Trade War Has Created Demand for Chinese Made Chips

China’s government was always willing to fund domestic chip production but the Trade War has created demand for domestic chips.

There was not much demand for Chinese chips because the assumption was that US chips would be available.

China will aggressively push their chips domestically and into Africa and other markets.

It be an expensive roughly ten year effort for China to catch up in semiconductors.

China is making good progress in some areas and should not be under-estimated. For a key type of memory chip known as NAND, Chinese firms are closing the gap.

“Money is not an issue for the Chinese government,” says one executive at a South Korean memory chip maker.

U.S. firms such as AMAT, LAM, KLA and Teradyne have very high market share in many niche markets of semiconductor manufacturing equipment. China has to build up competency in the entire supply chain and production technology.

The manufacturing process for advanced chips requires a lot of fine-tuning, and the NDAs covered the crucial tips and tricks on how to best use the machinery and achieve the necessary levels of “yield”, or the number of working chips in each batch.

There can be 800 people working on one part of the chip, so there is a lot of talent required.