By hmimcu 
After 1950, integrated circuits and computers were successively invented, and humanity entered the era of electronic information technology. In 1958, the United States combined information transmission with computers and pioneered data communication methods. From then on, data communication began to directly intervene in social production and became an important component of social production. Humans have opened the button of the information technological revolution.
Since the outbreak of the technological revolution, the importance of semiconductor technology as the industrial foundation has only increased, not weakened. Today, its status and role have reached a new height. Especially when multiple factors play a role together, the global semiconductor industry has opened a new stage of development. These factors include: the progress of integrated circuit manufacturing technology has slowed down significantly, the United States has comprehensively restricted the development of the electronic semiconductor industry in Chinese Mainland, and the COVID-19 has broken out worldwide.
Among the above three factors, the US’s suppression of Chinese Mainland’s industry is the focus, the industrial background and foundation are the obvious slowdown in the progress of integrated circuit manufacturing technology, and the global outbreak of the COVID-19 is the catalyst. Under their joint influence, the globalization of the semiconductor industry may gradually withdraw from the historical stage. In the words of TSMC founder Zhang Zhongmou, the globalization of the semiconductor industry is dead.
In recent years, the semiconductor industry in Chinese Mainland has developed faster and faster, which is in sharp contrast to the situation in the past half century. In the early years, especially before 1990, the semiconductor industry in Chinese Mainland was in a very slow development period, which was contrary to the development trend of the global semiconductor industry at that time, especially in the United States and Japan. Since 1990, especially since 2014, with the help of increasing experience and lessons, the semiconductor industry in Chinese Mainland has seen a marked acceleration in development and a rising sun industry. The semiconductor industry, represented by the United States, has been in a mature period, with slow development speed. Compared with Chinese Mainland, its advantages are becoming weaker and weaker. In this situation, in order for the United States to maintain or even expand its existing advantages, unconventional measures must be taken, which is also an important reason for the continuous emergence of various chip bills worldwide in recent years.
Both the semiconductor industry development policies of Chinese Mainland and the chip acts of the United States, Europe, Japan and South Korea play an important role in the industrial development of their respective countries and regions, especially in Chinese Mainland, whose role is more obvious and in-depth. It can also be said that different semiconductor industry policies have formed different industrial development processes and results in different periods.
01
The Development and Characteristics of China’s Semiconductor Industry Policy
Roughly divided, the semiconductor industry policy in Chinese Mainland has gone through three stages of development, namely 1949-1990, 1990-2014, and 2014 to date. The policies in these three stages are different, and the results also vary greatly.
In 1949-1990, the span was relatively large. At this stage, especially in the first 20 years (1949-1969), the semiconductor industry in Chinese Mainland and advanced countries and regions (mainly the United States) were basically in the same starting line. During that period, the integrated circuit industry in the United States also just started, not much ahead of China. In these 20 years, China has not implemented many policies targeting the semiconductor industry. It was not until 1965 that a breakthrough was achieved, namely the successful development of the first silicon based digital integrated circuit, which opened up the history of China’s integrated circuit industry.
Compared to the previous 20 years, China’s semiconductor industry policies introduced in the latter 20 years (1970-1990) have increased. For example, in 1982, the State Council established a leading group for electronic computers and large-scale integrated circuits, formulated a development plan for China’s integrated circuits, and proposed technological improvements to the semiconductor industry during the “Sixth Five Year Plan” period; In 1989, the then Ministry of Mechanical and Electrical Affairs held a seminar on the development strategy of integrated circuits during the “Eighth Five Year Plan” in Wuxi, proposing a development strategy for revitalizing integrated circuits; In 1990, the State Council decided to implement the “908” project. At this stage, more achievements have been made. For example, in 1982, Wuxi 742 Factory introduced a television integrated circuit production line from Toshiba, marking the first time China had imported integrated circuit technology from abroad; In 1985, China’s first 64K DRAM was successfully trial produced at Wuxi 742 factory. However, in the past 20 years, the gap between the development of China’s semiconductor industry and the international advanced level has gradually widened. It can also be said that this 20 years is a critical period for the development of Chinese Mainland’s semiconductor industry to lag behind the world.
