Hi, it’s Brady here.
I’m sure you’ve heard plenty about the chip crunch. Its consequences are diverse and wide-reaching: Automakers have had to suspend production. Manufacturers of gadgets and home appliances say retailers should expect smaller shipments. Factories of all sorts are unable to expand their operations because they can’t source heavy machinery. All of this could last until 2023.
As these cascading effects unfold, China is shoring up its domestic semiconductor industry. Writing from New York, AJ Cortese dived into this issue. How far along is China’s development of its domestic chip-making capabilities? And what are the snags?
Like any new infrastructure’s build-out, we see a confluence of public policy, engineering innovation in the private sector, and torrents of capital from investors looking to add a couple zeros to their net worth. Hastiness and overexuberance has led to a bubble, where some semiconductor projects reach billion-yuan valuations by their angel or Series A rounds.
AJ found out about multibillion-dollar projects that never got off the ground, as well as promising companies that are on their way to operating cutting-edge foundries within five years. Within this churn will be some high-profile duds, but more likely than not, Chinese chipmakers will soon occupy more links in one of the most complex supply chains ever designed by industrialists.
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