China’s Vice Minister of Industry and Information Technology Wang Zhijun said on November 28 at the second China Development Planning Forum, following the previous years in the steel, cement, electrolytic aluminum and other areas of duplication and overcapacity, including photovoltaic and other emerging industries, duplication of construction, chip manufacturing and other industries have also appeared blind investment and rotten projects.
Wang Zhijun said that some time ago, the media exposed the huge losses caused by investment in integrated circuit manufacturing projects, which requires planning and strengthening supervision. At the same time, it is important to see that mergers and reorganizations are an effective form of integrating innovative resources, achieving scale development and enhancing competitiveness.
Since the supply of chips from telecom giants ZTE and Huawei has been restricted and sanctioned by the U.S. in recent years, a large-scale “core-building” campaign has been launched in China. Public information shows that, as of early October this year, China has more than 50,000 companies registered as semiconductor integrated circuits, the first nine months of this year alone, the number of newly established chip companies reached 12,740.
Reports indicate that many of these companies are owned by companies with no connection to the semiconductor IC industry, including real estate companies, cement and food manufacturers, seafood vendors, auto parts dealers, and others. The main reason for this situation is to obtain state funding and tax breaks.
Earlier, in the face of the chip supply panic caused by the chaos in the chip industry, Chinese authorities said that the current disorderly situation around the country to engage in chip rectification, clearing a large number of huge rotten projects.
China’s National Development and Reform Commission spokesman Meng Wei said at a regular briefing on October 20, some inexperienced, no technology, no talent, “three no” enterprises into the chip industry, blindly on the project, the risk of low-level redundant construction is increasingly apparent.
China’s State Council in 2014 since the introduction of the National Integrated Circuit Industry Development Promotion Outline, including Shanghai, Shenzhen, Nanjing, Wuhan, Hefei, Chengdu, Guiyang, including a number of cities are heavily in the layout of the chip industry, in order to strive for national resources.
China’s independent chip supply to build, in recent years, the country’s efforts to develop the semiconductor industry, but also known as “China’s largest semiconductor scam,” Wuhan Hongxin. The company, which was in serious financial trouble this year, is set to be taken over by the local government, once again showing that China is failing in its pursuit of home-grown chips. Wuhan Hongxin was supposed to be a key part of a $20 billion investment plan that was supposed to help transform Wuhan into a semiconductor manufacturing hub.
Last year, Wuhan Hongxin recruited a large number of TSMC employees at high salaries, and also recruited former TSMC co-chief operating officer Chiang Shang-yi to be its CEO. A year later, Wuhan Hongxin was on the verge of bankruptcy and the company’s operations came to a standstill, and even Sang-Yi Chiang, who is considered to be Hongxin’s signature, admitted that “it was a nightmare. Shang-Yi Chiang has resigned from Honest Micro Wuhan and left China for the United States in July this year.
China is the world’s largest chip importer. Deteriorating U.S.-China relations have led to fears of chip supply disruptions in the Chinese market, especially after the U.S. imposed new sanctions on China.
China is a big chip importer, said Wei Shaojun, vice chairman of the China Semiconductor Industry Association, at the World Semiconductor Conference on August 26. He said that China’s chip imports after 2013 exceeded $200 billion. 2018, the figure exceeded $300 billion, and will remain at that level in 2019. He believes that if there are no anomalies in 2020, China’s chip imports may not fall below $300 billion.
The United States is the world’s largest supplier of chips, its share of chip exports accounted for about 52% of the global market share. Most of China’s imports of chips come from the United States.
Analysts have pointed out that China has always concentrated on doing big things as a systemic advantage of pride. But this national system has its advantages and disadvantages, can be mobilized to do good, but also often become a breeding ground for great disasters. In the early 1960s, the Chinese Communist Party launched the nationwide “Three Red Flags” and “Great Leap Forward” campaigns, which resulted in a nationwide famine that led to the starvation deaths of about 40 million people.
Many professionals say that chip manufacturing is an extremely complex and demanding process, smashing money is not smashed out. The current chaos in China’s chip industry is nothing more than a phenomenon in which local governments are trying to reap national investment by setting up projects. Huge waste is also one of the inherent characteristics of this national system.
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