A little-known government agency led by Vice-Premier Liu He, a trusted aide to President Xi Jinping, is emerging as the command centre for the most important battle in Beijing’s technology war against the United States: achieving chip autonomy by focusing on future technologies. One fighting strategy for China is to harness the integrated resources of universities, research institutions and private businesses to seek breakthroughs in next-generation chips for the “post-Moore Era”, when the 1975 rule-of-thumb from Intel co-founder Gordon Moore which posits that the number of transistors on a silicon chip doubles roughly every two years – potentially becomes obsolete. Analysts say China’s intention to leap from current silicon wafer chips to “third-generation” chips fabricated with new materials will be an uphill struggle given existing technological barriers. However, Beijing appears intent on testing a whole-country approach to give this long shot a try, in the same way that the Chinese Communist Party mobilised all its available science and technology resources in the 1960s to produce its first atomic bomb. The search for disruptive chip technology was made public last month at a meeting of the “National Leading Group for Reform of the Science and Technology System and Building an Innovation System”, an obscure interministerial body created in 2012 to coordinate China’s technology policy and projects across governmental agencies. Apart from its first meeting in 2012, the activity of the leading group has been largely shrouded in secrecy, until recently. Liu, 69, took over the leading group in September 2018, according to a statement issued then by the State Council. In last month’s meeting, chaired by Liu, members looked at China’s technology development strategy for the next five years, according to a government statement. The group, which includes delegates from China’s civil technology administrators as well as military technology units, also conducted a themed discussion on “potentially disruptive integrated circuit technologies in a post-Moore’s Law era”, indicating that Beijing is looking at areas such as new chip materials to cut the country’s reliance on US technologies and sidestep harmful sanctions. China’s semiconductor output in May hits all-time high “Third-generation chips open up a new field for research and commercial development … they offer new opportunities to participants who are keen to make investments. This is certainly true for China as well,” said William Deng, an analyst at UBS in Hong Kong. However, Deng said there are many challenges, as the fabrication of new materials “requires the support of the entire supply chain”, including equipment and materials that Beijing may not be able to source itself. At the same time, it would be over-optimistic to assume that a material other than silicon can replace the “entire existing semiconductor supply chain.” China is at a disadvantage in the global chip value chain as many chip designs tools, advanced materials, key production equipment – such as extreme ultraviolet (EUV) lithography systems – as well as the most advanced manufacturing capabilities currently sit under the control of the US and its allies. China’s memory makers push into low-end chips For example, domestic technology champion Huawei Technologies Co has been hobbled by US sanctions that cut off its access to advanced chipsets needed to manufacture its handsets. It is against this backdrop that China is pulling out all the stops to bolster its domestic semiconductor industry, with Beijing showering broad incentives across the industry as it seeks to spur disruptive new technologies. Mao Junfa, vice-president of Shanghai Jiao Tong University and an academic with the Chinese Academy of Sciences, said at a semiconductor conference in Nanjing this month that China can stay ahead of the industry through “heterogeneous integration”, or integration of separately manufactured components into a higher-level, assembly system-in-package. TSMC helps make breakthrough in semiconductor materials “Heterogeneous integration is the new direction for the industry in the post-Moore’s Law era,” Mao said. “It is also an opportunity for China to change lanes and overtake others in the IC industry.” But many industry analysts say China is still years away from the semiconductor self-sufficiency it craves, despite Beijing’s redoubled efforts. For now, silicon-based wafers still dominate the entire global value chain, with the top three suppliers – Japan’s Shin-Etsu Chemical, SUMCO and Taiwan GlobalWafers – taking about two-thirds of global market share. “At present, the development of third-generation semiconductor technology remains in an early stage globally, and the scale of the industry is still relatively small,” said Xie Ruifeng, a senior analyst with Shanghai-based semiconductor research firm ICWise. “The domestic technology level is far behind the world’s leading edge, in both SiC substrates and SiC-based items, where the world’s major supplier is [Durham, North Carolina-based] Cree,” he added. “Domestic manufacturers are prone to sluggish improvement of yield rates in mass production.” The new materials for next-generation chips include silicon carbide (SiC) and gallium nitride (GaN). As Moore’s Law approaches physical limits, using these new materials or heading down the path of heterogeneous integration, are seen as the two areas most likely to result in disruptive innovation. Currently though, most experts say China does not have an edge in either field. “With advantages on higher tolerance of temperature and voltage, third-generation materials are efficient for power management and signal transmission,” said Gary Ng, a Hong Kong-based economist at Natixis. “Still, the emergence of compound semiconductors (second and third generation) does not mean a full replacement of pure silicon and germanium.” “In terms of the development of third-generation semiconductors, Chinese companies have a large gap with leading companies in terms of technical strength, production capacity, and market share,” said Arisa Liu, a senior research fellow at the Taiwan Institute of Economic Research (TIER). “[As such] follow-up development by China’s semiconductor industry in a post-Moore’s Law era may not be a cause for optimism.”