China aims for total independence in SoCs, but it will be tough

china chipset

Since important realities such as HISILICON e SMIC have been banned from the US for the China the will to disconnect from the rest of the world has intensified in the chipset production. The nation has long since set up a real independence program called Made in China 2025. The strategic plan calls for China to move away from the current stereotypical image that the world has of it. When thinking of China, the average user thinks of low-cost factories supported by low-level labor. The goal is to raise the bar, becoming a qualitative reference point and not a "technology discount" from which other nations can draw easily.

China's chipset independence plan is to say the least poco ambitious

To pursue the Made in China 2025 program, China expects a 70% increase in the use of home-made raw materials and equipment. A step forward that would make the country more independent from foreign countries and from the problems that may arise in socio / political contexts such as the current one. The Trump presidency has shown that it can consistently oppose the Chinese actions. And even with the Biden presidency things could don't change that much, given the tensions arising from the treatment of Uighurs in China. Not to mention the disagreements with India, again for geopolitical reasons, from which nationalist movements were born also in the technological field.

usa vs china

Made in China 2025 is a plan to say the least poco ambitious. Although China is in an advantageous position, it will be almost impossible to completely move away from other nations, at least in the coming years. According to industry research companies, in 2025 chipsets produced in China will represent only 19,4% of the internal market. A percentage that is far from the target 70% and much closer to the 15,9% found in 2020 and 10,2% in the past 2010.

Not only that: of all chipsets produced in China in 2020, only 36,5% were made by entirely Chinese companies. The remaining 63,5% is in the hands of foreign manufacturers, such as the Taiwanese TSMC and UMC, the Korean Samsung and SK Hynix, the US Intel and other less known companies. Also according to the forecasts of IC Insights, in 2025 chipset manufacturing in China is expected to account for the 7,5% of the global market, with an induced amount of approximately 43 billion dollars.

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While China is a benchmark for global technology manufacturing, the nation has no relevant chipmakers to rely on to become independent. Over the years, the country has invested heavily in companies such as Huawei, ZTE, SMIC and Tsinghua Unigroup. They also tried to expand their work, but the US ban and related sanctions slowed everything down. Meanwhile TSMC and MediaTek are already thinking about next chips at 5 and 3 nm, SMIC is still stuck in manufacturing 14nm chips. In order to compete, equipment such as the EUV machines, produced by Dutch ASML, is required. But the US ban prevents it from buying them, subject to authorization from the US Department of Commerce.

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