🌏 China hits pause on semiconductor subsidies, so what’s next?
Plus: US and Mexico agree to hold their noses and work together
Hi there Intriguer. The global ban on chlorofluorocarbon propellants like hairspray appears to be working. On Monday, UN scientists announced that the ozone layer above Antarctica is on track to be restored to pre-1980 levels by 2066. So, great news for all life on earth; less great news for crimps, curls, bouffants, and perms.
Today’s briefing is a 5 min read:
- 💽 China hits pause on its semiconductor strategy.
- 🇲🇽 Biden’s trip to Mexico papers over the cracks.
- ➕ Plus: Finding France on a map, how the papers are covering Israel’s ban on the Palestinian flag, and a few geo facts to get you through hump day.
– VC & EP
🗺️ AROUND THE WORLD
- 🇰🇿 Kazakhstan: McDonald’s has announced it will end operations in Kazakhstan after six years due to supply chain issues caused by the Russo-Ukraine War. (Eurasianet)
- 🇧🇪 Belgium: Belgian officials have extended the life of two nuclear reactors to help secure winter energy supplies until 2036. The reactors were initially scheduled to shut down in 2025. (Euractiv)
- 🇵🇭 Philippines: The Filipino government announced it will import 21,060 tonnes of onions to bridge a supply gap until the domestic harvest in February. Prices for the culinary staple have quadrupled in the last four months. (The Strait Times)
- 🇲🇽 Mexico: At least 29 people have died during clashes between the Sinaloa drug cartel and Mexican security forces following the arrest of Ovidio Guzmán, the son of famed drug kingpin El Chapo. (Mexico News Daily)
- 🇮🇱 Israel: Israel’s new National Security Minister, Itamar Ben-Gvir, has instructed security forces to remove Palestinian flags from public places when they pose a “threat to public order”. Legal experts think the order will be overturned in the courts. (The New Arab)
🇨🇳 CHINA | INDUSTRY
China has halted semiconductor spending to focus on Covid response
Briefly: China recently froze a $145B subsidy scheme intended to boost its semiconductor sector to rival US tech. According to a new report, the government is pivoting resources away from tech subsidies to instead focus on China’s fast-spreading Covid-19 outbreak.
Some context: China accounts for about one-third of global semiconductor demand, but its domestic sector can satisfy only about 10% of its chip needs. China desperately wants to reduce its dependence on foreign chip makers, especially since the US imposed export controls on semiconductor sales in October.
Losing access to advanced US chips and expert workers has damaged China’s semiconductor industry and hardened the country’s resolve to build its own capabilities.
Intrigue’s take: If confirmed, pausing the semiconductor subsidy scheme could go one of two ways:
- The spending halt might just be a temporary measure, and Beijing will resume the scheme once its Covid-19 situation is under control, or;
- The new US export controls will force the Chinese government to rethink its chip strategy. Asia tech analyst Paul Triolo explains, “[the current] top-down state-led approach is not likely to yield broad and deep results in innovation that translate to commercial gains. Private sector led R&D efforts […] are likely to produce better results.”
China isn’t about to give up on its plans to develop a domestic semiconductor industry, so we’re betting the spending freeze will be temporary.
Also worth noting:
- Chinese telecoms giant Huawei is investing in advanced semiconductor technology and building a network of domestic manufacturers after it was kneecapped by a US government ban in 2019.
- Japan is also rolling out an ambitious government-backed program designed to ‘re-shore’ its advanced chip manufacturing capability from Taiwan and South Korea.
📰 GLOBAL PERSPECTIVES
How newspapers are covering: Israel’s national security minister Itamar Ben-Gvir’s ban on flying the Palestinian flag in public.
Sponsored by Claire Chandler
It’s time to grow your business on purpose with executive leadership advisor Claire Chandler. Hear from recent client James:
- “Claire has been instrumental in helping to develop the culture of our young company, sharing ideas and getting the most out of our team. With Claire’s enthusiasm and guidance, we now have an extremely effective group that has bought into the culture and mission that was developed as a team.”
Claire’s world-class clients include BASF, CSL Behring, Covance/LabCorp, Point32Health, Chick-fil-A, Blue Phoenix Group, Eco Recovery Solutions, and Nimbus Group.
🤝 NORTH AMERICA | DIPLOMACY
Biden, AMLO and Trudeau agree to cooperate on trade and immigration during ‘Three Amigos’ summit
Briefly: US President Joe Biden travelled to Mexico City on Monday (9 January) to meet Mexican President Manuel Lopez Obrador (AMLO). Canadian President Justin Trudeau joined his southern allies yesterday.
On the agenda: President Biden is facing political pressure to slow migrant crossings across the US’s southern border. Under a new migration plan, Mexico has agreed to accept up to 30,000 migrants who attempt to walk or swim across the US border but are turned back by US officials.
After Trudeau joined the festivities, the three leaders discussed several alleged violations of the US-Mexico-Canada trade agreement.
Intrigue’s take: The Biden-AMLO relationship has been uneasy from the beginning. AMLO took more than a month to congratulate Biden on his electoral victory in 2020 and defiantly skipped last summer’s Summit of the Americas. AMLO is well aware that with record-shattering border crossings in 2022, Biden needs his help more than he needs Biden’s.
Also worth noting:
- The US has threatened to start a trade war over Mexico’s plan to ban GMO-modified corn beginning in 2024.
- AMLO took the occasion of Biden’s visit to celebrate the recently-completed but controversial Felipe Ángeles International Airport outside Mexico City,
🗺️ MAP OF THE DAY
France’s longest land border is with… Brazil?
It may be an ocean away, but France and Brazil share a longer land border than any of l’Hexagone’s eight European neighbours. France’s border with Spain is the longest of the European bunch, at 656 kilometres.
It’s all because of French Guiana, one of France’s five fully-integrated overseas regions (along with Guadeloupe and Martinique in the Caribbean, and Mayotte and Reunion off the coast of East Africa).
Unlike many former colonies, these overseas regions appear happy to keep their ties to Europe. In 2010, French Guiana and Martinique considered a referendum to gain more autonomy, but 70% and 79% of voters respectively rejected the proposals.
➕ EXTRA INTRIGUE
Speaking of maps, here are some geography-based fun facts.
- The Sargasso Sea is the only sea that doesn’t have a coastline (it is a large patch of the northern Atlantic Ocean bounded by four ocean currents).
- The Mariana Trench is as deep as 13 Burj Khalifa buildings stacked on top of each other.
- China has the most neighbours, sharing its border with 14 countries.
- The longest place name in the world has 85 letters and is found in New Zealand: Taumatawhakatangihangakoauauotamateaturipukakapikimaungahoronukupokaiwhenuakitanatahu, no breath-breaks allowed.
🗳️ POLL TIME!
In the year 2030, advanced semiconductors will be made in…
*See yesterday’s results below your personalised referral section
Yesterday’s poll: Should the EU make it easier for new countries to join?
🟩🟩🟩🟩🟩🟩 🙅♂️ No, standards must be stringent. 81%
🟨⬜️⬜️⬜️⬜️⬜️ 🤗 Yes, the more the better. 19%
Your two cents:
- 🙅♂️ Benjamin: “The EU institutions require significant investment and take on huge risk to operate appropriately. Reducing the barriers to entry would necessitate a reduction in what those institutions can offer.”
- 🤗 Richard: “Embracing some dodgy candidates is likely to speed up their internal reforms. That’s largely what the original European Coal and Steel Community was about. Reject them and they are more likely to hunker down.”