IT Ministry Pushes for Accelerated Growth of China’s Chip Industry

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The Ministry of Industry and Information Technology (MIIT) is pushing for the accelerated development of China’s integrated circuit capabilities amidst an unresolved trade clash with the United States.

At a meeting of MIIT’s electrical science and technology commission (电子科学技术委员会) convened on 2 June, MIIT vice-minister Luo Wen (罗文) said that key work points for the authority would in future include “compensating for shortcomings in fundamental industry links,” and conducting research into “comprehensively influential” technologies such as integrated circuits and smart sensors.

Luo’s announcement arrive amidst unresolved trade tensions between China and the United States, at the crux of which lies access to American technology.

Washington recently imposed a ban on the sale of goods and services by US companies to China’s ZTE over the breach of sanctions against Iran, severely undermining the telecom giant’s viability.

The move has prompted the Chinese central government to heavily emphasise the development of China’s domestic chip industry, given its pivotal importance to the overall tech sector.

Beijing previously indicated that it wants to create a world-class chip industry by 2030, as well as called for foreign investors to contribute to its semiconductor development fund.

Data from Yicai indicates that China’s integrated circuit self-sufficiency rate was only 10.4% in 2016.

Assuming a compound annual growth rate of 28.5% in the output value of the chip sector, by 2020 China’s self-sufficiency rate will remain at the comparatively low level of 15%.

In 2017 China’s integrated circuit imports were worth $260.1 billion, as compared to exports of $66.9 billion, for year-on-year growth in net imports of 16.4% to reach $193.2 billion.

Chinese enterprises are expected to invest as much as USD$5.8 billion in semiconductor equipment in 2018.

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