Govt procurement, funding for R&D can boost domestic semiconductors' development: experts
After a sober reflection on the country's over reliance on foreign chips prompted by a U.S. move to cut off exports to Chinese telecom company ZTE Corp, the Chinese government has moved swiftly in recent weeks to support the domestic semiconductor manufacturing industry.
Recent actions by the central government are aimed at fast-tracking research and development (R&D) and expanding the real-world adoption of domestic chips by throwing considerable State support behind the critical product, industry analysts noted on Wednesday.
In its latest move, the Chinese government, for the first time, included servers that operate on domestic chips in its government procurement list, effectively granting the chips access to a massive market, according to media reports.
The list posted on the website of the Central Government Procurement Center on May 17 showed that a new category - "servers with self-developed chips" - under the server procurement section, listed three domestic servers: the Loongson 3B1500, the Phytium FT1500A-16 and the Sunway 1621.
The move is "of great importance and a milestone" for domestically produced chips, Hu Weiwu, president of Loongson Technology Co, which developed the Loongson 3B1500, told the Global Times on Tuesday. "When [domestic chips] were not included on the government procurement list, the government couldn't buy them even if it wanted to. Now, it can."
Previously, servers on the government procurement list were equipped with chips produced by U.S.-based Intel Corp. While inclusion on the list does not necessarily lead to government contracts, it is still a big boost for recognition and ultimately adoption.
Liu Kun, vice general manager of the IC Industry Research Center at Beijing-based CCID Consulting, said that the move showed two very significant developments in the Chinese chip industry.
"First, these microchips have met the standards for government procurement. Their performances have reached the level of the government's requirements," Liu told the Global Times on Wednesday. "Second, the government is moving to accelerate the application of domestic chips on the policy level," Liu added.
Chinese chip developers have been spending heavily on R&D and have made certain technological advances, but their relatively poor performance compared with foreign chips has stalled their further development and wider application, according to experts.
Xiang Ligang, chief executive of telecom industry website cctime.com, said that promoting the adoption of the domestic chips is the best way to help the domestic producers.
"Good products do not come out of just research and development but actual use," Xiang told the Global Times. "You have to use them to find the weaknesses and then improve on them."
While promoting adoption is a key point, the Chinese government has also stepped up its support for R&D.
China is poised to announce a new fund to support the chip industry, aiming to raise as much as 300 billion yuan ($47.4 billion), according to media reports on May 7.
These moves came after the U.S. President Donald Trump's administration barred U.S. chipmakers from exporting to ZTE for allegedly violating U.S. laws. The ban threatened the existence of the company, which relied on chips from the U.S. for its mobile phones. Chinese and U.S. officials are reportedly working on a deal to save ZTE, but no final agreement has been announced.
But although the U.S. could cripple ZTE, the move also sounded an alarm for China's chip industry that led to the recent support, Xiang said.
"China's chip industry needs to thank the Americans for helping it gain national support," he said.
