"Catch Samsung"... China Fails Despite Pouring 3 Trillion Won into Domestic Semiconductor Companies

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The Wall Street Journal (WSJ) reported on the 9th (local time) that despite the Chinese government pouring about $2.3 billion (approximately 3 trillion KRW) into domestic semiconductor companies to catch up with Samsung Electronics and Taiwan's TSMC, it ultimately failed.

After investigating Chinese state media, local government documents, and the corporate registration database Tianyancha, WSJ found that over the past three years, Chinese authorities invested in at least six semiconductor projects, including Wuhan Hongxin Semiconductor Manufacturing Corporation (HSMC) and Quanshin Integrated Circuit (QXIC), but these efforts ended in failure.

The amount invested in these projects was at least $2.3 billion (approximately 2.7692 trillion KRW), most of which was reportedly supported by the Chinese government.

These companies had presented blueprints aiming to mass-produce products with processes of 14 nanometers (nm = one billionth of a meter) or less, as produced by Samsung Electronics and TSMC, and planned to manufacture ultra-fine 7-nanometer process products within a few years.

However, these companies failed to produce commercial semiconductors.

In particular, as U.S. sanctions aimed at curbing China's semiconductor rise caused China to fall further behind in producing advanced semiconductors used in smartphones and computers, it was revealed that China scouted TSMC executives and engineers with high salaries as bait.

WSJ pointed out, "This is the result of belatedly realizing that mass production of cutting-edge semiconductors requires at least billions of dollars in costs."

Ultimately, HSMC officially closed in June 2021, and QXIC still exists but has temporarily suspended operations.

WSJ cited an anonymous source, a former employee of QXIC, reporting that these companies brought in professionals with semiconductor manufacturing technology but lacked the capability to integrate their technologies.

Producing more semiconductors is considered an essential task for China.

According to industrial consulting and analysis firm International Business Strategy, Chinese semiconductor manufacturers produce only about 17% of the semiconductors China needs.

Accordingly, since 2014, China has poured a total of $52 billion (approximately 62.6 trillion KRW) in semiconductor industry subsidies through two rounds of so-called "Big Funds."

However, WSJ reported that tens of thousands of companies, including those in the food service and cement manufacturing sectors, registered themselves as semiconductor-related companies to receive these subsidies.

This content was produced with the assistance of AI translation services.