China Semiconductor Industry To Overcome Obstacles

Experts emphasised the need for China to strengthen its domestic chip industry in order to play a bigger part in protecting global supply chains.

China Semiconductor Industry To Overcome Obstacles
China should take advantage of its enormous chip market to encourage the re-globalization of the semiconductor industry chain, which experts say runs the risk of further fragmentation in the face of export control measures led by the United States.

They asserted that despite Washington’s rhetorical shift from “decoupling” to “de-risking” in important supply chains, it is abundantly clear that the US has exerted pressure on other major chip-producing nations to limit China’s capacity to produce advanced semiconductors.

The remarks followed Bloomberg’s citation of unnamed sources as saying that the Dutch government intended to publish new export controls that would limit the shipment of more chipmaking equipment from ASML Holding NV to China. As soon as this week, the announcement is anticipated.

The restrictions, which the Dutch government had previously promised to publish before the summer, won’t specifically mention China or the ASML but are intended to limit the shipments of three models of the company’s machines to Asia, according to Bloomberg.

This is the most recent outcome of US pressure on nations like the Netherlands, according to Dong Yifan, an assistant research fellow at the Institute of European Studies at the China Institutes of Contemporary International Relations in Beijing. The globalisation of the semiconductor industry has been hampered by such actions, Dong continued.

Professor Wei Shaojun of Tsinghua University’s School of Integrated Circuits said: “We need to be independent because others are suppressing us more and more. Self-reliance does not imply solitude, though. It involves figuring out how to escape the containment.”

Wei, who is also the president of the China Semiconductor Industry Association’s integrated circuit design branch, said that China needs to support the re-globalization of the semiconductor industry by becoming self-sufficient in key technologies and by partnering with nations and businesses that are open to cooperation.

Wei continued, “China’s chip industry will grow stronger and give the nation the ability to play a bigger role globally.

In 2022, China, the largest chip market in the world, will consume roughly 60% of all semiconductors, predicts US market research firm Gartner Inc. After that, these semiconductors will be put together to create technological goods that will either be sold for final consumption domestically or for re-export.

The size of the global chip market in 2017 was approximately $600 billion, according to Gartner.

“For the past 20 years, China has been the sole contributor to the globalisation of chips. For China to truly make a difference in the re-globalization process, China’s role in the process must now fundamentally change “Wei declared.

The Semiconductor Industry Association, a Washington-based organisation that represents the US semiconductor industry, places a high value on China’s chip market despite rumours of a technological decoupling.

The association recently stated in a report that “access to this massive market (China) is essential to the success of any globally competitive chip firm today and in the future.”

Jensen Huang, CEO of US artificial intelligence chip giant Nvidia, issued a similar caution regarding the effects of additional trade restrictions on China in a recent interview with the Financial Times. “We don’t have a backup plan in case the Chinese market is taken away from us. There is only one China and no other China “said Huang.

Experts emphasised the need for China to strengthen its domestic chip industry in order to play a bigger part in protecting global supply chains.

It is necessary to actively investigate new opportunities, such as chips for new energy vehicles and the AI industries, according to Pan Helin, co-director of the Research Center for Digital Economics and Financial Innovation at Zhejiang University’s International Business School.

Despite significant gaps with more developed foreign competitors, according to Roger Sheng, vice president of research at Gartner, China’s chip industry has advanced steadily, and the restrictions put in place by the US government have actually sped up the development of Chinese businesses.

The sales revenue of China’s domestic chip industry increased by 516 billion yuan ($71 billion) in 2022 from 8.15 billion yuan in 2004, with a compound annual growth rate of 25.9%, according to data from the China Semiconductor Industry Association. Comparatively, the average annual compound growth rate across the globe during that time was 6.39 percent.