Factors Holding China Back from Becoming the World Leader in Semiconductors

Factors Holding China Back from Becoming the World Leader in Semiconductors

China is gearing up to build up a domestic semiconductor capacity through its “Made in China 2025” policy. While China is trying to reduce its dependency on foreign technology and become more self-sufficient, it is yet to overcome a few obstacles.

Fremont, CA: The last two decades have witnessed China’s unprecedented success in the semiconductor industry in the areas of testing, assembly, and packaging of electronics. However, it is currently seeing slow progress in the design and manufacture of the semiconductor integrated circuits. The semiconductor industry is propelling China’s economy forward as it generated $400 billion annual global revenue. The industry is also the source of innovation in different sectors, including computing, telecommunications, and the automotive sectors. China is gearing up to build up a domestic semiconductor capacity through its “Made in China 2025” policy. While China is trying to reduce its dependency on foreign technology and become more self-sufficient, it is yet to overcome a few obstacles.

• Currently, South Korea, Taiwan, and the US are the world’s leading semiconductor manufacturing facilities. Companies from Japan and the US supply the majority of the specialized equipment to those fabs. Today, China does not have any cutting-edge manufacturing semiconductor manufacturing facility. Its most advanced foundry only started production for creating chips from the 14 nanometers (nm) technology node in late 2019, at Semiconductor Manufacturing International Corporation (SMIC) in Shanghai. Thus, SMIC is almost a decade behind the advanced fabs run by TSMC, Samsung (South Korea), and Intel (United States).

• So as to upgrade China’s manufacturing capability from 14 nm to more advanced smaller nodes, its companies should improve manufacturing capabilities. China’s companies have not yet become fully capable of maintaining collaboration networks, creating and protecting intellectual property as well as managing a workforce able to lead edge fabrication. Currently, China has insufficient globally competitive talents for semiconductor manufacturing. In order to fill the pipeline, China started recruiting talents aggressively, sidetracking talents from Taiwan. China offered them double the salaries and bonuses than that of Taiwan. Locations from where Chinese officials had chosen to pick talents are the centers of intellectual property theft. This has led to increased talent monitoring.

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