From 1990 to 2014, this was the development period of the “trade industry technology” and “technology industry trade” routes that have been debated in the industry, and the actual situation was that “trade industry technology” had the upper hand. During this period, China introduced many more policies related to the semiconductor industry than in the previous 40 years. For example, in 1995, China launched the “909 Project” to promote the development of the semiconductor industry, which mainly involved two major projects. Firstly, the central government and Shanghai jointly invested in the establishment of an 8-inch wafer factory – Huahong Microelectronics (later renamed Huahong Group), and secondly, actively promoted the development of integrated circuit enterprises facing the market economy, While pursuing advanced manufacturing processes, taking into account market demand, it is not only necessary to rely on military support, but also to form competitiveness in the civilian market; In 2000, the State Council issued Document No. 18 to increase support for the integrated circuit industry, with a focus on manufacturing; In 2006, the “National Major Science and Technology Special Project” was launched, including the “01” special project, mainly targeting core electronic devices, high-end general-purpose chips, and basic software products, as well as the “02” special project, mainly targeting large-scale integrated circuit manufacturing equipment and complete processes; In 2009, the implementation of the national “Nuclear High Base” major special project; In 2011, a notice was issued on the issuance of several policies to further encourage the development of the software and integrated circuit industries, also known as the “No. 4 Document”.
Under the promotion of industrial policies, the achievements of China’s integrated circuit industry have also increased significantly. For example, in 1991, Shougang NEC Electronics Co., Ltd. was established as a joint venture between Capital Iron and Steel Company and Japanese NEC Company; In 1997, Shanghai Huahong Group and Japan NEC jointly established Shanghai Huahong NEC Electronics Co., Ltd. to undertake the construction of the “909” project’s ultra large scale integrated circuit production line; In 1998, Huajing signed a contract with Shanghua to jointly produce MOS wafers, and Chinese Mainland began to enter the Foundry era; In 2000, SMIC International was established; In 2002, the “Longxin No.1” was successfully developed, which was the first general-purpose CPU in China to be put into mass production.
During this period (1990-2014), although China’s integrated circuit industry policies and their achievements were unprecedented, the gap was still widening compared to developed countries and regions in the international semiconductor industry. The reason for this is quite complex, with several key points: insufficient overall investment in funds. The semiconductor industry is a typical technology and capital intensive industry, and China is still in a climbing period, requiring a continuous stream of capital investment, including from both the government and the market, which is not done well enough; Leading enterprises, especially IDM, have weak international competitiveness. During this period, the strong semiconductor industry in Europe, America, Japan, and South Korea was mainly reflected in IDM; The talent training system is not sound enough; While expanding international division of labor cooperation, there is a lack of awareness of enhancing one’s core competitiveness.
It is precisely in recognition of these issues that in 2014, the central government issued the “Outline for Promoting the Development of the National Integrated Circuit Industry” and officially established the “National Integrated Circuit Industry Development Investment Fund”. Since then, China’s semiconductor industry has entered the era of “big funds”.
Since 2014, the role of the “big fund” and related policies has become more and more obvious, especially in building an advanced production line for local chip manufacturing. For example, three major memory chip IDMs have been established successively with obvious results. For example, the mass production of 32 layer 3D NAND flash memory was achieved in 2018, which is a zero breakthrough in the field of chip products in Chinese Mainland. In addition, the leading companies in wafer foundry have also achieved a historic breakthrough in the mass production of domestically advanced process chips. If it were not for the intervention and suppression of the US government, these wafer factories would have achieved even more impressive results.
02
Changes in US Semiconductor Industry Policy
In different development periods, the semiconductor industry policies in the United States also vary.
In the early stages of the development of the integrated circuit industry, from 1950 to 1970, the US government provided strong support policies for the local semiconductor industry, with the aim of accelerating the development of the local industry through policy support during a period when the global semiconductor industry was basically on the same track. Specific policies include implementing semiconductor tax subsidies to promote the commercialization of the semiconductor industry. At this stage, the US government implemented policies primarily focused on tax incentives and further introduced relevant measures to improve the industrial development environment, including promoting diversified government procurement, reducing market barriers, and supporting the development of small and medium-sized enterprises.
