Chinese semiconductor industry

KYli said:

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Excellent paper Here is the other real reason beside what we discussed in this forum as to why Huawei never invest in FAB. Government, Company, Media buy the "Globalization concept" lock stock and barrel. Yup sucker

In fact, this can be extended to other Chinese tech arenas. Why did not China build its own computer operating system? Why did not China make its own advanced machine tools or lithography machines?

While there were external factors such as a Western tech blockade, the basic reality is that China's tech development was essentially a factor of China being integrated into the global supply chain. The mainstream thinking in China was that after initially serving as an assembly center and manufacturer of low-end products, the country would slowly move up the value chain.

In semiconductors, for instance, China first established itself as a center for testing and packaging, the most labor-intensive but least value-added segment in the semiconductor supply chain. After the turn of the century, Beijing initiated policies to promote chip design and chip manufacturing in a bid to climb up to higher value-added segments.

The policies were designed on the premise of globalized supply chains. Beijing gave more support for fabless companies, which were categorized as software companies and enjoyed more comprehensive policy incentives such as preferential interest rates and funding for training.

In addition, the policy offered import tax incentives for imported chips manufactured by foreign fabs but designed by domestic companies when such chips could not be made by domestic Chinese companies.

In other words, Chinese policies reinforced the globalized supply chain by further bundling Chinese chip designers with foreign chip manufacturers. The indirect outcome was that it created an almost impossible market environment for Chinese fabs to advance technologically because their most likely clients -- Chinese chip designers -- were incentivized to contract out to foreign fabs.

In parallel, the adoption of the globalized supply chains led to the dominant position of Chinese makers of things like televisions, air conditioners, refrigerators, computers and telephones, but also led to deeply bundled companies that are reliant on imported parts.

In hindsight, Chinese tech companies did not focus on self-development as much as they should have during more benign times when they could have built domestic substitutes. Despite Chinese corporations' R&D expenditures growing by 119 times from 1995 to 2019, China is still today heavily reliant on foreign tech, from semiconductors to medical equipment.

KYli said:

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I hate this Chinese way of thinking. Maybe it was the editor and not the reporter because in the US the editor sometimes "edits" the news. The whole "mutually beneficial" nonsense only puts China in a position of weakness. How about the claim how Huawei has been hurt by the US ban somehow appeals the American's humanity and thus will change their minds? Is that why Beijing stupidly publicly expresses US actions hurt the Chinese people's feelings sounding like a child? Do these people actually believe in the nonsense that the West treats and sees everyone on this planet equally? The West wants domination as to why they're in alarm of China's rise because they have no say. That's why playing up what's "mutually beneficial" does absolutely nothing to sway Americans to change their position. In turn why do Americans think they can stop China by denying the presence of themselves as they're the most important part in the success of anything? American don't feel they need China hence why appealing to what's "mutually beneficial" means nothing to Americans. What Chinese reporters should be writing is taunting how the US will lose the future because of their arrogance because that's what they're feeling right now hence why the US is taking action. If you want to make Americans thinks twice, it's when Americans realize how much they going to lose and not appealing to a sense of fairness that doesn't exist.

In theory Huawei should not need to have their own fabs. In practice it is a lot more cost effective for these companies to outsource fabrication and initially Huawei simply did not have enough demand to fill a fab on their own. That only changed recently with their rapid rise in the smartphone market. But you would expect Chinese SOEs to have their own fabrication facilities and resell this to Chinese companies to cover the gap. Unfortunately it seems they do not have enough production capacity to resell plus their process is probably not advanced enough. Not enough effort was put into making a fully Chinese mass market production line. Or at least one that was as fully Chinese as possible.

Also the industry players might not have had enough demand to make their own fabs back then but they could have certainly pitched in to make a common fabrication facility even if it was only used for marginal products at less than the state of the art. This was a major fail.

There was probably the expectation SMIC would come through but they have the same Western tool dependency everyone else has.
They should be putting the top people at SMIC and YMTC working on this to help drive enhancements to the Chinese tools to make them usable in mass production. Much like TSMC cooperated with ASML to make the EUV tools.

krautmeister said:

Bottom line, the self-sufficiency goal is just a target. It is not absolutely necessary. What is essential is domestic commercialization for all core components of semiconductor equipment and core IC technology.

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Which part of a chain is more important than the others? The answer is, all the links are important; a chain is only as strong as its weakest link. The same applies to the semiconductor production chain; all the links need to be localized, which implies total self-sufficiency.

Imagine 300 years from now some muppet will claim that Earth's economy cannot grow without trading with Mars because apparently autarky is proven to be detrimental to growth and development.

.....

I swear. These libtards and neolibtards.

Nutrient said:

Which part of a chain is more important than the others? The answer is, all the links are important; a chain is only as strong as its weakest link. The same applies to the semiconductor production chain; all the links need to be localized, which implies total self-sufficiency.

