How China is still paying the price for squandering its chance to build a home-grown semiconductor industry
- This is the first in a series of in-depth articles examining China’s efforts to build a stronger, domestic semiconductor industry amid rising trade tensions with US
- Here we look at how China came close to the US in the 1960s but lost its way, leaving it scrambling to catch up today
China is self-sufficient in nuclear power generation, it has put a man in space and it is leading in many areas of artificial intelligence.
But when it comes to semiconductor production, it remains woefully behind, spending more on imports of the chips that power the electronic gadgets, PCs and military equipment around us today than it does on oil.
Semiconductor design and production is a notoriously complex business, involving decades of expertise and extreme precision – get it slightly wrong and billions of dollars of investment can go up in smoke.
China has long been aware of the need to develop a strong semiconductor industry of its own but the recent trade war with the US, which threatens to cut off critical access to US components for national tech champions, has added extra urgency.
The trade blacklisting of Huawei Technologies by the US in May on national security grounds and an earlier ban on domestic rival ZTE for breaching an Iran sanctions settlement, has laid bare China’s reliance on the US when it comes to semiconductors, a vulnerability that has not been lost on China’s leaders.
“Technological innovation is the root of life for businesses,” China’s President Xi Jinping said in May on a visit to Jiangxi province, state-run news agency Xinhua reported. “Only if we own our own intellectual property and core technologies, then can we produce products with core competitiveness and [we] won’t be beaten in intensifying competition.”
