![]() Those heading the fund are now under investigation for corruption. And earlier in 2022 a review conducted by Vice-premier Liu He confirmed that there was little to show for this investment. Set up in 2014 and backed by the Ministry of Finance, the Big Fund has received over US$ 40 billion of capitalisation. Meanwhile it has become evident that China’s flagship initiative for promoting indigenous microprocessor manufacture, the China Integrated Circuit Industry Investment Fund (aka the Big Fund), is in deep trouble. It is doubtful whether this process can ever be commercially competitive. But it transpires that SMIC have, so to speak, gone about this the long way round, using Deep Ultraviolet Lithography tools which it has been able to stockpile to expose the silicon to light three or even four times in contrast to the once needed for Extreme Ultraviolet Lithography. One of China’s major microchip foundries, the Semiconductor Manufacturing International Corporation (SMIC), having previously said that it planned to maximise the production of less advanced microprocessors, has just announced that it will begin manufacture at the 7 nanometer production node. The Dutch company ASML has a monopoly on the production of Extreme Ultraviolet Lithography tools needed for the most advanced production nodes and the US has refused to allow these to be sold to China. Both are dependent on US IP which gives the US government the right to determine who can purchase them. And it requires access to sophisticated Electronic Design Automation tools and Deep or Extreme Ultraviolet Lithography tools. Production at these advanced levels requires huge investments and access to complex global supply chains producing chemicals at high levels of purity and lenses, mirrors, valves and tubes engineered to the highest levels of precision. The Taiwan Semiconductor Manufacturing Corporation (TSMC) and South Korea’s Samsung.Ĭhina’s continuing difficulties speak eloquently to the challenges of unwinding the complex global supply chains behind microprocessor manufacture The production of these advanced nodes is dominated by two corporations. But China is still a long way from being able to produce microprocessors at the most advanced production nodes, now 5 and soon to be 3 nanometers. 24 nanometers upwards (the nanometer is the measure of the gap between etched circuits on a silicon chip). The other more compelling imperative is the progressive deterioration in US-China relations and the fear that the US will exploit its dominance of the sector to deny China access both to advanced microprocessors and the equipment need to make them.Ĭhina’s own microprocessor industry now manufactures significant quantities of microprocessors at the less advanced production nodes, i.e. In 2021 China spent US$ 432 billion on imported microprocessors, equivalent to total expenditure on grain and crude oil imports. Weinstein and John Lee have responded below.Ĭhina has developed a series of initiatives designed to reduce dependence on western technologies and in particular to promote an indigenous microprocessor sector. LSE IDEAS China Foresight asked several experts to answer the question “Is China’s semiconductor strategy working?”. China’s “Made in China 2025” strategy aims to vastly increase domestic semiconductor production, but the plan has struggled to meet its targets and the chipmaking industry has come under increased scrutiny in recent months.
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