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China’s Place in the Global Semiconductor Value Chain

A semiconductor is a substance, usually a solid chemical element or compound, that can conduct electricity under some conditions. These tiny electronic devices, usually smaller than a postage stamp, power the modern economy.

China’s Place in the Global Semiconductor Value Chain

A semiconductor is called a semiconductor because it is a type of material that has an electrical resistance which is between the resistance typical of metals and the resistance typical of insulators. Semiconductors are employed in the manufacture of various kinds of electronic devices, including diodes, transistors, and integrated circuits. The semiconductor industry is a key factor underlying the US-China trade war.

The Forecast of China’s Semiconductor Industry

Market intelligence company Tractica forecasts the global deep learning chipset market will surge to US$66.3 billion by 2025. According to CNBC, Beijing highlighted semiconductors as a key area of the Made in China 2025 plan, a government initiative that aims to boost the production of higher-value products. China aims to produce 40% of the semiconductors it uses by 2020 and 70% by 2025. That’s backed by tens of billions of dollars of investment from Beijing into the country’s chip industry.

China Semiconductor Market Demand is Expanding

China semiconductor industry is still in the primary development stage but the industry has been developing steadily over the past decade, which is in line with China’s demand to establish its own industrial chain. The semiconductor market is anticipated to grow over the medium term as 5G wireless technology and next-generation automobiles take root. The latest development of China’s semiconductor industry shows the importance Chinese government is putting in this sector. China is still heavily dependent on other countries for importing semiconductor. But Beijing is trying hard to fulfill its semiconductor demand from local players.

China is making huge investments in the development and production of semiconductors and has set some lofty goals for its chip industry. For instance, it wants to produce semiconductors using 16/14nm process technologies and make chips on 450mm wafers by 2020, according to IC Insights. Currently, only 16 percent of China’s semiconductors are produced in-country. The nation wants to produce 40 percent of the semiconductors it uses by 2020 and 70 percent by 2025. Chinese semiconductor companies also are aggressively investing in open source projects.

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