US-China tech war: without advanced chips, can China’s smartphone industry survive?
- Limited access to high-end semiconductor chips poses a major threat to China’s world-leading smartphone manufacturing industry
- Chinese smartphone firms will face an ‘innovate or die’ situation, especially as multinationals look to diversify, industry insiders say
Tang Qi, a former phone dealer in Huaqiangbei, one of China’s largest smartphone grey markets in Shenzhen, has witnessed the ups and downs of the handset industry. But one thing is certain: business has always hinged on semiconductor chips.
Now, with the golden years of globalisation seemingly in the rear view, the country’s mobile phone industry is caught in the middle of a tech war that has seen the US and its allies ban exports of semiconductors used to power advanced smartphones, leaving the outlook far from certain.
Its fate, however, shows what can happen when access to high-end semiconductor chips becomes more difficult and domestic innovation falters.
“Before 2004, there were no counterfeit phones on the market,” Tang said. “Counterfeiting and knock-offs started to flourish in 2005 when MediaTek offered chips integrated with software, which made counterfeit mobile production easy.”