Dan Wang on China's Mission to Be a World Leader in Semiconductors

Joe Weisenthal (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:17)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

Tracy, you know how sometimes, I don't know if it's a joke, but at the end of an episode, we'll be like, well, we're gonna have to check back a year from now to see how that developed.

Tracy Alloway (0:29)

It's not meant to be a joke. It's meant to be-

Joe Weisenthal (0:32)

It's not a joke, but I don't know if we always do it or if we really always follow up on those, but it is something we say.

Tracy Alloway (0:39)

All right, but we're making good, we're making good on one of those comments now though, right?

Joe Weisenthal (0:46)

We are doing an episode that I think can legitimately be said to be a follow-up. I think it was obviously like basically a year ago around this time that we first sort of became aware of the coronavirus. We didn't know how big of a deal it was going to be. We didn't know how, we knew it was sort of bubbling up. We knew that there were cases in Wuhan.

We didn't know much though about the overall impact. And one of the first people that we discussed it with was with our guest today.

Tracy Alloway (1:21)

Right, so this particular guest has been on a few times now and we always get requests for him to come back.

Last year when we spoke to him, it was February. As you mentioned, the coronavirus crisis was just really getting underway, but we'd already seen a bunch of supply chain disruptions and there was a lot of talk at the time about what that might mean for tech specifically. So in tech, you have these really complicated supply chains with lots of little components, particularly semiconductors. So we had a big conversation about that at the time. And now we can check in and see what's actually happened.

Joe Weisenthal (2:04)

Yeah, I mean, I think it's useful. I think your framing there is really good, because at the time, we didn't know yet that it was going to be this global health crisis, right? We were at the time, we were focused on, well, what does this mean for Chinese manufacturing? Because we knew that a lot of factories were shut down, including the suppliers.

One of the first companies in the US to really warn that they were seeing an impact from the virus was Apple, which talked about disruption to its suppliers and the attendant disruption that would happen with its product rollout. So even in the very early days, that still seemed like the angle, tech and manufacturing. And then of course, it was just a few weeks later that we realized we were looking at a full blown global health crisis.

Tracy Alloway (2:51)

Right, and now of course, I mean, this is a little bit outside of tech, but now a year later, China's economy is actually doing a lot better on a number of measures versus places like the US or perhaps Europe.

It continues to develop its tech industry, of course. And we know the government has really doubled down on its attempts to create or improve its domestic tech capabilities. And if anything, I guess the tensions with the US over trade, plus the supply chain disruptions from COVID has really encouraged the leadership in China to look at this and to accelerate this idea of tech independence.

Joe Weisenthal (3:35)

Yep. So an extraordinary year, just sort of on all fronts.

As you mentioned, our guest is a recurring Odd Lots guest, always one of the most requested. So I'm very excited to have him back. We're going to be speaking with Dan Wang. He is a technology analyst at Gavekal Dragonomics. Knows a lot about a lot of stuff, particularly related to tech and manufacturing and can speak about it in a way that very few people can. So Dan, thank you very much for coming back on the show.

Always a pleasure.

Dan Wang (4:06)

Thank you, Joe and Tracy.

Joe Weisenthal (4:07)

I mean, there's so much to discuss over the last year and so many different things. And of course, we've been talking a lot about chips on the show and have been everything. But it's a starting big picture. I mean, we had last talked to you about a year ago.

You know, what have you learned about China and its manufacturing and business capabilities watching it deal with the crisis over the last year?

Dan Wang (4:37)

First, I learned that China is a lot more brutal than I thought and already from a pretty high level of efficiency as well as ruthlessness. And second, I thought that China is now the most can-do society in the world just by how quickly it mobilized to really try to contain this pandemic and to really try to restart production. And let me talk through both aspects of that. Now I lived in Beijing through the very worst of the pandemic. I was in Beijing starting from early February and it was a pretty much a ghost town at that time. A lot of restaurants had been closed, a lot of workers, a lot of people who left Beijing back home. I had not been able to make it back to Beijing for about a few weeks to an entire month. And the city was mostly locked down. I had a person posted outside my apartment checking for apartment passes to make sure that people can come in and out. There was basically universal mask wearing and there still almost is universal mask wearing about 12 months after the start of the pandemic. I had to bring a health code app, which is embedded into my smartphone everywhere that I went. And it was very difficult to travel within China and for a lot of foreigners or people outside of China, it was very, very difficult for them to come back. And this is to say nothing of the centralized quarantine system that China implemented to separate sick people away from families so that they don't transmit through an entire household, which basically was a very ruthless affair.