you don’t know what they’ve actually done to it.
Another weird blog tidbit that may only be of interest to myself: Starting October 6, 2025 and running through February 9th, 2026, the Internet Archive took multiple daily snapshots of my blog after a long period of snapshotting it on a somewhat random basis, sometimes several time a week, and sometimes only a few times a month. I would say the optimal periodicity would be once a day, but I have no idea how the process works.
This is Charlotte. While everyone’s losing their minds over delayed flights and tiny seats, this Jack Russell snagged a blue balloon at the airport and turned the terminal into her own racetrack. Pure zoomie chaos in the best way on Red Bull levels. https://t.co/v8WbxBxT33
— Puppies & Positivity (@Puppieslover) March 4, 2026
A bunch of AI-related news has popped up this week, so let’s do a roundup.
Some AI companies are complaining that TSMC is killing the AI boom by not expanding rapidly enough:
Asianometry notes that TSMC’s caution at expanding is amply justified by the boom-and-bust nature of the semiconductor industry:
“I’m hearing many similar views in the Silicon Valley Borg that TSMC is the break or limiter on the AI boom, as if they’re the reason why we don’t have AGI yet. Because they didn’t and still don’t believe.”
“If we can ever say that a company that spent $41 billion on capital expenditure in 2025, with another $53 to $56 billion in 2026 planned, is sitting on its hands, doing nothing.”
“TSMC having 90% share of the AI chip market looks pretty unhealthy. That should go down and it will. Samsung seems to be doing well so far.”
“The cold, hard reality is that shortages are a fact of life in semiconductors, as are horrific gluts.”
“What we are flippantly labeling as TSMC we really mean is the AI supply chain. And that supply chain is as complicated as you can possibly imagine. Like an iceberg, it looks big enough on the surface of the water, but goes way far deeper underneath. TSMC has thousands of suppliers in two categories: Equipment like the famed ASML lithography tools and materials like photoresist, silicon wafers, acid etch gases and so on. These are not generalized tools and materials. They are not fungeible like AWS compute units.”
“And then there are the memory guys. You cannot ship an AI system without memory. DRAM and NAND. Nvidia’s AI chips use a special form of DRAM called high bandwidth memory, and they use quite a lot of it. The memory industry is just as consolidated as the logic industry, with the major players being Samsung, SK Hynix and Micron.”
“The chip guys are last to know when the party is getting started, but first they get batoned in the face when the police shut things down.”
He points out that semiconductor manufacturers have log supply chains. He uses a different metaphor (the beer distribution game, or a bullwhip), but back when I was working at Applied Materials, it was described as trains linked together with slinkys. First software takes off, then hardware gets yanked along, then the chip manufacturers get yanked, and then, finally, semiconductor equipment manufacturers get yanked into motion, and shortly after that happens, the bust hits the front of the train, and the trailing cars all crash into each other. It’s a regular boom/bust cycle.
“From 1961 to 2006, electronics consumption in the United States grew positively but with wild volatility swings between 0 to 20%. But for the semiconductor makers, that translates to swings anywhere from 20% to 40%. And for the equipment makers, it is amplified even more, plus or minus 60%. The whip hits particularly hard in the semiconductor industry because of the industry’s long lead times. It takes 4.5 months to fabricate and package a chip. It takes 18 months to 2 years to build a fab. Meaning from shovels down to producing chips, and it takes 12 to 18 months to produce and install something like an EUV machine into the fab. Another 6 months before that machine actually starts patterning wafers.”
“Long lead times mean having to make very long demand forecasts, which leads to extreme volatility swings during up and downturns even if those up or downturns are relatively small.” People forget that in 1998, during the time we now think of as the DotCom Boom, there was a small semiconductor downturn that had Applied Materials forcing employees to take unpaid leave.
“ASML just reported 2025 earnings, and we see the bullwhip in full effect. TSMC raised capital expenditure 35% but ASML announced €13.2 billion of net new bookings. Analysts had expected just €6.32 billion. This is because ASML collected orders not just from TSMC, but also Samsung, Intel and the memory guys. When it rains it pours, right? Again, this is why I fear that another AI foundry would not mean our compute shortage is solved, because ultimately, when those foundries start scaling their capacity, they all go to the same suppliers.”
He goes over how car manufacturers cancelled orders during Flu Manchu, and then scrambled when the economy took off afterwards. “TSMC was trying to discern between double booked orders and real demand, which is not an uncommon experience for them. Customers lie about their own demand all the time, or at least we can say that they are eternally optimistic. TSMC tried to respond in 2022. The Taiwanese giant poured $36 billion into capital expenditure. They went to their suppliers and pushed like no tomorrow.”
“It turned out those customers really were double booking orders and artificially inflating demand. When the macro environment turned in 2022, the automotive, smartphone, and PC chips that were so hot during the COVID era fell out of vogue and customers started cutting orders.”
“Meanwhile, deeper down in the supply chain, TSMC and the rest of the semiconductor industry were getting bullwhipped by COVID hangover. Utilization at TSMC’s multi-billion dollar N7 fabs crashed, Semi analysis wrote in April 2023. Now, Semi analysis data indicates that the 7nm utilization rates were below 70% in Q1. Furthermore, Q2 gets even worse with 7nm utilization rates falling to below 60%. This is primarily due to weakness in both smartphones and PCs, but there is a broader weakness in most segments. A fab’s break even utilization rates are about 60% to 70%. So those N7 Taichung fabs were taking financial losses potentially on the order of hundreds of millions, maybe even billions. The financial burdens of low utilization are another reason why I’m skeptical another AI foundry could have rushed into the AI chip fray to save the day.”
He says that Intel incurred losses during this period due to an unnecessary fab expansion, which is probably true, but that was a secondary factor next to their longer running problem of getting their process wrong.
“ChatGPT was released in November 2022, and that kicked off a massive increase in capex amongst the hyperscalers in particular, but it sure seems like TSMC didn’t buy the hype. That lack of increased investment earlier this decade is why there is a shortage today and is why TSMC has been a de facto break on the AI buildout/bubble.”
“I recall news in mid 2024 of TSMC struggling with CoWoS capacity bottlenecks and yield problems, including one design issue that caused cracks in the Nvidia chips packaging.” CoWoS is Chip on Wafer on Substrate, which involves fabbing an interposer as a substrate for faster connections between your processing chips and memory.
“I also recall news in late 2024 noting how the vendors in charge of making the server racks for Nvidia’s Blackwell servers struggled with overheating, liquid cooling leaks, software bugs, and connectivity issues. Such technical difficulties delayed server deployment until early to mid 2025, creating a weird situation for several months where TSMC was pumping out chips that just went into storage. So that gated things, because you don’t scale until you first fix the technical problems.”
Then there’s the power-scaling issue, which is a whole ‘nuther can of worms.
There’s a lot of talk about a SaaSpocalypse going on thanks to a new AI tool. (SaaS is “Software as a Service.” Instead of hosting your own payroll or sales-tracking or whatever servers, you hire a company that already has cloud software setup to do it and you just tie into that, which can considerably reduce startup costs. A whole lot of successful new tech companies over the last decade plus have been SaaS companies.)
The software sector was jolted overnight with what analysts are calling a “SaaSpocalypse” — a sudden and severe selloff triggered by new artificial intelligence tools unveiled by US AI startup Anthropic. The episode has sharpened investor fears that AI is no longer merely helping software companies but may now begin replacing them.
Anthropic has expanded its enterprise AI platform, Claude Cowork, by launching 11 new plugins aimed at automating a wide range of professional tasks. Claude Cowork is an agentic, no-code AI assistant built for corporate users, allowing companies to automate workflows without writing software. The new plugins are designed to handle tasks across legal, sales, marketing and data analysis functions. The most recent addition is Anthropic’s Claude Legal agent, which can perform routine legal work such as document and contract review, and compliance checks.
Anthropic has said that the tool does not provide legal advice and that all AI-generated outputs must be reviewed by licensed attorneys. Even so, the breadth of automation signals a step change in how much white-collar work AI systems can now perform.
Productivity — Manage tasks, calendars, daily workflows, and personal context
Enterprise search — Find information across your company’s tools and docs
Plugin Create/Customize — Create and customize new plugins from scratch
Sales — Research prospects, prep deals, and follow your sales process
Finance — Analyze financials, build models, and track key metrics
Data — Query, visualize, and interpret datasets
Legal — Review documents, flag risks, and track compliance
Marketing — Draft content, plan campaigns, and manage launches
Customer support — Triage issues, draft responses, and surface solutions
Product management — Write specs, prioritize roadmaps, and track progress
Biology research — Search literature, analyze results, and plan experiments
A lot of those are already automated elsewhere, but I suspect a lot accountants and paralegals just felt a goose strut across their grave. On the other hand, who is really going to turn over, say, Accounts Payable to an AI? One glitch, and your entire bank account is drained…
If it works (a big if, give so many AIs are prone to hallucinations), this is potentially good news for Anthropic and the companies using their tools, and bad for SaaS companies and the employees currently doing those jobs.
