wisepowder: China wants its semiconductor industry to catch up with the U.S

wisepowder

China has been trying to ramp up its domestic semiconductor industry as the U.S. increases pressure on the country’s technology giants. To get more China breaking news, you can visit shine news official website.

But Beijing will face significant challenges strengthening its homegrown chip sector, analysts told CNBC. Semiconductors are extremely important components of consumer electronics. As an increasing number of devices become “smart” and connected to the internet, they will become more and more crucial in new areas, such as automobiles. That’s why China wants to be a powerful player.

However, China is also facing a situation where its companies’ access to important chip components, as well as its domestic chipmakers’ ability to procure technology to make those semiconductors, might be hampered.“So without semiconductors, China cannot be a very meaningful technological power, and its own technology companies including a major company like Huawei may not necessarily be able to maintain operation if China does not have substantial capability to actually maintain and manufacture semiconductors,” Dan Wang, technology analyst at Gavekal Dragonomics, a Beijing-based research firm, told CNBC’s “Beyond the Valley” podcast.

The trade war has exposed China’s reliance on foreign chips, the United States’ central role to the supply chain, and ultimately how complicated that supply chain is. Earlier this year, Washington amended a rule which requires foreign manufacturers using U.S. chipmaking equipment to get a license before selling semiconductors to Huawei. There is no indication that the U.S. will grant those licenses, either. While Huawei, currently the world’s largest smartphone maker, designs its own chips via a subsidiary called HiSilicon, those components are actually manufactured by Taiwanese firm TSMC.

In the process, TSMC uses chipmaking gear that is made by American firms. So Huawei will be cut off from TSMC’s chips after September 15 and has very few options globally to procure more, because of U.S. sanctions. The U.S. government is also considering whether to add Semiconductor Manufacturing International Corp (SMIC), China’s biggest contract chipmaker, to a blacklist known as the Entity List. That would restrict American firms exporting technology to the company. In effect, SMIC may not be able to get access to the gear it needs to make more advanced chips. Its technology is already several years behind TSMC and South Korea’s Samsung Electronics.