China's chip industry is transforming from a follower to a participant. Although it is difficult to catch up in the short term, it is expected to play an increasingly important role in the division of labor in the global chip industry in the future by gradually consolidating the industrial foundation through independent innovation and open cooperation.
The status quo of China's chip industry
The market size continues to expand, becoming the world's largest chip consumer market
According to the statistics of the China Semiconductor Industry Association, the sales of China's integrated circuit industry will reach 1.4 trillion yuan in 2022, accounting for 37.6% of the global market share, and it has been the world's largest chip consumer market for many years. The continuous expansion of China's chip market is mainly due to the strong demand in downstream application fields, especially in traditional advantageous fields such as communications, computers, and consumer electronics.
Cultivate a group of enterprises with independent intellectual property rights and core competitiveness
In recent years, with the strong support of the national industrial policy, China's local chip companies have made great progress. A group of enterprises represented by Huawei HiSilicon, SMIC, and Changxin Storage have independent intellectual property rights in the fields of mobile communication chips, wafer manufacturing, and memory, and have won a high market share and brand influence in domestic and foreign markets.
Breakthroughs have been made in chip design, packaging and testing
China has certain technical strength and industrial scale in chip design, packaging and testing. According to statistics, the sales volume of China's chip design industry will reach 380 billion yuan in 2022, accounting for 16.5% of the global market share; The sales volume of the packaging and testing industry reached 300 billion yuan, accounting for 23.5% of the global market share. Local enterprises such as Changdian Technology and Huatian Technology are at the international leading level in the field of advanced packaging technology.
However, key areas such as manufacturing process and equipment and materials are still facing a "stuck neck" situation
Although some progress has been made, there is still a significant gap between China's chip industry and the international advanced level in key areas such as process technology, equipment and materials. At present, the most advanced process technology in Chinese mainland has only reached 14 nanometers, while international giants such as TSMC and Samsung have mass-produced 3 nanometers. In terms of key equipment such as lithography machines and etching machines, and key materials such as electronic-grade special gases and photoresists, Chinese companies are generally in a catch-up position.
The main challenges facing China's chip industry
Technical challenges: core technology shortcomings restrict industrial development
Due to its long-term dependence on imports, China's chip industry has many shortcomings in core technologies. Technological bottlenecks in the fields of advanced manufacturing processes, EDA tools, key equipment and materials have seriously restricted the pace of development of China's chip industry. To break through the technical barriers in these fields, it is necessary to increase R&D investment, strengthen basic research, and cultivate high-end talents.
Talent challenge: insufficient pool of high-end compound talents
The chip industry has extremely strict requirements for talents, and requires a large number of interdisciplinary compound high-end talents. However, at present, China's high-end talent pool in the fields of chip design, process integration, and system architecture is still insufficient, and talent training is difficult to meet the needs of rapid industrial development. Strengthening the integration of industry and education and improving the talent training system are the key measures to meet the challenges of talents.
Supply chain challenges: The security of the industrial chain is threatened
In recent years, the security of China's chip industry chain and supply chain has become increasingly prominent. Some developed countries have imposed a technological blockade on Chinese enterprises, interrupting the supply of key equipment and materials, which has had a serious impact on China's chip industry. Accelerating the construction of local supply chains and enhancing supply chain resilience and security are major issues facing China's chip industry.
Challenges of capital investment: high investment and high risk restrict the layout of enterprises
The chip industry is a capital- and technology-intensive industry, with huge upfront investment and high risk. Due to limited financing channels, there is a significant gap between Chinese chip companies and international giants in terms of financial strength, which restricts their pace of layout in key areas to a certain extent. It is necessary to innovate financing models and increase government support to reduce financial pressure on enterprises.
Countermeasures for the development of China's chip industry
Increase fiscal and tax policy support to reduce the burden on enterprises
The government should further increase fiscal and tax support for the chip industry, improve preferential tax policies, and reduce financial pressure on enterprises. It is necessary to increase support for basic research and key technology research to inject impetus into the innovation and development of enterprises.
Strengthen basic research and overcome core technical problems
Chinese chip companies should increase investment in basic research, focus on core technical problems in advanced processes, EDA tools, key equipment and materials, and achieve breakthroughs through independent innovation. It is necessary to strengthen the coordination of industry, university and research, and give full play to the role of universities and scientific research institutions in basic research.
Improve the talent training system to attract and retain high-end talents
It is necessary to further deepen the integration of industry and education, build a new model of school-enterprise collaborative education, and cultivate compound high-end chip talents. It is necessary to optimize the talent introduction policy, provide a good development environment and incentive mechanism for outstanding talents at home and abroad, and attract and retain high-end talents.
Strengthen international cooperation and integrate into the global industrial division of labor
The chip industry is a globally integrated industry, and it is difficult for any country to be independent in all links. China should actively integrate into the global industrial division of labor system while adhering to independent innovation, strengthen technical exchanges and production capacity cooperation with international partners, and achieve complementary advantages.
Promote the localization of the industrial chain and enhance the security of the supply chain
It is necessary to accelerate the pace of localization and substitution, cultivate local supply chains, and reduce dependence on foreign countries. Relevant laws and regulations should be improved, intellectual property protection should be strengthened, and a good environment should be created for the innovation and development of enterprises. It is also necessary to strengthen practical cooperation with countries along the "Belt and Road" and expand new supply channels.
China's chip industry is transforming from a follower to a participant. Although it is difficult to catch up in the short term, it is expected to play an increasingly important role in the division of labor in the global chip industry in the future by gradually consolidating the industrial foundation through independent innovation and open cooperation. Adhering to independent innovation is fundamental, strengthening international cooperation is the only way, and only by grasping with both hands can China's chip industry be stable and far-reaching, and achieve high-quality development.