Competition between China and the United States in the semiconductor and other high-tech fields is becoming increasingly fierce. The United States has imposed restrictions on China in areas such as semiconductor IP/EDA, talent, advanced process chips, and advanced equipment imports. The series of measures taken by the US Department of Commerce has had a significant impact on China’s semiconductor industry. However, unexpectedly, Huawei’s statement of ‘backup becoming the main force’ has sparked a vigorous wave of domestic alternatives.
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U.S. Cut-off Benefits Domestic Substitutes
The U.S. “encirclement” action, while harming the interests of American companies, is also driving the rapid growth of China’s domestic high-tech industry. Many high-tech companies are accelerating their deployment, and the indigenous development in many key “bottleneck” areas is continuously gaining momentum.
In August, Huawei announced the successful localization of EDA design software for 14nm and above processes which will undergo comprehensive verification, marking a significant technological breakthrough.
He Yunbo, Chairman of Guangdong Ada Intelligent Equipment Co., Ltd., stated at the Semiconductor Packaging and Testing Special Equipment and Material Innovation Cooperation Forum that the domestication rate of wire bonders was essentially zero before 2019. After years of development, it has now reached 3% to 5%. In the LED field, the domestication rate of wire bonders is currently close to 50%.
It’s not just in the chip sector; in cutting-edge technologies such as new energy and metamaterials, domestic companies have quietly embarked on the path of self-reliance. Domestic substitution has become a necessity of the times and a prevailing trend, as well as a driving force for future industrial development.
New Energy: New energy is currently thriving in global markets. In addition to BYD and CATL, another company that has been deeply involved in domestic substitution and is rapidly growing is Tiantong Corporation. Leveraging years of technical accumulation in crystal materials, the company has broken foreign monopolies, leading in production technology, and mastering key core technologies such as large-sized crystal growth, chip blackening, and polishing. Currently, the company can maturely produce 3-inch, 4-inch, and 6-inch acoustic grade crystals, lithium tantalate and lithium niobate wafers, and doped lithium tantalate chips, and has developed 8-inch piezoelectric crystal materials. It has achieved independent and controllable technology, breaking foreign monopolies.
Metamaterials: Another field that achieves full industry chain independence and domestic substitution is metamaterials. Metamaterials represent one of the most cutting-edge and strategically significant achievements globally, primarily applied in the stealth performance of advanced defense equipment. They were once evaluated by the American journal “Science” as one of the ten most significant technological breakthroughs of the past decade by humans.
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Transitioned from “0” to “1”
For a company, going from “0” to “1” is often the most challenging phase. Once you’ve reached “1,” the importance of early-stage core R&D personnel significantly diminishes, and during the R&D process, you inadvertently cultivate waves of talent.
For instance, Zhang Ruijing has founded companies like SMIC, Semiconductor Manufacturing International Corporation, and XMC, Xinxin Microelectronics, among others. He has built the stage and these platforms have recruited numerous semiconductor talents, which is his most significant contribution.
Similarly, the American employees in companies like Northern Huachuang and AMEC, among others, in the semiconductor equipment industry, could be considered another set of individuals like Zhang Ruijing. Their most significant contribution lies in nurturing a large pool of talent during the R&D process. Now, due to U.S. policies, they may have to consider relinquishing their current positions. This could impact the companies, but the impact is manageable.
Currently, many advanced manufacturing industries in China, including semiconductors, have passed the challenging “0” to “1” stage and entered a phase of rapid development. While the U.S. trade restrictions may pose short-term challenges in relevant domestic sectors, in the long run, achieving China’s dream of becoming a major global player necessitates self-reliance and strength in the technology sector. The trend toward domestic substitution is inevitable. The U.S. pressure only accelerates the arrival of this trend, motivating those in the technology sector to strive harder and overcome challenges.
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