Producción de chips: el plan de China para dominar la industria tecnológica

Chip production: China’s plan to dominate the tech industry

There were few who did not notice. In recent years, processors, RAM memory, hard disks and even computers – especially laptops – have become much more expensive. The reason? The lack of semiconductors, also known as chips, the heart of every electronic device.

The initial problem, which arose as a consequence of the COVID-19 pandemic, turned into a global crisis: demand grew and production capacity could not keep up, affecting both manufacturers and consumers. And, as happens in many crises, someone saw an opportunity: China.

While countries like the United States and Taiwan have traditionally led the industry, the Asian giant has stepped forward with an ambitious plan to dominate semiconductor production and change the balance of power in the global market.

This is not a simple strategic decision at the country industry level, but a grand plan to dominate the industry. The figures we have read in the news in recent days leave no room for doubt: in 2024, China has invested 25 billion dollars in the purchase of machinery to manufacture processors, surpassing the United States, Taiwan and South Korea combined.

China accelerates investment in chip production

The most striking aspect of this news is that these important figures are only for the year to date, i.e. we are not yet talking about the total for 2024. According to data provided by the SEMI organisation, which represents more than 2,400 chip and electronics manufacturers worldwide, this level of investment will continue during the second half of the year, consolidating China as the largest investor in the construction of new semiconductor factories.

China’s strategic focus is no coincidence. In a global environment where geopolitical tensions and competition for technological resources are increasingly intense, controlling semiconductor production has become a priority to ensure its technological and economic autonomy.

One of the main drivers behind China’s move is the escalating trade and technology tensions with the United States. Washington, through the Chip Act, has incentivised local semiconductor production through subsidies and imposed severe restrictions on the export of advanced technologies to China. This includes high-performance chips and key tools for semiconductor design and manufacturing, crucial elements that could have allowed Chinese companies to advance in the production of next-generation processors.

Betting on legacy chips

As China invests massively in its semiconductor manufacturing capacity, a major part of its strategy is focused on ‘legacy chips’, also known as ‘mature chips’, which are chips that use production technologies of 28 nanometres (nm) or higher. While these chips are not the most advanced, they are critical for industrial, appliance and automotive applications. In fact, China’s manufacturing capacity for these chips is expected to double in the next five to seven years, giving it a competitive advantage in the production of these types of semiconductors.

This specialisation in mature chips also presents a unique opportunity for sourcing companies that manage the import of technology components. As China expands its production, new sourcing avenues will open up that could benefit companies that rely on these less advanced but equally important chips for many industrial sectors.

The challenge of Chinese technological self-sufficiency

Despite progress, China’s technological self-sufficiency in semiconductors remains a long-term challenge. Although it is investing heavily in R&D to close the technology gap with its competitors, access to advanced technology remains limited due to restrictions imposed by the West.

China’s success in its mission to lead in semiconductor production will depend to a large extent on its ability to overcome these obstacles, both technological and political. The race for semiconductor self-sufficiency is far from over, but the country has once again shown itself capable of mobilising massive resources and adapting to foreign-imposed restrictions. Will it finally achieve its goal of dominating the industry?