Chinese chip designers gaining market share

After decades of aggressive subsidies, Chinese chip designers are starting to gain market share in logic and memory chips, the U.S.-China Economic and Security Review Commission indicates

Aside from packaging and test, chip design is China‘s best-performing market segment, with an estimated 9% market share of fabless chip design in 2021.

Several Chinese semiconductor companies, such as Huawei’s HiSilicon, Loongson, Zhaoxin, Micro and Yangtze Memory Technology Corporation, are making progress at various stages of design.

As Jan-Peter Kleinhans, technology expert at Stiftung Neue Verantwortung (SNV), noted in testimony before the Commission, China’s chip design ecosystem and capabilities are “rapidly increasing.”

In August 2022, Biren Technology, using Taiwan Semiconductor Manufacturing Company’s (TSMC) 7-nanometer fabrication process, designed a GPU, important for training machine learning algorithms, with dramatically improved performance.

Chip designers

Consistent with precedents in other sectors, according to the Commission, the stated intent of Chinese policies is to see the dominant commercial positions of U.S. embedded and specialty design companies, such as Intel, NVIDIA, AMD and Micron, undermined and the strategic strength of the United States at this stage of the semiconductor chain eroded.

China’s race to acquire superior positions throughout the R&D phase of supply chains is interconnected with its increasingly vigorous and centralized industrial policy efforts.

While the United States continues to occupy a strategically advantageous position in the design phases of many supply chains, such as in the semiconductor supply chain, the preliminary successes of Chinese industrial policy, combined with its robust innovation ecosystem, are of concern to the United States.

More pressing, China’s continued extensive theft and technology transfer operations pose serious risks not only to U.S. economic competitiveness at the design stage, but also to U.S. geostrategic advantages, according to the Commission.

From its perspective, federal investment in research and development of the U.S. defense industrial base plays an important role in ensuring that next-generation supply chains are well established and continue to grow in the United States, an effort that is undermined by China’s industrial policies and interrelated technology theft efforts.


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