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Semiconductors

China chip champion urges global effort to ease supply crunch

'Any other way is wrong,' SMIC chairman says at opening of SEMICON China event

People visit SEMICON China, the country's biggest trade fair for semiconductor technology, in Shanghai on March 17.   © Reuters

TAIPEI -- The chief of China's top semiconductor maker has called for "global collaboration and openness" to resolve the chip industry's worst supply crunch, hinting that geopolitical tensions have been exacerbating the issue.

Zhou Zixue, chairman of Semiconductor Manufacturing International Co. and of the China Semiconductor Industry Association, said on Wednesday that the tech industry is "suffering its worst-ever chip supply crunch." 

"This serious global chip supply shortage is only going to be alleviated through global collaboration and openness, and by the industry worldwide working and developing together," Zhou said at the opening of SEMICON China, the biggest chip industry fair in the country which attracts tens of thousands of participants. "Any other way of doing this is wrong."

Chips are the heart and brains for everything from computers and servers to smartphones and connected cars, and both the U.S. and China have tied their production directly to national security.

For Washington, restricting China's use of American chip-related technologies has become an effective means to curb Beijing's tech ambitions, which include building a domestic semiconductor industry.

Zhou's SMIC, which supplies to both local and international chip developers such as Qualcomm, is among the Chinese companies that have been added to U.S. trade blacklists restricting its procurement of American equipment and materials for chip production. Such restrictions have already worsened the global chip supply crunch, as they hinder Chinese chipmakers' ability to ramp up output.

Zhou's call for international collaboration comes just ahead of the first high-level meeting between U.S. and Chinese official since President Joe Biden took office in January. Diplomats are scheduled to meet on March 18 in Anchorage, Alaska. 

Despite the various headwinds, including the coronavirus pandemic, Zhou said China's semiconductor industry still generated 891.1 billion yuan ($137 billion), including foreign companies' local output, in revenue in 2020, rising 17.8% to significantly outperform the global semiconductor growth of last year, as Beijing stepped up efforts to strike self-sufficiency.

"We still expect China's chip industry to continue maintaining speedy growth in 2021," Zhou said.

Top global companies emphasized the importance of the Chinese chip market and echoed Zhou's call to work together. The CEOs of five chipmaking equipment providers -- Applied Materials, Lam Research and KLA of the U.S., ASML of the Netherlands, Tokyo Electron of Japan -- all said in prerecorded remarks that the China is crucial for their business and promised further close collaboration with companies there.

"ASML has been a strategic partner for China's semiconductor industry for more than 30 years. ... The semiconductor industry in China is now growing at the fastest pace and has become more diverse and complex," ASML CEO Peter Wennink said on Wednesday. "ASML will continue to support our Chinese customers to the very best of our abilities. Collaboration with Chinese customers is essential in dealing with fast growth and tech transitions."

The CEO of Europe's biggest chip equipment vendor said it has more than 1,000 staff in China across 12 cities.

Applied Materials CEO Gary Dickerson also emphasized the importance of the Chinese market to the leading American chip equipment maker and said he hopes to continue to grow relationships and business there. He added that he personally has a deep affinity for China, as his wife is from Nanjing.

Earlier this month the two major semiconductor industry associations in the U.S. and China -- neither of which is related to their respective governments -- just agreed to set up working groups to discuss trade and export control issues, a move seen as an overture to ease tensions between the world's two biggest economic powers.

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