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China lags far behind in semiconductor battle

Daniel Nenni

Admin
Staff member
It could take China over 10 years to become relevant in industry: Tsinghua Unigroup chairman


TAIPEI (Taiwan News) — China is lagging behind in its quest to become a global leader in the semiconductor industry, said Chairman Zhao Weiguo (趙偉國) of China’s state-run semiconductor maker Tsinghua Unigroup.

China is faced with underinvestment problems as it seeks to develop its chip-making industry, Zhao said in a conference on Friday (Nov. 8). This is despite government-spearheaded initiatives to drive up demand and pursue advanced technologies, reported UDN.

According to Zhao, Samsung spends at least US$20 billion in research and development as well as capital expenditure each year, while Intel and Taiwan Semiconductor Manufacturing Company (TSMC) each invest more than US$10 billion annually. By comparison, China’s National Integrated Circuit Industry Investment Fund has only funneled 130 billion yuan (US$18.6 billion) into these areas over a span of five years.

Rebutting talk of an “overheated” semiconductor sector in China, Zhao reckoned that the country’s chip-making companies are concentrated mostly in the “lower tier” of the supply chain. For example, China has a staggering 3,000 firms dedicated simply to the design of chips.

“There’s no need for the United States to feel jittery,” Zhao joked, adding, “We’re trailing far behind, not posing any threat to the U.S. in the competition.” He estimated that it will take at least another decade for China to become relevant in the industry.

As semiconductors remain a core issue in the protracted U.S.-China trade war, Zhao on Friday also urged American companies to make efforts to help defuse tech tensions between the world’s two largest economies since they continue to reap profits from the Chinese market, reported Reuters.
 

Arthur Hanson

Active member
IP protection will be critical to the Chinese advancing. I have heard directly from associates that do business in China they not only steal IP from foriegn companies, but each other. This will do much to discourage home grown development in all areas since it will always be easier to steal domestically than from foriegn companies when you can actually gain physical access to people and facilities without leaving a trail like cyber theft. I hope the Chinese can learn honest collaboration will create a win/win environment for all.
 

Silas

New member
Just returned from 2 years in China working in the fab space. The article is spot-on to what I saw. There is a lot of money getting poured into Chinese fabs, but there is a lot more to success than just a building.
 

Daniel Nenni

Admin
Staff member
Just returned from 2 years in China working in the fab space. The article is spot-on to what I saw. There is a lot of money getting poured into Chinese fabs, but there is a lot more to success than just a building.
Very true, SMIC is a good example of that. With the home court advantage and full China Government support, what have they really accomplished over the last 20 years? SMIC is ramping 14nm while TSMC has 12nm in HVM right down the street and a cost reduced 6nm coming in 2020. The China mobile and cloud chip companies will need advanced technologies for AI integration and I don't see SMIC ever being able to compete.
 

Arthur Hanson

Active member
Morris Chang put together an unrivaled power house comprised not only of TSMC itself, but the partners needed to make an entire ecosystem unrivaled any where in the world. Morris Chang fully understood the value of cooperation and collaboration to an extent very, very few even today barely understand, let alone can put together. The world still has a lot to learn from this great man's example. I have not only followed TSM, but have a substantial long term investment in TSM and am proud to have played a part in this extraordinary ecosystem. I have also invested in some of the partners. These are lessons the Chinese and others should learn from in these increasingly dangerous times.
 

Daniel Nenni

Admin
Staff member
Morris Chang put together an unrivaled power house comprised not only of TSMC itself, but the partners needed to make an entire ecosystem unrivaled any where in the world. Morris Chang fully understood the value of cooperation and collaboration to an extent very, very few even today barely understand, let alone can put together. The world still has a lot to learn from this great man's example. I have not only followed TSM, but have a substantial long term investment in TSM and am proud to have played a part in this extraordinary ecosystem. I have also invested in some of the partners. These are lessons the Chinese and others should learn from in these increasingly dangerous times.
Morris did a great job with China, absolutely. Excellent foresight! China consumes more than half of the semiconductors manufactured and by last count there were more than 3,000 China companies making chips. Amazing growth!
 

simoncc2

Member
Last time I checked it's written "Republic of China" on the Taiwanese passport.
It's more likely that Taiwan will be integrated in Mainland China, along with TSMC. faster that the local players would catch up.
 

Daniel Nenni

Admin
Staff member
Last time I checked it's written "Republic of China" on the Taiwanese passport.
It's more likely that Taiwan will be integrated in Mainland China, along with TSMC. faster that the local players would catch up.
That is true, the passport stamp says: ROC (Taiwan) but I do not see reunification happening in my lifetime. The Taiwanese people are strongly against it and I think the US Government now knows that the semiconductor supply chain must be protected. Just my opinion of course.
 

benb

Member
Does anyone know what Tsinghua Unigroup does, in the Chinese semiconductor space? Do they have fabs? How advanced? What products (foundry, DRAM, NAND?) Trying to get context for the comments.

More questions: What are the goals for Made in China 2025 regarding semiconductor output? Is China on track? If they aren’t, and capital investment is the reason (as the comments indicate), why is this occurring? Semiconductors are very capital intensive, I’m sure China knew that and planned accordingly, so what has changed?

My uninformed thoughts: China generally invests to create jobs, since they need lots of jobs to justify the totalitarian state (a quid pro quo with the population). Semiconductors are a high RMB/low job ratio investment. So maybe semiconductors doesn’t work well in a totalitarian state.

If so, this applies equally to a hypothetical forcibly nationalized TSMC, which would come at a military cost, and provide few jobs, and require high ongoing capital expense.
 

chipsntexas

New member
That is true, the passport stamp says: ROC (Taiwan) but I do not see reunification happening in my lifetime. The Taiwanese people are strongly against it and I think the US Government now knows that the semiconductor supply chain must be protected. Just my opinion of course.
This. I've been making this comment regularly to people (almost everyone outside of semiconductor world) that TSMC won't be absorbed into China - as you say, in my lifetime. Way too much technology and risk for the US to simply allow that to happen. It's only part of the "trade wars" that makes much sense, as it does protect at least a little bit of the US sovereignty. And Taiwan's also frankly. More likely that TSMC would open an advanced (or even 2nd tier) fab in the US mainland than be relocated to mainland China.
 

Arthur Hanson

Active member
How China handles Hong Kong will be closely watched by the best and the brightest not only business people, but technologists and if the Chinese put fear into a significant fraction of these people, their efforts to advance in anything will be significantly hampered. The best and the brightest are accepted and sought after and can usually figure out how to move, even if it involves escape. This also applies to the movement of capital.
 
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