I note there’s no plugin for technical writing…yet.
And Google Cloud ended 2025 at an annual run rate of over $70 billion, representing a wide breadth of customers, driven by demand for AI products.
We’re seeing our AI investments and infrastructure drive revenue and growth across the board. To meet customer demand and capitalize on the growing opportunities we have ahead of us, our 2026 CapEx investments are anticipated to be in the range of $175 to $185 billion.”
Remember how Nvidia was going to invest $100 billion in OpenAI? Yeah, not so much.
In September 2025, Nvidia and OpenAI announced a letter of intent for Nvidia to invest up to $100 billion in OpenAI’s AI infrastructure. At the time, the companies said they expected to finalize details “in the coming weeks.” Five months later, no deal has closed, Nvidia’s CEO now says the $100 billion figure was “never a commitment,” and Reuters reports that OpenAI has been quietly seeking alternatives to Nvidia chips since last year.
Reuters also wrote that OpenAI is unsatisfied with the speed of some Nvidia chips for inference tasks, citing eight sources familiar with the matter. Inference is the process by which a trained AI model generates responses to user queries. According to the report, the issue became apparent in OpenAI’s Codex, an AI code-generation tool. OpenAI staff reportedly attributed some of Codex’s performance limitations to Nvidia’s GPU-based hardware.
After the Reuters story published and Nvidia’s stock price took a dive, Nvidia and OpenAI have tried to smooth things over publicly. OpenAI CEO Sam Altman posted on X: “We love working with NVIDIA and they make the best AI chips in the world. We hope to be a gigantic customer for a very long time. I don’t get where all this insanity is coming from.”
Microsoft’s Copilot chatbot has become central to its artificial-intelligence strategy as the company’s close partnership with OpenAI diminishes. But the effort to build it up as a ChatGPT alternative has been tough going.
Confusing brand positioning and interoperability problems have frustrated users, current and former employees who have worked on Microsoft’s AI products said.
Interoperability problems? With a Microsoft product?
Only a small proportion of subscribers to Microsoft’s enterprise suite use Copilot, and the percentage who favor it over Google’s Gemini or other tools has decreased in recent months, according to data reviewed by the Journal.
The stakes are high for Microsoft because Copilot is core to a push by Chief Executive Satya Nadella to transform Microsoft into an AI-first company, much as he transformed it into a cloud-first company around a decade ago. Copilot is one of Nadella’s top priorities, current and former executives said.
Microsoft shares tumbled after its earnings report last week sparked investor concern that growth in its most important unit, the Azure cloud-computing business, is slowing, and that its AI business is reliant on OpenAI while Copilot remains unproven. Shares fell nearly 3% Tuesday amid a slide in software stocks prompted by fresh concerns that AI tools will make enterprise subscriptions less necessary.
For other AI companies, we merely suspect they’re evil. For Microsoft (and Google), we already know they’re evil…
Happy Anti-Communism Week everyone! (In addition, of course, to May 1st being one of two Victims of Communism Day.) The #SchumerShutdown ends with a whimper, a whole lot of SNAP fraud has been uncovered, more Democrats committing fraud, Chip Roy wants a complete immigration halt, Ukraine hits a bunch more Russian oil refineries, some semiconductor shenanigans, another company leaves Delaware for Texas, some tech companies in trouble, an interesting new pistol design, and a novel theory on “AI-related layoffs.”
It’s the Friday LinkSwarm!
As a side note, the mosquitos have been brutal the last few days. Possibly because it’s been a very warm (though largely dry) November, and the bats have already migrated south.
President Donald Trump on Wednesday night signed a continuing resolution at the White House that ends the record-breaking 42-day federal government shutdown.
The Senate passed the resolution on Monday and the House passed it earlier Wednesday evening. The resolution will keep the entire government funded through Jan. 30, and extends funding for military construction, Veterans Affairs, the Department of Agriculture, and Congress beyond that, through Sept. 30.
Trump slammed Democrats for causing the shutdown by refusing to go along with a clean continuing resolution for over a month, and urged voters to remember the party responsible for causing the six-week-long chaos during next year’s midterms.
“Republicans never wanted a shutdown and voted 15 times for a clean continuation of funding,” Trump said. “The Democrats shutdown has inflicted massive harm … So I just want to tell the American people, you should not forget this when we come up to midterms and other things. Don’t forget what they’ve done to our country.”
The resolution gives backpay to many federal workers and reinstates employees who were fired during the shutdown, but does not include an extension of Affordable Care Act subsidies despite it having been a key Democratic demand in the shutdown. The subsidies are set to expire at the end of the year.
And what did Chuck Schumer get for shutting down large portions of the federal government for more than a month? Two things: “Jack” and “Squat.”
I hear that if you call Senate Minority Leader Chuck Schumer’s office, the hold music is Cheap Trick’s “Surrender.”
Last Tuesday night, Democrats were jubilant, convinced they had just inflicted the first of many consequential defeats upon their detested foes, President Trump and the Republican Party. And now here we are, six days later, and Democrats are once again disappointed, infuriated, and at each other’s throats.
For the past 41 days, Republicans have had 53 senators willing to reopen the government, joined by Catherine Cortez Masto of Nevada, John Fetterman of Pennsylvania, and “independent” Angus King of Maine, who caucuses with the Democrats. But it requires 60 votes to cut off debate and bring the legislation to the floor for a vote, and thus to reopen the government, Republicans needed at least four more Democrats to change their mind.
Last night, five additional Democratic senators agreed to vote to reopen the government — and in the eyes of their fellow Democrats, effectively surrendered. Tim Kaine of Virginia, Dick Durbin of Illinois, Maggie Hassan of New Hampshire, Jacky Rosen of Nevada, and Jeanne Shaheen of New Hampshire shifted their positions.
Those eight agreed to reopen the federal government at current funding levels through January 30, and in exchange, all they needed was a pledge from Senate Majority Leader John Thune of South Dakota to hold a vote on legislation to extend the Obamacare exchange premium subsidies by the second week of December.
There are one or two other deal-sweeteners in there for Kaine, notably an attempt to reverse more than 4,000 federal layoffs the Trump administration announced in the shutdown, and language to prevent future layoffs through January 30.
Snip.
Republicans just got the government reopened in exchange for a promise of a vote — not even promise of passage! — and rehiring government workers who were on the job on September 30. That’s a very small price to pay, and Republicans didn’t have to get rid of the filibuster, the ultimate short-term gain, long-term loss for Republicans in the Senate.
Across three-fifths of the United States, the Trump administration has found half a million people receiving SNAP benefits twice over and 5,000 dead people receiving them. In deep blue states, the fraud is probably much worse.
It is important to clarify that 20+ states out of the 50 did not comply with the federal government’s request for information on SNAP beneficiaries, likely because they are trying to hide how many illegal aliens are illicitly receiving food stamps. So the horrifying numbers revealed by U.S. Secretary of Agriculture Brooke Rollins on Laura Ingraham’s Fox News show, The Ingraham Angle, are actually incomplete, and will probably be much higher if the administration can make radical Democrat states provide the necessary data.
Snip.
The secretary continued to list off food stamp recipient statistics: “80% [are] able-bodied Americans, meaning they can work, they don’t have small children at home, they’re not taking care of an elderly parent. They can work, and they choose not to work, of course, because they’re getting significant benefits from the taxpayer.”
We need to restore shame to able-bodied adults living on the public dole.
(Hat tip: Stephen Green at Instapundit.)
A Texas congressman is proposing a “freeze” on all immigration until the federal government fixes the country’s broken system.
U.S. Rep. Chip Roy (R–TX) said Wednesday he is introducing a bill called the “Pause Act” that will freeze all immigration until Congress achieves certain objectives, including reforming chain migration and birthright citizenship and ending H-1B visas.
He said the nation’s record-high foreign-born population is creating “a cultural problem about who we are as Americans.”
Roy, who is in a four-way race to be the Republican nominee for Texas attorney general in 2026, explained his proposal on The Benny Show.
In addition to the immigration freeze and related reforms, Roy called for revisiting Plyler v. Doe, a case originating in Texas that resulted in a 1982 U.S. Supreme Court decision requiring states to fund the education of illegal alien children.
Roy also said his bill would require vetting people for their adherence to Sharia law.
“Why are we importing any human being that is adherent to Sharia law, which is totally contrary to the Constitution, and our values, and Western civilization?” Roy asked host Benny Johnson.
“In Texas, we’ve been dealing with the brunt of the illegal immigration influence. But now we’re seeing, I think, the ramifications of the H-1B system and how it has been abused, in addition to chain migration and diversity visas, which we’ve been trying to fix for a long time, and we’ve been unable to do so,” said Roy.
