By JOE McDONALD, AP Business Writer
BEIJING (AP) – To help make China a self-sustaining “tech superpower,” the ruling Communist Party is pushing the world’s largest e-commerce company into the delicate and expensive task of designing its own processor chips – a company that looks like nothing. Alibaba Group has already done this.
Its 3-year-old T-Head chip unveiled its third processor in October, the Yitian 710 for Alibaba’s cloud computing business. Alibaba says at this time that it has no plans to sell the chip to foreigners.
Other entry-level chip developers including games and social media giant Tencent and smartphone brand Xiaomi are pledging billions of dollars in line with official plans to create computer technology, clean energy and more. technologies likely to strengthen China’s wealth and global influence.
Processor chips are playing an increasingly critical role in products, from smartphones and cars to medical devices and home appliances. Shortages from the coronavirus pandemic are disrupting global manufacturing and adding to concerns about supplies.
Chips are a top priority in the ruling Communist Party’s marathon campaign to end China’s dependence on technology from the United States, Japan and other vendors Beijing sees as economic rivals and potential strategic. If successful, business and political leaders warn it could slow innovation, disrupt global trade, and impoverish the world.
âAutonomy is the foundation of the Chinese nation,â President Xi Jinping said in a speech released in March. He called on China to become a “technological superpower” to safeguard “national economic security”.
âWe must strive to become the world’s leading center of science and the high level of innovation,â Xi said.
Beijing could be chasing a costly disappointment. Even with huge official investments, businessmen and analysts say chipmakers and other companies will find it difficult to compete if they separate from global suppliers of advanced components and technology – a goal that no other country is suing.
âIt’s hard to imagine a single country rebuilding all of this and having the best technology,â said Peter Hanbury, who follows the industry for Bain & Co.
Beijing’s campaign adds to tensions with Washington and Europe, which see China as a strategic competitor and complain of stealing the technology. They limit access to the tools needed to improve its industries.
If the world were to come apart or divide into markets with incompatible standards and products, parts made in the United States or Europe might not work in Chinese computers or cars. Smartphone manufacturers that have a single dominant global operating system and two network standards may need to create unique versions for different markets. It could slow down development.
Washington and Beijing must “prevent the world from coming apart,” UN Secretary-General Antonio Guterres told The Associated Press in September.
Chinese factories assemble smartphones and tablets from all over the world, but need components from the United States, Europe, Japan, Taiwan and South Korea. Crisps are China’s biggest import, ahead of crude oil, at over $ 300 billion last year.
Official urgency on the matter increased after Huawei Technologies Ltd., China’s leading global technology brand, lost access to US chips and other technologies in 2018 under sanctions imposed by the House. White.
This crippled the ambition of the telecommunications equipment maker to be a leader in next-generation smartphones. U.S. officials say Huawei poses a security risk and could aid Chinese espionage, a charge the company denied.
Huawei and some Chinese competitors are poised to match Intel Corp., Qualcomm Inc., South Korean Samsung Electronics and Britain’s Arm Ltd.
But when it comes to making them, foundries like the state-owned SMIC in Shanghai are up to ten years behind industry leaders, including TSMC or Taiwan Semiconductor Manufacturing Corp., which produces chips. for Apple Inc. and other global brands.
Even companies like Alibaba that can design chips are likely to need Taiwanese or foreign foundries to make them. Alibaba’s Yitian 710 requires precision that no Chinese foundry can achieve. The company declined to say which foreign producer it would use.
âMy country still faces a big gap in chip technology,â said industry analyst Liu Chuntian of Zero Power Intelligence Group.
China accounts for 23% of global chip production capacity but only 7.6% of sales.
Wrapping millions of transistors onto a silicon ribbon the size of a fingernail requires some 1,500 steps, microscopic precision, and obscure technologies owned by a handful of suppliers from the United States, Europe, Japan and others.
These include KLA Corp. in California for ultra-precise measurements and TEL in Japan for machines for applying coatings a few molecules thick. Many are covered by restrictions on âdual-useâ technologies that can be used in weapons.
China “is lagging far behind” in tools, materials and production technology, the Semiconductor Industry Association said in a report this year.
Washington and Europe, citing security concerns, are blocking access to the most advanced tools Chinese chipmakers need to compete with world leaders in accuracy and efficiency.
Without these, China would fall even further behind, Bain’s Hanbury said.
âThe TSMC horse runs away and the Chinese horse is stopped,â he said. âThey can’t move on.
Washington stepped up pressure on Huawei last year by banning global foundries from using American technology to produce its chips. US vendors can sell chips to the company, but not for next-generation â5Gâ smartphones.
For its part, the European Union has said it will look into foreign investment after Chinese complaints eroded Europe’s technological lead by purchasing important assets such as German robot maker Kuka.
Alibaba’s Yitian 710 is based on Britain’s Arm architecture, highlighting China’s continuing need for foreign craftsmanship. Alibaba said it will continue to work closely with longtime foreign suppliers Intel, Arm, Nvidia Corp. and Advanced Micro Devices, Inc.
T-Head’s first chip, the Hanguang 800, was announced in 2019 for artificial intelligence. Its second, the XuanTie 910, is intended for self-driving cars and other functions.
In November, Tencent Holding, which operates messaging service WeChat, announced its first three chips for artificial intelligence, cloud computing and video.
Beijing says it will spend $ 150 billion from 2014 to 2030 to grow its chip industry, but even that is only a fraction of what world leaders are investing. TSMC plans to spend $ 100 billion over the next three years on research and manufacturing.
China is trying to gain experience by hiring engineers from TSMC and other Taiwanese producers. Taiwan, which Beijing claims as part of its territory and has threatened to attack, has responded by placing restrictions on job offers.
Beijing is encouraging smartphone makers and others to use suppliers in China, even if they cost more, but officials deny that China wants to detach itself from global industries.
âWe will never go back in history as we seek to decouple,â Xi said in a video link speech at a November meeting of Asia-Pacific leaders in Malaysia.
The latest conflict is with photolithography, which uses ultraviolet light to etch circuits in silicon at a scale measured in nanometers, or billionths of a meter.
The leader is ASML in the Netherlands, which manufactures machines capable of etching transistors just 5 nanometers apart. That would pack 2 million in a space one centimeter wide.
The Chinese minimum wage is about a third as accurate at 14 nanometers. Taiwan’s TSMC is set to increase its accuracy to 2 nanometers.
The minimum wage wants to upgrade by purchasing the latest ASML machine, but the Dutch government has not yet given its approval.
“We will await their decision,” ASML spokeswoman Monica Mols said in an email.
AP researcher Yu Bing in Beijing and AP writer Edith M. Lederer at the United Nations contributed.
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