China to scale up investment in chip design
Efforts to improve industry chain, give nation leverage
Chinese chipmakers should scale up investment in chip design and production where they have already made certain breakthroughs, industry insiders said at a forum, noting that such efforts could drive up the growth of the whole industry chain and lend China more bargaining chips amid escalating trade tensions with the US.
The forum was held in Beijing from August 10-12 with the aim of sharing cutting-edged findings in technology, science and their industrialization.
Chinese chips and industry globalization were some of the hot topics at the forum.
“China has built its chip industry from scratch and has made significant progress recently compared to the last two to three decades. Yet the country is still in an average position in the global market” in terms of production capabilities, said Dong Yunting, director of the expert committee under the China Information Technology Industry Federation.
Chips have been one of China’s top imported goods among major commodities since 2008. The product has even exceeded the value of crude oil imports in recent years, highlighting the critical problem of self-sufficiency, which Dong said is about 10 percent.
Another pressing issue is concentration on the low-end chip industry. In 2017, China exported 200 billion chips at a value of $66 billion. It also imported 377 billion chips that were worth $260.1 billion during that same year, according to Dong.
“[The figure] means that China sold a home-made chip at an average price of 33 cents, while paying 69 cents on average to import a chip from abroad… We are exporting low-end chips while importing middle- and high-end chips,” Dong illustrated. Advantages
However, industry insiders noted that among the five market specifications in the chip-making industry – material, equipment, design, manufacturing as well as encapsulation and test – domestic players have more advantages in design and manufacturing compared with foreign players.
For example, the global mainstream chip design is 20 nanometers, according to Dong. But Chinese Bitcoin mining rig Canaan Creative in early August launched the world’s first 7-nanometer mass-produced crypto mining chip, which will be used in blockchain supercomputer Avalon A9 to achieve increased performance for crypto mining.
The chip was designed on the Chinese mainland and its manufacturing followed the process used by Taiwan Semiconductor Manufacturing Company (TSMC).
In addition, media reports also suggest that the next generation of Huawei’s Kirlin 980, which will be launched within a month, was designed based on the 7-nanometer standard.
In terms of production, domestic leading memory designer and manufacturer Yangtze Memory Technology Corp said earlier that its $24 billion chip project in Wuhan, capital of Central China’s Hubei Province, is expected to begin mass production by the end of 2018.
Xiang Ligang, chief executive of telecom industry news site cctime. com, noted that considering China’s huge market of 1.4 billion people and position as the world’s factory, the country also has an overwhelming edge in industry chains that are closer to the market, such as design and production, compared with materials and equipment that are at the bottom of a supply chain.
Last year, China produced 1.92 billion smartphones, representing 75 percent of the global output. The nation also manufactured 310 million computers in 2017, accounting for 95 percent of the global output.
The demand for high-end chips will also grow in the future, boosted by China’s amassing artificial intelligence market and ongoing trends of its industry moving toward intelligence manufacturing.
“From a commercial perspective, the closer a domestic firm is to the mass market, the easier it is for them to make a profit and recover investment,” Xiang told the Global Times on Tuesday.
Xiang cited the example of Netherlands-based ASML, one of the few suppliers of lithography, a type of chipmaking equipment, in the world.
“The company’s clients are just several global chip manufacturers like TMSC and Intel, and it generally takes about two years or so to deliver equipment and recover cost, which is not a great deal for Chinese firms at the current stage,” he explained.
Dong also stressed that the improvement of domestic chip design and production could gradually prompt the development of other related downstream and upstream industries, including encapsulation, testing as well as materials, which would then increase competitiveness in the whole industry.
Industry insiders have urged Chinese regulators to allocate capital and resources to help fund the two sectors and issue coordinating policies to tackle the lack of talent in the chip industry.
“Government industry funds and venture capital have now spread across a variety of realms in the chip industry – this is not going to work,” Dong added.
More bargaining chips
Wang Huixun, co-president of Chinese chipmaker Tsinghua Unigroup, said that there is no country in the world, including the US, that is capable of monopolizing and controlling the whole chip-making industry.
“The chip industry’s development is a result of collaborations among companies in different countries and regions,” Wang noted.
But he also stressed that China must acquire core technologies in sectors where it has advantages, so that it can “have more bargain chips” when inking deals with its partners from other countries.
“When I have something in my hand that you want, and you have something in your hand that I want, we must enter a level playing field… The true substance of international cooperation is that we can depend on one another,” Wang illustrated.
Xiang further pointed out that China’s future chances in the chip industry lie in design and production, while the US currently excels in chip design and encapsulation.
“If China can bring its advantages into full play in the near future, it would have more chips in hand when negotiating with the US amid any trade disputes,” Xiang said.