Dozens of senior Chinese government officials and business leaders gathered last week at the 2020 World Semiconductor Conference, but their usual agenda of trumpeting the nation’s chip innovation was colored by fears their industry might be next to suffer trade sanctions from US President Donald Trump’s administration.
The White House’s campaign to contain China’s tech ascendancy has already shaken up the world’s technology supply chain and further restrictions would seriously set back China’s still-developing chip industry, executives including Legend Capital Co (君聯資本) managing director Arthur Ge (葛新宇) and AINSTEC (中科融合感知智能研究院) chief executive Wang Xuguang (王旭光) said at the conference.
That is despite the resiliency in China’s chip demand, which has been supported by a recovery in manufacturing following disruptions during the COVID-19 pandemic.
Photo: AFP
“If the US further hit key areas of Chinese tech industry, for example the advanced chip manufacturing, the impact would be devastating,” said Ge, whose Legend Capital is an investment arm of parent of Lenovo Group Ltd (聯想集團).
The White House last month slapped new restrictions on exports to Huawei Technologies Co (華為) amid an escalating standoff that has already ensnared other Chinese tech giants such as Tencent Holdings Ltd (騰訊) and ByteDance Ltd (字節跳動).
The latest rules required any chip companies using US technologies to seek licenses before working for Huawei, effectively closing off the loopholes that the Chinese firm had explored after earlier curbs that threatened the survival of its chipmaking unit HiSilicon Technologies Co (海思半導體).
The US is considering new restrictions on exports of semiconductor manufacturing equipment and associated software tools, lasers, sensors and other technology, Reuters reported last week.
Already, Synopsys Inc, the Mountain View, California-based provider of electronic design automation (EDA) tools, has suspended cooperation with Huawei following the US curbs, Synopsys China chairman Ge Qun (葛群) said at the conference.
“The entire chip industry is too fragile to defend itself. We are at least 20 years behind comparing to Silicon Valley from scale and quality of talent to size of the ecosystem,” said Wang, whose Suzhou-based company develops 3D visual chips. “If we can prosper [with the US], that’s the best, but if the situation doesn’t allow this to happen, we need to think what we have on our hands.”
The Chinese government has stepped up efforts to defend domestic tech companies and increase the industry’s self-sufficiency.
Last month, it rolled out a series of measures that include tax breaks, tariff exemptions and investment incentives to bolster chipmakers and software producers.
Local corporations are also boosting investments in research and development, with state-backed Tsinghua Unigroup Co (清華紫光) building a US$22 billion memory chip plant in the city of Wuhan.
Semiconductor Manufacturing International Corp (SMIC, 中芯國際) recently completed a secondary listing in Shanghai, raising more than US$7.6 billion that would be used to develop next-generation chipmaking technologies to compete with rivals such as Taiwan Semiconductor Manufacturing Co (台積電).
Tsinghua Unigroup and SMIC, along with HiSilicon and Cambricon Technologies Corp (寒武紀科技), are among a handful of homegrown firms that are engaged in advanced chip manufacturing.
“Although no one wants to say this, the world is approaching a new cold war era. I’m afraid this trend will get stronger in the future,” said Li Xing (李星), cofounder of Beijing-based private equity company V Fund Management and a former Goldman Sachs Group Inc executive. “However, the challenge could become an opportunity for the industry” as China seeks local replacements.
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