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In China, the world’s largest market for many smart devices, the global chip shortage has been a “chip famine” for several months. During the Covid-19 outbreak a year ago, Chinese parents and children with tutors bought tablets and laptops together, leading to a long wait. Then, as other parts of the world followed suit and factory problems were solved, chip demand began to far exceed supply.
As a result, there is a shortage of electric cars, washing machines and even toasters. There is also bad news for international travelers waiting for Beijing’s 21-day quarantine system: Nintendo said, Switching game consoles may be affected.
The founder of Xiaomi, China’s largest manufacturer of smart home appliances, warned that consumers may face higher prices for electronic products for up to two years.
Therefore, consumers should rest assured that Taiwan’s leading chip maker Taiwan Semiconductor Manufacturing Co. (TSMC) announced last month plans to expand the production of 28-nanometer chips in Nanjing, China, which is in short supply. The new production line may take a year to bear fruit, and the demand for smart devices using these chips is only rising.
Technology has become a politically sensitive area in China, especially because China realizes that its chip industry needs to develop an independent “de-Americanization” or “de-A” supply chain after US sanctions. One opponent became the focus of the debate: a nationalist technical analyst with 1 million Weibo followers and controversial theories.
Xiang Ligang wrote: “The shortage of chips is a wrong proposition.” TSMC used it as an excuse to expand in the mainland and “absorbed the blood of Chinese companies.” (China claims that Taiwan is part of its territory and threatens to launch an attack on Taiwan Taipei refuses to submit Indefinitely. )
Xiang Xiang is a classic “baby industry” argument: China needs to develop a leader in domestic chip manufacturing. However, when experienced foreign foundries such as Taiwan Semiconductor Manufacturing Company (TSMC) expand in China, they are using China’s land and labor to surpass domestic companies that need development opportunities.
The premise that China now needs better domestic chip manufacturers has been widely accepted here. Indeed, the United States’ constraints on chips give the Chinese people reason to complain that the world’s superpowers are pushing down their technology departments.
Bargaining chips have become a flashpoint for inciting nationalism, which has become popular on social media in China for a while. But unlike commentators like Xiang Xiang, Chinese chip industry engineers advocate interconnection rather than isolation as a means to achieve independence.
Chinese companies are far from producing 28nm chips on the same scale as TSMC. As a result, engineers in Chinese chip foundries usually regard their expansion as the ultimate benefit, rather than direct competition.
Someone mentioned the importance of learning from TSMC. He often meets his employees at industrial exchanges and conferences, and they will share knowledge about mature technologies that no longer have commercial significance for TSMC, but are useful for Chinese novices.
Another representative pointed out the importance of having high-quality competitors to motivate them to do better. Of course, the best chip engineers are also happy: TSMC has trained several top chip executives in China. In general, Chinese chip engineers are calling for cooperation with non-US companies to move toward a de-Americanized industry. The engineer said that it is no wonder the Nanjing local government has put in a lot of effort to help the expansion.
Although the state media Xinhua News Agency published an editorial refuting Xiang Xiang’s remarks, chip engineers feared that nationalist voices would cut global connections and harm the industry.
But since imposing U.S. sanctions on Huawei Two years ago, they had reached a consensus on at least one issue: Although they may not believe that isolation is a means to achieve isolation, a generation of engineers with previous international awareness has begun to work on the goal of de-Americanization.
The chip industry is globalized, which means that no country today can do it alone. Take Qualcomm as an example: The American chip giant has licensed its proprietary technology so that Chinese start-ups such as Xiaomi, OPPO and Vivo can produce smartphones, and the cost of producing smartphones from scratch will be very high.
As a result, these brands handed Internet access to millions of people who could not afford it. As we wait for the equipment to arrive, it may be worth reflecting on how we put them first.
Yuan Yang is the deputy director of the Beijing branch of the Financial Times
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