back to article How did China get so good at chips and AI? Congressional investigation blames American venture capitalists

The US has gone to great lengths to stifle China's fledgling semiconductor industry and deprive it of the tools to develop AI models. Yet a newly published congressional report has found that American venture capital firms are at least partially responsible for funding the Middle Kingdom's explosive growth in these arenas. The …

  1. Will Godfrey Silver badge
    Unhappy

    Just hot air

    If it's a choice between genuine human rights concern and campaign funding, guess which takes priority.

  2. elsergiovolador Silver badge

    Late stage capitalism

    It's more like late stage capitalism - where existence of VCs are the red flags that something is wrong with it.

    Normal businesses can't afford to move their production, manufacturing to Asia to side step local regulations.

    If companies with more money than sense, can pimp up their factories in Asia and neglect any manufacturing in the West, no wonder Asia is growing while the domestic manufacturing deteriorates.

    Paradox is that this also works in favour of big corporations (to an extent) - there is no incentive for people to go into manufacturing trades, there is no expertise, so local companies cannot find competent workers and they go out of business. This means no competition for big corporations.

    That of course until Winnie the Pooh decides to take a dump on the chess board.

  3. David 164

    It pretty funny that US congress thinks China needs US money to make progress in a industry, any industry. An china has kept up with AI simply because why Nvidia newest chips might make it cheaper and faster to train models, old hardware will do just fine, it will just takes longest and need more money. An most of the major breakthroughs in AI by the likes of Google an other companies and universities has been and publish online before US started it cracked down.

    1. Anonymous Coward
      Anonymous Coward

      They don't need US money. They need US technology.

      If you want to build a manufacturing plant in China, it has to be 50% owned by a Chinese company. Fine. However, once you being construction, the Chinese part-owners will begin simultaneous construction of their own facility using the same plans, usually in a differnent city, but sometimes on the other side of the same city.

      Once you work out the bugs and begin shipping, they'll begin production and start selling a competing product for less.

      Of course, you could simply not manufacture in China, but then you won't be permitted to sell your product in China, its a lose-lose proposition.

      1. Matt2012

        This is exactly what the Americans and the Japanese did to the British.

        It’s what all up and coming economies do.

        It’s also what corporations are doing when they poach talent.

        No country can afford to be dependent on other countries IP in such strategic areas.

  4. Pete 2 Silver badge

    Money can't buy intelligence

    Just as it can't buy good health.

    Even back in 2022, China was filing three times as many patents per year as the US was.

    1. katrinab Silver badge
      Meh

      Re: Money can't buy intelligence

      Given the relative population sizes, China should be filing about 4.25 times as many patents as the US.

      1. iooool

        Re: Money can't buy intelligence

        Bruh, the majority of the population didn't own a tv 20 years ago.. give it time

        1. katrinab Silver badge

          Re: Money can't buy intelligence

          Sure, but in terms of education provision, they are at about the same as England - universal public education achieved by around 1950. The USA as a whole managed it in around 1930, some states managed it sooner. Scotland [First implemented in 1498, achieved by about 1650] was waaaay ahead of everyone else.

          1. Anonymous Coward
            Anonymous Coward

            Re: Money can't buy intelligence

            Scotland [First implemented in 1498, achieved by about 1650] was waaaay ahead of everyone else.

            Given that the Scottish economy is now dependent upon transfer payments from England, it would seem the benefits of universal education are not enduring.

            1. Number6

              Re: Money can't buy intelligence

              But the Scots have a reputation for engineering, even as it extends to starships. Clearly something stuck, even if their politicians screwed it up in general.

              1. tyrfing

                Re: Money can't buy intelligence

                I guess their politicians succumbed to thinking that political science (having "science" in the name) was real. As opposed to being opinions, mostly not backed up by experience.

                Why else would most Scottish politicians be socialists?

            2. Siberian Hamster

              Re: Money can't buy intelligence

              Yet another falling for the "We (as in England) support you financially so you should be grateful" brigade. If you educated yourself a bit more maybe you'd realise the untruths you've been fed.

              Here's a bit of help, the McCrone Report, hidden by the Westminster government to stifle Scottish independence.

              https://en.wikipedia.org/wiki/McCrone_report#:~:text=Report%20content,-The%20eighteen-page&text=The%20report%20stated%3A,secure%20the%20Government%20%27take%27.

          2. martinusher Silver badge

            Re: Money can't buy intelligence

            >universal public education achieved by around 1950

            Some would argue that England's been going backwards in recent decades. I was too young to be at school in 1950 but I had started secondary school by 1960 and it was light years ahead (in terms of facilities and staffing qualifications) than many / most of the places my wife has taught at or visited in the last few decades.

            Investment in education needs to be ongoing. Its not something you pay for once and then let slide.

          3. gandalfcn Silver badge

            Re: Money can't buy intelligence

            "The USA as a whole managed it in around 1930," ROFL The USA still doesn't have real ' universal public education '. It has schools with no qualified teachers other than religious zealots.

