Leading Chinese suppliers of design software, processors and equipment important for chip production are increasing sales several times faster than global leaders Taiwan Semiconductor Manufacturing (TSMC) or ASML Holding.
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This sharp rise shows how tensions between Washington and Beijing are changing the global semiconductor industry, which is worth $ 550 billion (CZK 12.9 trillion). The industry plays an important role in virtually everything, from defense to the advent of future technologies such as artificial intelligence and autonomous cars.
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In 2020, the United States began restricting sales of US technology to companies such as Semiconductor Manufacturing International and Hangzhou Hikvision Digital Technology, successfully curbing their growth. On the other hand, they also stimulated the expansion of chip production and supply in China.
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Double the share price
The share price of companies such as Cambricon Technologies has more than doubled from this year’s low and, according to analysts, still has room for growth. In an effort to circumvent US sanctions, Beijing is expected to launch billions in investment in the sector through programs to support and fund national technology champions and purchases of Chinese products.
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The growth of Chinese companies has also attracted the attention of some of the most discerning clients. According to sources, Apple was considering choosing Yangtze Memory Technologies as a supplier of memory chips for its iPhones.
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Beijing’s ambitions in 2021 were to break away from the geopolitical rival and import more than $ 430 billion in chipsets. Orders for equipment for the production of chips from abroad increased by 58 percent last year, mainly due to the fact that local factories expanded capacity, according to data provided by the Semi industry. This has supported local business, with total sales of Chinese chip manufacturers and designers rising 18 percent last year to a record more than a trillion yuan (3.5 trillion CZK), according to the China Semiconductor Industry Association.
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China’s chip makers are also plagued by a persistent global shortage of chips, which limits the world’s largest car and consumer electronics manufacturers. This also helps Chinese companies to reach international markets.
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Full production even during a pandemic
The largest contract chip manufacturers, SMIC and Hua Hong Semiconductor, kept production at the Shanghai plant almost in full swing, even at a time when the worst covid-19 pandemic was paralyzing factories and transportation across China. SMIC recently announced that it increased its quarterly sales by 67 percent, outperforming larger competitors GlobalFoundries and TSMC. Shanghai Fullhan Microelectronics’ sales rose by an average of 37 percent and sales of Primarius Technologies, which develops design tools, have doubled in the last four quarters.
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Leaving aside concerns about the long-term profitability of Chinese companies, there is no doubt that analysts’ rapid capacity building will strengthen their global reach.
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