Don’t underestimate China’s ability to build its own advanced chips despite U.S. curbs, tech analysts say

Industry
analysts
are
optimistic
that
Chinese
chip
makers
will
develop
their
own
advanced
semiconductors
despite
Washington’s
attempts
to
cut
the
country
off
from
accessing
or
manufacturing
the
technology.

“I
don’t
underestimate
China’s
ability
and
resolve
to
find
a
way
to
build
next
generation
technologies
and
to
also
utilize
some
lagging
technologies
to
still
build
really
important
products,”
Daniel
Newman,
CEO
and
principal
analyst
at research
firm
Futurum
Group,
told
CNBC.

related
investing
news

an
hour
ago

Chinese
companies
such
as
Huawei
and


Alibaba
are
studying
methods
to
develop
cutting-edge
artificial
intelligence
performance
with
fewer
or
less
powerful
semiconductors,
or
combine
different
chips
to
reduce
reliance
on
a
single
hardware,

according
to
a
report
by
The
Wall
Street
Journal.

Industry
experts
believe
it
will
be
a
“challenge”
for
these
Chinese
tech
firms,
but
some
experiments
have
shown
“promise,”
the
WSJ
reported.

Paul
Scharre,
vice
president
and
director
of
studies
at
the
think
tank
the
Center
for
a
New
American
Security,
said
that
“nothing’s
impossible”

“I
certainly
think
in
the
long
run,
we
should
expect
the
Chinese
to
be
able
to
make
these
technological
advancements.
It’s
quite
possible
that
they’re
able
to
do
so
faster
than
maybe
others
might
expect,”
he
said.

In
a
retaliatory
move
to

Washington’s
efforts
to
cut
China
off
from
advanced
chip
tech,
China

banned
key
infrastructure
operators
in
the
country
from
buying
products
from
U.S.
chip
giant


Micron
Technology
in
May.
Washington
also

reportedly
urged
South
Korea
to
not
let
its
chip
makers
fill
Micron’s
void
in
China.

Nvidia
founder
and
CEO
Jensen
Huang

said
last
week
that
the
resources
China
is
dedicating
into
its
chip
industry
is
“quite
massive,
so
you
can’t
underestimate
them.”

China
is

pouring
more
than
1
trillion
Chinese
yuan
($140
billion)
into
its
chip
industry,
according
to
a
Reuters
report.
Domestic
chip
makers
already
benefit
from
government
subsidies
and
state-backed
research
projects.

As
a
result,
there
are
“many
GPU
startups
in
China”
and
existing
players
have
to
“run
very
fast
ourselves”
in
order
to
stay
in
the
competition,
Huang
told
media
at
the
Computex
Taipei
2023
event
last
week.
GPUs,
or
graphics
processing
units,
are
used
to
power
AI
applications.

China
could
also
pursue
dominance
in
legacy
chips
where
it
is
already
making
headway,
analysts
believe.

“China
is
showing
good
progress
in
making
chips
based
on
mature
technology,”
said
Charles
Shi,
a
principal
and
senior
semiconductor
analyst
at
asset
management
firm
Needham
&
Company.

Mature
technology
refers
to
processes
involved
in
making
28-nanometer
or
larger
chips
—
generally
considered
legacy
chips,
with
higher
numbers
denoting
older
technology.
“These
chips
are
increasingly
important
for
the
automotive
industry,”
said
Shi.
These
28-nanometer
chips
are
widely
used
in
automobiles,
consumer
electronics,
among
other
products.

U.K.-based
analysis
provider
Total
Telecom
said
that

China
has
acquired
competency
in
28-nanometer
and
14-nanometer
chip
manufacturing
back
in
2021.

The
demand
for
28-nanometer
chips is expected to more
than
triple by 2030,
creating
a
market
worth
$28.1
billion,
according
to
consultancy
International
Business
Strategies
Inc.

“I
certainly
think
that
big
Chinese
chip
makers
will
be
able
to
survive
building
legacy
chips
and
there’s
a
very
healthy
market
for
legacy,
older
model
chips,”
said
Scharre.

“There’s
absolutely
a
lot
of
money
to
be
made
and
opportunity
in
legacy
chips
versus
China’s
ability
to
manufacture
the
most
advanced
chips,
which,
at
least
in
the
near
term,
they’re
not
going
to
be
able
to
do
and
will
take
a
really
focused
amount
of
resources
and
attention
and
human
capital
to
get
to,”
he
added.