Shruti GautamChina is increasing its efforts to reduce its reliance on foreign chip technology, particularly in light of trade restrictions and export bans imposed by the US and its allies. The Chinese government has been subsidizing its domestic chip industry for years, but these recent developments have led to a doubling down on these efforts. China’s semiconductor supply chain is gradually deepening, and the government is pushing chipmakers to cooperate with local suppliers as a form of insurance against trade wars.
However, China’s chip industry is still behind its rivals in terms of technology. While companies like Huawei and SMIC have made some breakthroughs, they still lag behind Samsung and TSMC in producing advanced chips. China’s lack of advanced lithography equipment is a major barrier to further progress.
Nevertheless, China is making progress in reducing its reliance on foreign semiconductor technology. Huawei, for example, has been cultivating the country’s wider chipmaking ecosystem and is cooperating closely with chip foundries. Chinese chipmakers are also becoming more open to testing and using local alternatives to imported machinery. This has led to a boost in Chinese manufacturers of chipmaking equipment, with their market share increasing significantly.
China has already invested billions of dollars in subsidies for its chipmaking industry, and the government is now present throughout the country’s semiconductor supply chain. Although it is not as efficient as relying on global supply chains, China is prioritizing security over efficiency and believes that the cost is worth paying.
