US-China chip cold war? It's only helping the Middle Kingdom, silicon makers warn
It's blowback time again
China's cold war with the US on chips isn't slowing down the country's rapid growth in semiconductors, the Semiconductor Industry Association said this week.
The US sanctions on Chinese companies didn't have the intended effect of restricting China's semiconductor industry. In fact, the saber-rattling is only serving for China to get its act together on semiconductors, the industry body warned.
China's semiconductor industry sales totaled $39.8bn in 2020, a growth rate of 30.6 per cent from 2019, the SIA said. In 2015, China chip sales were just $13bn, or a 3.8 per cent market share.
Sales numbers for 2021 were not available. But the SIA is projecting that China, if it maintains that growth rate, could surpass EU and Japan as early as next year, and close the gap with US and Korea, whose predicted sales are on a largely declining or flat curve through 2025.
The SIA pointed out China's preference for procuring homegrown technology as a reason for the boom in the chip sector. The trade wars with the US, which discouraged chip companies from doing business in China, also revitalized the domestic chip sector with funding and incentives.
China quickly recognized semiconductors as being the foundation for its electronics industry plans, and prioritized their development much earlier than EU and US, which focused on home-grown semiconductor facilities only after being hit by shortages.
Some Chinese organizations on the US Entity list, including Chinese Academy of Sciences, are developing homegrown CPUs based on RISC-V. China Mobile this month deployed a chip made by Chinese company Phythium - which is also on the US Entity List - in the cloud.
The combined revenue of China’s CPU, GPU, and FPGA sectors was about $1bn in 2020, up from $60m in 2015, the SIA wrote. About 15,000 companies in China are registered as semiconductor companies, most of them fabless.
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To be sure, China's road to becoming a semiconductor powerhouse has had many lumps, with scams and many outdated chip-making efforts. Many of the chips developed by Chinese companies like Loongson, projected for PCs and servers, end up mainly in IoT and embedded devices.
A lack of cutting-edge fabs has put China at a major disadvantage. The US has placed China's top chip company, Huawei and top manufacturer, SMIC on the Entity list, and Chinese semiconductor companies are now pushing capital to mature fabrication technology.
SMIC planned to acquire EUV technology from Dutch company ASML for advanced lithography, but that was cancelled in 2019 amid US sanctions. EUV technology could have helped close the manufacturing gaps with the likes of TSMC and Samsung and SMIC is instead acquiring older lithography tools from ASML to make chips.
"All indications are that China’s rapid growth in semiconductor chip sales is likely to continue due in large part to the unwavering commitment from the central government and robust policy support in the face of deteriorating US-China relations," the SIA said. ®