China to Strengthen its Semiconductor Industry with a Major State-led Project

Published Date : Nov 04, 2015

To strengthen its domestic chip manufacturing sector, China is now planning for a massive state-led project. This push is creating a hurdle for the existing dominant chipmakers in Japan, the United States, Taiwan, and South Korea triggering another wave of industry realignment. It is said that China is now seeking to hire engineers from Japan.

A retired engineer in Japan was asked by headhunters and many others if he was keen on working in China. The engineer lives presently in the Kanagawa Prefecture located in the south of Tokyo and was responsible for production technology at the now defunct Elpida Memory in Japan.

A similar case was seen at the Tokyo Institute of Technology, where an engineering professor observed that Chinese students at the university were increasingly courted by chipmakers from China. He said that some of the Chinese students were going back to China in the middle of their Ph.D. programs. Many semiconductor equipment makers in Japan are confirming these rumors about China’s plan to invest massively in the semiconductor industry. Also, a chip technology consulting firm based in Japan stated that China was asking for technological assistance.

The Chinese government is planning to install a massive chip plant, according to sources familiar with the matter. This plant is expected to be based in the Wuhan, Hubei Province and the project will be worth around US$25 billion in total. If this plan becomes a reality, then the factory would be on par in terms of scale with Hwaseong semiconductor plant of Samsung Electronics in South Korea and Yokkaichi factory of Toshiba in Japan.

According to observers, the Chinese government is projected to shoulder massive costs for this project and the country has formed a fund worth US$18.9 billion. This fund is called the National Semiconductor Industry Investment Fund and the fund’s capital base has multiplied due to the contributions from local governments.