China may take decades to catch up in advanced chip race, says S&P | Manufacturing Asia
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China may take decades to catch up in advanced chip race, says S&P

‘Recent advanced-chip restrictions have made catching up more urgent’

Chinese semiconductor firms could take decades to catch up in the chipmaking race as the economic giant is crippled with restricted access to advanced chips and equipment, according to S&P Global Ratings.

In a report titled “China's Chip 'Moon Shot'--The Response To Restrictions, S&P said mainland China continues to heavily rely on imported technology from the US, Japan and Europe, despite having a large mature chip industry that already supplies electric vehicles (EV), smartphones and computers. 

The world’s second largest economy is now facing a huge setback with the US, followed by Japan and the Netherlands, banning the export of advanced chips for artificial intelligence, military use and supercomputing to China.

"Recent restrictions imply it could take decades for Chinese chipmakers to catch up to global firms in the production of advanced semiconductors,” said Clifford Kurz, Greater China technology lead at the credit rating agency. “It will require significant time and a mobilization of national resources.” 

Even prior to the restrictions, China’s chip industry has been well behind in advanced chip making due to its small presence in intellectual property cores, lack of homegrown breakthrough chip tech, and with domestic equipment makers relying on foreign tech.

S&P said the country’s public and private sector will have to boost their efforts and mobilize resources to achieve greater self-reliance and strength in science and technology.

On the part of the government, it said the country has shown commitment on long-term planning and supportive national policies that could help bolster the growth of crucial industries, similar to the Chinese EV sector which has experienced tremendous growth over the past two years.

Private companies could also be called upon to mobilize human and financial capital to support the domestic semiconductor sector, it said. The restrictions may also prompt local chip manufacturers to collaborate with local suppliers instead of their foreign partners and eventually prop up the growth of the domestic chip industry.

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