Nikkei Watch: China to launch chip manufacturing platform with Intel, AMD

2022-08-05 0 By

Beijing: China plans to set up a special organization to promote cooperation between domestic companies and overseas semiconductor giants such as Intel to promote development centers for software, materials and manufacturing equipment, according to a report in English.Behind the proposal is Beijing’s eagerness to build a domestic semiconductor supply chain unaffected by US sanctions.However, foreign governments are likely to be wary of such a move because of concerns that sensitive technology could be transferred to China.The group, called the Working Committee on Cross-border Semiconductors, will be launched in the first half of this year.It will be overseen by the Ministry of Commerce, which has jurisdiction over domestic and international investment and trade, in cooperation with the Ministry of Industry and Information Technology.A lab at Tsinghua University, with expertise in semiconductors, coordinated the work.According to sources, the role of the committee will be to strengthen cooperation between the Chinese and foreign semiconductor industries.The Chinese government has set a goal of establishing an independent Chinese chip supply chain.The group was conceived as a way to obtain advanced semiconductor technology from the United States, Japan and Europe to help advance that goal.The committee will encourage cooperation between foreign and Chinese companies and research institutes.It will also invite foreign companies to set up development or manufacturing bases by working with local governments and providing funding.It also envisions financial support for Chinese companies seeking to acquire semiconductor-related companies overseas.According to documents obtained by The Nikkei, targeted overseas companies include Intel and Advanced Micro Devices of the United States and Germany’s Infineon Technologies.It also includes a Dutch industrial group that includes ASML, a leading manufacturer of sophisticated semiconductor manufacturing equipment.Some companies have already expressed interest in participating, sources close to the matter said.Intel and ING declined to comment when contacted by Nikkei.China is said to account for about a quarter of global semiconductor demand.According to some media reports, China generated 26% of Intel’s sales in 2020, and AMD has many customers in China.”For many semiconductor companies, China is one of the biggest growth markets in terms of sales, so they can’t ignore the Chinese government’s wishes,” said an executive at a foreign company’s China unit.Leading Chinese companies are also expected to participate.Candidates include SEMICONDUCTOR Manufacturing International Corporation (SMIC).It is a major contract manufacturer with advanced micro machining equipment Company, which manufactures semiconductor manufacturing equipment.Then there is Xiaomi, a major smartphone maker, which has also started developing semiconductors.Chip-related investment funds will also participate.In addition to Tsinghua University, Peking University, the Chinese Academy of Sciences and research institutes under the Ministry of Industry are also expected to participate.Overseas companies are also included in China’s efforts to promote human resources and technology development by strengthening cooperation between industry, government and academia.The Chinese government has made semiconductors a priority in its “Made in China 2025” initiative announced in 2015.Through government-backed investment funds and more than $20 billion earmarked for the chip industry, China has nurtured companies such as Changjiang Storage Technology.However, China’s semiconductor self-sufficiency rate in 2020 was only 16 percent, according to US research firm IC Insights.Even China’s own estimates put the figure at only about 30%.Government-backed funds are now planning to invest in new SMIC facilities and put money into materials and manufacturing equipment to strengthen the supply chain.However, given China’s lack of technology, the newly established international cooperation platform can play a key role in this effort.Of course, China may find its efforts stymied.Countries around the world are offering substantial subsidies and other incentives to attract factories and research and development centers in an effort to boost the semiconductor industry.Moreover, the transfer of the technology involved is becoming an increasingly sensitive issue, as it may have national security implications.Washington has restricted the supply of semiconductors developed by American companies to Huawei Technologies, China’s leading telecommunications company.In addition, SMIC is not allowed access to export manufacturing facilities that use the most advanced technology, and these US measures hinder China’s technological development.And it is likely that the US will ask overseas companies not to participate in any way that could lead to technology transfer.’Our goal is to expand our business in China without running afoul of regulations in the U.S. and other countries,’ said a representative of a foreign company. ‘But there are likely to be situations where companies get caught between Chinese requirements and technical confidentiality.’