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analyst at research firm Gavekal Dragonomics. “In the face of
stricter U.S. restrictions on chip access, China’s response can
only be to keep pushing its own industry to develop.”
Shares in several major Chinese chipmakers gained. Shanghai
Fudan Microelectronics Group Co. finished 4.3% higher in Hong
Kong. On mainland bourses, Will Semiconductor Ltd. -- the second
most valuable listed Chinese chip firm -- rose almost 10%.
Xiamen Changelight Co. closed 14% up while Focus Lightings Tech
Co. jumped 5.6%.
The Ministry of Industry and Information Technology, which
is responsible for drafting the tech-related goals, did not
reply to a request for comment.
China Still Buying $300 Billion of Chips From U.S.,
Elsewhere
China imports more than $300 billion worth of integrated
circuits each year and its semiconductor developers rely on
U.S.-made chip design tools and patents, as well as critical
manufacturing technologies from U.S. allies. But deteriorating
ties between Beijing and Washington have made it increasingly
difficult for Chinese companies to source components and
chipmaking technologies from overseas.
The U.S. government has blacklisted dozens of China’s tech
companies so they can’t buy American parts, and slapped bans on
ByteDance Ltd.’s TikTok and Tencent Holdings Ltd.’s WeChat. In
the case of technology giant Huawei Technologies Co., the Trump
administration sanctioned the company and pressed allies to ban
the company’s equipment from their telecom networks.
This month, Huawei, the country’s largest handset maker,
will even lose access to chips from the likes of Taiwan
Semiconductor Manufacturing Co. under new American regulations
that prohibit suppliers anywhere in the world from working with
the company if those suppliers use American equipment. The
tighter rules have raised the urgency of building domestic
alternatives in Beijing.
Third-generation semiconductors are mainly chipsets made of
materials such as silicon carbide and gallium nitride. They can
operate at high frequency and in higher power and temperature
environments, and are widely used in fifth-generation radio
frequency chips, military-grade radars and electric vehicles.
Read more: China’s Chip Executives Worry They’re Next on
U.S. Hit List
Since no single country now dominates the fledgling, third-
generation technology, China’s gamble is its corporations can
compete if they accelerate research into the field now. Global
leaders such as U.S.-based CREE Inc. and Japan’s Sumitomo
Electric Industries Ltd. are just beginning to grow this
business, while Chinese tech giants such as Sanan
Optoelectronics Co. Ltd. and state-owned China Electronics
Technology Group Corp. have made inroads on third-generation
chipsets.
The country’s other chipmakers, which include Semiconductor
Manufacturing International Corp., Will Semiconductor Ltd. and
National Silicon Industry Group Co., may benefit more broadly
from the state support.
“This is a sector about to see explosive growth,” Alan
Zhou, managing partner of Fujian-based chip investment fund An
Xin Capital Co., told an industry forum last week. Because of
China’s increasing demand and investment, this is an area that
could create a “world-class Chinese chip giant.”