Low technological advancement, nominal market share restricts competitiveness
China’s semiconductor industry that is still inferior to its foreign counterparts in technological fronts and should not be considered as a threat to the US national security, experts suggest. On domestic fronts, the Chinese semiconductor industry has been witnessed a fair share of growth in recent years, but the country has a smaller share of the market as compared to the top five overseas suppliers including U.S.-based Intel and Qualcomm and Intel according to experts.
The US semiconductor manufacturers are at an advantageous position, hence, Chinese firms being a threat to the US national security in quite unlikely. The US government recently released a report to assure long-term leadership in semiconductors from the President’s Council of Advisors on Science and Technology (PCAST). The report reveals that the U.S. semiconductor sector faces challenges that involve competitiveness, integrity and innovation. The report further notes that the Chinese policies are altering markets in ways that emasculate technological innovation. Industry insiders believe that the US government is actively following the development of Chinese semiconductors that may change the industry’s position and negatively influence U.S. companies.
According to some reports, U.S. authorities mediated a potential merger and acquisition (M&A) of German firm Aixtron and a Chinese semiconductor manufacturing company Fujian Grand Chip Investment Fund by claiming that the purchase will be used for military purposes. The deal is supposedly worth $732 million-deal, which has been temporarily frozen. In addition, greater market concentration in China may increase security threats to the U.S. as well as other countries.
The growth of the domestic semiconductor sector is influenced by the advancement of China’s overall electronic information industry. China’s end-terminal device such as computers and smartphones assembly industry is mature, however, both its profit levels and technical content is minimal. In contrast, the upstream integrated circuit industry accounts for higher profit margins and technology breakthroughs. As the electronic market expands in China, the demand for finished semiconductors also gains traction as per experts believe.
Summary: Chinese semiconductors shouldn’t be a threat to the US national security