When the local industry develops to a certain level and is significantly higher than other countries and regions, the “presence” of the US government’s industrial policy is relatively weak. At this time, more market forces are relied on to regulate the industry.
When the semiconductor industry in other countries and regions develops close to or even surpasses that of the United States, the government of that country will raise the “big stick” of industrial policy, typical of which was to suppress Japan in 1986. Due to the rapid development of Japan’s semiconductor industry, especially in the field of storage chips, Japanese companies at that time had completely suppressed Intel, and around 1980, they were among the top ten semiconductor companies in the world, Japanese companies once held as many as six seats, which caused great pressure on the United States. In order to weaken Japan’s overall competitiveness, the US government conducted a 301 investigation in 1985, accusing Japanese companies of dumping DRAM and other chip products. After negotiations, Japan signed the first Semiconductor Agreement with the United States in 1986, which stipulated that Japan would stop dumping in the US market and require Japanese companies to purchase US chip products. In 1991, the United States signed the Second Semiconductor Agreement with Japan on the grounds that American companies had a market share of less than 20% in Japan. In 1996, the United States had a market share of over 30% in the Japanese chip market and a global market share of 30%, once again becoming the world’s largest semiconductor country.
After determining its advantages, the semiconductor policy of the United States will once again be in a “semi invisible” state, and industrial development mainly relies on market regulation.
In 2019, due to the accelerated development of China’s semiconductor industry, the industrial advantage of the United States was weakened, and at this time, its industrial policy “big stick” was once again launched. Since 2019, the United States has included Huawei in its physical control list, modified foreign direct product rules to restrict Huawei’s supply, and increased export controls on semiconductor equipment, EDA software tools, and high-end chips to China. In August 2022, US President Biden signed the 2022 Chip and Science Act, which officially came into effect. This legislation provides approximately $40 billion in government subsidies to the US semiconductor industry and encourages semiconductor companies to build factories in the United States. Under such policy guidance, TSMC was “forced” to build 5nm and 3nm process wafer foundries in the United States, Samsung also increased investment in wafer factories in the United States, and domestic IDM giants Intel, Micron, and Texas Instruments became the biggest beneficiaries. This wave of operation in the United States has not only promoted the return of high-level manufacturing industries to the mainland, but also vigorously restricted the development of chip manufacturing in Chinese Mainland, which objectively prevented the globalization of the semiconductor industry.
03
The Game of Semiconductor Industry Policies between China and the United States
From the above introduction, it can be seen that China’s semiconductor industry policy has always played a crucial role in the development of local industries, which is stronger than the regulatory ability of the market. However, the US semiconductor industry policy only plays a crucial role when competitors catch up, and other periods mainly rely on market regulation. China’s semiconductor industry policy is not exclusive, but more reflects a win-win attitude, while the relevant policies of the United States have a strong “exclusivity”, with a focus on maintaining high-level leadership in local industries.
Although there are differences, the semiconductor industry policies of China and the United States have one common point, which is that at a critical time point in their respective industrial development, policies that will play a decisive role in industrial development for a considerable period of time in the future will inevitably be introduced, which is once again fully reflected in the current situation.
The chip act determined by the United States in 2022 will have a profound impact not only on its own country and Chinese Mainland, but also on the global semiconductor industry chain. At the recently held “Two Sessions”, the Chinese government proposed to further leverage the advantages of the national system and increase support for local semiconductor industries and enterprises. Therefore, in the foreseeable future, China and the United States will continue to strengthen their support for the development of local semiconductor industries, while uniting as many developed regions and related enterprises in the Eurasian semiconductor industry as possible. There will be more evolutionary versions of the policy, and the game will continue.
For China, while increasing investment, developing local industrial competitiveness, and attracting more international partners, it is also necessary to pay attention to the following points: to concentrate relatively dispersed semiconductor industry resources (such as funds, talent, etc.) to form the “fist” of the industry; The project needs to be carefully considered to reduce unnecessary resource waste; Strengthen supervision and supervision to avoid incidents of fraud.