Mostly agree with this, though there would probably have to be a way for individual exceptions to be made (say, a foreign Christian under a death threat from jihadists, or a Russian or Chinese defector, or a foreign NBA draft choice). But it should be so narrow as to require the personal approval of DHS Director Kristi Noem…
There are Somalis in Minnesota who wouldn’t vote for far leftist Somali Omar Fateh because he was from a different Somali clan, and they want members of the rival clan kicked out of the country…
They also hit multiple targets in Novorossiysk, including both the oil terminal and the S-300/400 system defending it. Also, there’s no way I can donate €100 right now, but I really want one of those “This Is Fine” patches…
Orchestrating Over 180 Anti-Trump Lawsuits Through CREW: As co-founder of Citizens for Responsibility and Ethics in Washington (CREW), Eisen led hundreds of ethics complaints and lawsuits against the Trump administration, often perceived as partisan harassment that politicizes oversight and strains constitutional separation of powers.
Snip.
Involvement in USAID Funding Scandal: Accused of ties to $17M misappropriation via family-linked NGO, raising corruption concerns in foreign aid.
Plenty more at the link.
(Heavy sigh) Look, I’ve been avoid the whole stupid Tucker Carlson thing because he hasn’t been a particularly important part of the mediascape for a while, and plenty of other people were already dog-piling him. Yet, this week he seemed to turn up some pretty interesting information on would-be Trump assassin Thomas Crooks. Namely that he was a pro-Trump supporter…until he radically changed his tune in early 2020.
On July 19, 2019 Crooks writes: “Ilhan Omar and others are invaders and should honestly be killed and their dead bodies sent back.”
On July 20, 2018, Crooks writes: “If youre saying trump is a bad president you arent a patriot as trump is the literal definition of Patriotism”
Seven hours after that comment, Crooks writes: “I hope a quick painful death to all the deplorable immigrants and anti-trump congresswoman who dont deserve anything this countru [sic] has given them”
Later that evening he wrote: “Everyone of the Trump hat-ing democrats deserve to have their heads chopped of and put on steaks for the world to see what happens when you fuck with America”
These types of comments continued for months, “and became increasingly violent.”
“If any of the democratic candidates win. They wont be in there for long. Because unlike the dems we have guns and lots of them”
He also quoted Mao – writing “The only real political power comes from the barrel of a gun.”
The Change:
In early 2020 as the pandemic shifted into the headlines, crooks “radically” changed – writing of “trumps stupidity.”
He then began to mock the idea of the deep state – writing that “The deep state is simply made up of anybody who dis-agrees with the right wing. Conversation over.”
In Feb. 2020, Crooks called out Trump supporters as “brainwashed,” and a “cult.”
Later that day, Crooks called Trump a racist.
And in April 2020 when the COVID panic was in full swing, Crooks became pro-lockdown, writing “It seems that you people don’t understand that sometimes Public safety comes before your Personnel rights.”
He then wrote: “…going to a chinese new years party in america isn’t putting you at risk for corona virus because believe it or not viruses don’t spread through race like Tucker Carlson probably told you.”
In May of 2020, Crooks called Republican concerns over voter fraud “ignorant.”
He then wrote a comment that sounded like a “digital manifesto,” Carlson reports.
“they only way to fight the gov is with terror-ism style attacks, sneak a bomb into an essential building a set it off before anyone sees you, track down any important people/politicians/military leaders etc and try to asasinate them. Any sort of head fight is suicide and even ambush/surprise attacks likely aren’t going to end well.”
Sounds like another “known wolf,” doesn’t it? And the assertion that “there’s no deep state” (combined with what else we know about the assassination) makes you go “Hmmm.”
Senator Mike Lee (R-UT) is pushing back on the idea that the Affordable Care Act (ACA), known as Obamacare, has made health insurance costs more affordable, saying, “Obamacare makes everyone else poor.”
Lee shared a graphic, first posted by President Trump on Truth social, showing how major health insurance company stocks have performed since the ACA was enacted in 2010 to November 2025.
The seven major health insurance companies depicted on the graph show gains of anywhere from 414% to 1177% in their stock prices between March 2010 and November 2025.
Health insurance companies are making money hand over fist—not because they’ve discovered new & innovative ways of making Americans healthier, but because Obamacare insulates them from competition while giving them massive subsidies
Lee called out the insurance providers, noting that they’re “making money hand over fist” but not because they are providing “new & innovative ways of making Americans healthier.”
Instead, Lee says, these health insurance companies are prospering due to the bureaucratic barriers that prevent new competition and from massive subsidies from the federal government.
The Saudis are getting ready to purchase 48 F-35s.
California Governor Gavin Newsom’s former chief of staff Dana Williamson was arrested Wednesday in an FBI corruption probe and charged with multiple counts of bank and wire fraud.
Federal authorities accused Williamson, 53, of participating in a scheme to funnel campaign money from former federal Secretary of Health and Human Services Xavier Becerra into a personal account. Sean McCluskie, Becerra’s former chief of staff, was named as a co-conspirator.
“This is a crucial step in an ongoing political corruption investigation that began more than three years ago,” U.S. Attorney Eric Grant said in a statement. “As it always has, the U.S. Attorney’s Office will continue to work tirelessly with our law enforcement partners to protect the people of California from political corruption.”
Williamson and McCluskie stole $225,000 between February 2022 and September 2024 from Becerra’s dormant state campaign fund, the federal indictment says. The Department of Justice investigation into the matter began three years ago, under former President Joe Biden’s administration, FBI Sacramento Special Agent in Charge Sid Patel said.
“The news today of formal accusations of impropriety by a long-serving trusted advisor are a gut punch,” Becerra told local outlet KCRA 3.
Williamson was hit with 23 charges, including conspiracy to commit fraud, conspiracy to defraud the United States and obstruct justice, subscribing to false tax returns, and making false statements, the U.S. Attorney’s Office said.
Democratic political consultants are so money-hungry they’ll rake graft off other Democrats. Big fleas have little fleas…
Man, it sure seems like a lot of prominent Democratic politicians are committing mortgage fraud. ‘Rep. Eric Swalwell (D-Calif.) was hit with a federal criminal referral for alleged mortgage and tax fraud related to his purchase of a $1.2 million home in Washington, DC, that he claimed as a primary residence.” As Dwight notes: “You may remember Eric Swalwell for such hits as ‘banging a Chinese spy‘” and “threatening to use nuclear weapons against gun owners.”
So a Chinese fraudster connected to Communist intelligence services wandered in from Canada and bought a trailer park next door to a stealth bomber base in Missouri.
This is not the opening line of a surreal joke.
Whiteman Air Force Base is home to our tiny fleet of B-2 bombers, and yet an RV park just a mile away “is one of several properties near U.S. military interests acquired by a web of shell companies, which are ultimately owned by a couple who live in Canada and belong to organizations controlled by disgraced Chinese tycoon and self-described former CCP intelligence ‘affiliate,’ Miles Guo,” according to a bombshell Daily Caller report.
Someone in the federal government needs to get this fixed. Get a warrant to toss the entire trailer park to see what spectrum warfare equipment they might be using, then seize the place under eminent domain for national security reasons.
BREAKING: The Attorney General of Kansas just charged Mayor Jose Ceballos of the City of Coldwater for illegally voting as a noncitizen in several elections.
Not only did he get elected city councilman & mayor as a noncitizen, he also voted. WOW! The six charges come immediately… pic.twitter.com/amhsJJvaZW
‘We now have tools, thanks to the current White House, that we haven’t had in over 10 years,’ said Kansas Secretary of State Scott Schwab, ‘that we can check through the SAVE program, to find out if folks end up on our voter rolls. And they could be a legal resident, but they’re not a citizen. We want to make sure that gets clarified.’
Deport him.
Least you think I’m never critical of President Trump, I want to note that his trial balloon for 50 year mortgages is a really bad idea. It’s not a way to build wealth, and the only party getting rich off that deal is the banks. Financially, you’d be better off living in a van for a few years until you can afford a real mortgage.
This certainly has a whiff of scandal: “Houston ISD Sues Texas Attorney General to Block Release of Emails with California PR Firm. The district wants to keep communications with a PR firm from becoming public.”
Houston Independent School District (ISD) filed a lawsuit against Texas Attorney General Ken Paxton to block the release of emails between the district and Los Angeles public relations firm Bryson Gillette.
Bryson Gillette is former Obama aide Bill Burton’s public relations firm run by Democratic operatives. White House Press Secretary Jen Psaki was a senior adviser there.
Bryson Gillette was involved with the district’s rebranding in May. Houston ISD’s Chief of Public Affairs and Communications Alex Elizondo told an advisory committee that the district had a brand identity that “isn’t inviting or super compelling.”
A Houston ISD spokesperson said the rebrand came at no additional cost to the district and coincided with the rollout of new district and campus website designs scheduled for August.
According to the suit, ABC13 News requested one month of emails between Houston ISD and Bryson Gillette on May 8, which the district received on May 9. On May 21, the district asked Paxton to withhold documents and submitted the required materials to the Office of the Attorney General (OAG) asserting attorney-client privilege.
The OAG issued a ruling on August 12, ordering Houston ISD to release the records and stating that attorney-client privilege did not apply.
Houston ISD filed a lawsuit in Travis County on September 11, looking to block the emails from release.
