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What does Biden’s victory mean for an emerging silicon ‘Co
时间:2020-11-12 08:53来源:未知 作者:admin 点击:
Trump pushed US-China relations to their lowest point in years. Now, China is doubling down on its drive towards technological self-sufficiency.
 
Frictions between China and the US have been at sustained highs under the Trump presidency. Tightening US sanctions have made the chip sector a key battleground. President-elect Joe Biden might adopt a less adversarial style towards the emergent superpower, but will this change the course of China’s push for more sophisticated indigenous silicon capabilities, expedited by Trump’s hostility to Beijing?
 
Huawei – a world leader in 5G and jewel in China’s telecoms crown – has borne the brunt of the US’s punitive sanctions introduced under a Trump administration intent on crippling the company’s ability to enter and dominate western 5G markets, citing security concerns. (The UK agency set up to scrutinise Huawei’s security found “no end-to-end integrity, no good configuration management, no lifecycle management of software components, deprecated and out of support tool chains and poor hygiene in the build environments”, if no intentional capabilities designed for exploitation). 

Until recently, the company had found creative loopholes to traverse President Trump’s sanctions and still get the parts it needed, but the US has moved to cut off remaining avenues. Washington is now preventing international companies from manufacturing chips for Huawei, as well as American companies from supplying Semiconductor Manufacturing International Corporation (SMIC), China’s leading chipmaker.

In response, China is looking to bolster its domestic chip manufacturing capabilities. Last week the FT reported that Huawei would set up its own chip plant to get around US sanctions. Billed to be run by Shanghai IC R&D Centre, a chip research company backed by the Shanghai Municipal government, the effort could eventually see Huawei cut its reliance on foreign chip manufacturers.

Douglas Fuller, an expert in the Chinese chip industry at City University of Hong Kong, urges caution over whether Huawei’s own fabrication could present a long-term solution. He says that if it’s intended as a stopgap measure, to fill the temporary need for the infrastructure equipment: “It may do that for some chips.”

“I’m quite sceptical…”

“I’m quite sceptical that it will be a complete solution” he adds, dubbing it the “third-best solution” to Huawei’s crisis and saying that the plant could struggle to acquire technology for the most advanced process technologies.

For example, lithography equipment, a key part of any fab, is made by ASML, based in the Netherlands. Fuller says he’s not convinced that it would be worth ASML’s time and effort to sell to a small fabrication plant, when it could sell to much bigger companies like Samsung and TMSC, that the US has no problem with. 

Huawei’s fabrication plant will reportedly start off making low-end 45nm chips, but with plans to rapidly scale up. Huawei wants to make more advanced 28nm chips by the end of next year (suitable for internet of things devices) and 20nm chips by late 2022, which could be used in their 5G telecoms equipment. The plant wouldn’t create the chips necessary for smartphones or data centres. 

Fuller believes the fabrication plant represents a desperate final measure, and one that may not be needed come the inauguration of Joe Biden as the next US president. Fuller said he imagined that under Biden, “the policies against selling to Huawei would be dramatically relaxed”. 

The markets agree – the share prices of firms selling chip equipment into the Chinese market shot up in anticipation of a Biden win, indicating at least some traders believe he will alleviate the current sanctions. 

Fuller points out that the American tech industry doesn’t support the sanctions. Even Cisco, the only US firm that makes telecommunication infrastructure equipment at scale, isn’t pushing for it. “They would be happier if things were open, and they could sell more equipment to China,” says Fuller.

Not being able to sell to the biggest market in the world hampers US companies’ own growth. “There’s a lot of people in the Pentagon, [who say this] actually undermine[s] American industrial competitiveness, this isn’t a good idea,” says Fuller.

China hawks in the Trump admin such as Tom Cotton and Mike Pompeo have been agitating for pressure on China during the course of Trump’s presidency, but Fuller argues they represent “a pretty fragile coalition” – and one that won’t be in place much longer. Trump’s tech policies were intended to strike at the heart of China’s homegrown technological capabilities. While this is likely to be the immediate outcome, it has also hastened the country’s drive to de-Americanise its supply chains. 

A silicon Cold War? Perhaps not, but an unparalleled fillip to China’s chip sector…

The country’s recently announced five-year plan outlined that the nation must “make technological self-sufficiency the strategic backbone of national development”. The government aims to make 70% of its semiconductors domestically by 2025. At present, it’s about a third.

