After US sanctions on domestic champions like Huawei Technologies and Hikvision, China’s chip industry is growing at a quicker rate than anywhere else in the world.
According to Bloomberg, 19 of the world’s 20 fastest-growing semiconductor industry enterprises have come from China during the past four quarters.
It was found that China-based suppliers of design software, processors and other chipmaking equipment are outpacing global heavyweights Taiwan Semiconductor Manufacturing Co (TSMC) and ASML Holding NV in terms of revenue growth.
This accelerated growth demonstrates how tensions between the US and China are affecting the global semiconductor industry, which is worth $550 billion and plays a significant role in everything from defence to the development of future technologies such as artificial intelligence (AI) and self-driving cars.
A former employee of the Dutch company ASML has been accused of stealing its technology on behalf of a Chinese corporation backed by Beijing. It was reported that the goal was to reclaim the technology from ASML and then transfer the IP to China.
The US began restricting sales of American technology to companies like Semiconductor Manufacturing International and Hangzhou Hikvision Digital Technology in 2020, successfully limiting their expansion but simultaneously fueling a surge in Chinese chip manufacturing and supply.
China is anticipated to channel billions of dollars into the sector through ambitious programmes like its “Little Giants” blueprint, which aims to support and fund national IT superstars while also encouraging “buy China” strategies to avoid US sanctions.
Beijing’s objectives are driven by a desire to wean itself off a geopolitical foe and more than US$430 billion in imported chipsets by 2021.
According to data published by industry trade group Semi, orders for chip production equipment from overseas vendors increased by 58% last year as domestic companies increased capacity.
According to the China Semiconductor Industry Association, total sales from Chinese chipmakers and designers increased by 18% in 2021 to more than 1 trillion yuan.
The persistent chip shortfall that is limiting output at the world’s leading auto and consumer electronics manufacturers is also helping Chinese chipmakers gain easier access to the worldwide market, often with premiums slapped on top-selling products like vehicles and PC chips.
When the pandemic paralysed factories and logistics across China, SMIC and Hua Hong Semiconductor, have maintained their Shanghai-based plants running at nearly full capacity. As the badly-hit city was put under lockdown, cargo aircraft from Japan brought crucial materials and gear to chip manufacturers with the cooperation of local officials.
As result, SMIC has announced a 67% increase in quarterly sales, outperforming far larger competitors GlobalFoundries and TSMC.
Similarly, due to the significant demand for surveillance devices, Shanghai Fullhan Microelectronics’ income increased 37% on average and it has also promised to grow into electric vehicles and AI sections.
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