Is the US chip wall starting to collapse?
Failure is not an optionis an epic line associated with Gene Kranz and the Apollo 13 moon landing mission, which went horribly wrong, but ended happily thanks to some feats of Mission Control. Likewise, with a newly appointed vice premier at the head of the microchip, China no longer has any excuses for failing. The countrys decision to anoint a chip czar is the latest step in advancing its semiconductor industry in the face of harsh US sanctions. While China still has a long way to go to catch up with the United States, Taiwan and South Korea, Vice Premier Liu He is a wise choice to lead the development of future semiconductor technologies, Reported trade standard. He has been leading Chinas technological reform since at least 2018, has acted as chief negotiator in the US-China trade talks, and his position within the inner circle of leader Xi Jinping ensures that his recommendations are heard. The Harvard-trained career bureaucrat is not an engineer, but rather an expert in economics and industrial policy. This means Liu, 69, will have to rely on experts when it comes to making decisions in his field: semiconductor materials, equipment and processes. But rather than just catching up, the Lius chips strategy is likely to be to explore areas its rivals have yet to master in the hopes that China can colonize these technologies. This is the kind of moonshot approach that the Peoples Republic is already practicing. China released the first images taken on Mars as part of its Tianwen-1 interplanetary mission last week. This success, according to Beijing-based consulting firm Trivium, validates the focus on continuing leapfrog development, focusing on next-generation technologies where no country has a clear advantage. Beijing is right to trumpet the success in space, and the results should boost morale within its struggling chip industry. According to South China Morning Post, Chinas production of integrated circuits (ICs) in May hit a record high in one month, as the country made every effort to produce chips, according to central government data. Chinese chip production in May jumped 37.6 percent from a year ago, to 29.9 billion units, according to the National Bureau of Statistics. Courtesy of Xinhua. While Chinese chipmakers are unable to produce high volumes of advanced 14nm node chips of the type needed to power the latest iPhones, the countrys chip designers and makers can produce mature technology integrated circuits for home appliances and automobiles, reported SCMP. In the first five months of this year, China produced 139.9 billion IC units, an increase of 48.3% from the same period last year, the data showed. The latest data confirms that China is sparing no effort in its quest for semiconductor self-sufficiency, SCMP reported. In March, Beijing decided to lift taxes on imported parts and semiconductor materials until 2030, SCMP reported. The Chinese government has declared its ambition to cultivate a domestic components market of $ 237 billion by 2023. Meanwhile, Huawei Technologies is adamant in its pursuit of world-class semiconductor development despite the tightening of US sanctions, according to Catherine Chen, director and senior vice president of Huawei, Nikkei Asia reported. Chen said the company has no plans to restructure the HiSilicon chip design subsidiary, despite the fact that it has more than 7,000 employees and is expected to go years without contributing to profits. But Huawei is a private company and is unaffected by outside forces, and its management has made it clear that it intends to keep HiSilicon, Chen said. In May 2020, the U.S. government banned companies using U.S.-made products or services from doing business with Huawei, in principle. As a result, Taiwan Semiconductor Manufacturing Co. (TSMC), the worlds largest contract semiconductor manufacturer, and other companies have stopped accepting new orders from Huawei. The action was severely criticized by ASML Holding CEO Peter Wennink, who said Bloomberg, export controls against China will not only fail to halt its technological progress, but also, and ironically, will hurt the US economy. China was barred from acquiring advanced lithography tools from the Dutch industry leader due to the US-China technology war. I think export controls are not the right way to manage your economic risks if you have determined that there is an economic risk, Wennink said at an online industry event, arguing that if you prevent China from accessing technology, it will also cost no -Chinese economies have a lot of jobs and a lot of income. While it will take a long time for China to build its own equipment and semiconductor technology due to a lack of access to foreign technology, non-Chinese companies will end up being left out of one of the most large flea markets, Wennink said. If US business with China on semiconductors is completely shut down, it will likely cost between $ 80 billion and $ 100 billion in sales and 125,000 US jobs, Wennink added, citing Commerce Department estimates, as follows: Bloomberg reported. ASML, which has a de facto monopoly on the advanced extreme ultraviolet lithography equipment needed to manufacture cutting-edge chips, is a key supplier to Samsung Electronics and TSMC, but plans to expand further into China. Beijing wants to build a world-class local chip industry to wean itself off from foreign imports, an effort that would require one-of-a-kind EUV ASML machines, Bloomberg reported. Yet the company has struggled to get the Dutch government to renew a license to export the systems to China amid persistent trade tensions. Semiconductor manufacturing InternationalCorp. (SMIC), the nations flagship in manufacturing, is still years behind world leaders TSMC and Samsung. And these rivals are not standing still. TSMC is set to invest US $ 100 billion over the next three years to expand its absolute dominance, while Samsung and Intel Corp. announced bold spending plans. Nonetheless, the SMIC took the lead in achieving Beijings goals, securing municipal funding to establish a $ 2.6 billion factory in Shenzhen. Europe, too, hopes to become less dependent on microchips. An investment of more than 1.6 billion in the production of high-quality semiconductors at a Milan plant was announced this week, InnovationOrigins reported. The plant will produce silicon wafers with a diameter of 300 millimeters. It is the first of its generation in Italy and one of the few factories of this type in Europe. STMicroelectronics (STM for short) is a Franco-Italian company in which the two States hold a minority stake. The commissioning last week of a chip factory in Stuttgart, Germany, also fits in this context, where Bosch is starting production of complex semiconductors for the automotive industry. In addition, the US Senate is currently considering a bill that would provide $ 30 billion in funding to the US semiconductor industry. Congress approved similar legislation last summer but did not fund it. However, lawmakers took action as the chip shortage disrupted U.S. auto production. Sources: Business Standard, Nikkei Asia, South China Morning Post, Caixin Global, Origins of innovation, Yahoo Finance, Bloomberg, TheBurnIn.com