China is once again investing a lot of money in chip production. More than three times the sum of the US Chips Act or the European version, the EU Chips Act, is to flow into the project. In this way, China not only wants to become more competitive with these countries, but also to cushion the tighter trade restrictions.
“A trillion yuan” is what the US media says in big letters today. This is exactly the sum that China wants to put into the country's chip production. Converted, this corresponds to around 144 billion US dollars and quickly makes the efforts in the USA and Europe look small. Part of the sum is to be paid out directly from the beginning of next year, but it is also to be applied indirectly in the form of tax breaks. The period is to extend over a total of around five years. The target group is primarily the company's own chip industry.
A flood of “old” chips?
China does not rely on the most modern technologies, nor can they due to trade restrictions. Instead, production processes are used that are around ten years old in the base. These are more than sufficient for many products, SMIC in particular is mentioned as a lighthouse project in the foundry business. They are already producing chips in 28 nm and in small quantities in 14 nm. SMIC itself even claims to have produced the first prototypes in 7 nm. This is also possible with existing machines, as even Intel still proves today with the Intel 7 process, but it is extremely complex and therefore error-prone. And how much 7 nm is ultimately in the process is written on another paper anyway, after all this information is more of a marketing thing for every manufacturer.
There are fears that the combination older chip technologies and the highly state-sponsored production, which ultimately takes place without the need to make a profit, could flood the market, reports Reuters. The fear: Western companies could potentially perish as a result.
China also stops chip exports
But there are interesting reports about China in the matter of trade restrictions also from another direction. As the Russian newspaper Kommersant reports, Beijing has banned the export of processors from the Loongson family, which are said to have “military grade”, because the chips are too important for their own systems. Apparently, this is a general export ban, but it is particularly affecting Russia at the moment.
Because not only the Russian military, but also increasingly other branches of industry had hopes for Chinese ones Solutions have been set and some of these have already been extensively tested in order to compensate at least a little for the loss of processors from AMD and Intel. Since the outbreak of the Russian-Ukrainian war, these have not been available, or only through extremely detours.