Is China Really Close to Become the World Leader in Semiconductors?

Today, China does not have any bleeding-edge manufacturing semiconductor manufacturing facility.

Fremont, CA: The pastfewyears have seen China’s unprecedented success in the semiconductor industry in the spaces of testing, assembly, and packaging of electronics. However, it is currently witnessing slow progress in the design and manufacture of the semiconductor integrated circuits. The semiconductor industry is immensely contributing to China’s economy as it generated $400 billion annual global revenue. This industry is also the source of innovation in different sectors, including telecommunications, computing, and the automotive sectors. China is planning to build up a domestic semiconductor capacity through its “Made in China 2025” policy. While China is trying to minimize its dependency on foreign technology and become more self-dependent, it will need to overcome a few obstacles.

Let us look at the current position of china in the semiconductor industry:

Insufficient Manufacturing Facilities

Currently, Taiwan, South Korea, and the US are the world’s leading semiconductor manufacturing facilities. Companies from Japan as well as the US supply the majority of the specialized equipment to those fabs. Today, China does not have any bleeding-edge manufacturing semiconductor manufacturing facility. Its most advanced foundry only began 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 manufacturing facilities run by TSMC,Intel (United States), and Samsung (South Korea). 

Efficiency Gap

In order to upgrade China’s manufacturing capability from 14 nm to more cutting-edge smaller nodes, its companies need to improve manufacturing capabilities. China’s companies are still to become fully capable of maintaining collaboration networks, creating and protecting intellectual property as well as managing a workforce capable of leading-edge fabrication. Right now, China does not have sufficient globally competitive talents for semiconductor manufacturing. So as to fill the pipeline, China began recruiting talents desperately, ignoring talents from Taiwan. China provided them with double the salaries and bonuses than that of Taiwan.

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