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International chip wars likely to get nasty

by on26 October 2020


Governments are more concerned about the industry

Jimmy Goodrich, vice president of global policy with the Washington-based Semiconductor Industry Association is warning that spats for dominance over the chip industry are going to become nastier.

Goodrich said that the techno-nationalist trends gaining traction in multiple capitals around the world are a challenge to the semiconductor industry.

He said that once highly globalised and yet concentrated in the hands of a few countries, the industry has choke points that the US, under the presidency of Donald Trump, has sought to exploit in order to thwart China's plans to become a world leader in chip production.

Washington says Beijing can only achieve that goal through state subvention funding at the expense of US industry, while furthering Communist Party access to high-tech tools for surveillance and repression.

China rejects the allegations, accusing the US of hypocrisy and acting out of political motivation. For both sides, Taiwan, which is responsible for some 70 percent of chips manufactured to order, is the new front line.

Goodrich pointed out how the European Commission is exploring a 30 billion euro drive to raise Europe's share of the world chip market to 20 percent, from less than 10 percent.

Beijing wants to accelerate research into so-called third-generation semiconductors — circuits made of materials such as silicon carbide and gallium nitride, a fledgling technology where no country dominates.

Without silicon capabilities it will be difficult for China to build a proper semiconductor industry, said a senior TSMC official.

Another person from a company involved in third-generation chip production said designing them is an art, and even poaching a team of designers won't necessarily guarantee success.

The consensus is it won't be easy for China to catch up, especially at the cutting edge, where TSMC and Samsung are producing chips whose circuits are measured in single-digit nanometres, or billionths of a meter.

SMIC a partially state-owned Chinese semiconductor foundry, would have to double annual research spending in the next two to three years just to prevent its technology gap with those companies widening, says Bloomberg Intelligence analyst Charles Shum.

Last modified on 26 October 2020
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