Beijing launches a project to rival Washington in microchips

by **rocky** Sun 21 Mar 2021, 7:40 am

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Beijing launches a project to rival Washington in microchips

by rocky Sun 21 Mar 2021, 7:40 am

Beijing launches a project to rival Washington in microchips

China has launched its first mega project, as part of a plan it prepared to compete with the United States in the advanced chip industry and achieve independence in this sector. The Chinese International Semiconductor Manufacturing Corporation intends to build a $ 2.35 billion plant.

And Bloomberg reported that China is seeking to establish a group of technology giants that can compete with the American companies, Intel and the Taiwan Semiconductor Industry Corporation.

While the details of this plan may take months, Chinese Premier Li Qiang pledged to boost spending and push research toward the advanced chip sector, in Beijing's latest five-year plan that included a technology blueprint to compete with Washington for global influence.

The agency indicated that China is moving quickly to stop its dependence on the West for important components such as chips, and this is an issue that has become more urgent after the exacerbation of a global shortage of semiconductors during the outbreak of the new Corona virus.

The United States blacklisted major Chinese technology companies, including SMIC, in a move that curbed its ability to acquire American technology and severely weakened its ability to purchase the chipmaking equipment it needed.

Fears of shortage

It remains unclear whether President Joe Biden's administration will allow US companies to resume selling to SMIC on a large scale, or relieve pressure on US allies in Europe and elsewhere over doing business with the Chinese company.

And it was stated in a disclosure statement to the Stock Exchange, directed by the Chinese company, that it had agreed to a joint project with the city of Shenzhen, located in the south of the country, under which it would develop and operate a chip production plant that could produce chips with 28 nanometers or more of silicon.

The two partners aim to attract third-party investment and start production by 2022, eventually producing 40,000 12-inch chips per month, according to Bloomberg.

SMIC warned that the shortage in this sector may worsen during 2021 and 2022, causing Chinese companies to falter if Beijing does not now intensify its production capabilities domestically.

"The shortage in chip-manufacturing capacity is very serious, and the situation may deteriorate between 2021 and 2022, if Chinese companies do not accelerate their expansion," said SMIC Vice President Zhang Xin.

Merger to establish huge companies

Bloomberg indicated that an agreement with the government may be necessary to achieve the country's ambitions. Chinese companies aim to produce more advanced chips than the 28-nanometer technology now used in industries, including cars and televisions, but it needs billions of dollars and years of testing to make more advanced semiconductors for devices such as smartphones.

Many of China's hopes are based on progress on booming sectors, such as artificial intelligence and third-generation chips, made primarily of materials such as silicon carbide and gallium nitride, which can operate at high frequency and in higher energy and temperature environments, with wide applications for the fifth generation of Internet and radars Military and electric cars.

A prominent official in the semiconductor industry called on the giant domestic chip manufacturers to merge with their counterparts to create giant national companies able to compete in the world.

In addition to SMIC, other notable chip makers in China include the state-backed giant Tsinghua Group, which is spending billions to expand its capabilities, Huawei-owned HiSilicon, and Campecon Technologies Corp., which specializes in Artificial intelligence.

Industrial integration

"More industrial integration is needed to improve our resistance to risks. Mergers and acquisitions should be encouraged," said Yi Tianchun, deputy director of the China Semiconductor Industry Association.

The SMIC project in Shenzhen will be one of the limited factories in China that focuses on manufacturing 12-inch chips instead of 8-inches, which saves costs.

SMIC operates factories in 4 cities, including Beijing and Shanghai. It will own 55% of the proposed new plant, while a government-owned entity will own a stake of 23%.

"Silicon wafer is an essential raw material in semiconductor manufacturing, yet it is also one of the areas of the semiconductor supply chain in China that has the lowest," said Li Wei, executive vice president of the National Silicon Industry Group, a state-backed company that makes chips. A level of domestic production, especially 12-inch silicon chips.

https://economy-news.net/content.php?id=24541