Should the World be Scared of China in Semiconductors?
The global semiconductor industry is witnessing a significant shift in power dynamics, with China rapidly gaining ground on established players like Taiwan and South Korea. According to recent reports, China is on track to control 30% of global semiconductor foundry capacity by 2030, leaving many to wonder if the world should be scared of China’s growing dominance in the sector.
To put this into perspective, China’s SMIC (Semiconductor Manufacturing International Corporation) has already emerged as the second-largest foundry player globally, with its revenue surging by 44% year-over-year in 2020. This impressive growth has been fueled by the company’s aggressive expansion plans, strategic partnerships, and a significant investment in research and development.
So, what’s behind China’s rapid ascent in the semiconductor industry? And more importantly, should the world be concerned about its growing influence?
The answer lies in China’s long-term strategy to develop a domestic chip manufacturing ecosystem, which involves creating a self-sustaining supply chain that can meet the demands of its burgeoning technology sector. This effort is being driven by the country’s 14th Five-Year Plan, which aims to transform China into a global technology powerhouse by 2025.
One of the key focuses of this plan is to develop China’s domestic chip design capabilities, which currently lag behind those of Taiwan and South Korea. To achieve this, the Chinese government has been investing heavily in semiconductor research and development, with a particular emphasis on advanced technologies like artificial intelligence, 5G, and high-performance computing.
China’s progress in these areas has been remarkable, with the country now boasting some of the world’s leading semiconductor companies, including Huawei, Xiaomi, and Alibaba. These companies have been driving innovation in areas like mobile processors, graphics processing units, and memory chips, which are essential components of modern technology products.
However, despite China’s significant progress in mature nodes like 28nm and 14nm, it still lags behind in advanced lithography, such as extreme ultraviolet (EUV) lithography. EUV lithography is a critical technology for producing complex chips with smaller feature sizes, which are essential for next-generation applications like artificial intelligence and high-performance computing.
This gap in advanced lithography is a major concern for global chipmakers, who fear that China’s dominance in mature nodes could lead to a flood of cheaper chips onto the global market. This could put pressure on established players to reduce prices, leading to a decline in profitability and potentially even bankruptcy.
Moreover, China’s growing influence in the semiconductor industry has raised concerns about technology dominance and national security. The US, in particular, has been vocal about its concerns, with the Trump administration imposing restrictions on the export of US-made equipment and software to Chinese chipmakers.
India, which is still struggling to develop its domestic chip manufacturing ecosystem, remains a significant laggard in the global semiconductor landscape. Despite efforts to promote domestic chip design and manufacturing, India’s semiconductor industry is still stuck in the early stages of development, with many companies relying on imports to meet their chip requirements.
In conclusion, China’s rapid ascent in the semiconductor industry is a significant development that has far-reaching implications for the global technology landscape. While China’s progress is impressive, its dominance in mature nodes and lagging performance in advanced lithography are major concerns that need to be addressed.
As the world becomes increasingly reliant on semiconductors for its technology products, it’s essential that global chipmakers, policymakers, and industry stakeholders work together to ensure a level playing field and maintain the integrity of the global semiconductor supply chain.
Source: https://www.dqindia.com/esdm/should-the-world-be-scared-of-china-in-semiconductors-9509216
