Techno-Nationalism

Chapter 8China’s Semiconductor Problem

China’s indigenous semiconductor landscape is a story of two very different realities.

Regarding the fabrication of ‘leading-edge’ chips, China’s top chip makers lack the needed capabilities and lag far behind a handful of elite foreign firms. Regarding the fabrication of older generation ‘trailing edge’ chips, however, Chinese companies could soon be making so many that they could flood global markets with oversupply.

Both scenarios come with high geopolitical stakes, for Beijing, Washington and a host of other foreign capitals.

Regarding leading-edge chips, as we have discussed, China’s homegrown semiconductor companies could remain years—possibly decades—behind the world’s most advanced chip nations until China can overcome chokepoints in chip supply chains imposed by Washington and its allies. These chokepoints include electronic design automation (EDA)—which involves super-advanced software and AI—as well as different kinds of manufacturing equipment and a broad range of chemicals and specialised materials.

Consequently, Chinese foundries have focused on mature trailing-edge chip nodes of mostly 28 nanometres and above, which require less advanced processes but nonetheless meet widespread market demand. These legacy nodes, which are based on 10 to 20-year-old technology, include memory chips, logic chips and power chips.

Trailing-edge chips figure to account for more than half of the global semiconductor market for years to come, ...