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China Pushes Self-Made Chips In Response to ­.S. Threats

By Financial Times

May 30, 2019

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China is stepping up efforts to design and manufacture semiconductors itself rather than buy from the U.S., amid fears that sanctions might cripple its high-tech industry.

U.S. restrictions last year on exports to telecoms equipment maker ZTE, and this month to its bigger rival Huawei, have sharpened Beijing's focus on semiconductor self-sufficiency. This will only become more urgent if Washington, as feared, places other leading Chinese technology groups on its blacklist.

China's ministry of finance last week announced tax breaks "to support the development of integrated circuit design and the software industry," cancelling corporate taxes for some companies for two years.

Yet while some U.S. chips could be substituted by Chinese equivalents in the next few years, Beijing recognizes that self-sufficiency is a long way off.

"I think it will take another 30-to-40 years for China to be self-sufficient in the majority of key areas" including software for chip design and chip fabrication, says Gu Wenjun, chief analyst at Shanghai-based semiconductor research company ICWise.

From Financial Times
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