klee7_Wang GangChina News Service via Getty Images_chinasemiconductor Wang Gang/China News Service via Getty Images

How Realistic Are China’s Semiconductor Ambitions?

Despite big aspirations – and big investment – China has struggled to catch up with the US in an economically and strategically vital industry, and will continue to face significant barriers to progress. But a number of factors – from rising US inflation to fast-growing scientific capabilities – could work in its favor.

SEOUL – When Joe Biden landed in South Korea last month – his first official trip to the country as US President – he headed straight for Samsung’s massive semiconductor factory outside Seoul. There, he met with South Korean President Yoon Suk-yeol and Samsung Electronics Vice Chairman Lee Jae-yong, and praised the construction of a $17 billion Samsung semiconductor factory in Texas. The economic and strategic importance of semiconductors could not have been made any clearer.

During the COVID-19 pandemic, semiconductor supply disruptions forced a range of industries – from automobiles to consumer electronics – to slow or halt production. Reliable semiconductor supplies, it became clear, are vital to a country’s economic resilience. For the United States and China, they are also central to a strategic competition in which leadership in cutting-edge industries plays a crucial role.

As it stands, the US has a bigger slice of the global semiconductor pie, owing to its strength in chip design and in the fabless segment of the industry. But the vast majority of chips are manufactured far from America’s shores, including at the Samsung factory in Chinese President Xi Jinping’s hometown of Xi’an. And China – the world’s biggest chip market – is investing heavily in the sector as part of its effort to boost indigenous innovation. So, is the US set to lose its semiconductor edge?

https://prosyn.org/SUWlbW2