China Inc. going all in on chips
TAIPEI — When Chinese President Xi Jinping in April talked about how his country can foster new tech, he encouraged Chinese companies to forge partnerships and work together to build a domestic chip industry.
Three months later, senior executives from 27 leading Chinese tech companies and research institutions — including Huawei, Lenovo Group, ZTE and Tsinghua Unigroup — formed the “high-end chip alliance.” Its goal is in line with Xi’s vision: to make inroads into a domestic market worth over $100 billion annually and eventually tap into the $300 billion-strong global market.
“The launch of the alliance really shows our country’s ambition in building a competitive chip industry,” Chairman Zhao Weiguo of Beijing-backed conglomerate Tsinghua Unigroup told other company chiefs in the southwestern Chinese city of Chengdu in Sichuan Province, known as the “heaven state” and home to giant pandas.
Zhao later told the Nikkei Asian Review in an email that the alliance has Xi’s support.
There is a reason the Chinese government is pushing initiatives to grow a strong chip ecosystem in the world’s No.1 semiconductor market — to make the country self-reliant and reduce its dependence on foreign tech products.
Chips serve as the brains of computers and smartphones.
The Snowden effect
Demand for chips is expected to grow exponentially with the rise of the Internet of Things, the new wave of connectedness that is putting everything from kitchen appliances to cars online. Research firm IC Insights estimates global IoT chip sales could reach $29.6 billion in 2019.
According to IC insights, China’s semiconductor output in 2015 only accounted for about 13% of the domestic market’s $104 billion in sales. It is still relying on Intel for personal computer processors and is buying the majority of its smartphone chips from Taiwan’s MediaTek and U.S.-based Qualcomm.
Beijing has proposed to invest at least 1.2 trillion yuan ($180 billion) over a decade to build a domestic chip industry. Eventually, it wants to compete with Taiwan’s world-class semiconductor producers and global chip titans such as Intel and Qualcomm.
source: NIKKEI Asian Review (www.asia.nikkei.com)