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5 things you need to know about the chip crunch and China’s pursuit of semiconductors

Written by KrASIA Writers Published on   2 mins read

The convergence of private R&D and state-driven investments is creating a rush to create new chip production capabilities in China.

Production slowdowns. Raised prices. Trimmed revenues. There are lasting effects of the global chip crunch. For policymakers in China, who have indicated the need to turn their country into a deep tech superpower, a shortage of semiconductors only proves that they need expert engineers now more than ever.

KrASIA has been following new developments in China as state-back initiatives and private enterprises all kick into gear to build out an advanced semiconductor sector. Here are five things you need to know about the chip crunch and China’s new silicon pursuits.

#1: China is after its own cutting-edge chips

But the rush to develop domestic semiconductor R&D and manufacturing means there will be costly hits and misses.

Semiconductor Manufacturing International Corporation, or SMIC is a publicly listed and partially state-owned semiconductor foundry in mainland China. Photo source: Tuchong.com.

#2: The drive is creating high valuations for new chip design firms

Take, for example, AkroStar, which bagged more than RMB 400 million, or USD 62 million, in its angel and pre-Series A rounds.

semiconductor startups
AkroStar is just one of many Chinese chip companies to gain investors’ favor. Image source: Shutterstock.com.

#3: Graft is rife in a hot market to develop new fabs and development capabilities

One con man posed as a chip community executive and convinced the Wuhan government to hand him billions of yuan. Needless to say, the deal didn’t end well.

The race for China to build up domestic chip production capabilities is filled with hurdles. Photo by John Cameron on Unsplash.

#4: Major names in tech and business are getting in on the action

ByteDance is designing its own chips for cloud AI and servers. Baidu’s chip unit, Kunlun, was spun off as a standalone company in late June. Carmaker BYD has a semiconductor arm too, and it’s heading to the ChiNext board of the Shenzhen Stock Exchange.

baidu kunlun
Kunlun’s next-generation integrated circuit is three times more powerful than its predecessor and is set to be released in late 2021. Image courtesy of Baidu and Kunlun.

#5: So are education institutions

Tsinghua university set up its own semiconductor school to train future professionals for the the field.

Universities in China are incubating the next generation of technical professionals for the semiconductor industry. Photo by Louis Reed on Unsplash.

Read this: Taiwan’s Powertech happy at home as chipmaking peers head overseas

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