China’s semiconductor strategy

BY PETE SINGER, Editor-in-Chief

China has become the largest and the fastest growing market in the world. 40% of the worldwide semiconductor shipments go to China and that’s expected to increase to almost 42% in 2019.

The “National Semiconductor Industry Development Guidelines” and “Made in China 2025” were published by China’s State Council in June 2014 and May 2015, respectively. Both policies have already led to a major push in the development of the local IC industry, with investments in semiconductor memories, design, foundries, OSATS, and equipment and materials.

Based on the “National Semiconductor Industry Development Guidelines,” a US$19 billion national industry investment fund has been set up to help local foundries finance the build-up of advanced manufacturing processes, and also to assist local IC firms to form mergers and/or make acquisitions internationally. Dieter Ernst, a Senior Fellow at the East West Center In Hawaii says with this plan, China seeks to move from the catching up stage to a full-scale forging ahead.

With the “Made in China 2025” initiative, China is aiming to improve the self-sufficiency rate for ICs in the nation to 40% in 2020, and boost the rate further to 70% in 2025.

What will be key is how Chinese companies can gain access to 16/14nm, 10nm, and 7nm technologies as well as DRAM and 3D NAND technologies.

According to Handel Jones of IBS, who spoke at SEMI’s Industry Strategy Symposium earlier this year, China is also strongly positioned in 5G. “China will be the global leader in 5G,” he said. Based on an analysis of Huawei, Ericsson, Nokia and others, Jones said Huawei – which is investing about $1 billion/year — is ahead. “That’s going to have a fairly disruptive effect on the supply chain,” he said. He expects early development in 2017/2018 and then fairly extensive deployment in 2020.

In a recent report, “From Catching Up to Forging Ahead: China’s Policies for Semiconductors,” Ernst points out that while the opportunities for China are real, they all involve considerable uncertainty. “Basic parameters that determine how China will fare may change at short notice and in unpre- dictable ways,” he said. To succeed, China needs to move toward a bottom-up, market-led approach.

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One thought on “China’s semiconductor strategy

  1. Dr. Dev Gupta

    Really sad ( and disgusting ) to see that Marketing types in the US are still repeating China’s BIG LIE and kowtowing to the arrogant Middle Kingdom now revived by almost free technology transfer forced by Wall St. To justify its leverage over individual foreign chip companies doing business in China, the ever aggressive PRC inflates its semiconductor consumption by adding to its domestic sale all the components that are brought into China by foreign OEMs for assembly and re-export ( e,g. of various consumer electronic systems ). And its mouthpieces in the US have no qualms at all to repeat the PRC’s still very COMMUNIST PROPAGANDA !!

    China is no longer the sole source for low cost Assembly which for 2+ decades had given them leverage over even the largest US Corp.s. As Vietnam keeps looking more viable by the day as an alternative to China re: quality and even scale, the PRC fears losing its leverage over US Corp.s that are under the thumb of Wall St. With free xfer of Assembly technology from the West, China has grown stronger & richer, but it is not quite capable yet of jumping on its own to the next higher level ( i.e., world class Fabs ). Just look at the track record of SMIC over the last decade in spite of generous subsidies by their Govt. Hence the huge fund for acquisition of foreign technologies and blackmail of US fabless Co.s under guise of legal proceedings. At the same time they have been playing one foreign semiconductor company against another ( e,g using UMC to pressure TSMC to break down and announce a 300 mm Fab in Nanjing ) and strong arming industry leaders like QCOMM under cover of legal proceedings !

    Without these Market Research & Analyst types who have consistently misled US Corp.s for the last quarter century, China could not have become so aggressive and challenged the US.

    With friends like these ( starting with their patron saint Henry Kissinger ) who needs enemies ??

    Reply

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