California Gov. Gavin Newsom has repeatedly slurred a federal judge by name, echoing President Trump’s history of diatribes against judges even before the current Democrat started copying the former Democrat’s social media style and insulting nicknames.
The perceived contender for the 2028 Democratic nomination for president may cluck his tongue again when he sees the latest order from U.S. District Judge Roger Benitez in a lawsuit against The Golden State’s alleged mandate on school districts to hide from parents their children’s asserted gender identity at odds with sex.
The President George W. Bush nominee ordered state Attorney General Rob Bonta and the California Department of Education to “show cause” on why they should not be sanctioned for “misleading” Benitez so he would remove them from the suit by teachers who allege their school district muzzled them and parents of “gender incongruent children.”
The state defendants’ motions to dismiss and opposition to the plaintiffs’ motion for summary judgment claimed that CDE had “withdrawn and conclusively replaced” an FAQ page that contained the challenged policies, which they claimed was the “only basis” for being named defendants and thus made the case moot, Benitez wrote.
“However, evidence demonstrates that the CDE may have merely moved the challenged content of the FAQ page to a new, required ‘PRISM’ training module,” as documented by the plaintiffs’ lawyers at the Thomas More Society, the judge said, ordering state defendants to explain their behavior Nov. 17 in court.
“From day one, officials from the local school district all the way to the governor’s mansion have tried to deflect responsibility” but “have now been caught not only lying to California taxpayers but attempting to mislead the Court to escape accountability,” TMS Executive Vice President Peter Breen said in a statement.
Based on early voting and some voting day results, no candidate secured over 50 percent of the votes cast, so the two highest vote recipients will move on to the runoff election, the date of which remains to be set by Gov. Greg Abbott.
The North Texas Senate seat was vacated when former state Sen. Kelly Hancock (R-North Richland Hills) resigned and was appointed by Abbott to fill the vacancy as the Texas Comptroller of Public Accounts.
Snip.
Wambsganss was endorsed early on in the race by Lt. Gov. Dan Patrick, who has vocally opposed expansion of casino gambling in Texas. She has also received support from Texans United for a Conservative Majority (TUCM), which opposes gambling expansion as well. Texans for Lawsuit Reform, a group not frequently on the same side of an electoral battle as TUCM, has also supported Wambsganss.
The Substrate startup has been doing the rounds in the news lately, thanks to its proposition of making chips using particle accelerators and X-rays instead of conventional EUV lithography, claiming it can eventually have angstrom-sized features at only $10,000 per wafer—in U.S. fabs, no less.
Oooo, where to begin? IBM tried experimenting with x-ray lithography in the 1980s and 90s, and found the rays were too energetic to use because they damaged wafers.
And technically, semiconductor equipment manufacturing already has particle accelerators: they’re called ion implanters and they’re used for gate dopants. Axcelis (formerly Eaton Semiconductor) and Applied Materials (both companies I worked for in the 1990s) make good money selling them, and there are a whole bunch of limits-of-physics reasons why you can’t use them for lithography. (Historical trivia: Applied Materials used to have their own in-house designed ion implanters, but their current offerings trace back to a competitor named Varian they bought in 2011.)
Those are bold claims, and an article by Fox Chapel Research (FCR) is seriously questioning whether they pay off.
The write-up is the first of two parts, and takes aim at not just the seemingly outlandish technological claims, but also at the track record of the venture’s founders, as well as the overall messaging on Substrate’s website. The start-up is backed by various investment funds, namely but not only Founders Fund, of whom Peter Thiel is part of.
The report says the founders are James and Oliver Proud, who reportedly have no experience in the semiconductor industry, nor do any of the investor funds. James’ latest venture was apparently the Sense sleep tracker, a product that had its inception on Kickstarter to the tune of $2.5m, but didn’t materialize until funding rounds raised over $50m. After release, the tracker was found to be borderline useless by reviewers and drew many comparisons to a scam.
ClowfishTV floats an interesting theory: A lot of those “AI-related” layoffs are just companies using that as an excuse to purge the woke from the ranks.
For more than half a century, Delaware stood as America’s corporate capital, renowned for its business-friendly laws, respected Chancery Court, and consistent legal rulings. But in recent years, leftist activist lawmakers and politicized judges have undermined that very foundation, sparking an exodus of major companies seeking stability and fairness to more welcoming states like Texas and Nevada.
On Wednesday morning, Coinbase joined the growing exodus, announcing on its website and in a Wall Street Journal op-ed by Chief Legal Officer Paul Grewal that it is moving its state of incorporation from Delaware to Texas.
“For decades, Delaware was known for predictable court outcomes, respect for the judgment of corporate boards, and speedy resolutions,” Grewal wrote in the op-ed.
However, he pointed out that recent inconsistent Chancery Court rulings and reliance on ad hoc legislative fixes do not create a sustainable business environment.
“Our decision to leave is about ensuring more predictable opportunities for the company, our shareholders, our customers and the new on-chain ecosystem we’re building,” he noted, adding, “Texas offers efficiency and predictability, in part thanks to recent corporate-law reforms that enhance governance flexibility and legal predictability.”
Grewal concluded, “Delaware wasn’t always the go-to choice for companies. At one point it was New Jersey, and before that New York. We’ve reached another inflection point in corporate law. The more states that can credibly attract companies, the better—and we’d like to see Delaware step up to stay in the mix. But as for Coinbase, you can find us in Texas….”
The exodus list from Delaware increases:
Tesla: Moved to Texas.
SpaceX: Moved to Texas.
Trump Media & Technology: Moved to Florida.
Dropbox: Moved to Nevada.
TripAdvisor: Moved to Nevada.
Roblox: Moved to Nevada.
Pershing Square: Moved to Nevada.
The Trade Desk: Moved to Nevada.
AMC Networks: Moved to Nevada.
Madison Square Garden Sports: Moved to Nevada.
Fidelity National Financial: Voted to move to Nevada.
So was a Delaware judge letting Elon Musk know how much he hated him for supporting Trump worth it?
“750-meter-long Chinese bridge partially collapses just weeks after opening.” From a landslide, but I’m betting the usual Chinesium/tofu drugs construction quality didn’t help…
At its Midlothian Data Center, alongside a number of state officials, Google announced a $40 billion data center infrastructure investment in Texas.
Sundar Pichai, CEO of Google and its parent company Alphabet, said that the investment will go toward the construction of three data center campuses located in Armstrong and Haskell counties.
Armstrong County is southeast of Amarillo. Haskell County is north of Abilene. Both counties have a whole lot of nothing there.
“They say that everything is bigger in Texas – and that certainly applies to the golden opportunity with AI,” Pichai stated.
“This investment will create thousands of jobs, provide skills training to college students and electrical apprentices, and accelerate energy affordability initiatives throughout Texas.”
Gov. Greg Abbott said the new Google AI data center announcement is “a Texas-sized investment in the future of our great state.” U.S. Sens. John Cornyn (R-TX) and Ted Cruz (R-TX) were also in attendance, along with Congressman Jake Ellzey (R-TX-06) and a number of other local officials.
“Google’s $40 billion investment makes Texas Google’s largest investment in any state in the country and supports energy efficiency and workforce development in our state,” Abbott added. “We must ensure that America remains at the forefront of the AI revolution, and Texas is the place where that can happen.”
Google has already officially broken ground on two other data centers in the state: one in Midlothian in 2019, and the other in Red Oak in 2023. The technology company has since announced further investments into data and cloud infrastructure to the tune of $2.7 billion.
This most recent announcement of a $40 billion investment will focus on building out infrastructure to support the three new data centers. Some of that investment includes building up new and existing energy storage facilities, advanced water use operations, and partnering with universities to offer technology training and education.
My reservations about Google’s AI notwithstanding, that will offer a bunch of real jobs for real Texans…assuming the AI bubble doesn’t burst before they get built.
Speaking of tech firms in trouble, video game maker Ubisoft (makers of Prince of Persia and Assassin’s Creed games) has not only postponed an earnings report, they’ve suspended stock trading. I can’t recall a single instance where that was a good sign. The last time we mentioned Ubisoft, they were pissing off Japanese gamers for including a black samurai in one of their games…
Ian McCollum looks at the new Rideout Arsenal Dragon, a low-bore-axis, lever-delayed pistol. It’s funky looking and has some interesting features, including complete non-tool disassembly. However, the price point would make it way too expensive to consider even if I had a job, he experiences several firing malfunctions testing it (though it is a prototype), and I fear the tiny little tabs it uses may not hold up under heavy use. Still a pretty interesting design.
Having been out of work for a while, people ask me if I’ve been displaced by AI. My reply is “Not directly.” Indirectly, I think the factor is that just about all venture capital funds are throwing money at AI-related companies, meaning non-AI startups that might need technical writers aren’t being funded.
