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Domestic demand can shelter Chinese chip firms, insiders say. Photo: Shutterstock

Tech war: industry veterans say huge domestic demand for mature chips can shelter Chinese firms from US hostilities

  • Experts were speaking at the Semicon China executive summit, a forum for executives, researchers and government officials to share views
  • Some speakers said China should focus on mature node technology as there is huge downstream demand for these chips

China’s huge domestic market will offer a buffer and a safe haven for the domestic semiconductor industry as the US seeks to slow the country’s progress towards developing advanced chips, a group of Chinese industry insiders said at a forum in Shanghai on Tuesday.

The industry participants spoke at the Semicon China executive summit, an industry forum for executives, researchers and government officials to share views. The comments come after the US recently fortified trade sanctions on Chinese chip companies.

Chu Lung, president of Semi China, said the updated US export controls targeting China’s chip ambitions are set to have a “significant influence”. Chu, who once worked for US chip process control systems firm KLA, said sentiment had soured in China as people sense “danger” for the industry, a far cry from two years ago when the mood was upbeat.

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Tang Wenkan, a deputy director of the Shanghai Municipal Commission of Economy and Informatization, said that China will maintain an open market approach to woo investors. Shanghai, which currently accounts for a quarter of China’s semiconductor output, plans to build up five industrial parks for chips – some of which focus on mature node products – amid huge expected demand from downstream sectors such as automobiles, said Tang at the forum.

Wang Ning, president of China Electronics Chamber of Commerce, said that China’s chip market will continue to grow thanks to the development of the country’s digital economy. With the US adopting “a Cold War mentality” to contain China’s advancement, the semiconductor sector will likely receive increased government support, Wang said at the forum.

Wu Hanming, a professor at Zhejiang University, said China can adjust its road map to focus more on mature process nodes. “Advanced process technology development is extremely challenging … so China’s technology road map has to be refocused,” on advanced packaging and specialised process technology, Wu said. “China’s IC market capacity is huge for mature process technology nodes,” Wu said.

Chinese chip experts debate impact of US Chips Act but see no quick solutions

China’s semiconductor industry is adjusting to new restrictions announced by the US Bureau of Industry and Security on October 7, which included a ban on “US persons supporting the development or production” of chips at certain China-located semiconductor fabrication facilities without a licence.

Xie Xiaoming, director of the Shanghai Institute of Microsystem and Information Technology of Chinese Academy of Sciences, a state think tank, said that China should focus on mature node technologies, namely commoditised chips for automobiles and home appliances instead of chips that power the latest smartphones and super computers, to survive the US sanctions.

“China’s market is promising even if we do not rely on advanced nodes,” said Xie, adding that Chinese businesses should focus on projects with lower risks but predictable returns.