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China’s Push For Self-Sufficiency In Semiconductor Technology
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China’s Push For Self-Sufficiency In Semiconductor Technology

Yao Xinlu
All Weather TMT, 2019
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The trade war between the United States and China has strengthened China’s resolve in its longstanding goal of developing its own semiconductor industry and becoming a world leader in microchip technology. In this article from tech media platform All Weather TMT, writer Yao Xinlu traces the developmental path of China’s semiconductor industry, discusses why growth has been difficult and outlines challenges the industry continues to face.

Summary

A long, costly intellectual property lawsuit stymied growth in China’s semiconductor industry in the early 2000s.

China’s efforts to build its own semiconductor industry began at the turn of the 21st century. Semiconductor Manufacturing International Corporation (SMIC), China’s first modern microchip company, began as a state-owned enterprise in 2000. More than 10 other semiconductor companies were created between 2000 and 2004, giving the industry a boost.  The Chinese government’s ambition was to overtake Taiwan Semiconductor Manufacturing Company (TSMC), the world’s first and largest dedicated semiconductor foundry.

SMIC actively recruited TSMC engineers to gain expertise, but the strategy backfired when TSMC sued the Chinese competitor for misappropriating TSMC intellectual property. The lawsuit dragged on for six years. SMIC had to pay TMSC nearly $375 million in settlements. This was a heavy blow to both SMIC and China’s microchip industry as a whole. Growth slowed, microchip companies suffered losses in net profit and engineers fled the industry to find more secure employment prospects.  

Bleak prospects in the semiconductor...

About the Author

Yao Xinlu is a staff writer for Chinese news website All Weather TMT, which focuses on the latest developments in China’s technology, media and telecom sectors. 

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