Chinese chip industry defiant as trade curbs bite

SHANGHAI

"Support Chinese chips, join the enterprise of the century" read an upbeat slogan at a recent semiconductor industry fair in Shanghai, where the mood was defiant despite the intense pressure placed on the sector by geopolitical tensions.

Stands at last week's Semicon were packed with visitors, who inspected the mostly domestic displays of glittering wafers, silicon ingots and circuit boards, while sales staff touted products and services running the gamut of the chip manufacturing process.

Semiconductors, which power everything from mobile phones to cars, have become a key battleground in recent years, with the United States and some European countries blocking exports of high-tech chip technology to China over fears of military use.

In response, Beijing has turbo-charged a drive for self-sufficiency - a prominent theme at the fair, with exhibitors plastering their stands with slogans like "Overcome 'bottleneck' technology, realise nationalisation of key 'Chinese chip' materials."

Vicky Zheng, a representative of a Qingdao-based chip assembly company, said she believed restrictions would force China to "have more updated development to catch up or even replace things, so we will have more and better solutions."

Huang, an exhibitor representing the Suzhou-based semiconductor testing company King Long Technology, agreed.

"Under an environment with such pressure, China's internal expansion of some technology and production capacity and the training of technical personnel are making very rapid progress," he told AFP.

In September, the United States and its allies got a nasty shock when it appeared that rapid progress was indeed underway.

Telecoms giant Huawei released its new Mate 60 Pro smartphone, powered by the Kirin 9000s chip.

The chip initially appeared to be a homegrown replacement of the earlier Kirin 9000 chip made by Taiwan's TSMC, which Huawei is no longer able to purchase due to U.S. sanctions.

But the chip's provenance has since come into question, with a U.S. official saying last week that the Huawei chip could have been made using American equipment, in violation of Washington's export controls.

King Long's Huang admitted that foreign restrictions would "still have an impact", especially in the short term.

Major domestic chip firms have warned of losses over the past year, with fabless chip maker Loongson Technology reporting a 329 million yuan ($45.5 million) net loss for 2023, compared to a 5.2 million yuan profit in 2022.

"Ultimately if China is willing to invest enough, they can likely catch up with the rest of the world but my guess is it is at least a decade away," said Scotten W. Jones, a senior fellow at specialist platform TechInsigh.

Beijing is planning that serious investment - Bloomberg news agency reported this month that China was raising more than $27 billion for a massive chip industry fund.