Hi everyone! Happy upcoming holiday season. This is Cheng Ting-Fang, your #techAsia host for this week.
I recently had a year-end gathering with a friend who has extensive experience in China’s semiconductor industry. He was travelling to Taiwan for business, and we discussed the industry’s chip expansion plans. Despite China’s macroeconomic slowdown, he said he has had a busy year, often travelling to three cities in two days to meet clients eager to buy chipmaking equipment. Notably, he said, not only are there new chipmakers popping up, but makers of silicon wafers and materials as well. Even many Chinese university-led research centres are building clean rooms and offering chip test production services.
“The US has effectively curbed China in advanced chip production with its export controls, but China is rushing to build capacity in places wherever they are not yet restricted, in chips and in related supply chains,” the industry veteran said.
Globally, the recovery in the chip industry is uneven. Demand for cutting-edge AI chips remains strong, but sectors like consumer electronics and industrial and automotive applications have yet to bounce back completely. Many chipmakers, including Intel, Wolfspeed and Nanya Technology, have slowed their purchases of machines or postponed expansion plans due to the demand slump.
That makes the scale of expansion in China all the more alarming for the tech community, as it brings to mind past instances where aggressive Chinese expansion in sectors like photovoltaic equipment, LEDs, and displays triggered intense price wars and financial woe for many companies.
Now China is gradually positioning itself to offer more cost-effective solutions in a wide range of electronics components, including chips, chip substrates and printed circuit boards.
Industry executives liken the intense competition in the Chinese market to a “hotpot with super-thick soup”. The rise of domestic suppliers could impact global supply and demand dynamics, despite the trend of tech decoupling between the US and China. With memories of past financial pain still vivid, the question many executives are asking themselves now is: “Who will be next?”
Five years of fighting
More than five years since the US added Huawei to its trade blacklist, where does the Chinese tech champion stand? This exclusive report by Nikkei Asia’s Cheng Ting-Fang, Lauly Li and Shunsuke Tabeta shows how Huawei has become a technology adviser for production partners across China, aggressively helping chip and technology companies enhance their technological prowess.
“If you dig into some chipmakers or tech companies that are now doing more advanced technologies in China, very often people still find shadows of Huawei,” one chip industry executive told Nikkei Asia.
Huawei still leads in R&D efforts and technology developments in China, according to interviews with multiple industry insiders.
One notable example is SJ Semiconductor, a little-known company located in Jiangyin, along the Yangtze River. Huawei dispatched an elite task force to assist SJ Semiconductor in developing advanced chip packaging capabilities, mirroring TSMC’s CoWoS technology, the industry’s gold standard adopted by Nvidia and Amazon for their latest AI chips.
More exclusive examples of Huawei’s efforts, as well as visually rich graphics mapping China’s supply chain progress, can be found in this week’s feature. We hope you enjoy it!
Looking for a hand
TikTok chief executive Shou Zi Chew met Donald Trump at Mar-a-Lago, in Florida, on Monday as the popular video app looks to the president-elect to rescue it from a possible US ban, writes the Financial Times’ Hannah Murphy.
The ByteDance-owned app will be banned for the company’s 170mn US users if it does not divest from its Chinese parent under a law that comes into force on January 19, the day before Trump’s inauguration as president. TikTok says a divestiture is not technologically feasible. Beijing says it will block such a move.
TikTok has been fighting the law, which cites national security concerns due to the company’s Chinese parent company, in the courts to little success. In recent days, a US appeals court rejected both a challenge to the law and a subsequent request to halt it temporarily. TikTok has now filed a new motion for a temporary stay on the law with the Supreme Court.
If unsuccessful, Trump is its best hope. Already, he has promised to “save” the app and on Monday said he had a “little bit of a warm spot” for TikTok, citing his overperformance with young voters in November’s election. It is unclear how he might do this – and whether ByteDance or TikTok will make any concessions in order to remain in the US.
Carmakers need to know chips
As cars become more interconnected and electrified, automakers will increasingly need to develop in-house chip expertise to differentiate their products, Synopsys CEO Sassine Ghazi said in an exclusive interview with Cheng Ting-Fang of Nikkei Asia.
The CEO said this applies to companies developing automation solutions and robots, as well, emphasising that the integration of software and specialised chips will be crucial to creating products that stand out from competitors.
Synopsys, the world’s leading provider of electronic design automation (EDA) software, spotted this trend and now makes some 45 per cent of its revenue from “system” companies, as opposed to pure chip developers, as in the past. As electronic systems become increasingly sophisticated, Synopsys expects the importance of EDA tools will only grow.
Listed at last
Japan’s top memory chipmaker Kioxia, a leading provider of NAND flash memory, debuted on the Tokyo Stock Exchange on Wednesday, with shares ending the day 16.9 per cent higher. The IPO marks a milestone for the company, which was carved out from Toshiba in 2018, as it aims to accelerate its tech development and capture the growth in the AI era, Mitsuru Obe of Nikkei Asia writes.
The IPO also came as Japan aims to revive its semiconductor industry and boost the onshore production of vital chips. NAND flash memory, a type of data storage component, is needed for all electronic devices. The market, however, is still soft due to global economic factors and competition from major players such as Samsung, SK Hynix and Micron, as well as emerging players in China. Against this backdrop, Kioxia’s market capitalisation of around ¥863bn ($5.6bn) at the close of its first trading day was well below its ¥2tn valuation when, as Toshiba Memory, it was acquired by a Bain Capital-led consortium in 2018.
Suggested reads
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Rapidus becomes 1st Japan chipmaker to receive ASML’s whale-sized EUV machine (Nikkei Asia)
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