After Intel Corp and Foxconn Technology Group (富士康) said they would build advanced factories in the US, it might have seemed as if the US were gaining high-end manufacturing momentum.
However, on Friday, California-based chipmaker GlobalFoundries Inc announced a US$10 billion project in China, showing how the center of gravity continues to shift across the Pacific.
The new advanced semiconductor factory, in the central Chinese city of Chengdu, is only the most recent in an array of investments, often by major multinationals, into China with the support of the Chinese government. The projects have become markedly more sophisticated, making more modern microchips, memory chips or flat-panel displays.
The reason for the shift is in part the Chinese government. In 2013 Beijing announced a major initiative to expand the country’s ability to produce microchips, which act as the brains of everything from guided missiles to smartphones. Also driving the companies, according to analysts, are new guidelines urging Chinese electronics makers to buy chips made in China.
Since China has begun focusing on semiconductors, the provenance of advanced chips has become an increasingly fraught political issue. The US government has blocked several Chinese deals for US and European chip companies during the past two years, and a commission created by then-US president Barack Obama said China’s chip policies posed a risk to US companies.
The election of US President Donald Trump has further increased pressure on companies, several of which have announced plans to build facilities in the US. In Intel’s case, it was a recommitment to an earlier plan the company had announced.
Leading China’s charge have been the central and provincial governments, which have been spending billions of US dollars on investments and subsidies. The Chinese government has said would spend about US$100 billion to bring chip factories and research facilities to China.
“Almost all of the large semiconductor enterprises in the United States have received investment offers from Chinese state actors,” according to a report from the Mercator Institute for China Studies, a think tank based in Germany.
The report added that China’s newest industrial policy, Made in China 2025, had named semiconductors as a crucial area to improve.
Although analysts remain unsure of how quickly China might be able to close a huge gap with companies from Taiwan, Japan, South Korea, and the US, the funds have been slowly attracting new plants.
A semiconductor industry group said in a recent report that it was tracking the production of more than 20 semiconductor manufacturing plants in China.
“Such spending momentum will drive China to the top-tier bracket for fab equipment and is paving the way to establish China’s position on the global semiconductor stage,” according to a recent report by SEMI, a global microelectronics industry association, referring to tools used to fabricate chips.
The GlobalFoundries project is being built in cooperation with the Chengdu municipal government. GlobalFoundries declined to specify the amount of the investment, but several documents on government Web sites put the total project at about US$10 billion.
GlobalFoundries spokesman Jason Gorss declined to provide financial details, but said in an e-mail that “industry analysts estimate that the total cost of an advanced semiconductor fab is on the order of US$10 billion and this fab will be in that range.”
It is not clear how much investment is being provided by the company and how much by the Chengdu government.
GlobalFoundries is based in Santa Clara, California, and owned by Abu Dhabi, one of the United Arab Emirates.
The company has semiconductor plants across the world, including two former IBM Corp plants in the US that it uses to make chips for the US military.
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