Chinese chip industry experts and investors have congregated in Beijing for one of the largest annual chip forums to discuss the impact of Taiwan Semiconductor Manufacturing Company (TSMC) cutting advanced foundry services for some mainland clients and the outlook for the country’s chip sector under a new Donald Trump administration in the US.
Despite US threats of more sanctions, China should be bullish about developments in advanced semiconductors and generative artificial intelligence (AI) because of the potential of its huge market, according to industry insiders attending the 21st China International Semiconductor Expo.
The conference, which kicked off on Monday, gathered more than 500 firms from China’s semiconductor supply chain spanning design, foundry services and packaging in Beijing. Leading Chinese semiconductor equipment tool firms Naura Technology Group, 3D NAND flash memory chipmaker Yangtze Memory Technologies Corporation, DRAM chipmaker ChangXin Memory Technologies, and chip designer Huawei Technologies all took part in the three-day event.
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Geopolitics has been one of the key concerns for many at the expo, as China braces for the uncertainty surrounding US policies when Trump returns to the White House for a second presidential term in January. Trump has vowed to increase tariffs on China-made goods by 60 per cent.
YMTC’s 64-layer 3D NAND flash memory wafer. Photo: YMTC alt=YMTC’s 64-layer 3D NAND flash memory wafer. Photo: YMTC>
He Weiwei, co-founder and general manager at BASiC Semiconductor, said during a panel at the Expo on Tuesday that the company has poured an extra 20 million yuan to 30 million yuan (US$2.8 million to US$4.1 million) into developing manufacturing facilities and materials in mainland China over fears that US sanctions could cut off supplies.
“This is a huge burden for a start-up like us,” He said. “We used to buy US materials and have the chips manufactured in Taiwan, and then ship them back to mainland China for packaging.”
When Trump started a trade war with China in 2018, BASiC feared it could be cut off from Taiwanese manufacturing, according to He. Technological decoupling in subsequent years also started to hurt expansion plans for Chinese companies.
“Some first-tier American carmakers made it very clear that they will not buy products made in China,” He said.
Dong Longfei, co-founder of graphics processing unit (GPU) start-up Moore Threads Technology, said in response to a question at a panel on Tuesday that Chinese firms will eventually find a way to advance semiconductor production.
“I believe if the government, industry and academics combine their efforts, we will solve the manufacturing problems,” he said. “Unlike smartphone chips, GPUs don’t require the most advanced processing node – there are many ways such as chiplets that can help us make [GPUs].”
Chiplets are modular integrated circuits that can be packed together in chips to make a more powerful device. It has been widely viewed as one way for China to overcome certain manufacturing setbacks from US export restrictions.
Moore Threads’ MTT S400 GPU. Photo: Moore Threads alt=Moore Threads’ MTT S400 GPU. Photo: Moore Threads>
Moore Threads was added to a US trade blacklist in October 2023, dealing a blow to its ambitions to take on Nvidia in China. The company – started in 2020 by Zhang Jianzhong, the former head of Nvidia’s China operations – lost access to global foundry services using US technology, including TSMC’s, as have many of its domestic competitors such as Biren Technology and Huawei.
TSMC has notified some Chinese AI chip designers that it will suspend foundry services for 7-nanometre feature sizes or smaller, as the chipmaker tightens its vetting of customers after some of its integrated circuits were found in a Huawei device.
Few Chinese companies have disclosed where their chips are processed, but no mainland fabs are capable of matching TSMC in advanced nodes.
TSMC’s sales coming from Shenzhen have ballooned this year on the back of strong demand from manufacturers of smart hardware, even as the world’s largest contract chipmaker faces US pressure to reduce business in China, Zhao Xiaoguang, research head at Tianfeng Securities, said during the panel.
Despite US efforts to decouple from China, the world’s second-largest economy still has to keep its market open to global semiconductor companies, according to industry experts.
Liu Yuanchao, deputy general secretary of the China Semiconductor Industry Association, recently told 11 representatives of South Korean chip firms during the China-Korea Semiconductor Expert Conference that the two countries have great potential to work together because they have complementary industries.
