Disclaimer

by clicking a geography button, you agree to abide by terms and conditions listed herein.

Home Markets Semiconductor...

Semiconductor Industry China – Taiwan Loses Chip Makers

As many as 3,000 semiconductor engineers, as per Nikkei Asia Review and Taiwan’s Business Weekly, may have left Taiwan for China’s mainland. Nikkei says this figure has been confirmed by the Taiwan Institute of Economic Research and it forms a tenth of Taiwan’s chip research and development workforce.

China is increasing its recruitment of semiconductor sector talent by offering salaries as much as three times higher as well as other benefits. Taiwan is struggling to compete.

China could overtake Taiwan in the semiconductor market

Taiwan Semiconductor Manufacturing Co (TSMC) is one company losing talent. It acquired a business owned by Richard Chang in 2000. Chang left Taiwan and went on to launch Semiconductor Manufacturing International Corporation (SMIC) in Shanghai taking “several hundred” employees as per Nikkei. His new company has become the fifth largest contract chip manufacturer in the world now rivalling TSMC with support from Beijing. Other key executives from TSMC have also moved to China’s leading chip makers.

Two of China’s companies, Changxin Memory Technologies and Yangtze Memory Technologies are set to begin mass-producing memory chips next year, one of Taiwan’s most robust sectors. And, some speculate manufacture in mainland China could exceed that of Taiwan in 2020.

Made in China 2025

The “Made in China 2025” plan was revealed in 2015 and sees China endeavour to move away from producing lower quality goods towards the manufacture of higher-value products and offering of technology services. Its focus is on the semiconductor industry as well as pharmaceuticals, IT, robotics, and the automotive and aerospace industries. China hopes to produce 70% of the chips it consumes by 2025.

The Center for Strategic and International Studies describes the initiative as one designed “to comprehensively upgrade Chinese industry.” If successful, it could take China’s manufacturing capability into direct competition with the US. The Chinese government has committed the equivalent of around $300 billion to the plans.

Asian Market Insights

Exclusive news, analyses and opinion on Asian economies and financial markets

Asian Market Insights

Exklusive News, Analysen und Meinungen zu den asiatischen Finanzmärkten

China may lose access to US semiconductors

The US has taken steps to restrict Chinese technology companies from using American products as part of the ongoing US-China trade war. It has added Huawei, 68 of its subsidiaries, and semiconductor companies to the US Commerce Department’s “Entity list” barring these firms from buying US-made chips. China, in response this year, created its own “unreliable entities list.

The actions of the US are all the more critical as it remains the semiconductor global leader and is home to the most advanced chip-making firms including Qualcomm, Nvidia, Intel, and AMD. In contrast, China is the world’s largest purchaser of chips. As per Quartz, in 2016, China bought $160 billion worth of semiconductors but sold only $20 billion making them China’s biggest import by value. CNBC puts the volume of chips made in China and used in the country at now nearer 16%.

New restrictions may be on the way

Just days ago, the US government began to look again at the restrictions on chip and other component sales to Huawei. Some US companies have managed to continue to supply Huawei under provisions which exempt products that are 75% produced outside of the US. As per Bloomberg, and sources, the US government could look to increase the threshold to 90% and add more products as soon as January 2020. US technology companies are opposed to the potential plans and argue that they will lose sales to component makers in other countries.

China could rescind its reliance on US semiconductors in the next ten years

An exodus of talent from Taiwan to mainland China may be aiding China’s semiconductor production capacity, and that is growing by the fastest rate in the world, as per SEMI and CNBC.

Some believe that China could quickly take a greater share of the global semiconductor manufacture market whereas others say it will take some time for the country to close a technological gap. For China, increasing self-sufficiency, especially in the chip-market will reduce the impact of US trade tariffs and restrictions.

Neil Shah, research director at Counterpoint Research told CNBC, in an unrelated story to Taiwan’s loss of talent, that “if China as a whole is able to acquire the right human resources talent, companies, and partnerships, it should still be on track to create a homegrown semiconductor industry over the next decade without access to American tech.”

More News

Indian stocks stumble in October amid lacklustre earnings

0
Indian stocks faced a challenging October as disappointing corporate earnings and foreign investor outflows dampened market ...

After LDP’s loss at Japan’s snap election – what now?

0
Japan’s Liberal Democratic Party (LDP), which had ruled Japan almost continuously since 1955, just took a blow at the snap ...

Disappointing policy measures put a dent in China’s equity ra...

0
Chinese equities rallied strongly in recent weeks, but a new announcement of "disappointing" fiscal measures has dampened th ...

Fed rate cut decision and the impact on Asia

0
In a highly awaited move, the US Federal Reserve (Fed) has cut interest rates by 50 basis points, marking the first cut in f ...