China sets out to become global leader in chip manufacturing

China wants to encourage more investment in its local chip-making industry

China is propping up its local chip manufacturing industry with new policies and financial support intended to turn the country into a semiconductor-making powerhouse by 2030.

In policy guidelines published Tuesday, the Chinese government laid out a blueprint to develop the domestic integrated circuit industry.

The country not only wants to sharpen its competitive edge, but also wean itself from foreign chip makers, China's Ministry of Industry and Information Technology said in a separate posting.

China is already the biggest manufacturer of electronics, and also one of the largest markets for them. Last year, China-based companies made almost 1.5 billion mobile phones and 340 million PCs. But the country's electronic industry, with profit margins at about 4.5 percent, is not generating the net earnings it would like from the goods, according to the ministry.

In addition, China's semiconductor makers are still far behind their international rivals. In 2013, the country's integrated circuit imports reached US$231 billion, the ministry said.

"Speeding up development of the integrated circuit industry represents a fundamental requirement to improve the IT industry and will raise the nation's level of security," the ministry added.

China set out several goals in the Tuesday guidelines. They include establishing a "financial platform and policy environment" by 2015 to support the local chip industry. In the same year, China's integrated circuits industry will have exceeded 350 billion yuan (US$56.8 billion) in revenue and have started large-scale production of chips built with 32- to 28- nanometer manufacturing processes, the ministry said.

By 2020, China's chip makers in mobile devices, networking and cloud computing will reach production levels on par with the global leaders, the ministry forecast. The technology is expected to be bought globally.

The Chinese government hopes that the industry blueprint, hammered together by various ministries, will pave the way for China's integrated circuits industry to lead globally by 2030. Several Chinese companies in the industry will be considered top tier by then, according to the plan.

To meet these goals, China is creating a small government group to push the industry's development. It's also starting a fund to support industry players, and will encourage local banks to invest in the market.

Tuesday's guidelines mark China's latest effort to promote its domestic tech industry. The country is still largely dependent on foreign IT vendors. For example, Microsoft's Windows and Google's Android are the two most popular OSes in the country and Intel chips power many of the PCs and servers in China, as well as its fastest supercomputer, the Tianhe-2.

But certain Chinese companies are growing quickly. Lenovo is the world's largest PC maker, and Huawei Technologies is a major supplier of networking gear. Chinese chip vendors Allwinner and Rockchip are also putting pressure on foreign rivals and gaining market share in lower-end tablets and smartphones.

Lately, China has also been pointing to the dangers of using foreign technology, in light of the U.S.' surveillance programs. Last month, the Chinese government threatened to ban vendors from selling their products in the country if they failed to pass a new "cybersecurity vetting system."

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Michael Kan

IDG News Service
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