Bloomberg reported in early December 2023 that the Chinese government has been directly investing to assist Huawei in building its chip supply chain since 2019, indicating that the ongoing uncertainties in the U.S.-China trade war, the pursuit of semiconductor industry self-sufficiency is expected to be a long-term development direction for China.
Chinese Government Establishes Investment Fund for Huawei, Creating Exclusive Supply Chain
On May 15, 2019, when the United States announced the inclusion of Huawei and its 70 subsidiaries in the trade blacklist, the Chinese government swiftly established a fund named “Shenzhen Major Industry Investment Group” in Shenzhen, where Huawei’s headquarter is located.
This fund, directly funded by the local government, aimed primarily at creating a large supply chain for Huawei, consisting of optical factories, chip equipment developers, and chemical manufacturers.
One chip manufacturer, SiCarrier, maintained close ties with Huawei. Besides talent exchanges, the company also transferred over a dozen patented technologies to Huawei.
Escalating U.S.-China Trade War Drives Long-Term Semiconductor Self-Reliance in China
This contradicts the earlier claim by Chinese media of a 90% domestic production rate. Nevertheless, the Mate 60 Pro shows a noteworthy 18% increase in domestic production compared to the Mate 40 Pro in 2020.
Additionally, during the component analysis, it was reaffirmed that the self-developed 5G processor, Kirin 9000S, featured in Huawei’s Mate 60 Pro smartphone, has a circuit width of 7nm. This demonstrates China’s semiconductor technological prowess despite restrictions imposed by the U.S. ban.
However, when the semiconductor industry value chain is divided regionally, it can be observed that in the uppermost stream of the supply chain, including electronic design automation software and licensed intellectual property used in chip design, this domain is primarily concentrated in the hands of U.S. firms.
Currently, China’s overall share in the global semiconductor value chain remains relatively low and is more concentrated in downstream packaging and manufacturing. If China aims to establish a fully “self-sufficient” semiconductor supply chain, it is estimated that there is still a long way to go.
However, what is certain is that in the ongoing U.S.-China trade war, the pursuit of semiconductor industry autonomy will be a long-term development direction for China.