Are U.S. Semiconductor Makers Getting Played by China?

Last month senior Chinese officials met to discuss steps to ramp up the country’s semiconductor making capabilities. The purpose of those talks was to set a course to onshore production of “third-generation” chips, the most advanced type necessary to run emerging technologies.

Semiconductor and semiconductor-manufacturing equipment (SME) makers that “still believe China is a viable long-term business are kidding themselves,” columnist Tim Culpan wrote last week.

“We should expect to see more money, more policy favoritism, and more attention from party cadres aimed at ensuring the establishment of big successful [Chinese] chip and software firms,” Culpan warns. American SME makers would be “foolish to not understand that local rivals, backed by Beijing, are doing everything possible to replicate their products.”

That has become China’s modus operandi to unseat competitors—steal the tools and knowhow (often through state-backed companies) and then use those capabilities to price the competition out of the global market. Companies that prioritize short-term profits over the Chinese threat could very well be writing their own demise—and surrendering the United States’ technological supremacy, since R&D will dwindle alongside market share.  

“Whoever the next big Chinese tech giant is,” Culpan concludes, “you can be sure that Beijing has the money and determination to make sure it succeeds. At all costs.”