Chinese chip industry brings high hopes to Shanghai show
TAIPEI – With supply shortages and a crackdown from Washington, China’s emerging chipmaking industry has rarely seemed to be under such pressure – and yet William Wang could hardly be happier as he surrenders in Shanghai for the biggest Chinese semiconductor event of the year.
Shanghai-based consulting firm IC Cafe CEO Wang will be looking for networking and business opportunities at SEMICON China, and he is confident that a local industry that has managed to grow by 20% last year despite a global pandemic and unprecedented tensions between the United States and China continue to deliver.
“There are indeed challenges because of geopolitical issues and the pandemic, but it also brings many opportunities… the global ecosystem is booming,” Wang told Nikkei Asia. “I have never seen the semiconductor industry highlighted so much. … It has become a national theme that everyone talks about and cares about. It is also leading to more chip related customers asking us to help them with market research and consultancy work. . “
The three-day event will feature a virtual lecture by Bertrand Loy, CEO of leading U.S. supplier of chip materials Entegris and president of SEMI, a global industry association, as well as speeches from local leaders of major global manufacturers of equipment and chip materials such as Applied Materials and Lam Research of the United States and Merck of Germany. Industry leaders from China’s national chip champions, including Semiconductor Manufacturing International Co., are also scheduled to attend.
SEMICON China is closely following the annual National People’s Congress, where the government’s key economic plan for the next five years and targets until 2035 have been finalized.
The plan places the development of integrated circuits – along with artificial intelligence, quantum computing, health sciences, neuroscience and other fields – among the country’s top policy priorities to bolster its technological prowess. The plan also highlighted the importance of building vital components and materials nationwide, mentioning at least 10 times the efforts to upgrade and build a secure and diverse supply chain.
SEMICON China will also mark the first international physical semiconductor show since US President Joe Biden took office in January, and comes just ahead of the first high-level meeting between Chinese and US diplomats in Anchorage, Alaska, on March 18.
The two major semiconductor industry associations in the United States and China – neither of which are linked to their respective governments – further agreed to set up working groups to discuss trade issues and export control, an approach seen as an opening to ease tensions between the two greatest economic powers in the world.
Chips – which serve as the brains and hearts of electronic devices ranging from computers and servers to smartphones and connected cars – have become a key battleground in US-China technological tensions.
Under the Trump administration, China’s top chip developer HiSilicon Technologies, Huawei’s semiconductor unit, was barred from using unlicensed U.S. technologies last year. The minimum wage has also been added to several U.S. trade blacklists to limit its use of U.S. equipment, and U.S. investors have been ordered to part with any Hong Kong-listed shares of the chipmaker they may own.
“These sudden cuts came as a serious warning, and most local tech companies have realized that no matter how difficult it is, building a diverse supply chain and reducing reliance on it. foreigners are inevitable and crucial, ”said a Chinese chip industry executive who asked to remain anonymous. for fear of reprisals from Washington and Beijing. “We also learned a cruel lesson from the US-China technology war that actions speak louder than words, and you have to make yourself nearly invisible and keep a low profile even if your business makes key inroads to avoid becoming a target.”
Nonetheless, the Chinese industry has responded by stepping up efforts to reduce its reliance on US chip design tools, while Huawei has stepped up investment in small chip-related businesses to plug holes in its own chain. supply, Nikkei Asia reported earlier.
At the same time, many executives in the US chip industry, including Xilinx CEO Victor Peng, told Nikkei that China is still an important market for their companies. Loy d’Entegris told Nikkei he hoped the Biden administration would be more willing to consult with the industry before formulating new policies.
China became the world’s largest semiconductor market in 2005 and continues to grow, but local chip production continues to lag, according to research firm IC Insights. Of the $ 143.4 billion worth of chips sold in China in 2020, only 15.9 percent, or about $ 22.7 billion, were produced in China, the company said in a recent research note.
On the bright side, China’s semiconductor industry revenues, including the operations of foreign companies in the country, reached nearly 900 billion yuan ($ 138.5 billion) last year, up by 19% compared to 2019, according to an estimate by the China Semiconductor Industry Association. By comparison, the global chip industry only grew 5% last year.
The country even became the world’s largest buyer of chip production equipment in 2020, overtaking Taiwan and South Korea, in part to stockpile more tools and parts to counter the US crackdown, Clark Tseng said. , Research Director at SEMI, the global trade body. This trend may not last, however.
“China’s investment in purchasing chip equipment for expansion and construction of new chip manufacturing facilities may show signs of slowing down in 2021.… We still see a lot of uncertainties brought about by the US-Chinese geopolitical tension, ”Tseng said.
Wang of IC Cafe, however, remains optimistic that adversity will bring opportunity.
“Friends in the industry across China are already messaging each other to get together during the show, as confirmed local cases of the coronavirus are almost gone,” Wang said. “Many local chip developers are also seeing opportunities for business engagement they never imagined before with big tech companies, as they all need to look for alternatives when there are risks associated with the pandemic or US trade disputes. -Chinese.”