Report: China plans to curb 'chaos' in domestic chip sector

October 20, 2020 // By Peter Clarke
Report: China plans to curb 'chaos' in domestic chip sector
The Chinese government has said it plans to increase supervision of companies entering its domestic semiconductor industry, according to a South China Morning Post report.

The report quoted Meng Wei, a spokeswoman for the National Development and Reform Commission, speaking at a regular press briefing provided by the state agency.

The move comes as China is increasing efforts to decouple itself from reliance on off-shore suppliers and the US has imposed restrictions on the supply of leading-edge semiconductor technology (see US hits SMIC with embargo, as expected ). It also comes after a series of high-value chip projects have failed.

Wei is reported saying that a number of companies without sufficient knowledge of IC development had entered into projects. "The risks of low-level construction have appeared repeatedly, and there has even been stalled construction of individual projects and vacant factories, resulting in a waste of resources," the report quoted Meng saying in translation.

"(The NDRC will) work with relevant departments to strengthen top-level design, pay close attention to industrial planning and layout, and strive to maintain order in industrial development in response to the current chaos in the industry," the report quotes Meng saying.

Examples include the construction of a wafer fab by Wuhan Hongxin Semiconductor Manufacturing and the construction of a wafer fab by Globalfoundries at Chengdu. A third example referenced in the report is a US$3 billion wafer fab owned by Tacoma Nanjing Semiconductor Technology that became bankrupt in July after failing to attract investors.

Local governments are often key actors in driving semiconductor projects because of the high value jobs such projects can create but at the same time local government officials have put considerable sums of money at risk without appreciating the complexity of chip manufacturing.

Meng said that those in charge of risky or failed projects would be held accountable.

Nonetheless, China's national government has been one of the key drivers of multibillion dollar investments as the country seeks to increase domestic semiconductor manufacturing and reduce the importation of semiconductors.

Related links and articles:

South China Morning Post report


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