Focus on making breakthroughs to gain advantage in chip sector

The global chip shortage and the resulting problems for China’s chip industry, which, as some say, have “seized the sector by the neck”, have raised widespread concerns.

In order to ensure the normal operation of the domestic chip sector, China should look for breakthroughs in areas in which it enjoys advantage, rather than pursuing across-the-board development.

After all, a 1 percentage-point increase, or a small breakthrough, in a sector sometimes means 100 percent opportunities.

The chip industry plays a key role in the whole industrial chain, where “pulling one hair can move the whole body”.

For example, not long ago, a decline in the production of photoresist, a material sensitive to light used in the industrial processes such as chemical etching of integrated circuits, by a leading Japanese manufacturer reduced the supply of the photoresist to several Chinese or semiconductor enterprises, triggering a drastic rise in its prices.

Photoresists account for less than 1 percent of the value of the semiconductor industry. Yet this seemingly insignificant material has had a huge impact on the entire chip production chain.

The idea of “achieving a 1 percent breakthrough” is in line with the efficiency-first principle. Despite the rise of anti-globalization sentiment in many parts of the world, the chip industry still relies on the international division of labor and global cooperation.

On average, enterprises from 25 countries are involved in the chip industry’s chain, with companies from 23 countries being part of the ancillary industries.

Industrial integration is so deep that no country can flourish alone, which is to say no country can completely monopolize the chip industry.

Countries participating in the chip industry have different resource endowments, technological advantages and thus can play different, important roles.

This is determined by the industrial development and also conforms to the efficiency-first requirement in resource allocation.

In the global chip industry’s landscape, if China focuses on “achieving a 1 percent breakthrough” in a key area, it can win a vital bargaining chip and better safeguard the security and stability of the supply chains.

As the world’s largest chip market, China enjoys a significant advantage in developing the chip industry. The great progress it has made in chip design, sealed testing and other areas also means it can gain new advantages in the international industrial division of labor.