Why Can’t China Make Semiconductors?May 1, 2018 9:11 am
After decades of failure, it may now be on the right track.
Jack Ma says he’s ready for China to make semiconductors at home. It’s a longstanding goal for the Chinese government. And thanks to a recent crackdown on certain technology exports by the U.S., it’s now a critical one. The question is whether China can finally conquer this challenge after decades of failures.
Semiconductors are the building blocks of electronics, found in everything from flip phones to the servers that make up a supercomputer.
Although China long ago mastered the art of making products with semiconductors produced elsewhere (the iPhone is the most famous example), it wants to move beyond being a mere assembler. It aspires to being an originator of products and ideas, especially in cutting-edge industries such as autonomous cars. For that, it needs its own semiconductors.
That’s no small challenge. China is currently the world’s biggest chip market, but it manufactures only 16 percent of the semiconductors it uses domestically. It imports about $200 billion worth annually — a value exceeding its oil imports. To cultivate a domestic industry, the government has slashed taxes for chip makers and plans to invest as much as $32 billion to become a world leader in design and manufacturing. Yet as history shows, spending won’t be enough.
China’s earliest semiconductor was built in 1956,