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China responsible for just, oh, 20% of global semiconductor revenue in 2018, no biggie

That's almost a hundred BEEEELLION dollarydoos

Semiconductor sales by Chinese manufacturers are said to have reached ¥653.2bn in 2018 – that's about $97.3bn, or around 20 per cent of global semiconductor revenue for the year ($476.7bn).

The number was claimed by Ren Aiguang, head of the integrated circuits office at China's Ministry of Industry and Information Technology, at a meeting held in the manufacturing hub of Shenzhen, and reported in the state-owned Xinhua News.

This means that since 2012, the Chinese silicon market has been expanding at a compound annual growth rate of 20.3 percent, nearly three times the global average.

The rapid growth could be seen as a result of the application of the principles of economic self-reliance – as made popular by Chairman Mao – to the country's chip industry.

Such efforts were no doubt accelerated by the ongoing trade war between China and the US, where semiconductors play a key role, as well as unrelated sanctions against Chinese businesses beloved by the Trump administration.

In 2018, ZTE, one of the world's largest smartphone manufacturers, was forced to halt production after the US government slapped it with a seven-year ban on crucial components, including silicon, from US-based Qualcomm.

According to research by Deloitte, China currently consumes more than 50 per cent of all semiconductors made worldwide, but local manufacturers can only meet around 30 percent of the country's demand. The Chinese leadership would like to address this imbalance.

Ren noted that 2018 saw the Chinese chip industry move from basic, low-margin work like silicon packing and testing to higher value contracts in chip design and manufacturing. He added that the country's chip makers still lagged behind in storage silicon used for products like SSDs – implying that CPUs and memory no longer posed a challenge for local builders.

Why is this important? China was recently singled out by the US Semiconductor Industry Association (SIA) as the main threat to the continued dominance of American chip makers.

"While America leads the world with nearly half of global market share, overseas governments are seeking to displace US leadership through huge government investments in both commercial manufacturing and scientific research," stated the SIA document titled "Winning the Future: A Blueprint for Sustained US Leadership in Semiconductor Technology".

"For example, the Chinese government has announced efforts to invest well over $100 billion over the next decade to catch up to the United States in semiconductor technology, artificial intelligence, and quantum computing. While China may not meet all its goals, the size and scale of its effort should not be ignored."

In order to keep up with their Chinese counterparts, the US chip makers have asked the federal government for increased R&D funding and preferential treatment for qualified STEM graduates, among other things. ®

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