Chinese Chip manufacturing competing directly against US production
Many have titled the battle of chip manufacturing in China the "China-US Chip Cold War." And it’s for a good reason. The manufacturing industry for chips in China is snowballing, helping companies, both native and offshore, benefit from the increased demand. With controversies in the US to move away from Chinese made equipment, has fuelled the chip war.
According to the Semiconductor Industry Association (SIA), China’s cold war with the US is not slowing down anytime soon. We’ve seen the US and UK neglecting the Chinese network equipment business due to security concerns. Major Chinese tech platforms are having a tough time on this side of the world.
It goes both ways, and China follows a similar strategy to tackle its revenue. Subsidies in a timeline procurement preference are some of the steps we’ve seen them take. As many European and American companies have their manufacturing plants sitting at the heart of China, the country is revolutionising.
They are making their chips to facilitate the demand and start a competitive cycle with the major US manufacturers. The homegrown chip sector is a booming market for many countries as it facilitates computing and smartphones, EVs, and many other projects. This calls for a vast amount of supply.
To cope with the demand, the total number of manufacturing plants worldwide are pulling up longer work hours, but even that’s not sufficient. At that moment came the Chinese production of chips. Perfect or not, they work, and some companies would be happy to have them.
In 2020, China’s semiconductor industry brought over $39.8 billion. From 20219, it was a 30.6 per cent growth. That number was $13 billion in 2015 and kept multiplying. Even though US sanctions faced the problems, the Chinese semiconductor industry kept the supply for local manufacturers multiplied.
SIA predicted if China keeps up the manufacturing numbers similar or above, they could surpass the EU and Japan as early as next year. The gap is small between China and US-Korea manufacturing growth, which is quite phenomenal, to be honest. However, the news did not come in anywhere but was kept under the radar.
2025 chip supply and demand seem promising for the new rival in the industry. Even though China has been a large part of global tech, manufacturing plants with mass facilities to become chip makers is fascinating. Alibaba came with 5 nm chips from the get-go along with Baidu. Baidu is also playing in the big leagues with their 7 nm server CPU development.
At the moment, Huawei is a top Chinese chip company, and SMIC remains the leading manufacturer. They both are on the US entity list. The chip industry is still young in China even though they hit a large sales number without acquiring top-grade designs, coming to a point where the latest-generation chips compete will be hard.
SMIC had plans to buy EUV technology from ASML. ASML is a Dutch advanced lithography company that declined to sell through 2019 US sanctions. It could boost production with advanced technology deployment in the Chinese chip sector. TSMC, Samsung, and SMIC are looking to buy other lithography tools from ASML.
China’s consumer electronics manufacturer Xiaomi, Oppo, Vivo, Huami also has semiconductor and chip, designing teams. They started in 2020 and currently have fully satisfying designs. We may see them live in a few years.
Alibaba and Baidu’s chips are primarily developed to handle the severe side of things and impact China’s goal to boost domestic capabilities.
Experts said China still has a long way to go even to get one step closer to self-sufficiency, which tells us a lot about the current stage and the future of Chinese chip development.