Focus on chips draws concern overseas

Updated 2017-08-07 10:36:11 Global Times

Relentless efforts by China in recent years to develop its semiconductor industry to reduce reliance on imports for key technologies have drawn concerns from some foreign key players in the field.

Dominant players in the global semiconductor sector like the U.S., South Korea and Japan feel threatened by China's drive and are trying to block it from acquiring the necessary technologies. Although such efforts might slow China's pace in making breakthroughs in the field, they won't stop the nation, given its government's laser-like focus on the sector, Chinese experts said on Sunday.

Government officials and business leaders in the U.S. and South Korea have shown growing concern over China's heavy investment and policy support in the semiconductor industry, and they are reportedly weighing countermeasures.

In South Korea, Kwon Oh-hyun, vice chairman of Samsung Electronics, one of the world's largest chipmakers, said that the country's semiconductor industry is facing a talent shortage because of an outflow of engineers abroad, mainly to China, the Korea Times reported on August 1.

"China's drive to boost its semiconductor industry is considered a threat from the long-term perspective," Kwon said in a meeting with President Moon Jae-in, according to the Korea Times report. "We will expedite technological development and take extra care not to lose our technologies and human resources."

In the U.S., officials are reportedly considering a wide-ranging investigation into China's trade practices, amid growing concerns over China's bid to become a global leader in microchips, and other crucial technologies, the New York Times reported on August 1.

China's efforts, under its "Made in China 2025" policy, to become a leading manufacturer in such fields as semiconductors, driverless cars, artificial intelligence and robotics, have caught the attention of U.S. officials, according to the report.

The Chinese government has designated the semiconductor industry as a crucial one for development and has thrown much support behind the industry, in an apparent move to reduce heavy reliance on foreign countries as demand for microchips in China continues to grow.

Most recently, the State-owned Integrated Circuit Fund announced in mid-July that it would invest 20 billion yuan (.97 billion) into China Electronics Corp for the development of the integrated circuit (IC) sector. The fund, which was set up in 2014, had invested in 37 domestic companies involving 50 projects as of the end of June, the Xinhua News Agency reported on July 24.

Apart from the central government, governments in several Chinese provinces have also been investing heavily and supporting the chip industry, according to Wang Yanhui, head of the Shanghai-based Mobile China Alliance.

"We have seen some major efforts both on the central and local government levels in supporting the semiconductor industry in recent years," Wang told the Global Times on Sunday. "I think that's why some foreign countries are increasingly concerned."

Those efforts could really push forward China's semiconductor industry, said Xiang Ligang, chief executive of domestic telecom industry portal "It is without doubt that China will one day become a global leader in chipmaking, just like the cellphone and computer industries."

Xiang told the Global Times that it's natural that countries like the U.S. and South Korea are getting nervous because their current dominant position in the market is threatening, "the trend for China to become a global leader cannot be reversed with."

However, to catch up on global leaders in the semiconductor industry may take some time, given the standing of the Chinese semiconductor industry in the global market, said Xu Xiaohai, an industry insider.

"We are still behind these countries in terms of market share … and technologies," Xu told the Global Times, adding that more investment and support from the government is needed to further help the industry. "The governments of the U.S., Japan and South Korea also offered capital and policy support developing their IC industry."

From 2001-16, the value of China's IC market grew more than 23-fold to 1.2 trillion yuan. But the domestic industry share of IC design accounts for only 8 percent of the world total, according a report released by the China Semiconductor Industry Association in March.

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