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All links along the supply chain are important but some links are more important than others. CORE technologies, meaning those technologies needed for everything else, are the most important because they are held by few, but used by many. China's stated 70% self-sufficiency in ICs by 2025 is meaningless without the core capabilities needed to create those ICs in the face of tech sanctions. China could always ramp up IC self-sufficiency if they had total self-sufficiency in semiconductor equipment and materials. If it had 100% IC self-sufficiency without 100% self-sufficiency in IC production technology and materials, any sanctions along the production chain would immediately destroy their "supposed" IC self-sufficiency.

Core technologies, just like anything else that is held by few, but used by many, are an important tool the West uses to control the world. Whether that control is in the form of semiconductor equipment & materials, turbofan engines, US Dollar, SWIFT, GPS, ARM, etc., it all still comes down to control. This is why China is that guy, that threat to the Anglo-American empire that the Soviet Union never was. Unlike the Soviet Union, China has the ability to break every single choke point technology control mechanism the West has. Like I've said before, the US are control freaks.

krautmeister said:

Unlike the Soviet Union, China has the ability to break every single choke point technology control mechanism the West has. Like I've said before, the US are control freaks.

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This is just rewriting history, the Soviet Union wasn't for want of technology, it was strangled because it forgot about its populace and concentrated too much on a technology/arms race that bled the economy, there's only so much patriotism on offer if you have to queue for food!

The population was then seduced with the BS lies about how being a democratic market economy will make every one rich while grubby bankers and oligarchs walked off with everything that's not bolted down.

Those days are gone no one in the developing world believes the democratic get rich lies any more which is why the Chinese model is such a threat,

The whole tech war is wrapped up in racist propaganda that some how the West is smarter and everyone else is behind, where as in reality its just inertia and fear driven by a massive media campaign. They just keep telling everyone how smart they are and people actually believe them! Like some spoilt brat the US is used to throwing its toys out of the pram to get its way the day people stop picking up the toys and putting them back is the day they are finished.

All the Xnm this semi-conductor special that just goes into pointless consumer trinkets. Apart from bragging rights what does a 2021 smartphone allow you to do that a 2016 model doesn't, take a better selfie, have a smoother game play experience, wow world changing and everyone buys into it.

China barred coin mining we can all afford not to be scalped for graphics cards, hallelujah! oh dear Karen can't get the 2022 model year car in the colour she wants because Ford is out of chips give me a break when there's a shortage of semi-conductors for MRI machines that's a real issue, funny haven't seen any news reports about that!

When the tech war is over and the West is still around it will be an AI war or Gene war, anything to keep the voting sheep in the country focused on something else rather than their declining living standards because they can't rob the third world anymore!

Rant over!

visitor123 said:

Imagine 300 years from now some muppet will claim that Earth's economy cannot grow without trading with Mars because apparently autarky is proven to be detrimental to growth and development.

.....

I swear. These libtards and neolibtards.

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I partially agree.
If Mars was a planet that houses a civilization similar to the human civilization, then not trading with them would indeed detrimental. The countries that traded with them would have advantages compared to those who do not. This China-US case is different. The US is a country that never hesitates to weaponize trade.
For decades, China's strategy was making the economies interdependent so the US would never try to bring the Chinese economy down as doing so would harm it too. China succeeded in making these two economies interdependent but it was wrong in its original premise. The US is currently showing that it is willing to harm itself as long as whatever it's doing harms China more. The tariffs did not work so the strategy changed to the targeting of individual Chinese companies. All Chinese companies that are specializing on high-added value services and goods are in danger if they are using things that come from the USA. The ones that are working on technologies that the USA considers "strategic" are in even more danger.
China shouldn't go after autoarky, it is pointless. But it should definitely get rid of all technological dependencies to the USA. Unfortunately, the semiconductor industry is dominated by the USA in all segments except fabrication and memory chips (pointless on its own) so China will have to develop all the technology.

ansy1968 said:

@WTAN Sir all of it will be delivered to SMIC ? or will be subdivided between Huawei ICRD ,Hua Hong , SMIC and YMTC?

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It will be subdivided this year.

BoraTas said:

China shouldn't go after autoarky, it is pointless. But it should definitely get rid of all technological dependencies to the USA. Unfortunately, the semiconductor industry is dominated by the USA in all segments except fabrication and memory chips (pointless on its own) so China will have to develop all the technology.

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Not just fabrication and memory chips. The USA also increasingly dominates CPUs less and less. With the rise of ARM CPUs US architectures no longer dominate in smartphones and increasingly are losing space in notebooks and servers as well. They also probably never had a dominance of flat screens. They have no dominance in motherboard and PCB design and manufacture in general. They have lost the dominance in solar cells a long time ago. Chinese regulators need to ensure the USA does not use their dollar printing to do mergers and acquisitions to tilt the field in their favor at the same time CIFUS blocks Chinese acquisitions even of tiny South Korean companies though.

Examples include Toshiba losing Kioxia to Bain Capital after a murky dealing with US Westinghouse. Or Micron's acquisition of Taiwanese memory vendors. NVIDIA buying ARM might be next.