Chinese Govt finally realising the importance of the Semiconductor Industry to China's National Security and Prosperity.
China now funding R&D on 4 types of EUV Light Sources but this all takes time.
Govt now spending big on EUVL Development.
SMEE 28nm DUVL will go into small scale production in 2nd half of the Year.
Mass Production in 2022.
To be fair, Chinese government realized the importance of the semiconductor industry at least since 2000, when the first set of state regulations and policies promoting both public and private investments in the sector came into effect. Soon after, both semiconductor manufacturing and equipment figured prominently in China's Key State Projects 2005 - 2020. A lot of government investments since then have gone into R&D, venture funding and subsidies. These have started to bear fruits, particularly in the last five years.
But you need an industry-wide collaborative and coordinated efforts to truly make across-the-board advances and to become largely self-reliance in the semiconductor supply chain, given how far behind China has been in the sector compared to the global competitors. The facts that it's a very dynamic industry and China's semiconductor market, including both chip manufacturing and equipment, is wide open, make it very difficult for Chinese companies to close the gap and make a dent in market share.
Enter the US sanctions. First it was ZTE - people thought it was an one-off event and some even blamed ZTE for non-compliance or carelessness. Then came the crackdowns on Huawei, with ever tightening screw, it had become clear that the US was deliberate and determined to cripple if not kill a national champion. Finally, it was everybody else, from SMIC, AMEC, to Phytium and other chip companies for supercomputers and more. It was meant to suffocate China's tech industry. It's now become a matter of national security and prosperity.
China therefore needs a whole-of-government and whole-of-society strategy to deal with the challenge. Business as usual won't do. Some short-term pains and setbacks are inevitable, e.g. Huawei. But with a huge and booming market for everything semiconductor, a very board industrial and scientific base, China should be able to address the problem in 5-10 years. The track records of Chinese dealing with similar challenges in defense, space, electronics and other industries speak to the confidence of China stepping up to the challenge.
The last few years have been a stress test for the rise of China. It exposes some weaknesses of China, semiconductor being one of them. But for the most part, China has withstood the test and shown its strength and resilience in the face of real challenges to its government, people, society and system. In the end, the US sanctions on semiconductor may very well turn out to be a blessing in disguise.