“As the industry insider joke goes, it’s Trump’s policies that are working as the biggest stimulus for China’s semiconductor sector, achieving what China’s industrial policies and billions of taxpayer investment has so far failed to do,” writes Nina Xiang, founder of China Money Network, a data platform tracking the country’s smart investments, in Nikkei Asia.

As the next phase of its 30-year push into the chip industry, China will inject $1.4trn into its technology sector by 2025.

According to the FT, Beijing plots a shift away from “basic building blocks” such as chip manufacturing, and towards electronic design automation (EDA), the software used in chip design, as well as creating the machines used in chip fabrication plants. 

The first two phases of China’s semiconductor push saw the launch of two “Big Funds” that have contributed to the $50bn in central government subsidies given to Chinese chipmakers over the past two decades. But lead analyst for global trade issues at the Economist Intelligence Unit, Nick Marro, says the money hasn’t been spent wisely. 

13,000 Chinese chip companies registered in 2020…

“China’s industrial policy has been pretty singularly centred around throwing tons and tons of money at the chip industry and just hoping something sticks, and that strategy hasn’t really worked,” says Marro. He says fiscal incentives are encouraging companies with less than solid credentials to enter the market, and believes there is a substantial volume of subsidies wastage and even subsidies fraud going on. This has contributed to a trend which saw more than 13,000 Chinese firms registered as chip companies in the first nine months of 2020, despite having no previous experience in the industry.

Marro says there have been some signs of tech regulators attempting to establish a bit more control over the chipmaking industry in recent months, and to encourage legitimate contenders to enter it. “But at the end of the day, this is a decision down to local governments. It’s not entirely sure that local governments have the oversight or even the technical ability to prevent these actors from entering the industry.”

Marro believes that China’s investment in this sector will continue under a Biden presidency. “Even if the US backs down… that long-term strategic competition is going to persist – and it’s going to be most felt in 5G and in companies that are very visible in China’s ambitions in that arena,” he says. 

He believes any rolling back of Trump’s policies in this area would most likely be targeted at helping US companies get sufficient revenue for R&D, by, for example, permitting more sales to Chinese tech powerhouses. “But some of those more sensitive and specific items aimed at curtailing Chinese access to really advanced US components… or anything with a dual-use component – I think those are probably going to be preserved and maybe even enhanced under a Biden administration.”

Adjunct associate professor at Xi’an Jiaotong University, Chen Xi, told Tech Monitor pre-election: “Without any doubts self-sufficiency is the goal; even if Biden takes the White House, there will be no change to that goal.” 

There has been a strong de-Americanisation push in China since at least 2013 or 2014, which has been expedited under Trump’s more aggressive policies. Chen Xi believes that self-sufficiency in China’s chip industry will take “at least ten years” – a typical estimate for expert analysts. 

But China’s eventual goal is homegrown chip manufacturers that can compete on the global stage – something that companies like Nvidia, Intel, Samsung or TSMC (whose stocks took a tumble after China announced its plans), likely dread. The level of government support poured into its tech sector provides China’s tech companies an undeniable edge on the global playing field.

China’s increased domestic chip production could exacerbate the issue of overcapacity that Marro says is already growing in some areas of the chip supply chain. He says at present, this is more of an issue in the lower-end manufacturing, with dynamic random access memory chips. China’s policy push to expanding its capacity means that there are a number of suppliers that are all pushing the prices down to stay competitive. “In China, that’s possible because the state can give them subsidies… but that’s not necessarily the case for producers in South Korea or Taiwan,” says Marro. 

The further technological decoupling of the US and China could precipitate several other troubling outcomes. It will fragment and silo the global technology market – an innovation dampener – and it might push countries and companies to pick between China and the US.

The US has spearheaded a push to align more closely with democratic countries – throwing ideas around like a 5G alliance formed on the basis of the Five Eyes intelligence-sharing agreement or the “D10”. The Wall Street Journal reported that this trend is likely to continue under Biden. 

It’s a phenomenon that has been termed the new Cold War, because it could see the world fracture into two camps based on geopolitical allegiances. The trend is already underway with regards to 5G and Huawei, the worst-case scenario is if it infects all tech-related businesses.

When TMSC was forced to scale back its relationship with Huawei due to US sanctions, “that was essentially a nightmare scenario,” says Marro. “I think anyone with multinational operations has to consider that… what would a nightmare scenario look like – if we had to choose between China and the US?” 

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