Wed. Jan 26th, 2022

China’s cold war with the United States on chips is not slowing the country’s rapid growth in semiconductors, the Semiconductor Industry Association said this week.

The US sanctions against Chinese companies did not have the intended effect of restricting China’s semiconductor industry. In fact, the saber-rattling only serves to allow China to seize semiconductors, the industry body warned.

China’s sales of the semiconductor industry were $ 39.8 billion in 2020, a growth rate of 30.6 percent from 2019, the SIA said. In 2015, sales of Chinese chips were only 13 billion. USD or a market share of 3.8 percent.

Sales figures for 2021 were not available. But the SIA predicts that China, if it maintains this growth rate, could surpass the EU and Japan as early as next year and close the gap with the US and Korea, whose expected sales are on a broadly declining or flat curve until 2025.

The SIA pointed out China’s preference for purchasing homemade technology as a reason for the boom in the chip sector. The trade wars with the United States, which discouraged chip companies from doing business in China, also revitalized the domestic chip sector with financing and incentives.

China quickly recognized semiconductors as the basis of its electronics industry plans and prioritized their development much earlier than the EU and the US, which only focused on home-grown semiconductor facilities after being hit by shortages.

Some Chinese organizations on the U.S. device list, including the Chinese Academy of Sciences, are developing homemade CPUs based on RISC-V. This month, China Mobile installed a chip made by the Chinese company Phythium – which is also on the US device list – in the cloud.

Total revenue from China’s CPU, GPU and FPGA sectors was around $ 1 billion. in 2020, up from $ 60m in 2015, the SIA wrote. About 15,000 companies in China are registered as semiconductor companies, most of them fables.

It is quite certain that China’s path to becoming a semiconductor powerhouse has had many lumps, with scams and many outdated chip manufacturing efforts. Many of the chips developed by Chinese companies like Loongson, intended for PCs and servers, end up mainly in IoT and embedded devices.

But the larger technology organizations in China are spending resources on chip manufacturing. Alibaba participated in the server chip race last year with a 5nm part, and Baidu is developing a 7nm server CPU.

Lack of groundbreaking products has put China at a major disadvantage. The US has placed China’s leading chip company, Huawei and the top manufacturer, SMIC on the Entity list, and Chinese semiconductor companies are now pushing capital for mature manufacturing technology.

SMIC planned to acquire EUV technology from the Dutch company ASML for advanced lithography, but it was canceled in 2019 due to US sanctions. EUV technology could have helped close the production gaps with e.g. TSMC and Samsung, and SMIC instead procures older lithography tools from ASML to make chips.

“All indications are that China’s rapid growth in semiconductor chip sales is likely to continue due to the unwavering commitment of the central government and robust political support in the face of deteriorating US-China relations,” the SIA said. ®

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