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Opinionated - China Chipping Away to Semiconductor Dominance

Welcome to Shanghai, I will gladly lease an apartment in Hongqiao - a Taiwanese neighborhood - to him at discount rate! TSMC is like Huangpu Military Academy for chipset industry. After Richard Chang (張汝京, founder-SMIC), Dr. Tzu-Yin Chiu (CEO-SMIC) and now Chiang Shang-yi (independent director), all great TSMC talents transfer from Taipei to Shanghai, let's make SMIC another Chinese chip powerhouse after TSMC.

Huangpu Military Academy celebrates 90th anniversary
Xinhua June 16, 2014
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Read http://www.china.org.cn/china/2014-06/16/content_32685265.htm
 
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China’s capital expenditures on wafer fabs from the start 2015 to the present has reached around RMB 480 billion, of which 86.5% or about RMB 435 billion came from state-backed funds (including the National IC Fund and local funds for IC ventures).


Yes SMIC is backed by China Integrated Circuit Industry Investment Fund Co., Ltd., (CICIIF), a huge fund to support strategic development of IC industry. Some earlier news:

http://www.prnewswire.com/news-rele...rcuit-industry-investment-fund-300035322.html
http://www.eetimes.com/document.asp?doc_id=1328783

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It is getting difficult to compete with China in the semiconductor industry.

China has the plan and the money (China Integrated Circuit Industry Investment Fund Co., Ltd., (CICIIF).

This is indeed very good for China but not for the rest.

Kudos to China's meritocratic & dynastic system of government.
 
It is getting difficult to compete with China in the semiconductor industry.

China has the plan and the money (China Integrated Circuit Industry Investment Fund Co., Ltd., (CICIIF).

This is indeed very good for China but not for the rest.

Kudos to China's meritocratic & dynastic system of government.


Yes, to re-invent the nation in the coming decade, government has identified 10 sectors that China must excel, that's "Made in China 2025", like semiconductor (integrated circuits) as says here, and machine tools (CNC machine tools) as discussed in another thread. China government knows what are the targets, but how?
  1. Directly fund R&D in state institutions/universities, which in turn support SOE and millions of POE by ToT or patent sharing. Check Industry-University-Research (Post 48 on https://defence.pk/threads/world-in...g-of-171-countries.462744/page-4#post-8974670)
  2. Directly build state-led RMB funds, which finance R&D in SOE and millions of POE. CICIIF is a good case. An interesting fact: Some CICIIF capital actually came from lucrative tobacco industries, well smoking is very bad habits but smokers are at least contributing indirectly to China's strategic semiconductor development.
  3. Directly build sovereign welfare funds to acquire overseas assets, be that R&D patents, critical supplies or downstream market channels, in order to support Chinese firms.
 
Yes, to re-invent the nation in the coming decade, government has identified 10 sectors that China must excel, that's "Made in China 2025", like semiconductor (integrated circuits) as says here, and machine tools (CNC machine tools) as discussed in another thread. China government knows what are the targets, but how?
  1. Directly fund R&D in state institutions/universities, which in turn support SOE and millions of POE by ToT or patent sharing. Check Industry-University-Research (Post 48 on https://defence.pk/threads/world-in...g-of-171-countries.462744/page-4#post-8974670)
  2. Directly build state-led RMB funds, which finance R&D in SOE and millions of POE. CICIIF is a good case. An interesting fact: Some CICIIF capital actually came from lucrative tobacco industries, well smoking is very bad habits but smokers are at least contributing indirectly to China's strategic semiconductor development.
  3. Directly build sovereign welfare funds to acquire overseas assets, be that R&D patents, critical supplies or downstream market channels, in order to support Chinese firms.
Interesting.....

Another key sector:

Railway equipment: China is already exporting its high speed rail products to countries from Malaysia to Russia. Beijing clearly wants to grow its competitiveness in this area, including through infrastructure projects in the “One Belt, One Road” initiative.

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China Chip Policy Poses Risk to U.S. Firms, White House Says


by David McLaughlin
and
Ian King
7 มกราคม 2560 01:27 GMT+7 7 มกราคม 2560 04:52 GMT+7
  • Obama panel says China investment threatens national security
  • Technology advisers recommend steps to counter China’s push
China’s push to develop its domestic semiconductor technology threatens to harm U.S. chipmakers and put America’s national security at risk, the Obama administration warned in a report that called for greater scrutiny of Chinese industrial policy.

China’s goal to achieve a leadership position in semiconductor design and manufacturing, in part by spending $150 billion over a 10-year period, requires an effective response to maintain U.S. competitiveness in the industry, according to the report released Friday.

“We found that Chinese policies are distorting markets in ways that undermine innovation, subtract from U.S. market share, and put U.S. national security at risk,” the President’s Council of Advisors on Science and Technology said in the report.

The warnings about China could give ammunition to President-elect Donald Trump two weeks ahead of his swearing in. Since winning the election, Trump has backed up fiery campaign rhetoric toward China with a series of pronouncements on Twitter and the appointment of China hawks to key roles. Trump’s attacks have stoked fears of a trade war between the world’s two biggest economies.

Chinese Scrutiny

China is prepared to step up its scrutiny of U.S. companies in the event Trump takes punitive measures against Chinese goods, according to people familiar with the matter, Bloomberg News reported Thursday.

The options include subjecting well-known U.S. companies or ones that have large Chinese operations to tax or antitrust probes, the people said, asking not to be identified because the matter isn’t public. Other possible measures include the launch of anti-dumping investigations and scaling back government purchases of American products, according to the people.