Having lived through the dotcom bust, I have to wonder how bad the fallout from the AI bubble bursting is going to be. The dotcom bubble wasn’t all beenz and pets.com…
…and it fueled a whole lot of subsidiary bubbles: PC and server manufacturers to run the software, Microsoft to run the PCs, semiconductor manufacturers to provide chips for the PCs and servers, semiconductor equipment manufacturers to build those same chips, network gear providers to connect the data centers, etc. And that only scratches the surface. Cisco, Dell, Compaq, Netscape, Yahoo, AOL, Oracle, Sun, HP, Intel, AMD, Applied Materials (where I worked 1997-2001), LAM Research, KLA-Tencor, all had huge growth spurts during the dotcom era as their customers spent big money to get “on the web.” Even dinosaurs like IBM, Motorola and DEC enjoyed business boosts from the era. All suffered in the wake of the dotcom bust, some being bought up or disappearing into other companies.
The same is true of today’s multi-trillion dollar AI boom. Companies like OpenAI may get the most ink, but a whole lot of other companies are getting boosted as well. Some of the names are even the same as the dotcom bubble: Microsoft, Oracle, AMD. Applied Material stock has gone through the roof now that I don’t own any. Cisco is just getting back to the level of their record stock highs during the dotcom era.
Data centers are supposedly planned or going up all around the country, and so many are buying Nvidia’s AI chips that they now boast a breathtaking $4.88 trillion market cap.
Someone is supposedly going to build a $165 billion data center in New Mexico near El Paso. That number is kind of insane, as you could build 5-10 cutting edge fabs for that kind of money. I don’t see how you get any sort of ROI on such a big upfront investment.
When the AI bubble busts (not if, when), a whole lot of these projects will likely come a cropper. A lot of people will have made a lot of money, AI will probably revolutionize a few industries and prove mostly hype in others, and retail investors and bondholders will be left holding the bag. Like the doctom bust, a lot of new companies will rise from the wreckage and start the cycle all over again.
And companies that can best take advantage of idle data centers and newly abundant nuclear power (assuming the boom even lasts that long) will be the ones poised to help build the next tech boom…
President Trump announced his tariffs on countries, especially those that tariff goods from the United States.
President Donald Trump on Wednesday imposed sweeping new tariffs on all imported goods and unveiled a detailed list of reciprocal duties targeting more than 60 countries, asserting that the move is necessary to combat trade imbalances and restore U.S. manufacturing.
“This is Liberation Day,” Trump said during a Rose Garden ceremony, holding up a printed chart of countries and their new tariff rates. “For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike.”
The tariffs, which he described as “reciprocal,” fulfill a key campaign pledge and are aimed at pressuring trade partners to lower their own barriers. The administration expects the new rates to remain in place until the U.S. narrows a $1.2 trillion trade imbalance recorded last year.
But the extensive list of tariffs also threatens to upend the U.S. economy, as many — but not all — economists say they amount to taxes on American companies that will be passed down to consumers.
Trump held up a chart while speaking at the White House, showing the United States would charge a 34 percent tax on imports from China, a 20 percent tax on imports from the European Union, 25 percent on South Korea, 24 percent on Japan and 32 percent on Taiwan.
The centerpiece of the announcement is a 10 percent universal baseline tariff on all imports, effective immediately. For instance, Chinese imports are now subject to cascading tariffs of 10, 20 and 34 percent, for a total of 54 percent.
In addition, Trump’s administration imposed country-specific reciprocal tariffs on nations it accuses of unfair trade practices — including India, Vietnam, and the European Union, in adding to China. The rates are calibrated at approximately half the rate those countries impose on U.S. goods.
For example, China, which Trump said charges 67 percent in tariffs on U.S. goods when factoring in non-tariff barriers, will now face a 34 percent reciprocal tariff under the new system, in addition to the 10 percent baseline tariff and the 20 percent tariffs already in effect. Vietnam, assessed at 90 percent, will face a 46 percent tariff; India at 52 percent will now see 26 percent duties; and the EU, which imposes 39 percent, will be met with a 20 percent response, according to the White House chart.
This is a “devil in the details” issue that has a lot of ramifications depending on how the directives are written. But several of those countries are big players in semiconductors, so here’s a quick and dirty look at winners and losers if those tariffs stay in place a significant amount of time.
The main countries here, along with the reciprocal tariffs being applied to them:
Taiwan (32%)
South Korea (25%)
China (34%)
European Union (not a country, but they play one on TV) (20%)
Japan (24%)
Singapore (10%)
Israel (17%)
Save a few smaller, older fabs here and there, that’s pretty much 99% of semiconductor manufacturing, though Vietnam (46%) and the Philippines (17%) do a lot of semiconductor package assembly work, and the tariffs may apply to them, depending on wording.
So let’s look at the business Losers and Winners in the space. (Note: You might find this post useful, as it defines some of the semiconductor industry terms used here.)
Losers
TSMC: As the world’s biggest and most important chip foundry, the Taiwanese tariffs will hit TSMC hard. Their U.S. fab in Arizona isn’t ready for production yet, so all their chips will (theoretically) get hit with tariffs, assuming Trump doesn’t grant them a waiver because they’re already constructing a plant. But if they do go into effect, possibly even more heavily impacted will be:
TSMC customers, including Apple, Nvidia and AMD. All three get their very highest-end, cutting edge, sub-10nm chips fabbed there. For Apple, the M-series and A-series chips made there form the heart of all their Macs and iPhones. Likewise, Nvidia gets its highest end GPU/AI/etc. chips fabbed by TSMC. AMD’s most powerful CPU’s are also fabbed by TSMC, though some lower end chips are made elsewhere (like GlobalFoundries).
Tokyo Electron: Japan’s biggest semiconductor equipment manufacturer assembles pretty much all their equipment in their home country. 24% tariffs may make their equipment uneconomical compared to rivals Applied Materials and LAM Research.
South Korean DRAM manufacturers Samsung and SK Hynix: 25% tariffs will definitely impact sales in a market segment whose overall margins (robust in booms, and barely breaking even during busts) are thinner than others.
Every American electronics company that uses DRAM. Which is pretty much every American electronics company.
Every American AI boom company. Their data center costs are going up, while those of their foreign competitors are not.
Korean flat panel display manufacturers Samsung and LG Semicon, who between them control over 50% of the market.
Every American TV and monitor manufacturer, the vast majority of which have their devices manufactured overseas.
UMC: They’d fallen woefully behind TSMC for foundry work, and they won’t be winning much additional American business now.
Every company trying to build a sub-10nm fab in the U.S., as steppers from Netherlands-based ASML just got more expensive and the competition to obtain them might have increased.
Pretty much every fab in China just got more screwed…but they were pretty screwed (and trailing badly) before.
American fabless chip startups: Their costs for getting chips to market probably increased.
Winners
Applied Materials, LAM Research and KLA Tencor. Buying competing Tokyo Electron equipment just got more expensive, and a bunch of companies now have incentives to build fabs in America.
Intel: Assuming they’ve finally got their process technology sorted out (a big if), they’re well-positioned to take CPU market share from AMD and to grow their under-performing foundry business.
Micron (sort of): As the only American DRAM manufacturer, they can probably earn more per each chip produced domestically. But Micron has a lot of overseas fabs these days, and building new domestic DRAM fabs will take years.
GlobalFoundries: The costs of their global competitors just increased, so they can probably win more business for their domestic foundries…if they have the available wafer starts. But they have a lot of foreign fabs as well.
Samsung‘s US foundry business. Presumably the wafer starts for their Austin and Taylor fabs will see increased demand.
Maybe Texas Instruments, but I’m not sure how much mixed-signal and analog competition they have, and that’s their bread and butter.
Neutral
ASML: Being in the Netherlands and having TSMC as their biggest customer, you figure they’d be hurt, but no. You can’t get EUV steppers from anyone else, and I get the impression they’re building EUV steppers as fast as they possibly can already. Anyone building a cutting-edge fab will just have to pay more to get them.
Tower Semiconductor: Half their foundries are in Israel and half in the U.S., so I figure it’s a wash.
That’s my quick and dirty analysis. Of course, Trump is using tariffs like a battering ram to smash foreign tariffs, and if he’s immediately successful, there probably will only be minor hiccups in the global supply chain. But if not, a whole lot of disruption might lie ahead, and it usually takes a minimum of 3-5 years to bring a new fab online.
I know that any time I talk about semiconductors, a significant percentage of my readership’s eyes glaze over, but this is Big Freaking News.
Intel shares rose 6% in premarket trading after Reuters reported that Taiwan Semiconductor Manufacturing, or TSMC, had approached US chip designers Nvidia, Advanced Micro Devices, and Broadcom about taking stakes in a joint venture that would operate the struggling chipmaker’s factories.
Four sources told Reuters that the Taiwanese chipmaking giant would run Intel’s foundry division under the new proposal, producing chips tailored to customer requirements but not owning more than 50%. The sources added that Qualcomm has also been approached about the venture.
TSMC is far and away the largest chip foundry (a company that builds chips for other companies, but doesn’t design its own chips) in the world, and the one with a clear technological lead over everyone else. TSMC has the third largest market cap of any semiconductor company.
