Why are Chinese companies still reliant on foreign IP for chip manufacturing?
Talent shortage
China’s huge population doesn’t translate yet into more talent in chip design & manufacturing, and a number of STEM graduates are choosing to work abroad.
Costs — still hard to bear
Semiconductor production requires billions of dollars of investments, and China doesn’t have the edge so far. Companies are focusing on chip design instead, relying on foreign IP and architecture to build their prototypes.
#Huawei for example relies on tech from Arm, Qualcomm, Synopsys, and Cadence according to SCMP.
The stakes are high, with semiconductors being used in computers, phones, IoT, 5G, AI, and Autonomous driving.
As part of the 14th five-year plan, Beijing announces big plans of incentives to support the industry’s development. The improvement in #semiconductor research will account for 8% of the country’s total R&D expenditure. (China International Capital Corp (CIIC) report)
But market shares of Chinese companies in semiconductor IP is less than 1% globally, with the US still ahead (He Weiling, chairwoman at CIP United).
So will China catch up with Western countries?
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