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China’s semiconductor industry will continue to grow in 2021
The contradictions between the United States and the PRC, which worsened under President Trump, only strengthened the latter’s desire to gain technological independence in the field of semiconductor production. The closure of borders due to the pandemic has exacerbated the desire of companies to locate production closer to the main sales markets, which also benefited China.
Image source: SMIC
The actively discussed migration of assembly plants outside China does not cover the production of semiconductor components, according to experts from DigiTimes Research. In contrast, South Korean memory manufacturers Samsung Electronics and SK Hynix intend to expand their presence in China. In the coming year, they will launch new production lines for the production of memory chips in this country.
The US is countering the development of China’s national semiconductor industry in several ways. Firstly, due to sanctions, objectionable companies are cut off from access to modern lithographic technologies, as happened with Huawei and SMIC. Second, the US authorities are blocking access to international capital markets for Chinese companies. New laws prohibit American investors from owning shares of certain Chinese companies, and issuers from the PRC have recently lost the ability to list on American stock exchanges.
All this does not diminish the determination of Chinese companies to continue developing their semiconductor components business, according to DigiTimes Research. According to analysts, next year China will see an increase in semiconductor production. Both contract component manufacturers and vertically integrated developers intend to increase production at factories in China. Unfortunately, US sanctions could not help but prevent SMIC from realizing its initial plans to expand production capacity. How serious the damage will turn out to be too early to judge.