Hong Kong Media: Chip Core Technology, China Still Depends On The United States And The Whole World.

Hongkong "South China Morning Post" July 4th article, the original question: China will rely on the core technology of the United States for a period of time, but as the whole world has entered the next stage of the so-called ZTE incident, Chinese public opinion has begun to sigh that the field of technology exists or will require more than one generation of hard work to overcome the "huge gap". Although such smart words are intended to weaken China's strength, it is also true.

Not only China and global prosperity are built on "sand". This is because sand is the raw material for producing silicon -- most of the semiconductors, known as the basic materials for microchips. Semiconductors are China's largest imports, even more than oil. Despite decades of efforts to catch up with the west, silicon is still the Achilles heel of Chinese technology.

Since the transistor co inventor William Shackley set up a silicon based transistor manufacturing enterprise in California, the United States has harvested "Silicon dividends" for more than 50 years. Many people called on China to achieve self-sufficiency in the core technology area. In fact, in 90s of last century, China invested heavily in new semiconductor production lines, but found that these wafers were outdated when they were released. Much of China's efforts to acquire technology from the US semiconductor business through legal takeover failed, too, because Washington was blocked by national security.

Chinese technology supporters like to mention HUAWEI's Unicorn cell phone chip, which is seen as an example of Chinese enterprises' dependence on foreign core technology.

But if China's long-term goal is to reduce dependence on geopolitical rivals such as the United States, the acquisition of chip design technology is only the first step, and it needs to have local chip manufacturing, which is much more difficult than the first step. The problem is that HUAWEI can't produce autonomous chips, nor can Qualcomm be able to do so. These companies outsource this extremely complex and capital intensive production to independent fabs. The world's leading wafer maker is Taiwan's TSMC, which accounted for 56% of the industry's revenue in the first half of this year. Followed by the American Glover semiconductor Limited by Share Ltd. China's largest wafer fabrication enterprise is SMIC which accounts for only about 6% of the global market share.

Although HUAWEI's fans may be pleased to believe that the company does not make the mistake of relying on American chips, they will be surprised to learn that the wafer fabrication plants that make the Kirin chips are mostly dependent on devices from the US. In the front-end wafer fabrication equipment market, three Silicon Valley companies accounted for about 55% in 2017, and 38% in Japan and Europe.

Even so, China is not completely without self-defense. China is firmly in control of the rare earth supply that is critical to many electronic products, and can also use market access for technology. But given the foreseeable future of relying on American core technology, China should prudently increase its investment in the original research and development of Semiconductors - but not to exaggerate, as Deng Xiaoping said. (the author Craig Addison, translated by Wang Huicong)