Broadcom is the second-largest semiconductor company in the world by market cap, and they have their fingers in a lot of different pies: networking, wireless, storage, you name it. They’re generally considered a fabless chip designer, but the company is such a weird amalgamation of other companies (what we call Broadcom used to be Avago until they acquired Broadcom in 2016) that they might still have a lower end fab or two lurking somewhere in the company. They also use TSMC as a foundry, though I’m not sure how extensively. They’ve also recently made a big move into software, acquiring CA Associates and VMWare, among others.
Nvidia is a fabless chip designer (the sort of company that contracts with foundries to fab their chips) that went heavily into high end GPUs (the chips that render video for your PC, in Nvidia’s case geared toward high end games and other highly demanding tasks), then crypto-mining chips, and more recently into chips geared for AI applications, all very lucrative market segments, which has made Nvidia not only first among semiconductor market cap, but among the largest companies by market cap in the world (along with Apple and Microsoft). Nvidia has their chips fabricated by TSMC, as well as some by Samsung and GlobalFoundries, which was spun off from…
Advanced Micro Devices, which used to be an Integrated Device Manufacturer (or IDM, a company designs their own chips and builds them in their own fabs) creating Intel-compatible CPUs, but eventually spun off their fabrication plants as GlobalFoundries because they couldn’t keep up with Intel’s capital spending. AMD also has some of their highest end chips fabricated by TSMC. If AMD were to help take over Intel, it would be an extremely ironic ending to a longtime rivalry.
Qualcomm is a lot like Broadcom: A mostly fabless design house with its fingers in lots of different pies, and they’re about the sixth largest semiconductor company by market cap. Broadcom tried to acquire Qualcomm in 2017-18 and was blocked by the Trump45 administration.
Intel is an IDM, and for decades was the undisputed “chipzilla” of the semiconductor world. Intel’s CPUs were the dominant processor for the vast majority of the last 40 years and a huge ingredient for helping create the PC revolution. Intel used to be the technology process leader as well, but somewhere along the way they screwed up their sub-10nm process nodes, allowing TSMC to take the process technology crown. Indeed, they screwed up so badly that they’ve been forced to have TSMC fab some of its highest end chips. Despite having a vast number of fabs, Intel’s market cap has slipped down to 16th among semiconductor companies.
Back to the piece:
The sources noted that the Trump administration is exploring ways to revive Intel and strengthen US manufacturing under the ‘America First’ agenda. They added that TSMC’s joint venture pitch to chip designers took place before the company, alongside President Trump, announced plans last month to invest $100 billion in semiconductor manufacturing in the US, building on its existing $65 billion investment in its Phoenix, Arizona, factories.
Any deal between TSMC and Intel would be subjected to approval from the Trump administration.
If the Trump Administration’s goal is to increase available sub-10nm wafer starts (and it should be) and maintain American control of Intel’s fabs, then this proposal is a win-win. Intel’s fabs plus TSMC’s tech would create a foundry powerhouse. It wouldn’t happen overnight (nothing in semiconductors happens overnight), but probably in 12-24 months, depending on how quickly the new entity can acquire the necessary pieces of equipment to upgrade Intel’s fabs to thee new tech (I’m guessing that the availability of ASML steppers will, as usual, be the gating factor). And all this without the tens of billions in taxpayer subsidies for the CHIPS Act.
If this goes through, it would have mostly winners, with a few losers:
Winners
Every company that’s part of the deal. TSMC gets to radically expand production capacity without spending $20 billion+ to build a new fab. Nvidia, AMD, Broadcom and Qualcomm gain a lot more capacity for expanding production of their high end chips. Ditto for Apple (who’s not part of the deal, but who is TSMC’s biggest customer and a big demand driver for cutting edge fab capacity) and every other consumer of sub-10nm chips.
AMD additionally gets the egoboo of partially taking over its longtime hated rival and confirming it’s crown as the x86/x64 chip manufacturer of choice. Plus their then-risky decision to spin off GlobalFoundries looks like a genius move in hindsight.
The Trump Administration, which gets to take credit for vastly increasing American Foundry capacity at zero additional taxpayer expense and keeps Intel under American control.
Semiconductor equipment manufacturers like ASML, Applied Materials, LAM Research, Tokyo Electron and KLA (short term). It’s likely most or all of those companies (along with smaller players like Axcelis and Teradyne) will receive a bump in extra sales from leveling up Intel’s fabs to run TSMC’s process.
American chip startups: With so much high end capacity becoming available, existing and potential chip startups are going to look like more attractive investment capital opportunities.
ARM Holdings: ARM doesn’t make chips, they’re an IP design house that licenses their functional chip blocks to other chip designers. Just about every foundry and IDM is a licensee (yes, including Intel and TSMC), so unleashing more chip designs will almost certainly result in more royalties for ARM. (Nvidia tried to buy ARM in 2020, and regulators quashed that idea good and hard.)
Intel investors, who will either get a big lump-sum payment or shares in the new, probably far more profitable company (depending on how the buyout is structured).
Even Intel wins long-term by unleashing existing fab capacity to take on new business not tied to its faltering CPU manufacturing model. And actually, with TSMC’s process, Intel has a chance to recover in the CPU space as well.
Losers
Samsung: Along with TSMC and Intel, Samsung (which has both IDM and foundry components) has some of the best sub-10nm process tech in the world. They gain a whole lot of unleashed competition and stand on the outside looking in.
Intel‘s dreams of reclaiming their spot at the top of the heap, and suffering the indignity of being partially owned by AMD. How the mighty have fallen.
Every Chinese fab, which goes from “very far behind” to “even further behind.”
Semiconductor equipment manufacturers (long term): They better enjoy the out-of-band upgrade money from retrofitting Intel’s fabs, as it will likely mean a significant delay in anyone building a new cutting edge wafer fab for quite a while. And having two of their biggest customers team up is probably going to put them under a lot of downward pricing pressure.
GlobalFoundries (and other trailing edge foundries) might lose some business, but there’s very little overlap between Intel/TSMC cutting edge processes and GlobalFoundries trailing-edge fabs. Ditto UMC.
Are there anti-trust concerns with such a heavy accumulation of cutting edge process technology? Oh yeah. Big time. But almost all of those concerns were already there in some form or another thanks to the interconnected “cooperation” nature of the industry. All those companies going in with TSMC were already getting chips fabbed by TSMC. Samsung could try to claim that the deal would result in TSMC having a de-facto monopoly on sub-10nm foundry business, but it wouldn’t start with one, and that business isn’t the whole of foundry business (though it is the most profitable part), much less semiconductors as a whole.
Given that this would go a long way toward achieving Trump’s goal of increasing cutting edge fab capacity in America, I would imagine that the Trump47 administration could very well be persuaded to let this deal go through.
China has launched a massive $47 billion fund, the largest in its history, to bolster its semiconductor industry and establish a local supply chain. This fund, equivalent to 344 billion yuan, is the third phase initiated by the China Integrated Circuit Industry Investment Fund [also known as the National Integrated Circuit Industry investment Fund Company (ICF), or just “Big Fund.”-LP]. It’s worth noting that this amount is twice the total funds raised in the previous phases in 2014 and 2019.
Do you remember the last time I covered where the money went to in those previous phases? The money went to companies like Wuhan Hongxin Semiconductor Manufacturing Co. Result? “Hongxin’s unfinished plant in the port city of Wuhan now stands abandoned. Its founders have vanished, despite owing contractors and investors billions of yuan.”
Or maybe Tsinghua Unigroup. Result? They arrested a whole lot of executives, a lot of money disappeared into various pockets, and “Tsinghua Unigroup abandoned its plan to build DRAM memory chip manufacturing plants in Chongqing and Chengdu in southwest China earlier this year.”
At lot of times, loans and investments are siphoned through four or five different entities from the purposes for which they were originally obtained. Everyone’s trying to get rich, and they hope to survive on smoke and mirrors long enough to get profitable. Imagine if Kleiner Perkins invested $25 million in a software startup, only to find that money was spent on a noodle shop, a used car dealership and a golf club manufacturer.
Sometimes it works. You can build a company on margin, get profitable quickly, and be paying off investors and contractors before anyone realizes how shaky the entire enterprise is.
But you can’t do that with semiconductor manufacturing. The startup costs are simply too high, easily in the billions. Very, very few companies can afford to be in a game that expensive. China’s two biggest semiconductor manufacturing success stories, SMIC and Tsinghua Unigroup, all have have CCP direct government investment.
And bunches of Tsinghua Unigroup executive still got pinched for sticking their snouts into the trough.
My assumption is that, yet again, the funds earmarked for semiconductor companies will be siphoned off into a thousands unrelated pockets. (Though the rest of China’s business climate is sucking so badly that maybe some money will actually fund real semiconductor startups, if only through lack of other money-making opportunities to siphon funds off for.) Sanctions will continue to leak. A few years from now, China will announce the arrests of more executives using the Big Fund to play more investment shell games. And five years from now China will announce an even bigger set of subsidies…
The talks between the US, Japan, and the Netherlands over wider bans on exports of semiconductor technology to China have reportedly seen the three agree to concerted action.
