Sat, Sep 10, 2016 - Page 11 News List

CEO urges care in China’s semiconductor ambitions

‘RESPONSIBLE’:A global oversupply in semiconductors would benefit neither companies nor the government, Western Digital Corp chief executive Steve Milligan said

Bloomberg

Western Digital Corp chief executive Steve Milligan said that China’s burgeoning semiconductor industry might flood global markets if the rapid growth of domestic chipmaking capacity runs unchecked.

The country’s ongoing effort to build a world-class microchip industry requires careful planning and consideration, because a global glut — a persistent concern for a largely commoditized memory sector — benefited neither companies, the government nor the market, the executive told Bloomberg News.

The Chinese government is intent on spending more than US$100 billion to become a leading supplier of semiconductors in coming years, to compete on an even footing with the likes of Samsung Electronics Co or Qualcomm Inc.

Semiconductors are seen by the political leadership as vital to national security, but the success of the effort comes down to accessing technology, analysts have said.

“I understand China’s desire to get into the semiconductor and memory business, I respect that. But let’s try to do it in a way that is economically responsible,” Milligan said in Nanjing. “Because if you want to call it ‘destroying’ an industry, it is not good for anybody. You just need to be careful how you layer in the capacity.”

Miligan on Thursday attended the opening of a 1 billion yuan (US$150 million) storage solutions venture with Tsinghua Unigroup Ltd (清華紫光), the sprawling conglomerate that emerged from the prestigious local university of the same name.

Called Unis-WDC Storage Co, it is 51 percent owned by an arm of the Chinese company and 49 percent by Western Digital, and is to operate a research and development center in Nanjing as well as a marketing office in Beijing.

The many affiliates of state-backed Tsinghua University — including Unigroup — have become the vehicle for a Chinese effort to wean itself off foreign technology. Together they have spearheaded a spate of high-profile acquisitions in recent years, despite being forced to drop a proposed US$3.8 billion investment in Western Digital after it fell under US security review.

Unigroup bought RDA Microelectronics Inc (銳迪) and Spreadtrum Communications Inc (展訊), and came close to a potential US$23 billion bid for Micron Technology Inc.

“Our goal is to build a Pacific fleet for China’s information technology industry,” Unigroup Chairman Zhao Weiguo (趙偉國) said at the venture’s opening ceremony. “It not only needs a strong defense power to fuel China’s growth, it’s our responsibility to help the country grow high-technology capability.”

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