            "Not many places in West Virginia offer physics programmes in their high schools and those who do very few of them are taught by people actually trained in physics,"

            https://cdn.acidcow.com/pics/20140207/funny_exam_answers_16.jpg

    2. Anonymous Coward
      Anonymous Coward

      Re: Money can't buy intelligence

      I've worked in the USA with some China companies for years now, "Money" is the definition in the USA but "intelligence" is a similar level in China. America is excellent at creating great technology ideas, but China has always been wonderful at building them (generating money for the US corporations) and making everything work more reliably and better than the original creation in the USA. This is just an observation because I'm not American or Chinese.

      1. martinusher Silver badge

        Re: Money can't buy intelligence

        People of Chinese origin are way more common in the technology firms I've worked at in California than born and bred Americans.

      2. gandalfcn Silver badge

        Re: Money can't buy intelligence

        Have you ever chscked on what China has invented?

    3. Anonymous Coward
      Anonymous Coward

      Re: Money can't buy intelligence

      Due to the worthlessness of so many patents, that number means little. As would "1" or "1/3". However, I don't for a moment doubt that many good patents are coming out of China.

      1. Anonymous Coward
        Anonymous Coward

        Re: Money can't buy intelligence

        "I don't for a moment doubt that many good patents are coming out of China."

        Got any evidence for that?

      2. Anonymous Coward
        Anonymous Coward

        Re: Money can't buy intelligence

        Everybody agrees that most US "patents" are worthless.

        1. EricB123 Silver badge

          Re: Money can't buy intelligence

          "Everybody agrees that most US "patents" are worthless."

          Rodime made plenty of money suing manufacturers of 3.5 inch disk drives, due to a patent on that form factor. Far more profitable than actually producing their own disk drives. But I agree, there are many patents that are laughably worthless, viewed in any light. Counting actual patent numbers is almost as useful as Olympic medal counts.

  5. I like fruits
    Big Brother

    The problem is not new

    "The Capitalists will sell us the rope with which we will hang them."

    Nothing changed since then.

  6. Number6

    Choose a Chinese manufacturing plant and within six months, your cheap competitor will appear on the market.

    Actual practical example of this observed, tore down one of their products because one of its features was basically the same as ours. Superficially the design was similar in the same way that a couple of cars might look similar due to form and function requirements,, but I don't see why they bothered to etch one of our part numbers on the copper on the PCB like we did if it wasn't a direct copy.

    1. FIA Silver badge

      What criteria did you use to select your manufacturing partner?

    2. An_Old_Dog Silver badge

      Imitations

      Slavish direct-and-complete copying is easier than truly understanding the copied product.

  7. ecofeco Silver badge
    Facepalm

    WHOCOULDAKNOWED?!

    How could anybody not see this coming?

    1. Blank Reg

      Re: WHOCOULDAKNOWED?!

      The CEOs making the decisions to move manufacturing to China didn't care. In modern business all that matters is the next quarter. By the time this became a problem they would have cashed out their stock options and be long gone

  8. RedGreen925

    I am totally shocked the same parasites and their corporations that shipped our jobs lock stock and barrel to China for the last fifty years to take advantage of the lax environmental standards and slave labor are behind this latest scumbag move. Who would have every thought it was possible for this to happen, must have been a new ground breaking study using AI that produced this shocking conclusion.

  9. An_Old_Dog Silver badge

    But What is China Doing with AI?

    I'd like to know whether China is employing pseudo-AI/ML for its internal business use (apart from generating fake "influencing" articles and posts), or mostly selling it to other countries who desperately wish to use snake oil to lubricate things which are not snakes.

    If they're mostly selling it to other countries, that might explain why they're doing so relatively well: their businesses have not yet been handicapped by pseudo-AI/ML "management solutions."

  10. BenMyers

    A light bulb lights up somewhere in Congress

    US electronics manufacturers have long been fleeced by the Chinese, going back to Digital Equipment moving some hardware manufacturing there in the 1990's. China has no laws about intellectual property, and many joint ventures resulting in IP falling into Chinese hands.

    Consider 3COM and Huawei. They did a joint venture. 3COM is no more. Huawei does very well in the worlds of electronics and networking.

    The United States is simply too damned parochial and too naïve in business to do really well dealing with foreign businesses. And until recently, the US government has stayed away from any involvement whatsoever in businesses strategic to the long term health of the country. US public school education has worsen, especially in the red states, and far too many kids do not or cannot learn mathematics, the underpinnings of STEM and finance.

    Suddenly someone in Congress with an iota of insight wakes up and gets worried about everything past. How much thought are our lawmakers giving to the long term and the future of this country? Close enough to none to be recognized as none.

    Ben in the United States

  11. steviebuk Silver badge

    They didn't.

    They stole everything and if you think their Sara AI is good then you're delusional.

    Watch the wumao's come in.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like