In recent years, China has made remarkable strides in the integrated circuit (IC) industry. Not long ago, Huawei released the world’s first 10-nanometer AI chip, while the third-generation Beidou chip achieved sub-meter positioning accuracy and chip-level security encryption. Additionally, supercomputers equipped with domestically developed chips have won three consecutive titles in global rankings. These achievements reflect the significant progress China has made in catching up to the world's advanced levels in the IC field.
Despite this progress, a major challenge remains: the "coreless soul." Although China's telecommunications network, internet, and electronics manufacturing industries are among the largest in the world, they are not yet strong. The core weakness lies in the lack of essential technologies, particularly in integrated circuits. For many years, China has imported more chips than oil, spending over $200 billion annually. In 2015, China accounted for one-third of the global IC market, but over 95% of the supply came from foreign companies.
The IC industry is a strategic and foundational sector that underpins the digital economy. It plays a crucial role in information technology. Countries around the world, especially developed ones, are vying for dominance in this field. President Xi Jinping has repeatedly emphasized that "core technology being controlled by others is our biggest risk." He warned that even if a company is large or has high market value, reliance on foreign components could leave its "life gate" in others' hands—like building a house on someone else’s wall.
To address these challenges, the Chinese government launched the National Integrated Circuit Industry Development Outline in June 2014. This initiative aimed to accelerate leapfrog development in the IC industry. A massive fund was established, backed by 15 leading companies, including Guokai Finance, China Tobacco, and China Mobile. With an initial size of 120 billion yuan and total fundraising reaching nearly 140 billion, this fund targeted key areas like design, packaging, and wafer manufacturing.
Local governments also contributed significantly, with total investment exceeding 200 billion yuan. Over the next decade, China is expected to invest more than 100 billion yuan in the IC industry. These policy-driven investments have fueled rapid growth. By 2016, the national IC industry generated sales of 433.55 billion yuan, a 20.1% increase from the previous year. High-end chip design saw a 24.1% growth, with companies like Ziguang and Huawei rising to global prominence.
Ziguang, a key player in the IC industry, received substantial support from the big fund, including 30 billion yuan from the National Integrated Circuit Industrial Investment Fund and another 150 billion in financing. This financial backing enabled Ziguang to expand rapidly through mergers and acquisitions. The company aims to surpass MediaTek in five years and become the world’s second-largest IC supplier.
Meanwhile, Changjiang Electronics acquired Singapore-based Starcoop, becoming the world’s third-largest chip packaging and testing company. In wafer manufacturing, the Yangtze River Storage project, supported by the big fund, is set to produce 3D flash memory at scale, aiming for 300,000 units per month by 2020 and 1 million by 2030.
As the IC fund continues to drive innovation, China is steadily moving toward self-reliance in chip production. With strong government support, increased R&D investment, and growing global competitiveness, the dream of a self-sufficient chip industry is becoming a reality. As Ding Wenwu, president of the National Integrated Circuit Industry Investment Fund, stated, “China’s ambition in the chip industry will eventually come true.â€
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