China met only 16.7% of its own chip demand in 2021, but should reach 70% by 2025, according to market research firm IC Insight.

Source: Global Times

Switzerland "New Zuricher Zeitung" article on July 11, original title: "That's just PR, forget it" Beijing hopes to significantly expand its semiconductor production. China met only 16.7% of its own chip demand in 2021, but should reach 70% by 2025, according to market research firm IC Insight. Because of this, since 2014, two sovereign wealth funds have invested approximately US$50 billion in China’s chip industry. Many Chinese cities and provinces are also competing to provide subsidies.

chip data map source visual China

Since 2019, Washington’s sanctions have further indirectly promoted the development of the industry in China. Huawei no longer has 5G chips, and China's largest chip manufacturer SMIC no longer has the best lithography machine , which has prompted China to move against the wind. The country now wants to master as much technology as possible faster, especially chip technology.

Even if there is a global chip shortage in the past two years, there is a positive side for China. Because Chinese customers are now increasingly daring to replace out-of-stock foreign chips with chips from local newcomers. For many customers, even an imperfect product is better than nothing.

Data from the company Chacha show that there are nearly 16,000 companies in China with the word "semiconductor" in their names, of which more than 6,000 were established in the past three years. According to data from market research firm Preqin, Chinese chip start-ups received a total of US$8.8 billion in investment from venture capitalist last year, while similar companies in the United States raised only US$1.3 billion.

Of course, not all chip companies will succeed. Ying Jian, the head of a start-up company in Shenzhen, believes that there are many reasons for failure. The first is personnel issues. It is estimated that China's chip industry lacks at least 250,000 employees. Startups like his can't compete with big chip companies. At the same time, it is difficult for startups to meet financing standards. Finally, "we didn't get enough to wafer ". (Author Matthias Sandel, translated by Aoki)