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7 - Growth, Upgrading, and Limited Catch-Up in China’s Semiconductor Industry

Published online by Cambridge University Press:  08 June 2019

Loren Brandt
Affiliation:
University of Toronto
Thomas G. Rawski
Affiliation:
University of Pittsburgh
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Summary

Semiconductors represent a major building block of high-tech industry. This chapter analyzes the trajectory of China’s rapidly growing semiconductor sector, focusing on the interplay among global technology developments, Chinese government policy, and three groups of firms: purely domestic manufacturers, Chinese operations of multi-national corporations, and hybrid firms based in China but with offshore ownership and financing.

China has pursued policies aiming to build a globally competitive domestic industry. Policy instruments include outlays on technical education, and more focused initiatives that channel investment funds, imported technology and product demand toward domestic firms, mostly state-owned ones. Despite strong government backing, domestic state-owned firms have generally failed to generate technological dynamism. Only the hybrids have delivered substantial technological advance.

Recent policy initiatives continue to lavish resources on state-owned firms while limiting the capacity of potentially more innovative hybrid and domestic private operators to expand and upgrade. As a result, China’s semiconductor industry appears locked into a path that combines quantitative expansion with low financial returns and limited qualitative improvement. This trajectory offers little prospect for attaining China’s long-term objective of propelling domestic semiconductor manufacture toward the global frontier of technology and innovation.

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Chapter
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Publisher: Cambridge University Press
Print publication year: 2019

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References

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SCMP

South China Morning Post

WSJ

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Newspaper Abbreviations

JJGC

经济观察 Economic Observer

EE Times

Electrical Engineering Times

ESJJBD

二十一世纪经济报道 The 21st Century Economic Herald

FT

Financial Times

NYT

New York Times

SCMP

South China Morning Post

WSJ

Wall Street Journal

经济观察 Economic Observer

Electrical Engineering Times

二十一世纪经济报道 The 21st Century Economic Herald

Financial Times

New York Times

South China Morning Post

Wall Street Journal

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