China to Expand Its Semiconductor Industry

According to Strategy Analytics, China’s recent announcement of Phase II of its National Integrated Circuit Industry Investment Fund will lead to near self-sufficient production of integrated circuits at the all-important 28 nm feature size, probably within two years.

This is but one of the consequences of the technology cold war that has broken out between the U.S. and China, as outlined in the new report Self-sufficiency for China at the Important 28 nm CMOS node: The Plan Can Succeed.

China has funded a second phase of its investment plan to establish self-sufficiency in semiconductor production with a focus on the 28 nm CMOS process node. This plan will probably succeed, but it will not end the need for trade and cooperation between the U.S. and China, especially in semiconductors and related technologies such as 5G and AI.

Christopher Taylor, Director of RF & Wireless Components and author of the report, stated “Efforts by the U.S. Government to cut off the sales of semiconductors to some commercial electronics producers in China have led to an increase in China’s efforts to develop its own, indigenous semiconductors. With China facing increasing restrictions on importing chips, semiconductor production equipment, and electronic design software from the U.S. and its allies, the move to self-sufficiency should help reassure customers of Huawei, HiSilicon, Fujian, SMIC, and a host of consumer electronics firms in China. However, consequences will probably include lower market share and higher production costs for the U.S. semiconductor industry and U.S. allies.”

Stephen Entwistle, VP of Strategic Technologies at Strategy Analytics, added “China was expected to have been the largest buyer of semiconductor production equipment in 2020 up until the imposition of semiconductor equipment restrictions by the U.S. As it stands now, China plans to put a big proportion of its Phase II investment into developing its own photolithography, etching, thin film deposition and wafer cleaning equipment.”

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