March 15, 2017 12:50 am JST

China's top chipmaker downplays rivalry with US

SMIC chairman says Chinese semiconductor companies are still too weak

CHENG TING-FANG, Nikkei staff writer

SMIC Chairman Zhou Zixue dismisses notion that China poses a threat to U.S. chip sector

SHANGHAI --The technology sector in China is still not sophisticated enough to compete with the U.S. in the global chip market, the chairman of China's top contract chipmaker said on Tuesday.

"The Chinese chip sector is still very weak in its preliminary developing stage. We do not have any semiconductor companies that are on global top 20 lists like those in America, South Korea, Japan and Taiwan," said Zhou Zixue, chairman of Semiconductor Manufacturing International Co., at the SEMICON China conference in Shanghai. "We are not posing a threat to the U.S. at all."

SMIC is the world's No. 4 contract chipmaker, trailing Taiwan Semiconductor Manufacturing Co., Globalfoundries and United Microelectronics Corp.

Meanwhile, Zhou also serves as head of the influential China Semiconductor Industry Association.

Zhou's comment appears to be an effort to play down the White House's claim in January that China's aggressive push to grow a domestic chip industry would hurt American chipmakers and even undermine U.S. national security.

Zhou said the media's negative coverage of the subject had led to unnecessary worries from some countries.

The Chinese executive dismissed the report as unconvincing, and argued that U.S. chip leaders such as Qualcomm and Intel, both of which contributed to the White House report, had made a lot of money in China.

China in recent years has been aggressively developing its chip industry in order to increase self-sufficiency and slash reliance on foreign companies such as Intel, Micron, Samsung Electronics, Qualcomm, TSMC, and Toshiba.

China is building more advanced 12-inch wafer facilities than any other country in the world, according to Semiconductor Equipment and Materials International (SEMI), a global industry association.

Some notable ongoing projects in China include SMIC's construction of an advanced 12-inch facility in Shanghai. TSMC is also building its first 12-inch plant in the southern Chinese city of Nanjing.

Meanwhile, Beijing-backed Tsinghua Unigroup is building two memory chip projects valued at $54 billion in Wuhan and Nanjing.

Zhou said, however, he was concerned that some companies had not been spending money wisely and efficiently when it comes to developing advanced chip technologies.

"The allocation of resources currently is randomly here and there. I don't think that's a correct way and we should be more careful when the industry is heading toward consolidation," said Zhou.

Zhou also expressed reservations about whether Beijing's chip policy can be well executed.

Yet for semiconductor suppliers and equipment makers, the Chinese market is still the one showing the fastest growth and seen as very attractive.

"China currently contributes some 12% of our company's revenue, and the growth rate is faster in China than in the rest of the world," President and Chief Executive Peter Wennink of Europe's largest semiconductor-equipment maker ASML told Nikkei Asian Review at the conference. He said he travelled to China three to four times a year.

The Dutch company generated sales of 6.79 billion euros ($7.22 billion) last year.

"Our Chinese customers' plans are very aggressive," he added. "If Chinese IC industry expands faster than the global industry, the market share of China and for our business will grow."

ASML supplies to all major global chipmakers including Intel, Samsung, TSMC, and China's SMIC, Huali Microelectronics, and others.

Asia300

Taiwan Semiconductor Manufacturing Co., Ltd.

Taiwan

Market(Ticker): TAI(2330)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 178,223.03M
Shares: 25,930.38M
Asia300

United Microelectronics Corp.

Taiwan

Market(Ticker): TAI(2303)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 6,013.46M
Shares: 12,624.31M
Asia300

Samsung Electronics Co., Ltd.

South Korea

Market(Ticker): KRX(005930)
Sector:
Industry:
Electronic Technology
Telecommunications Equipment
Market cap(USD): 309,053.78M
Shares: 149.31M

Toshiba Corp.

Japan

Market(Ticker): TKS(6502)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 10,860.70M
Shares: 4,237.60M

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