China’s chip industry is gaining momentum – it could alter the global economic and security landscape
China’s national champions for computer chip – or semiconductor – design and manufacturing, HiSilicon and Semiconductor Manufacturing International Corporation (SMIC), are making waves in Washington.
- China’s national champions for computer chip – or semiconductor – design and manufacturing, HiSilicon and Semiconductor Manufacturing International Corporation (SMIC), are making waves in Washington.
- Despite being the recipient of billions of dollars from the Chinese government since its founding in 2000, it remained far from the technological frontier.
- But now it faces formidable competition from China, who’s technological advance carries profound economic, geopolitical and security implications.
Semiconductors are a big business
- Smaller transistors result in lower energy consumption and faster processing speeds, so massively improve the performance of a microchip.
- Semiconductors are the backbone of the modern economy.
- The US push for “made in the USA” semiconductors has to do with this systemic importance.
Stifling China’s chip industry
Since the 1980s, the US has helped establish and maintain a distribution of chip manufacturing that is dominated by South Korea and Taiwan. But the US has recently sought to safeguard its technological supremacy and independence by bolstering its own manufacturing ability. Through large-scale industrial policy, billions of dollars are being poured into US chip manufacturing facilities, including a multi-billion dollar plant in Arizona.
- This includes the high-profile case of Broadcom’s attempt to buy Qualcomm in 2018 due to its China links.
- The US government has called on its friends to adopt a unified stance around excluding chip exports to China.
- Washington has also limited talent flows to the Chinese semiconductor industry.
- It banned the sale and import of equipment from Huawei in 2019 and has imposed sanctions on SMIC since 2020.
What’s at stake?
- Beijing’s ascent to the technological frontier would mean an economic boom for China and bust for the US.
- Taiwan’s status as the leading manufacturer of semiconductors has so far deterred China from using force to attack the island.
- Read more:
The microchip industry would implode if China invaded Taiwan, and it would affect everyoneChina is advancing its semiconductor capabilities.
The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.