Despite chip curbs, nation will progress

The semiconductor market has spawned a growing rivalry between the world's two largest economies, with the U.S. government striving to curb the technological rise of China.

But use of political power in an industrial chain that is highly globalized and based on market dynamic will eventually harm the interests of companies globally, including those in the United States itself, experts said.

Recognizing this, several MNCs said they are against U.S. sanctions on China's chip industry.

In a podcast with Financial Times, Microsoft Co-Founder Bill Gates decried the professed rationale behind such sanctions and said he does not think the U.S. will ever be successful in preventing China from having cutting-edge chips.

"Given that they (China) are at scale to catch up fairly quickly, I don't see how that's (sanctions) some gigantic benefit (for the U.S.)," he said.

"So if you really think there's gonna be a (trade) war in the next decade, then you shouldn't have warned them that you were gonna cut their chips off in advance."

Similar views have been shared by Dutch chipmaking equipment maker ASML Holding CEO Peter Wennink. He said that U.S. sanctions would eventually push Beijing to successfully develop its own technology in advanced chipmaking machines.

"If they cannot get those machines, they will develop them themselves. That will take time, but ultimately they will get there," he said in an interview with Bloomberg.

"The laws of physics in China are the same as here," Wennink said. "The more you put them under pressure, the more likely it is that they will double up their efforts" in building lithography machines that can rival those of ASML, he said.

According to research company Daxue Consulting, as the world's largest chip market, the Chinese mainland consumes more than half of the world's semiconductors, which are then assembled into tech products to be reexported or sold in the domestic market.

At the beginning of March, the then vice-premier Liu He called for efforts to mobilize resources nationwide to promote the development of integrated circuits, and offer real national treatment to foreign chip experts.

During a tour to IC enterprises in Beijing, Liu said that to develop the industry, China should take advantage of a new system for mobilizing resources nationwide. It should also make better use of government and market resources.

He urged the government to formulate industrial policies in line with national conditions and new situations, play an organizational role in areas where the market fails and guide long-term investment in the field.

Also, efforts should be made to form a mechanism to tackle major problems, where companies act as the main players, and rely on entrepreneurs to achieve healthy development of the IC industry.

Soon after Liu's comments, smartphone maker Xiaomi Corp and software and cloud company Kingsoft Corp, along with a handful of other investors, announced the plan to set up a 10 billion yuan ($1.44 billion) fund to develop chips and related technologies, a regulatory filing showed.

"Amid U.S. chip sanctions, Liu's visit is expected to give strong confidence to companies and the entire chip market. It also sends a signal that a supportive policy for the semiconductor industry is likely to be launched soon," said Wang Peng, a researcher at the Beijing Academy of Social Sciences.

Roger Sheng, vice-president of research at U.S. market research company Gartner, said, "China is now seeking a more flexible, supportive policy in order to better mobilize resources in the IC industry so as to avoid wasting time and resources while exploring ways to solve bottlenecks."