To circumvent US tech sanctions and restrictions, China’s chip industry needs to become more “open” and “cooperative,” according to a top Chinese semiconductor industry expert.
To circumvent US tech sanctions and restrictions, China’s chip industry needs to become more “open” and “cooperative,” according to a top Chinese semiconductor industry expert.
China has a number of favourable factors to help grow its chip industry despite disrupted supply chains, according to Wei Shaojun, director of the Institute of Microelectronics at Tsinghua University and a representative of the China Semiconductor Industry Association.
These include its “super large” domestic chip market and the divergent objectives between politicians and businesses in the west.
Wei said, according to a transcript of his speech released by the event’s organizer, “Our goal is to shatter the blockade and containment to achieve self-sufficiency, but it has to be noted that self-sufficiency doesn’t mean to close ourselves off [to the rest of the world]”.
Even though they are prohibited from exporting cutting-edge chip technologies to China by the US, legacy chip makers have been drawn to China by its sizable domestic market.
In order to meet China’s growing demand for silicon carbide (SiC) devices, STMicroelectronics, the second-largest chip maker in Europe by revenue, will establish a US$3.2 billion semiconductor joint venture in Chongqing.
Meanwhile, US chip maker Micron Technology, which is subject to a partial sales ban by Beijing, announced that it will make a new investment of US$600 million to upgrade its plant in Xian.
The more stringent US export regulations prevent Nvidia from selling its most sophisticated chips to China, but it has developed chips specifically for Chinese customers.
According to reports, ByteDance, the company behind TikTok, has purchased Nvidia chips for use in projects involving artificial intelligence for US$1 billion..
Wei claimed that the semiconductor industry has been disrupted by US sanctions and Covid-19 lockdowns and that China is “facing serious challenges” in developing its own chip industry.
The Biden administration most recently added 31 more Chinese firms to its export blacklist, and in July, Japan will implement export controls on 23 different types of equipment used in semiconductor manufacturing.
Wei, however, asserted that in order to achieve “re-globalization,” China can encourage “openness” and “cooperation” among international semiconductor companies. “Cooperation” will be the key characteristic to promote re-globalization,” he said, “if ‘division of labour’ was the main feature of the global semiconductor supply chain in the past 20 years.
Wei claimed that businesses can “benefit” from being in China, which will continue to be a massive market, by being upstream and downstream in the supply chain.
Although China’s semiconductor industry has grown quickly over the past ten years, Wei also noted in his speech that a large portion of that growth has come from foreign chip companies operating in China. However, between 2013 and 2022, the proportion of locally produced chips in China’s total chip sales rose from 13% to 41.4%, according to Wei.
As of April of this year, the 135 semiconductor firms listed on the Star Market of the Shanghai exchange and the ChiNext board in Shenzhen, which is modelled after Nasdaq, had a combined market value of just over 3.08 trillion yuan (US$420 billion), which is less than half of the market value of Nvidia, the most valuable chip maker in the world.
Wei added that China should seize the new chances to create chips for use in cars and in AI applications, calling AI “an extravaganza that cannot be missed.”