The US is intensifying competition with China in semiconductor technology

CFP

Editor’s note: Djoomart Otorbaev is a former Prime Minister of the Kyrgyz Republic, Distinguished Professor at Beijing Normal University’s Belt and Road School, and author of the forthcoming book Central Asia’s Economic Rebirth in the Shadow of the New Great Game (Routledge, 2023). The article reflects the views of the author and not necessarily those of CGTN.

The previous article showed that the competition between the leading countries for the development of modern semiconductors, which are in high demand in almost all high-tech industries, has intensified. The US government, recognizing the critical importance of leadership in the development of semiconductors, has taken draconian measures to prevent the export of these technologies to China. Accordingly, we will discuss in which direction the semiconductor industry will develop and whether China can catch up.

US companies fear China will retaliate by restricting their firms’ access to its vast market. Nonetheless, China has decided to step up support for its domestic champions. These are: Semiconductor Manufacturing International Corporation (SMIC) for logic chips, Yangtze Memory Technologies Corporation (YMTC) for memory chips, and domestic manufacturers of the latest devices.

Chinese President Xi Jinping said at the 20th National Congress of the Chinese Communist Party (CPC) on Oct. 16, “China has joined the ranks of the world’s innovators with breakthroughs in some core technologies in key areas.”

The semiconductor sector is one of the few critical high-tech segments where China is lagging, but the gap is narrowing. Companies like Shanghai-based state-owned SMIC invest billions of dollars in semiconductor research and development.

With an unprecedented 30.6 percent growth in semiconductor chip manufacturing in 2020, mainland China’s semiconductor industry soared to $39.8 billion in annual revenue, according to SIA analysis. The US accounted for 37 percent of the world semiconductor industry in 1990, and that has changed over the past thirty years. In 2020, China accounted for 37 percent of global chip production, South Korea 21 percent, and Japan 15 percent, compared to 12 percent in the United States

In July, Canadian research firm TechInsights announced that despite sanctions and restrictions, SMIC had managed to manufacture and use a 7nm chip in its products. In a follow-up report, TechInsights confirmed that the quality of the 7nm chips manufactured by SMIC is world-class.

No one expected SMIC to break the 7 nm barrier so soon. Most analysts believed that SMIC could only produce 14nm chips and it would take years to develop new generations of semiconductors. More than 70 percent of semiconductor sales and 90 percent of modern chips are based on 7nm or older processes, which China now has access to. Established in April 2000, SMIC has been successful by recruiting foreign talents. A year after opening, the company hired 1,300 people, 400 of whom came from the US, Japan, South Korea and the Chinese region of Taiwan.

Workers make chips for export at an electronics company in Sihong, east China's Jiangsu Province, Feb. 23, 2022. /Xinhua

Workers make chips for export at an electronics company in Sihong, east China’s Jiangsu Province, Feb. 23, 2022. /Xinhua

Workers make chips for export at an electronics company in Sihong, east China’s Jiangsu Province, Feb. 23, 2022. /Xinhua

In addition, SMIC has developed its 5nm chips using locally produced lithography machines and technologies and plans to build these chips by 2025. SMIC isn’t the only Chinese company making headlines. Last year, Alibaba introduced one of the most advanced applications called the Yitian 710, which uses a 5nm server chip designed for use in the Internet of Things (IoT).

Therefore, US sanctions will not harm the Chinese semiconductor industry. In the short term, this will slow down the growth of high-tech industries such as artificial intelligence or supercomputers. However, some experts believe that China could reach parity or move ahead in the competition with the West in the medium term.

In addition, competition for the production of 2 nm chips is emerging. In contrast to the previous levels of rivalry in high-tech areas, competitors have almost the same starting conditions. Accelerating the development of the latest EDA (Electronic Design Automation) devices, China is collaborating with the American company Cadence, which has joint ventures in China and offers its design programs. China is investing in developing alternative materials to silicon, such as carbon. Beijing has already included research on carbon fiber, graphene, silicon carbide and other carbon-based composites in its 14th five-year plan. The list of accelerated technology competitions goes on and on.

On Nov. 14, Berkshire Hathaway reportedly bought a stake in Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest chipmaker, from billionaire Warren Buffett that could be worth more than $5 billion. Shares of the Taiwanese manufacturer rose more than 10 percent after news of the deal.

Even with the current global economic slowdown, the ongoing struggle for dominance in the design and manufacture of the latest semiconductors will not abate. Semiconductors are becoming the primary molecules shaping the future world of artificial intelligence, virtual reality and supercomputing. Nobody is ready to lose the battle in these important areas.

(If you have something to contribute and have specific expertise, please contact us at [email protected] Follow us @thouse_meinungen on Twitter to discover the latest comments in the CGTN opinion section.)



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