While that video from Asianometry contains interesting historical information, it does not include any evidence for their thesis that the GDR's mismanagement of their semiconductor industry was a greater contributor to the country's bankruptcy than their mismanagement of all the other branches of the economy.
If they would have directed some of the resources spent in attempts to modernize the semiconductor industry to any other economic activities, at least the same fraction of the resources that were wasted in the semiconductor industry would have been wasted elsewhere.
So there is no proof that this choice has been worse than others. On the contrary, even if in GDR their efforts did not result in the desired production capabilities, at least they taught many engineers and technicians, so that this made Dresden attractive after reunification as a place where to invest in this field, until in the present with this fab planned by TSMC.
While they could not export towards Western countries, semiconductor devices formed a significant fraction of their exports to the Soviet Union and to the countries dominated by the Soviet Union, i.e. to the other members of the Comecon.
If the GDR had not used most of its resources for a greater development in the domains of semiconductor devices, precision mechanics and optics than most other members of Comecon, it is likely that they would not have been able to export much except food, which they did not have enough even for themselves, while needing to import a lot of resources that they did not have.
If Asianometry had made a video with the similar title "How Semiconductors Ruined Intel", that title would be closer to the truth, because during most of the last decade the performance of Intel in developing semiconductor manufacturing has been much worse than that of the GDR.
Hopefully the woes of Intel will end this year with the launch of the "Intel 4" process, but before that Intel has succeeded in 6-7 years to transform an advantage of 2-3 years in semiconductor manufacturing against all others into a handicap of 2-3 years compared to the top competitors.
By contrast, GDR has started with a handicap of at least 10 years against USA (the US semiconductor industry has been created in the middle of WW2, for the fabrication of radar diodes) and after some 35 years it still had about the same 10 years of handicap.
While GDR and the other communist countries have never been able to reduce the technological gap between them and USA, they also never had any such tremendous fall behind, like Intel, where it seems that the management methods and the internal cooperation between divisions have not been better than those that were rightly criticized for GDR.
Unfortunately bad management is not an exclusive feature of the "planned" communist economies, but it becomes more and more frequent in the present economies that have become dominated by quasi-monopolies everywhere.
(I have no clue about the stuff you say about Intel)
I again couldn't find a lot of data on the exports you've mentioned, but I do guess if it's CPUs it was mainly reverse engineered, illegally produced Z80 ("U880").
It looks like the GDR did reverse engineer a 80286 ("U80601") and started limited production in 1989, in very low numbers because of production problems (The West was using 486 at that point). So it is unclear how reverse engineering of CPUs would progress
Z80 8.5k transistors
286 134k transistors
386 275k transistors (+ 120k for 387)
486 >1200k transistors (the 486 had an FPU)
(As the GDR also illegally cloned DEC MicroVax systems, there is a "U80701" MicroVax clone with 130k transistors, same like the 286 clone. This doesn't seem to have gone into production)
The reason the GDR could not pull it off where manifold. First the Eastern block countries tried a different concept in IT in the 50s and 60s compared to the West, that proved not as practical. Second the GDR lost time by reverse engineering and spending money on smuggling CPUs and machines. Third the West had a huge network of companies building a supply chain for production of semiconductors. The GDR (or Eastern block) would have needed to bootstrap the whole supply chain by it's own. The Western supply chain in semiconductors was probably 1000x the value and people the GDR did or could spend.
The collapse of the GDR has many reasons, mostly it ran out of money during the 80s. There have been several reasons for running out of money, e.G. taking on massive credit in the 70s to produce more consumer goods and build flats (the reason Honecker was very popular after his coup against Ulbricht), which it had problems to pay back in the 80s. Also minor things like spending millions on importing coffee (all experiments to replace coffee with something else failed - Vietnam is one of the worlds biggest coffee exporters because of GDR investments that came too late).
Another reason was Russia cutting cheap oil during the 70s after the oil shock. The GDR had imported cheap oil from Russia, was refining it and selling it with high margins to the West for $/Deutsche Mark. That source of money dried up in the 80s.
With sparse resources, the GDR was between a rock and a hard place. For modern production it needed chips, reverse engineering western chips e.G. Z80s (reverse engineered chip called U880 in the GDR) or smuggling chips was very expensive (~5-10x the price). Building chips on their own was also expensive. But they decided to invest billions into home grown chip production (they smuggled a whole factory via Austria, see "Red Fini") leading to the famous 1mbit chip "U61000" - which was old at that time, also the Japanese produced the same amount of chips in a day that the GDR was able to produce in a year. So things went nowhere.
But those billions were not available for other things.
Without money ($, Deutsche Mark), in the 80s to pay back credits to western banks a lot of vegetables, fruits and consumer products like clothing and washing maschines were exported to the West (most of the fruit production of the GDR around West Berlin went to West Berlin, many products in the West German QUELLE catalogue - like Sears - were made in the GDR). These products were missing in local shops, shelves were often empty, especially outside the large cities like Berlin, Leipzig and Dresden.
Additionally factories in the 80s in the GDR were in a very bad state (my father in law was head of production in a large machine factory in East Berlin during that time), lots of stuff was being stolen on a constant basis, maschines were old and lacked computer support (see above). This again reduced available consumer goods.
Because consumer goods were scarce, when things were available people bought more than they needed, leading to more scarcity (as seen during the pandemic). It is said that every household in the GDR had a second car as spare parts (another example are agricultural factories hoarding harvester spare parts, so when broke down, spare parts where hard to get).
Missing consumer goods in the GDR led people to leave their jobs in factories whenever something was available, e.G. rain boots, which reduced productivity even more.
In the end so many things were missing that people mass fled the GDR when Hungary opened the border.
All this together made the Central Committee believe everything is lost (book to read in German "Das Ende der SED - Die letzten Tage des Zentralkomitees" with meeting notes from the Central Committee), and the Russians not willing to come to help with tanks this time [0] (like they did in 1953 to kill Germans to keep the communists in power in East Germany) power was transfered to the people leading to reunification.
[0] For comparison: When Poland went bancrupt in 1980/1981 Russia and the GDR were near an invasion - which Poland prevented with a military coup.
Thanks so much, really informative! I need to read up on economies of Warsaw bloc countries. For some reason I’ve never even heard about a Poland bankruptcy in 1980-81, and I’m from Ukraine (so I’m more than familiar with goods deficit, sadly).
Yes do! I think too many different things have been lumped together in "the fall of the iron curtain". Every country of the "Warsaw Pact" (NATO speak) was in a different state with different problems, e.G. Poland had a strong opposition with the Solidarność movement, the GDR had some opposition with a environmental movement (which later became the freedom movement) (I don't know about Bulgaria and Hungary etc).
What unified them was the threat of the Soviet Union to intervene on behalf of their governments if there would be danger to the state.
When that threat broke away with Gorbachev, the states collapsed at the same time in different ways (e.G. Ceaușescu was killed, Honecker went into exile) and for different reasons (although the overall driving force for more wealth and freedom was the same).
