US-China chip cold war? It's only helping the Middle Kingdom warn silicon makers
- Reference: 1642204865
- News link: https://www.theregister.co.uk/2022/01/15/us_china_chip_war/
- Source link:
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 [1]said . In 2015, China chip sales were just $13bn, or a 3.8 per cent market share.
[2]
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.
[3]
[4]
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.
[5]
Some Chinese organizations on the US Entity list, including Chinese Academy of Sciences, are [6]developing homegrown CPUs based on RISC-V. China Mobile this month [7]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.
[8]Europe completes first phase of silicon independence project
[9]US Senator Marco Rubio calls Intel cowards for scrubbing remarks about Xinjiang and apologizing to China
[10]TSMC allocates a third more on capital spending in 2022 – that's a fab-ulous $44bn on new plants and other things
[11]Rocketing chip sales growth to ease off this year, reach $680bn, say analysts
To be sure, China's road to becoming a semiconductor powerhouse has had many lumps, with [12]scams and many outdated chip-making efforts.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.
But the larger tech organizations in China are putting resources into chip making. Alibaba last year [13]entered the server chip race with a 5nm part, and Baidu is [14]developing a 7nm server CPU.
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.
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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. ®
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[1] https://www.semiconductors.org/chinas-share-of-global-chip-sales-now-surpasses-taiwan-closing-in-on-europe-and-japan/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YeJU9g2V0XV5rnQTLk387QAAAA0&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YeJU9g2V0XV5rnQTLk387QAAAA0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YeJU9g2V0XV5rnQTLk387QAAAA0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YeJU9g2V0XV5rnQTLk387QAAAA0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2021/12/09/china_homegrown_chips/
[7] https://www.phytium.com.cn/article/861
[8] https://www.theregister.com/2021/12/24/european_processor_initiative_phase_one_concludes/
[9] https://www.theregister.com/2022/01/12/rubio_intel_xinjiang/
[10] https://www.theregister.com/2022/01/13/tsmc_q4_21/
[11] https://www.theregister.com/2022/01/10/chip_growth_this_year/
[12] https://chinatalk.substack.com/p/billion-dollar-heist-how-scammers
[13] https://www.theregister.com/2021/10/19/alibaba_yitian_710_arm_server_cpu/
[14] https://www.prnewswire.com/news-releases/baidu-announces-upgraded-baidu-brain-7-0-and-mass-production-of-2nd-generation-kunlun-ai-chip-301358126.html
[15] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YeJU9g2V0XV5rnQTLk387QAAAA0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[16] https://whitepapers.theregister.com/
At last some common sense -- but will politicians listen?
Back in the good old days, just a few short years ago, China was "one of us". OK, it was China and, yes, it was sweeping the pool with mercantilism but most of the wounds it inflicted on us (the US) were self-inflicted. We all know about the effects of off-shoring, how local industry, often starved of investment, is run down because its cheaper to procure overseas. Its a process that's been going on for decades in the US and had pretty much completed 40-50 years ago in the UK. One day, though, a well connected company that's used to the fruits of being Number One finds itself Number Two, years behind the competition, so instead of dealing with this it turns to its lobbyists and so The China Menace is born. This will meet with an enthusiastic reception in Congress and in the public at large -- after all, all many people have ever known is a world where there's some external menace ready to destroy our Way Of Life. We can now blame all our shortcomings and failings on 'them' while justifying an infinite defense budget.
Back in real life what this has done is disturb a well oiled supply chain. China was happily being a Global Citizen because it was doing well out of the status quo (we accuse them of cheating but I think that it might have more to do their schools turning out 35,000 engineers a year). Still, the build/buy calculus for semiconductors included a lot of 'buy', they were more interested in building products with the parts than making the parts. We then disturb this with our new Cold War, not only changing the build/buy calculus to 'build' but making it personal, its now not just a commercial decision but a matter of national honor.
You have to have monumentally arrogant politicians to think they'd bring China down. (Or monumentally stupid -- same thing.) Now we're fresh out of options. The more we abuse our soft power the less effective it becomes. Every time we show our hand, threatening to cut people off from SWIFT or denying inbound investment (or preventing investment by our target countries in our own businesses) we deal ourselves a little more damage. We're rapidly getting to the point where the only card we've got left is WW3 -- and we'd play it if we thought we could get away with it.
Sanctions
Sanctions rarely have the desired effect. After the fall of the US supported government in Cuba, the six decades of sanctions haven't resulted in regime change. Instead they have only strengthened the hardliners. The same happened with the four decades of sanctions in Iran that followed the overthrow of the US supported Shah.
Looking at the Soviet Union, it was broken up not by sanctions but by economic competition while the Russian sanctions against Putin seem to have little effect.
The US needs to take a hard look at what the effect of sanctions in China are and reassess its actions. If the sanctions had helped Taiwan (or Ukraine), or if they had helped ethnic minorities, that would be one thing. But they haven't.
Unfortunately the Red Scare mentality is still alive and well in both parties and a reassessment is unlikely.