"China has gained from global openness but has been less committed to sustaining it -- and, in some cases, has worked against it," the White House report said. "Now, globally, more countries are questioning the benefits of economic openness -- a trend that will shape, and be shaped by, how the United States responds to challenges in the semiconductor arena."

U.S. industry leaders don’t want Trump to engage in a standoff with China. Giving corporate tax breaks to U.S. companies is the way Trump advocates bringing back jobs to this country, according to Intel Corp. Chief Executive Officer Brian Krzanich.

"The real answer is not a trade war, it’s not restrictions, it’s really about making the U.S. more competitive," Krzanich said on CNBC Friday. "Lowering the tax rates, making it easier for people to do manufacturing here, that’s what will bring manufacturing back to the U.S."

Working Group

Krzanich attended the recent meeting between the president-elect and leaders of technology companies. The Council of Advisors on Science and Technology’s semiconductor working group includes several industry executives such as Paul Otellini, the former chief executive officer of Intel, and Paul Jacobs, the chairman of Qualcomm Inc.

Foreign acquisitions of U.S. businesses are routinely reviewed for national security risks by a panel of officials led by the Treasury Department. That panel -- the Committee on Foreign Investment in the U.S. -- has frustrated some Chinese investment in the U.S. semiconductor industry. In December, President Barack Obama blocked a Chinese company from buying the U.S. business of Germany’s Aixtron SE, a semiconductor-equipment supplier.

The White House report recommends a strategy for U.S. policy makers that includes countering “innovation-inhibiting” Chinese industrial policy and improving the business environment for U.S. chipmakers. It suggests broadening what is considered a national security risk as part of CFIUS reviews in certain circumstances, while also cautioning against blanket opposition to China’s advancement in the industry. U.S. officials should also work with allies to strengthen global export controls, according to the report.

Industry Leaders

The U.S. has led the semiconductor industry since it took off in the 1960s. Companies such as Intel and Qualcomm have pushed the technical bounds of innovation in the $300 billion market. In 2015, China didn’t have one company among the top 10 industry suppliers. China, the world’s most populous country, is nonetheless the biggest buyer of the electronic components.

The main rivals to the U.S.’s dominance are in South Korea and Taiwan, where companies such as Samsung Electronics Co., the second-largest chipmaker by revenue behind Intel, and Taiwan Semiconductor Manufacturing Co. have gained ground over the last decade.

Chinese Subsidies

To strengthen its position in chip manufacturing, China relies on subsidies for domestic suppliers, according to the White House report. That can harm U.S. firms by allowing Chinese companies to sell below cost and reduce U.S. market share, the report says. China also encourages domestic customers to buy only from Chinese suppliers and requires technology transfer to China in exchange for access to its market, the White House said.

A representative of the Chinese embassy in Washington didn’t respond to an e-mail seeking comment about the report.

Underlining some of the difficulties that U.S. chipmakers have faced gaining unfettered access to their largest market, in February 2015, Qualcomm announced it had paid $975 million to settle a case brought by China’s National Development and Reform Commission accusing the company of abusing its dominant position in the chip market for mobile phones. Under the settlement, Qualcomm agreed to lower its licensing fees for phones sold in China to rates that are lower than it charges in other countries, but it’s still striving to get Chinese handset makers to pay up.

https://www.bloomberg.com/news/arti...licy-poses-risk-to-u-s-firms-white-house-says
 
Remember: Money talks, bullsh*t walks.

You can scream all you want, but if you don't have the money no one will listen.

When you have the biggest market for semiconductors, you can call a lot of shots.

More so, when you have the money too.

That's the harsh reality.
 
“We found that Chinese policies are distorting markets in ways that undermine innovation, subtract from U.S. market share, and put U.S. national security at risk,” the President’s Council of Advisors on Science and Technology said in the report.


Beautiful choice of wording. Not "unpresidented," but funny. As funny as "engine departing the plane."

"Subtract from US market share," in layman's term, would mean China's successfully competing with the established brands.

I think the US can close own its market (actually, they already did with high-end chip export) and block acquisitions by Chinese venture holdings (and they did).

What the US cannot do is to compete China outside the US market in which more equal rules apply and US bullying does not mean much. The future course is written on the stone: China will put two or three domestic companies at the top ten semiconductor chip makers by 2025.

@cirr
 
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Selling below cost is never a viable market strategy.

UNLESS...

You have an alternate source of income to offset your market losses -- the government.

Or more accurately, the taxpayers who unwittingly supports unfair market practices.

This is China and she can do whatever she want in terms of internal affairs. If the Chinese government want to force Chinese companies to use only Chinese products, that is her right. But do not present this as anything else other than unfair business practices.
 
Selling below cost is never a viable market strategy.

UNLESS...

You have an alternate source of income to offset your market losses -- the government.

Or more accurately, the taxpayers who unwittingly supports unfair market practices.

This is China and she can do whatever she want in terms of internal affairs. If the Chinese government want to force Chinese companies to use only Chinese products, that is her right. But do not present this as anything else other than unfair business practices.

well good thing you got trump to make america great again!
 
The US wants to hold on to its near monopoly on semiconductors, thereby allowing it to charge exorbitant prices for what is basically a commodity.

China is out to break that monopoly.

Simply really.
 
The US wants to hold on to its near monopoly on semiconductors, thereby allowing it to charge exorbitant prices for what is basically a commodity.

China is out to break that monopoly.

Simply really.
China is the good man and US is the evil. With China , many commodity use to be unaffordable for the masses become affordable. Semi conductor will be another market liberated by China.

There is not doubt US is a declining country. Trump has to choose 10 Gerald ford CVN vs rebuilding US scientific lead over funding. I guess warmonger US will choose weapon :enjoy:
 

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