As The Register has often chronicled, the US has restricted exports of critical chipmaking and silicon technologies to China, hoping to prevent its economic and strategic rival from developing military technologies – and to protest human rights abuses.
While the Home of the Brave has spawned many of Earth’s most significant chipmakers and designers – Intel, AMD, Qualcomm and many others have headquarters stateside – other nations also export semiconductor tech to China. The Land of the Free would rather put a stop to that if possible.
The Biden Administration also recognizes that its bans could be seen as creating an opportunity for other nations to cash in on the absence of US vendors in the Chinese market. The three-nation talks therefore have the extra dimension of making sure America’s policies have their desired effect against China and don’t harm the home team.
Those twin desires saw Japan and the Netherlands in talks with the US last week, and according to numerous reports the meetings produced a unified approach to restrict semiconductor exports to China.
Without equipment from the US, Japan and The Netherlands, you can’t equip and run a modern semiconductor fabrication plant.
Peter Zeihan (him again), who has evidently lost a bet requiring him to dress as Gimli, discusses the ramifications.
This is one case where Zeihan gets the generalities right, but is wrong on some specifics.
Right: The idea that China can just forge a complete “alternative” semiconductor supply chain out of thin air to replace western alternatives is indeed “hideously wrong.” “The nature of the semiconductor industry is more of an ecosystem. There are there’s very few places that without, significant industrial build out, could even pretend to do more than two or three steps of it, much less than a dozen or so steps that are necessary.”
However, in conflating semiconductor manufacturing and semiconductor equipment manufacturing (possibly to avoid contracting hypothermia) he’s muddied things up a bit. There are five essential semiconductor equipment manufacturers:
Applied Materials (USA)
ASML (The Netherlands)
KLA (USA)
LAM Research (USA)
Tokyo Electron (Japan)
If you’re building a modern, sub-10nm fab, chances are pretty good you need all five. You have to have an ASML EUV stepper, or else you have to go with trailing-edge machines from Canon and Nikon and deal with the computational pain and complexity of self-aligned quadruple patterning. You need KLA inspection tools to raise and maintain yields, and you need, at the very least, one of AMAT, LAM or TEL to provide the rest. Take away all three and you can’t equip a fab, period.
“We now have an agreement, and very soon the Dutch will formally be joining the sanction system against the Chinese.”
“The best [chips], these are 10 nanometer and smaller. This is typically what’s in your cell phone or in your high-end computers and servers those about 80% percent of them are actually fabricated in Taiwan, with another 20% in South Korea.” No. Although TSMC and Samsung are indeed leaders in this space, Intel has had 10nm processes running in their advanced fabs is Hillsboro and Chandler for a while, even though they’ve suffered yield problems.
His assertion that only China does legacy 90nm and above processes is false, as a look at this list of wafer fabs will attest, as there are a lot of companies (TI, TowerJazz, Oki, Mitsubishi, etc.) still profitably running older nodes, though many are comparatively funky technologies like BiCMOS, Analog, GaAs, etc.
Some quibbles about the details, but he gets the big picture right.
As for his suggestion that companies stick to over 10nm nodes, well, I don’t think much of it. Those that can do >10nm nodes will and push the technology forward, and those that can’t afford to won’t…
The administration of US President Joe Biden next month is to broaden curbs on US exports to China of semiconductors used for artificial intelligence and chipmaking tools, several people familiar with the matter said.
The US Department of Commerce intends to publish new regulations based on restrictions communicated in letters earlier this year to three US companies — KLA Corp, Lam Research Corp and Applied Materials Inc, the people said, speaking on the condition of anonymity.
Every wafer fabrication plant in the world uses equipment from one of those three companies. Applied Materials and LAM Research (along with Tokyo Electron) have their fingers in almost all areas of chipmaking equipment (PVD, CVD, Etch, etc.), while KLA (formerly KLA-Tencor) dominates the wafer inspection equipment segment. Add ASML in the Netherlands, and those five absolutely dominate the semiconductor equipment market.
The letters, which the companies publicly acknowledged, forbade them from exporting chipmaking equipment to Chinese factories that produce advanced semiconductors with sub-14 nanometer processes unless the sellers obtain commerce department licenses.
This is where things get tricky. SMIC claims they can do 7nm, but everyone outside China doubts they can do it reliably, repeatably and profitably. SMIC announced they’re about to start manufacturing 14nm, and that they can probably do. Practically, they’re the only semiconductor manufacturer in China that can do sub-14nm, as just about everyone at the top of the next biggest semiconductor manufacturer, Tsinghua Unigroup, just got arrested in July.
Without a continued stream of machines, spare parts and technical know-how from those five semiconductor giants, China’s semiconductor industry is doomed. China’s domestic semiconductor equipment industry is essentially garbage, and they’re so far behind in so many areas that they can’t even steal their way to parity. The knowledge gulf is just too vast.
According to World Trade Organization statistics, China’s trade deficit in integrated circuits and electronic components (including Hong Kong’s trade deficit) has almost doubled from the equivalent of $135 billion in 2010 to $240 billion in 2020.
The growing trade deficit in integrated circuits reveals one crucial fact: Achieving technological self-reliance is still a faraway Chinese dream. To keep its exports growing, China has no other way but to keep importing advanced chips to assemble into consumer goods with high-tech intensity (e.g., smartphones, tablets, and the like).
Although China (including Hong Kong) is also the largest exporter of semiconductor chips in the world, less than 7% of chips produced in China were made by Chinese semiconductor companies in 2021.
More than 90% of chips produced in China are made by foreign firms. In other words, China’s exports of semiconductor chips are overwhelmingly dominated by foreign companies.
Its inferior level of technology is the main reason for China’s chip reliance on foreign firms. While Chinese firms are stuck with advancing toward 7nm chips, the Taiwan Semiconductor Manufacturing Co. and Samsung are progressing towards mass production of 3nm chips this year. Intel plans to take over TSMC’s leading role in semiconductor technology by 2025.
The competition among a few tech giants in the U.S., Taiwan, and South Korea is clear, and the Chinese firms are not likely to jump into the global technology competition in the semiconductor industry anytime soon.
The U.S. restrictions on exporting chipmaking equipment to China’s largest semiconductor firm, Semiconductor Manufacturing International Corp., have not only deterred China’s technological advancement, but also exposed the fundamental mismanagement problems inside China’s semiconductor industry.
Xi might not have noticed his industry’s poor performance had China been able to continue to produce chips with foreign equipment.
Some parts about the Tsinghua scandal snipped.
Several Taiwanese executives leaving China’s semiconductor industry last year is another major setback in the development of China’s semiconductor industry.
China not only spent tremendously on building chip plants and purchasing expansive equipment, but also on recruiting talent from overseas. Over the past few years, China recruited more than 3,000 skilled workers from Taiwan to work in China’s semiconductor industry.
China amassed enormous capital, talent, and foreign equipment, but the problem is with governance. Xi’s absolute authority encouraged a rush into China’s semiconductor industry. Moreover, the extraordinary integration of the public and private sectors in China has twisted industrial development toward short-term profit-making, instead of long-term accumulation of manufacturing strength and technological improvement.
Xi’s “wolf warrior” diplomacy has further overshadowed the outlook of its semiconductor industry. China’s success relies on close partnerships with various suppliers and customers in different countries across the globe. Alienating them on the geopolitical front only undermines those relationships.
The U.S. ban on exporting chipmaking machines to China was the straw that broke the Chinese semiconductor industry’s back.
On top of that, the CHIPS and Science Act just signed into law bans semiconductor companies receiving U.S. government subsidies from investing in China for the next 10 years. There are major loopholes in that prohibition, but if Congress can manage to keep the administration’s feet to the fire—including by tightening the legal restrictions—it could have a major impact on China’s tech development.
In addition, the U.S. has extended the export restriction to 14 nm chipmaking machines to the Semiconductor Manufacturing International Corp. and other foreign chipmakers in China. A specific electronics design automation software for making advanced chips is also banned from exportation to China.
Without foreign investment and inputs, China is only likely to deepen its reliance on importing advanced chips from overseas.
Peter Zeihan notes (correctly) that China’s semiconductor industry has been singularly unable to fab advanced chips on their own.
Not to mention that fraud still abounds. Chinese CPU semiconductor startup Quillion Technology closed up shop three months after raising $89 million.
$89 million is probably enough to get you to tape-out for a fabless semiconductor house designing a smaller chip (or maybe even a low-power ARM-based CPUs for embedded markets), but it’s a woefully small sum for a real cutting-edge CPU company, and laughable if they intended to be an integrated design manufacturer fabbing their own chips, where building even a trailing edge fab starts in the billions.
More on that topic:
Takeaways:
“Money seems to have a strong corruptive power over CCP officials that they can’t resist. Like China’s real estate industry, China’s semiconductor industry is also plagued with corruption, over-construction, and highly leveraged capital maneuvers.”
She goes over the history of the Chinese “Big Fund” for semiconductors I covered here, and later talks about the indictments.
