Chinese semiconductor industry

Status
Not open for further replies.

Weaasel

Senior Member
Registered Member
I often hear that the semiconductor industry is highly globalized in terms of content source and that it is impossible for any single country to have the entire content of the supply chain domestically? To this I ask, says who?

To me, that's sounds just economic liberal orthodoxy, very much in line with the theory if comparative advantage, which is an extremely flawed theory, which if adhere to, keeps a country technologically backward, never allowing that country to progress towards more value added and more sophisticated technologies and manufacturing industries. Granted that when it comes to raw costs, it is economically more advantageous, in many industries, including the semiconductor industry (from silicon smelting all the way to EUV lithographic, vapour deposition, and photoresist production) to have certain industries more concentrated or more specialized in certain countries, that doesn't mean that there cannot be any country that cannot locate the entire spectrum of the value chain of manufacturing of IC chips and IC chip manufacturing equipment domestically.

If there is any country that can actually do so and indeed has a big incentive to do so, it would be China (Russia also has a HUGE incentive to do so). China has a huge population, a huge market, it has the skilled labour force and it can train much of the incoming labour force towards developing the necessary skills and knowhow in semiconductor manufacturing. It has the financial wherewithal to undertake the investment.

With regards to the logic of the least commercial cost that would be argued for China not to focus on developing and concentrating to a significant extent the entire value chain domestically, that sort of argument goes entirely out of the way when China is threatened with security of obtaining such goods by a powerful country that is hell-bent on ensuring that China does not get the supplies of equipment and particular chips and materials from manufacturers and suppliers from other foreign countries that the powerful foreign country in question goes out its way to persuade them in different ways not to supply China what it does not want China to be supplied with.

Hence China should not follow and listen to the orthodoxy that it can't and shouldn't locate the entire spectrum of the value chain of semiconductor industry within China. China should in particular aim to eventually void itself of any semiconductor chips or equipment that possesses any content whatsoever from that particular powerful foreign country. That can be extended to other items of technology as well. The hostility that that country has shown to China warrants such an aim.
 

gelgoog

Brigadier
Registered Member
That concept is pretty much bullshit. Japan managed to basically do everything by themselves in the 1980s-1990s. Fully integrated supply chain and semiconductor industry. And I do mean everything from materials, to tools, and chip design, everything. Even today, with the exception of EUV lithography, they can make pretty much every single thing you need. A country with less than a tenth of the population of China. Japan only stopped because their industry simply lacks the scale to continue the investments to push further. China does not have those issues.
 

HumanHDMI

New Member
Registered Member
I often hear that the semiconductor industry is highly globalized in terms of content source and that it is impossible for any single country to have the entire content of the supply chain domestically? To this I ask, says who?

To me, that's sounds just economic liberal orthodoxy, very much in line with the theory if comparative advantage, which is an extremely flawed theory, which if adhere to, keeps a country technologically backward, never allowing that country to progress towards more value added and more sophisticated technologies and manufacturing industries. Granted that when it comes to raw costs, it is economically more advantageous, in many industries, including the semiconductor industry (from silicon smelting all the way to EUV lithographic, vapour deposition, and photoresist production) to have certain industries more concentrated or more specialized in certain countries, that doesn't mean that there cannot be any country that cannot locate the entire spectrum of the value chain of manufacturing of IC chips and IC chip manufacturing equipment domestically.

If there is any country that can actually do so and indeed has a big incentive to do so, it would be China (Russia also has a HUGE incentive to do so). China has a huge population, a huge market, it has the skilled labour force and it can train much of the incoming labour force towards developing the necessary skills and knowhow in semiconductor manufacturing. It has the financial wherewithal to undertake the investment.

With regards to the logic of the least commercial cost that would be argued for China not to focus on developing and concentrating to a significant extent the entire value chain domestically, that sort of argument goes entirely out of the way when China is threatened with security of obtaining such goods by a powerful country that is hell-bent on ensuring that China does not get the supplies of equipment and particular chips and materials from manufacturers and suppliers from other foreign countries that the powerful foreign country in question goes out its way to persuade them in different ways not to supply China what it does not want China to be supplied with.

Hence China should not follow and listen to the orthodoxy that it can't and shouldn't locate the entire spectrum of the value chain of semiconductor industry within China. China should in particular aim to eventually void itself of any semiconductor chips or equipment that possesses any content whatsoever from that particular powerful foreign country. That can be extended to other items of technology as well. The hostility that that country has shown to China warrants such an aim.
No it is a fairly logical statement. If every chip advancement paused and only China was allowed to develop then I would agree with your statement. The issue is that basically every step of the manufacturing process is so complicated, the field is researching new stuff very fast, the field is already very closely interlinked that it is very hard to make a 100% chip industry that is also globally competitive. Like the US is denying China chips, but has granted several exemptions repeatedly to American manufactures of Chip-Making equipment. Those companies depend on Chinese buyers and to varying extents, suppliers too. There should be

People talk about Taiwan's "silicon shield" but don't realize that China has a silicon shield too. 30% of Chip packaging is located in China. Chip packaging is difficult and would take at least 3-5 years to replace. Plus 8% of chips, are fabbed in China anyway, thats not Taiwan level, but still going to see massive disruption
 

ansy1968

Brigadier
Registered Member
That concept is pretty much bullshit. Japan managed to basically do everything by themselves in the 1980s-1990s. Fully integrated supply chain and semiconductor industry. And I do mean everything from materials, to tools, and chip design, everything. Even today, with the exception of EUV lithography, they can make pretty much every single thing you need. A country with less than a tenth of the population of China. Japan only stopped because their industry simply lacks the scale to continue the investments to push further. China does not have those issues.
@gelgoog and here I applaud Trump MAGA, if he doesn't appear we may blindly follow the Japanese to our extinction (Semiconductor only)
 

gelgoog

Brigadier
Registered Member
The US got pretty close to extinction against Japanese semiconductor players in the late 1980s.

