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TiB 185: Semiconductor independence; Net Zero; Dominic Cummings; and more...

Matt’s Thoughts in Between
Matt’s Thoughts in Between
This week: Why China’s quest for semiconductor independence is so challenging; Microsoft’s lessons from trying to get to Net Zero; Dominic Cummings on reforming the state; and more…

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Can China become "semiconductor independent"?
We’ve talked a lot about the geopolitics of semiconductors and I continue to think this is one of the most important threads to follow in the world today. Jordan Nel just published a two part introduction to the topic on Lilian Li’s Substack. This is probably the best primer I’ve found so far, particularly if you don’t have a lot of background knowledge on the semiconductor industry. It’s a reasonable commitment of time - maybe 45 minutes across the two posts - but it’s well worth it.
Nel examines the question through the lens of China’s push for “semiconductor independence” and looks at what this means, why they want it, who the key players are, and how they’re going about it. His conclusion is that China is at least a decade away from independence in leading edge chips - if it’s possible at all, given the global complexity of semiconductor supply chains. The key choke point is access to extreme ultraviolet (EUV) lithography equipment, which is critical for manufacturing the most advanced semiconductors and on which the Dutch company ASML has a quasi-monopoly (We discussed in TiB 174 the US’s pressure on ASML not to sell to China).
There are many important takeaways from Nel’s posts, but perhaps the most striking is just how much leading edge semiconductor manufacturing is the closest thing to magic humankind has yet produced. How’s this for a process:
[T]he mirrors required for ASML’s extreme ultraviolet lithography (EUV) machines are polished to a smoothness of less than one atom’s thickness… if the mirrors were the size of Germany, the tallest ‘mountain’ would be just 1 millimetre high
More here from ASML on their work. Nel does an excellent job at showing how and why the complexity for the industry - in terms of talent, knowhow and learning by doing (see TiB 164) - means that even with hundreds of billions of dollars of investment, it’s hard for China to catch up.
Net zero: harder than it looks
Many companies have stated they want to get to net zero, but working out how to do it is harder than it sounds. Nature ran an interesting piece this week looking at the experiences of Microsoft and Stripe, two technology companies that have made public commitments to reduce their greenhouse gas emissions to zero. Both have solicited proposals for removing and storing carbon from the atmosphere (more on Stripe’s programme here). It’s striking how few proposals met the quality bar. The article reports that Microsoft received proposals offering an aggregate removal of 154 Megatonnes of CO2, but accepted projects totalling only two MtCO2.
Some of this is a technology problem - and one that initiatives like Microsoft’s and Stripe’s should help to solve: demand for solutions should stimulate the market, and technology should improve as Wright’s law kicks in. But some of the challenge is more institutional: the lack of clear and consistent definitions of net zero; the lack of high quality measurement and accounting systems for carbon; and the relative immaturity of markets for carbon that take into account quality concerns. There’s been a flurry of startup activity in this space, with companies like Sylvera (in which I’m a small investor), the Future Forest Company (ditto) and Supercritical hopefully making inroads.
It’s also exciting to see technologically ambitious projects start to make headway. The Nature piece mentions the Orca carbon-capture plant in Iceland, which the Economist also profiled recently. The basic idea is that carbon dioxide is captured by chemical filters, combined with water, and then pumped into Iceland’s volcanic basalt bedrock, which reacts with it to form calcium carbonate. Orca and similar efforts would need to scale up (and reduce cost) massively to play a significant role in climate mitigation, but it’s a promising start.
Cummings on remaking the state
It’s a shame that British politics suffers from what you might call “Cummings Derangement Syndrome” (CDS). Whatever you think of Dominic Cummings’ politics - and long time readers won’t be surprised that I have many disagreements - he is a more interesting thinker than most of his critics. His latest post, on how to rebuild the US (or UK) political system with a startup-sized budget and organisation is fascinating throughout. I don’t agree with it all, but it deserves higher quality engagement than cries of “but the bus / Barnard Castle / you edited your blog”.
Indeed the fact that it does get this reaction is reasonably strong evidence for one of his core claims: that the Anglo political world generally invests more energy in guessing how any given issue will play out in the media than in taking a structural or systems view of the challenges we face. Exhibit one is the handling of the pandemic. I’m also sympathetic to Cummings’ argument that much of the media systematically misreports (or is incurious about) where agency in government really lies. Is there a good counterargument to the claim that radical political change requires fundamental reform of the civil service? I’m less sure, though, that a startup approach to government, as Cummings proposes, can solve the problem he diagnoses.
Cummings argues that much of the permanent bureaucracy is beyond repair and that the only solution is to close bits down and replace them with (public sector) startups. I see the temptation, but “startups-as-a-problem-solving-methodology” work not just because of people and incentives, but because there are a lot of them, the cost of any one failing is low, but the social gains of scaling the winner are high. I agree with Cummings that there’s an underrated risk in continuing with a failing status quo, but it’s hard to let-a-thousand-flowers-bloom in the Pentagon or DWP. Nevertheless, I’d encourage you all to push past CDS and ponder further…
Quick links
  1. The very resource hungry c. elegans. For better or worse, whole brain emulation - even of very simple organisms - seems to be a dead end.
  2. Even if I said what you think I said… We dislike our political opponents for beliefs they do not hold.
  3. Infrastructure warfare. Interesting thread on when Iran tried to flood a town in New York.
  4. 20th century American politics in one map. In which election did Republican vote peak in each county? So many stories in this one map.
  5. You’ll miss me when I’m gone. Facebook has unusually high consumer surplus. And it appears to lower ethnic tensions in Bosnia.
UPDATE: No, that wasn’t Sodom. A correction to last week’s Sodom and Gomorrah link, which seems deeply flawed (Thanks David for the link)
BONUS: If you work in European tech, do fill out this short survey from my friends at Atomico for their annual State of European Tech report
The bit at the end
Thanks for reading Thoughts in Between. If you enjoy it, you should share it with a friend or on social media.
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Until next week,
Matt Clifford
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