Overtaking in a corner is unrealistic_China Semiconductor's ambition

China acknowledges that its ambition to become a global semiconductor leader must be grounded in reality. While it may not be able to match the massive R&D investments of industry giants like Intel in the short term, China is making significant strides in emerging fields such as the Internet of Things (IoT). At the recent China International Semiconductor Summit in Shanghai, Ding Wenwu, president of the National Integrated Circuit Industry Investment Fund Co., Ltd., emphasized that the so-called "curve overtaking" strategy is unrealistic. He explained that the $20 billion government-backed fund launched in 2014 aims to help China’s chip industry gain a foothold, but true dominance requires more than just financial support. Currently, China is working hard to reduce its reliance on approximately $200 billion in annual semiconductor imports, driven by concerns over national security and the long-term development of its domestic industry. Over the next decade, China plans to invest around $150 billion to lead in chip design and manufacturing. However, U.S. corporate leaders and government officials have raised concerns that this ambitious plan could threaten American interests. The National IC Industry Investment Fund, led by Ding Wenwu, plays a central role in guiding investment and shaping the industry's strategic direction. Ding Wenwu stated that achieving a "corner cut" or rapid advancement is highly impractical. “It’s only possible if everyone starts from the same line,” he said. He pointed out that companies like Intel, Samsung, and TSMC spend billions—sometimes tens of billions—on R&D each year, which makes it extremely difficult for China to catch up quickly. As the automotive and smart technology sectors grow, China’s Ministry of Industry and Information Technology is focusing on intelligent hardware and potential markets like smart sensors. Shi Shijing, director of the Electronic Department, said the ministry supports innovation in areas such as smart hardware, sensing, connected vehicles, and medical technology, emphasizing that the integrated circuit industry is exploring new growth opportunities. Ziguang, a leading semiconductor manufacturer under Tsinghua University, has become one of the largest players in China, relying on high-performance processors and 3D-NAND memory chips. In March of this year, Tsinghua Unisplendour secured 100 billion yuan in financing from the National Development Bank. Additionally, Huaxin Investment Management, established in 2014, has invested up to 50 billion yuan to support the domestic semiconductor industry. This aggressive push has raised concerns in the United States, prompting the White House to issue a report warning that China’s efforts in semiconductor technology could harm U.S. manufacturers and pose a risk to national security. Wei Shaojun, director of the Institute of Microelectronics at Tsinghua University, highlighted China’s deep concern about being dependent on foreign semiconductor supplies. “We don’t want other industries to be controlled by others,” he said. “What if they suddenly stop providing us with chips?” Meanwhile, overseas executives have also expressed worries. One CEO asked, “You buy a lot of our chips. What will happen if you stop buying?” Ziguang and other Tsinghua subsidiaries have made several acquisitions, including RDA Microelectronics and Spreadtrum Communications, to enhance their design capabilities. They have also signed agreements with global companies like Western Digital. However, some deals were blocked, and Tsinghua was forced to withdraw its investment in Western Digital due to U.S. regulatory concerns. Similarly, a planned acquisition of Taiwanese firms was also abandoned. Now, China is worried that a surge in overseas M&A activities could lead to capital outflows, further threatening its ability to build technological credibility quickly. As Ding Wenwu noted, the overseas acquisition environment has become increasingly complex, though he did not go into detail about the specifics.

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