Computer manufacturing moved to Taiwan and Hong Kong in early 1980s. PC making in the US died. And Japanese makers made cheaper chips on basically every product category. Intel for example used to be known for making DRAM. Believe it or not. Until like 1983 chips typically did not have much protection of IP. Only patents were applicable and those basically covered how to implement a given hardware functionality not a specific chip design. And several countries made unlicensed clones. The Japanese started with that and later licensed production of chips. Then after the US tightened IP law, with copyright for chip designs, the Japanese moved to making their own chip designs. In here they had more issues. Due to the huge installed base of computers by that point and the difficulty of converting software to a different architecture it meant their own CPU architectures and OSes never had much of a chance in the market. The desktop computer makers relied way too much on foreign operating systems and applications and Japanese ports of US origin software. I think that is what doomed their industry. Well not just the Japanese since basically all other personal computer architectures from the early 1980s other than the IBM PC design died.

The US came up with SEMATECH to compete with the Japanese. And between that the Japanese losing the DRAM market to the South Koreans their industry lost volume. Companies like Sony also only got big on semiconductors later on and I think Sony relied way too much on foreign, namely US, chip design know-how.
 
Last edited:

european_guy

Junior Member
Registered Member
I am more and more impressed by YMTC. Considering this company was only founded in 2016, to capture 7-8% of NAND market share in less than a decade is astounding.

And doing so while working around any kind of external influence: entity list, patents threats, equipment banning, relying on local equipment makers that are themselves on the learning path, etc.

And if the Apple's news will be confirmed, namely that YMTC will become Apple supplier, well, that is a very bold step too.

The 192-layer 3D NAND is important news, but I am more impressed by the monthly output to 100,000 wafers, it is this what really counts at the end. If they will be allowed to reach 200K in 2023 (I hope so but equipment, included US one, roll-in is still not started) that will be a strategical milestone for China.
 

european_guy

Junior Member
Registered Member
The US got pretty close to extinction against Japanese semiconductor players in the late 1980s.

I agree with your points, but there is a big difference between localization as strategical goal in China and in US, namely US, even if relies on foreign companes, nevertheless it can "influence" the regions where supply chain is located. Japan, Europe, SK all have US military bases on their territories, all are under US sphere of influence. So US, in total contrast with China, does not fear any "banning" from those regions.

IMO this is the main reason why China push to localization is much stronger than US, as it should be.
 

BlackWindMnt

Captain
Registered Member
The US got pretty close to extinction against Japanese semiconductor players in the late 1980s.

Computer manufacturing moved to Taiwan and Hong Kong in early 1980s. PC making in the US died. And Japanese makers made cheaper chips on basically every product category. Intel for example used to be known for making DRAM. Believe it or not. Until like 1983 chips typically did not have much protection of IP. Only patents were applicable and those basically covered how to implement a given hardware functionality not a specific chip design. And several countries made unlicensed clones. The Japanese started with that and later licensed production of chips. Then after the US tightened IP law, with copyright for chip designs, the Japanese moved to making their own chip designs. In here they had more issues. Due to the huge installed base of computers by that point and the difficulty of converting software to a different architecture it meant their own CPU architectures and OSes never had much of a chance in the market. The desktop computer makers relied way too much on foreign operating systems and applications and Japanese ports of US origin software. I think that is what doomed their industry. Well not just the Japanese since basically all other personal computer architectures from the early 1980s other than the IBM PC design died.

The US came up with SEMATECH to compete with the Japanese. And between that the Japanese losing the DRAM market to the South Koreans their industry lost volume. Companies like Sony also only got big on semiconductors later on and I think Sony relied way too much on foreign, namely US, chip design know-how.
It should be interesting what China will do does China has enough software engineers to create their own app sphere?
Really wondering how HarmonyOS will shape their desktop experience.
 

tphuang

Lieutenant General
Staff member
Super Moderator
VIP Professional
Registered Member
It should be interesting what China will do does China has enough software engineers to create their own app sphere?
Really wondering how HarmonyOS will shape their desktop experience.

Having critical mass means you will have more 3rd party developers writing apps for your App Store. As long as Harmony is only used in China and friendly countries, a lot of app developers just won't have the incentive to develop apps to Harmony. Having more software engineers in China will not change that situation. I think they need to somehow make HarmonyOS compatible with Android apps (even if operating at lower performance level).
 

BlackWindMnt

Captain
Registered Member
Having critical mass means you will have more 3rd party developers writing apps for your App Store. As long as Harmony is only used in China and friendly countries, a lot of app developers just won't have the incentive to develop apps to Harmony. Having more software engineers in China will not change that situation. I think they need to somehow make HarmonyOS compatible with Android apps (even if operating at lower performance level).
Chinese companies are already starting to displace some western software in certain sector think TikTok and Shein. As long as China can keep that wave coming and making sure they support HarmonyOS it should make it easier to export HarmonyOS to ASEAN, Central and western Asia. Then you pretty much have the biggest market in the world that is all what counts having the biggest market.

HarmonyOS already support Android apps but Android without google services is a really limited experience for non tech people.
I'm using a Huawei p40 pro but given i only use a limited amount of apps that have their own notification services so i'm fine, before Huawei i used that "do not disturb" on switch on OnePlus devices. But i would never give advice to get a Huawei phone to someone else given the limited android software support
 
Status
Not open for further replies.
Top