September 20, 2022
China Hit Some Bumps on Its Road to Semiconductor Dominance
Don’t be lulled into thinking China is failing in its goal to become the world’s biggest semiconductor-chip producer. That’s the conclusion some are drawing from such troubles as the bankruptcy of national champion Tsinghua Unigroup and the high-profile arrests of several officials and executives. If China is failing, the argument goes, why is Washington launching an expensive industrial policy to subsidize domestic semiconductor manufacturing? This analysis is emblematic of the Western habit to underestimate the strength and resilience of China’s economy, political system and industrial strategies.
China’s statist approach suffers from endemic waste, misallocation of capital and corruption. China isn’t guaranteed to succeed simply because Beijing wants to.
But the notion that these arrests and bankruptcy signal China’s failure lacks evidence.
Consider the solar and shipbuilding industries. Similar to semiconductors, solar technology was invented and first commercialized in the U.S., only to be targeted later by China’s state planners. In 2012, after years of massive subsidies and overinvestment, China’s largest solar firms began to suffer high-profile setbacks. Trina and others cut production to maintain profitability. LDK Solar and others were bailed out by local governments while defaulting on foreign bonds. Suntech, the Nasdaq-listed darling of China’s solar sector, went bankrupt in 2013. Fast-forward to the present, however, and China’s solar industry is so dominant that U.S. and European green-energy goals depend on Chinese exports.
Read the full article from The Wall Street Journal.
More from CNAS
-
South Korea-U.S. Launch Ulchi Drills as Kim Slams Exercise as “Hostile”
Video
With North Korea's growing alignment with Moscow, plus renewed great-power diplomacy following President Trump's latest call with President Putin, the Korean Peninsula is once...
By Dr. Go Myong-Hyun
-
Commentary
Indo-Pacific Security / Energy, Economics & Security
Can India Survive the Trade War?India has little choice but to try to soothe simmering trade tensions with the U.S. without abandoning its redlines, while carefully managing the implications of increased coo...
By Eleanor Hume & Kyle Rutter
-
Commentary
Indo-Pacific Security / Technology & National Security
America Should Rent, Not Sell, AI Chips to ChinaSelling AI chips to China outright reduces America's AI lead for little benefit....
By Janet Egan & Lennart Heim
-
From Military Warnings to Global Maneuvers; Is North Korea Poised for a Strategic Shift?
Video
As Washington and Seoul prepare for a key summit, the North is tightening military ties with Russia, pledging thousands more personnel by year's end. To help break down what's...
By Dr. Go Myong-Hyun