“The state-run Semiconductor Investment Fund was used more as an instrument to speculate in stocks than an institution for conducting basic R&D. The government-backed fund, aka the “Big Fund,” has investments in 2,793 entities within three layers of ownership.” Very few of them have the word “semiconductor” in their names. (Like I said before, shell games all the way down.)
From 1984 to 1990, the Ministry of Electronics Industry delegated the management of the vast majority of state-owned electronics enterprises to local provincial and municipal governments. While these state-owned enterprises (SOEs) obtained more autonomy, something strange happened. These companies imported outdated integrated circuit production lines that had no commercial value. The wasteful projects cost money, but people used the opportunities to take foreign trips, receive kickbacks, and send their children abroad. And this happened on a large scale.
Pretty much classic ChiCom behavior.
China’s high-tech industry, like its financial industry, is dominated by powerful CCP families, and the Jiang Zemin family is one of them. In 1999, Jiang Zemin gave his oldest son, Jiang Mianheng, the reins of China’s “autonomous chip development.” As vice president of the Chinese Academy of Sciences (CAS) and president of the Shanghai branch for many years, the junior Jiang has long held the turf of China’s science and technology sector. He is also personally involved in the semiconductor business. His Shanghai Lianhe investment has holdings of Shanghai Zhaoxin Semiconductor Company.
Classic story:
Chen Jin, a former junior test engineer at Motorola, joined Shanghai Jiaotong University in 2001 after returning to China.
He was given the responsibility to develop the “Hanxin” chip, an important part of the state-run high-tech development program known as the “863 Program.” In just three years, Chen obtained 100 million in R&D funding and applied for 12 national patents. On Feb. 26, 2003, Chen’s team officially released the “Hanxin 1” chip. The Shanghai Municipal Government, the Ministry of Information Industry, and the Chinese Academy of Sciences all backed his work. The expert panel declared the “Hanxin 1” and its related design and application development platform as being the first of its kind in China and achieving an important milestone in the history of China’s chip development. Subsequently, Hanxin 2, 3, 4 and 5 chips were launched, all of which were claimed to have reached an advanced level globally. The Hanxin series of chips even entered the General Equipment Procurement Department of the Chinese military. However, 3 years later, on Jan. 17, 2006, “Hanxin 1” was revealed to be completely fake. Chen downloaded a Motorola chip source code through a former Motorola colleague. Then he secretly bought a batch of Motorola dsp56800 series chips, paid a peasant to scrape the original Motorola logo with sandpaper, and asked a local Shanghai print shop to print the “Hanxin” logo on it.
China correctly identified semiconductors and semiconductor equipment as key technologies for truly becoming the world’s preeminent technological manufacturing giant. Unfortunately for them (and fortunately for us), the CCP’s endemic culture of corruption and their top-down command economy are antithetical to the onrush of capitalist technological innovation that powers Moore’s Law.
A semiconductor shortage has been plaguing the automobile industry for several months, and this piece explains why:
To understand why the $450 billion semiconductor industry has lurched into crisis, a helpful place to start is a one-dollar part called a display driver.
Correction: The semiconductor industry itself isn’t in crisis, it’s making money hand-over-fist right now. It’s certain industries relying on semiconductors that have the problem.
Hundreds of different kinds of chips make up the global silicon industry, with the flashiest ones from Qualcomm Inc. and Intel Corp. going for $100 apiece to more than $1,000. Those run powerful computers or the shiny smartphone in your pocket. A display driver is mundane by contrast: Its sole purpose is to convey basic instructions for illuminating the screen on your phone, monitor or navigation system.
The trouble for the chip industry — and increasingly companies beyond tech, like automakers — is that there aren’t enough display drivers to go around. Firms that make them can’t keep up with surging demand so prices are spiking. That’s contributing to short supplies and increasing costs for liquid crystal display panels, essential components for making televisions and laptops, as well as cars, airplanes and high-end refrigerators.
“It’s not like you can just make do. If you have everything else, but you don’t have a display driver, then you can’t build your product,” says Stacy Rasgon, who covers the semiconductor industry for Sanford C. Bernstein.
Now the crunch in a handful of such seemingly insignificant parts — power management chips are also in short supply, for example — is cascading through the global economy. Automakers like Ford Motor Co., Nissan Motor Co. and Volkswagen AG have already scaled back production, leading to estimates for more than $60 billion in lost revenue for the industry this year.
A bit of background here: Back in the dim mists of time, some major car manufacturers used to have their own captive wafer fabrication plants for automotive components. They were more art-of-the-state than state-of-the-art, as well as heavily unionized. (Your etch machine broke? Better figure out whether you need the union plumber or the union electrician to fix it…) GM shut down their last semiconductor plan in Kokomo, Indiana (which I think was running a 500 nanomemter process, which was beyond old even then) in 2017.
The situation is likely to get worse before it gets better. A rare winter storm in Texas knocked out swaths of U.S. production. A fire at a key Japan factory will shut the facility for a month. Samsung Electronics Co. warned of a “serious imbalance” in the industry, while Taiwan Semiconductor Manufacturing Co. said it can’t keep up with demand despite running factories at more than 100% of capacity.
“I have never seen anything like this in the past 20 years since our company’s founding,” said Jordan Wu, co-founder and chief executive officer of Himax Technologies Co., a leading supplier of display drivers. “Every application is short of chips.”
The chip crunch was born out of an understandable miscalculation as the coronavirus pandemic hit last year. When Covid-19 began spreading from China to the rest of the world, many companies anticipated people would cut back as times got tough.
“I slashed all my projections. I was using the financial crisis as the model,” says Rasgon. “But demand was just really resilient.”
People stuck at home started buying technology — and then kept buying. They purchased better computers and bigger displays so they could work remotely. They got their kids new laptops for distance learning. They scooped up 4K televisions, game consoles, milk frothers, air fryers and immersion blenders to make life under quarantine more palatable. The pandemic turned into an extended Black Friday onlinepalooza.
Automakers were blindsided. They shut factories during the lockdown while demand crashed because no one could get to showrooms. They told suppliers to stop shipping components, including the chips that are increasingly essential for cars.
Then late last year, demand began to pick up. People wanted to get out and they didn’t want to use public transportation. Automakers reopened factories and went hat in hand to chipmakers like TSMC and Samsung. Their response? Back of the line. They couldn’t make chips fast enough for their still-loyal customers.
Here’s the crux of the problem:
Wu explained that he can’t make more display drivers by pushing his workforce harder. Himax designs display drivers and then has them manufactured at a foundry like TSMC or United Microelectronics Corp. His chips are made on what’s artfully called “mature node” technology, equipment at least a couple generations behind the cutting-edge processes. These machines etch lines in silicon at a width of 16 nanometers or more, compared with 5 nanometers for high-end chips.
The bottleneck is that these mature chip-making lines are running flat out. Wu says the pandemic drove such strong demand that manufacturing partners can’t make enough display drivers for all the panels that go into computers, televisions and game consoles — plus all the new products that companies are putting screens into, like refrigerators, smart thermometers and car-entertainment systems.
There’s been a particular squeeze in driver ICs for automotive systems because they’re usually made on 8-inch silicon wafers, rather than more advanced 12-inch wafers. Sumco Corp., one of the leading wafer manufacturers, reported production capacity for 8-inch equipment lines was about 5,000 wafers a month in 2020 — less than it was in 2017.
Hell, there are people still running some four inch fab lines out there, though usually it’s for something funky like gallium arsenide, old analog signal processes, etc.
The problem is, no one is building any new capacity in those old geometries because fabs are too expensive to build and need 2-3 years of lead time to get up and running. Moore’s second law states that the cost of a new, cutting edge semiconductor plant doubles every four years. You can’t just take an existing building and turn it into a fab, it has to be specially built from the ground up with exacting standards for cleanroom air filtering, concrete slab level uniformity, etc. And equipment manufacturers like Applied Materials and LAM Research aren’t going to sell you old technology machines to build older geometry chips because they’re not making them anymore. And if you have to pay full price for the equipment, you might as well fab higher-value chips in current geometries anyway.
TSMC is already spending $100 billion for expanded manufacturing capacity over the next three years, and Intel another $20 billion. That spiraling fab cost is why so many former integrated device manufacturers went to a fabless model, designing chips but letting the manufacturing be handled by foundries like TSMC, UMC and Global Foundries. (And Intel is expanding their own foundry business at the same time they’re paying TSMC to fab some of their top-end chips. You can’t tell the players without a scorecard…)
The other problem is the extremely cyclical nature of the semiconductor industry. In booms, fabs make money hand over fist. During busts, some segments (like RAM) barely break even. The foundry model has smoothed the spikes out somewhat, but as the current shortage shows, not entirely.
Just-In-Time delivery was one of the great disruptive business innovations. Leaner, more tightly-coupled computerized inventory lead to decreases in unused parts and faster times to market. But when there’s a hiccup in the supply chain, it makes it more immediately disruptive. It’s hard to obtain additional semiconductor parts if everyone’s fab is already at full capacity, so expect shortages to extend into the year.
