China adds domestic chip makers to government buy list amid ZTE tussle

China has added three domestic semiconductor makers to its government procurement list as part of a package of measures to support the home-grown chip industry, at a time when ZTE has been banned from buying American components.

Computer servers powered by chips from domestic developers Loongson, Shenwei and Phytium, have been added to the Chinese government procurement plan for 2018 to 2019, according to a purchasing proposal published on the official website of the Central Government Procurement Centre.

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China’s semiconductor industry, which relies on an annual US$200 billion of imports from the US, has been in the spotlight recently after ZTE, the nation’s biggest publicly-traded telecom equipment maker, was banned from buying key American components for seven years. ZTE relies on components, such as chips from US semiconductor firm Qualcomm, to build its smartphones and networking gear.

According to a report by mainland newspaper Global Times, this is the first time that servers powered by locally-made central processing units (CPUs) have been included in the Chinese government’s procurement plan.

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“The inclusion of Chinese local chip makers is a milestone for the industry,” Hu Weiwu, chief executive of Loongson Technology Co, was quoted as saying to the Global Times. Previously, the servers on the government procurement list were powered by chips from US giant Intel, according to Hu.

Loongson is the brand name for China’s first self-developed, general-purpose microprocessor, which was developed by the Institute of Computing Technology under the Chinese Academy of Science. In 2016, Shenwei said it had built the world’s fastest supercomputer without US chips. Phytium’s chips were developed by the National University of Defence Technology, a top military academy in China, according to China’s official newspaper China Daily.