Tech nationalism continues with China attempting to secure its own domestic supply of chips! China plans on building another fab to produce 28nm chips…
China has established the Beijing Yandong Microelectronics (YDME) semiconductor company, destined to operate a 300mm fab that will cost around $4.6 billion to get up and running. BOE Technology will support the chipmaker, which will produce microelectronics on mature process technologies such as 28nm and above, reports the South China Morning Post.
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YDME’s fab is set to have a capacity of 370,000 wafer starts per month (WSPM) by 2027 and will use process technologies of 28nm and older. The fab will significantly contribute to China’s aim to become self-sufficient in microelectronics production. China aims to increase its local production rate of chips from 16.7% in 2021 to 21.2% by 2026.
While this is not a “challenge” to America’s technological leadership it certainly is an interesting development. China is increasing its domestic semiconductor manufacturing ecosystem and weaning itself off of foreign suppliers of older chips like Japan. It is of course cheaper and easier for China to buy equipment for older designs than it is newer but despite being older these chips still have utility. Older chips are used wherever you simply do not need bleeding edge chips and want to keep costs reasonable.
This increase in the domestic semiconductor ecosystem is exactly what America is trying to achieve with its CHIPS Act. The CHIPS Act provided loans and some direct funding to semiconductor research and manufacturing that occurs inside the United States. It’s one of President Biden’s achievements that is probably not going to be literally undone by the incoming administration.
This is tech nationalism and it’s a good thing. The United States cannot continue to rely on China and Taiwan for all of its electronics and semiconductors. China is a brutal communist state that is basically George Orwell’s 1984 on earth. It is unacceptable for the government of freedom to be beholden to any government that forcibly sterilizes women let alone imprisons people for their religion. It is the exact opposite of what our founding fathers intended to happen.
Chinese and Taiwanese manufacturing capacity, the entire semiconductor ecosystem, must be replaced by a domestic ecosystem. We ultimately need a CHIPS Act II to achieve this. A CHIPS Act II is necessary to stabilize Intel and maintain jobs while also stimulating the semiconductor input manufacturer’s replacements inside the United States. I’m sorry Japan, but all of those specialty semiconductor products you make need to come here. You’re too physically close to China.
China is basically doing the same things as the United States. They’re attempting to create an ecosystem not beholden to America just as much as America is trying to build one not beholden to China. It’s The Great Semiconductor Separation.
But it doesn’t stop at semiconductors. A huge amount of America’s electronics are manufactured / assembled inside China. Can you imagine how devastating a conflict with China would be to our domestic supply of electronics? We’d be out there rationing keyboards and computer monitors like the rationing we did during WWII. That would be pretty pathetic. And lets not even discuss what that would do to our GDP. An ELECTRONICS Act as well as a CHIPS Act II are necessary to American survival. You need to be able to go to Walmart and buy a US made keyboard for $15.
Ultimately China building a new 28nm fab just shows us that the US and China are separating. And that’s perfectly fine.