Arms race (12/9/22)

Good morning. Happy Friday readers! Keeping it shorter today with an op-ed from head honcho Mo as over half of us are on the road today. It's been a crazy week here in Payload world. 

In today's newsletter:🚀 Arms race op-ed 🦾 Reader survey 💫 Payload's picks 

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Op-Ed: The Technology Arms Race Intensifies

It’s not hyperbolic to say that the Sino-American technology arms race is accelerating across every axis of emerging technology, from AI and quantum to 5G networks and (of course) space. 

In the last few months, we’ve seen legislation, rhetoric, and executive action intensify around US semiconductor policy, including what amounts to a virtual overnight kneecapping of China’s chip sector. Although chip decoupling doesn’t have a direct impact on the space industry, it’s a clear preview of what lies ahead. For that reason, I’ve spent some time analyzing recent geopolitical developments and thinking about their possible implications for the space industry.

Driving the news

In early October, the US unveiled a set of new regulations designed to cut off China’s access to advanced chips, designs, employees, and critical chip-making tools. With the new rules, the White House intends to:

• Slowroll China’s AI progress: The US will restrict the sale of high-end chips above a predetermined computational performance level. These chips are designed to be clustered together in data centers or supercomputing facilities to train and run large AI models. 

• Cut off access to US-origin design software: Chinese chip designers will not be able to manufacture advanced semis, even if the software was legally acquired or licensed before the new policy went into effect. 

• Choke of the supply of manufacturing tools: Nearly every chip manufacturing facility in the world uses technology developed or made in the US. Washington is now restricting equipment sales for advanced ships and the export of older equipment. 

• Restrict the sales of U.S.-manufactured chip components: By cutting off access to US-built components, China will have a much more difficult time with short-term domestic semi production. 

China accounts for 60+% of semi demand globally, but only 10% of that demand is produced domestically. The rest is met through imports and foreign firms producing chips in China. 

In the near-term, this will undoubtedly create friction in China’s desire to build a leading domestic-chip industry. However, it will also provide the momentum necessary to fuel President Xi Jinping’s push for technological and supply chain self-sufficiency (a point emphasized at the CCP’s 20th National Congress).

China isn’t sitting on the sidelines

At the beginning of the pandemic, China began accelerating a significant infrastructure campaign known as “New Type Infrastructure.” The campaign is set to put $2.7T to work over five years exclusively for the purpose of switching out analog for digital infrastructure. 

New Type covers the construction of an industrial internet, a national dual gigabit network, a nationally integrated system of big-data centers, and a satellite internet network. Beijing describes the campaign as a pivotal part of China’s effort to win the Fourth Industrial Revolution.

Some of China’s digital transformation so far…

5G networks: The US is “far behind in almost every dimension of 5G while other nations—including China — race ahead.” says Eric Schmidt. He’s not wrong. China has installed over 2.1M 5G base stations vs. the US’s 160,000 (population-adjusted, the coverage is 3x higher in China). The US also does not have a domestic manufacturer of 5G networking equipment (the top three are China’s Huawei, Finland’s Nokia, and Sweden’s Ericsson). 

Quantum sciences: China is leading hack-proof quantum communications networks. The country recently launched its second quantum satellite, Jinan 1, with plans to deploy more soon to enable a new level of secure communications globally. The satellite makes China the first country in the world to achieve real-time, satellite-to-ground quantum key distribution with micro-satellites and ground stations.

Hypersonics: China tested a nuclear-capable hypersonic glide vehicle that circled the world last year. For more on this matter, check out this thread from Hermeus CEO AJ Piplica: 

And last but not least, space! There’s much to discuss here, but allow me to name a few recent wins for Beijing: 

• China became the first country to land a probe on the far side of the Moon, 

• the second nation to land a rover on Mars, 

• the third nation to successfully bring lunar soil back to Earth, 

• built the world’s largest telescope, 

• is second globally for the number of satellites in space (363), 

• and just launched the final module of its space station.

Can we learn from space?

Space has historically been an arena with virtually no cooperation between the US and China. This is largely due to the “Wolf Amendment,” a law passed by Congress in 2011 as a one-year limitation on U.S.-Chinese cooperation in space, but has been reaffirmed annually. The law effectively prohibits NASA from cooperating with China or Chinese-owned companies without the FBI’s sign-off that there's no risk of national security-related information leaks. The law was ultimately intended to change China’s human rights policies and slow down their progress in space.

The cynic would point out how the Wolf Amendment is a great example of an 11-year-old law meant to slow down China but had the opposite effect. It helped China’s space program become more autonomous, effective, and dominant. 

Will the recent semiconductor legislation lead to the same outcome? It’s certainly possible, and enough to make you think what we could still learn from what happened in the space industry.

This is an abbreviated version of a piece featured in Mo's Monthly Newsletter. Refer at least one person to get on the list. 

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In Other News

• SpaceX launched 40 OneWeb satellites into orbit. 

• Thomas Marsh, a prolific astronomer, passed away at the age of 60.

• SOFIA will have a permanent home in the Pima Air & Space Museum in Tucson, AZ. 

• US Patent and Trademark Office granted OQ Technology two further patents for the world’s first 5G IoT satellite constellation in low Earth orbit.

Payload's Picks

🏆 NASA invests commercially: New NASA awards will support 12 small businesses in developing early-stage, high-risk technology concepts that could be commercialized in areas like climate resilience, low-cost solar cells, and active debris remediation.

🌠 Asteroid simulator: Behold this awesome, if slightly unsettling, Asteroid Launcher website that lets you “create” an asteroid and launch it at your desired location of Earth. The web app lets you toggle the diameter, speed, and impact angle of your asteroid, and simulates what happens next.