Has China’s domestic chip industry reached an inflection point?

Article By : Majeed Ahmad

China's domestic chip industry is showing signs of growth while also gaining access to global markets.

There’s been a fundamental shift in the $550 billion semiconductor industry in the post-Covid times: chip companies in China are growing and expanding faster than the rest of the industry after the U.S. sanctions were put in place in 2020.

A Bloomberg report shows that 19 of the world’s 20 fastest-growing semiconductor firms are in China, which amounted to 8 just a year ago. Moreover, according to the China Semiconductor Industry Association, total sales of chip firms in China rose 18% to more than $150 billion in 2021.

Meanwhile, large fabs like Semiconductor Manufacturing International Corp. (SMIC) and Hua Hong Semiconductor have been running at nearly full capacity even during the worst Covid-19 outbreak in 2020. SMIC has recently reported a 67% increase in quarterly sales, which puts it ahead of rivals like GlobalFoundries.

Another startling factor reported by Bloomberg relates to how chip shortages and supply chain woes of the Covid pandemic might have benefitted semiconductor firms in China. It seems to have given chipmakers in China timely access to global markets. Take the case of Apple, known to have used flash memory for its iPhones from Yangtze Memory Technologies.

Another chipmaker in China, Shanghai Fulhan Microelectronics, which increased its revenue by 37% due to the high demand for surveillance products, now aims to expand into high-growth markets for electric vehicles (EVs) and artificial intelligence (AI).

It seems China has finally turned a page in its bid to build a domestic semiconductor industry comprising chip designers, fabs, software houses, and toolmakers. Meanwhile, the government in China is expected to continue investing in programs like “Little Giants” to support domestic semiconductor outfits.

This article was originally published on EDN.

Majeed Ahmad, Editor-in-Chief of EDN and Planet Analog, has covered the electronics design industry for more than two decades.


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