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China wants global semiconductor leverage

Posted: 05 Sep 2014     Print Version  Bookmark and Share

Keywords:China  Intel 

Of course, a national plan without engineering talent can only produce empty promises. China, however, is ready to up its game, according to Lu, both in terms of the fundamental science and the volume of talented engineers to carry out some of the toughest projects.

He cautioned us: "Don't judge China just by looking at today's China." More important is what China is capable of doing in the next 10 years.

Consider the example of the fundamental science for developing a 3D topological insulator, says Lu. A project that originated at Stanford University now has a group of scientists at Tsinghua University (Prof S.C. Chang's group) and the China Academy of Science vigorously working on it.

Further, take note of the 400,000 students graduating from universities in China every year with engineering degrees. Fifty per cent have degrees in integrated circuits, according to Lu. Where else in the world could higher education pump out so many students with engineering degrees?


Let's face it. China doesn't exactly have the best record of accountability when government gets involved in spreading around investment money. Even projects that started out with the best of intentions have failed as money disappeared somewhere along the food chain. How do you ensure the accountability of the National Framework for Development of the Integrated Circuit Industry?

Several things need to happen, notes Lu. First, policymakers must show results. They need to demonstrate that the policy can generate better domestic jobs. They also need to encourage China's system companies to design with parts produced in China. The use of domestic components is especially encouraged for "special-use" products such as military applications. Policymakers also need to demonstrate the use of the domestic chips in such applications as IoT and healthcare systems that will be particularly helpful in improving the lives of Chinese people, he says.

China semiconductor

Source: PWC

By choosing credible and successful companies (foreign and domestic) as targets for investment, China is seeking to produce results quickly, Lu says. That's why he views the next two years as critical.

Unlike the old China, which often insisted on developing domestic versions of global standards (e.g., VCD vs DVD) so that it could avoid paying licensing fees or royalties, the success of China's new policy hinges upon following international rules, Lu points out. Instead of pursuing a domestic standard for the sake of, say, a home-grown operating system, China must put commercial deals first.

In sum, China is at a threshold. China is ready. If it succeeds in the OmniVision acquisition, China can easily take OminVision's business away from TSMC and bring it to SMIC. As far as Lu is concerned, "The game is fair, and things in China are moving faster than ever."

Other regions in the world, on the other hand, have only themselves to blame if China bypasses them. As Lu concluded, innovation is the only way for us to differentiate ourselves.

In 2013, China's semiconductor consumption market grew by 10.1 per cent (more than double the worldwide market growth of 4.8 per cent). It has reached a new record of 55.6 per cent of the global market. Ongoing global demand for smartphones and tablets is the main reason for this continued strong growth in China's semiconductor consumption and will continue to be a factor in the coming years.

- Junko Yoshida
  EE Times

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