China discovers how to produce chip without foreign technology

The manufacture of computer chips became, just over two years ago, a nerve in the trade (and technological) dispute between China and the United States.

The origin of the conflict lies in a resolution by the US Department of Commerce that banned, as late as 2020, companies around the world from selling processors to China whenever these chips ship any technology created in the US.

In practice, this measure dramatically limited the chip supply chain for China, which imported, that year, about 96% of the processors that shipped in locally manufactured devices. This is because, even manufacturers in Taiwan, Korea or Germany, at some point, use components or patents created by private companies or research institutes based in the United States.

The move was a severe blow to China’s tech industry, which, although it has progressed enormously in several areas, in the chip segment is still dependent on foreign technologies, in particular for more sophisticated semiconductors, such as those with 7 and 14 nanometer architecture. .

The tightening of American restrictions made, for example, ASML, a Dutch company that is world leader in the production of machines capable of “printing” circuits on delicate silicon wafers (an essential item for the manufacture of processors) refuse multimillion contracts with China.

The American objective with the restrictions, in part, was achieved: to delay the technological development of China. In fact, the expansion of 5G networks and the production of autonomous cars in the country has been slowed in the last year by chip shortages.

The possible solution found by the Asian country was to produce chips by itself or with partners that do not use agreements with American companies.

This week, Canadian consultancy TechInsights published a report in which it claims that SMIC, the largest Chinese chipmaker, is already capable of producing its own components made on a 7-nanometer architecture. According to TechInsights, 7nm chips from SMIC have been found on data processing boards used for cryptocurrency mining.

SMIC and Chinese authorities have not confirmed — or denied — the Canadian company’s report.

Shortly after the publication of the documents by TechInsights, without naming the United States, Wei Shaojun, president of the National Semiconductor Association in China, published an article in the local press, calling for more public investment in this industry.

According to Shaojun, over the last 12 months, Chinese companies have invested “only” US$ 1 billion in research and development of new chips, an amount considered excessively low by Shaojun.

According to the association’s representative, such investments are urgent and, as they do not allow a quick financial return, they do not sufficiently attract the interest of private agents. Hence the call for funding from Beijing.

In response to Shaojun, representatives of the Chinese agency equivalent to the Ministry of Science recalled that there is a publicly funded venture capital fund that offers more than US$ 40 billion for the expansion of the chip industry in the country.

An example of the effectiveness of this fund would be the financing of US$ 7.5 billion guaranteed to SMIC to build new chip manufacturing plants on the outskirts of Tianjin, in the north of the country.

The relevance of retaining technological control of the entire chip manufacturing cycle can be expressed in the “Chips & Science Act”, a law created with rare consensus between Republicans and Democrats in the US Congress. Between direct access to public funding and tax incentives, the law mobilizes US$ 53 billion in favor of the development of the national chip industry.

On the initiative of the Biden government, companies from some foreign countries can also benefit from these incentives if they are involved in projects in partnership with US companies. So far, three countries have been authorized to sign collaboration agreements, all of them Asian: Japan, South Korea and Taiwan.

As it turns out, a chess move to make it difficult for China to cooperate in the high-tech sector with its neighbors.

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