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Chinese Government Asks Contract Chipmakers to Prioritize Local Clients

Chips

It appears that supporting local high-tech enterprises in one way or another, while oppressing overseas companies that have invested in China, isn’t enough for the Chinese government: According to a new Bloomberg story, the Chinese government has established a new committee to maintain a whitelist of Chinese enterprises that manufacture hardware or software to replace foreign technology in sensitive sectors. Hua Hong Semiconductor, China’s second-largest contract chipmaker, has informed its international customers that it must henceforth prioritize Chinese customers. That means it won’t be able to give them the same amount of chips as in the past, and the corporation may have to cancel some orders as a result of a new national policy. This guideline isn’t limited to chips. According to Nikkei, Hua Hong recently informed Holtek, a Taiwanese microcontroller supplier, that it may not be able to give it greater production capacity in 2022 than it did in 2021 due to a need to prioritize mainland Chinese customers. The foundry cautioned that it would have to cancel certain overseas orders due to supply shortages, citing China’s national policy of prioritizing demand from domestic chip designers. China is said to have established a program to strengthen local supply chains. Hua Hong and SMIC, two Chinese contract chipmakers, use proven process technology to make the majority of their ICs. Its 90nm production technique for low-power logic and mixed-signal applications is the most advanced node. SMIC, on the other hand, has 14nm and 28nm technology in its portfolio, but thicker nodes account for 82 percent of its revenue.
While neither business makes complex high-end processors for international customers, they do produce a large number of small and inexpensive microcontrollers that are used in practically everything nowadays. Global chip supply restrictions could intensify and weaken global electronics supply if they cut supply to overseas clients to prioritize demands from local chip designers. Hua Hong and SMIC, two Chinese contract chipmakers, use proven process technology to make the majority of their ICs. Its 90nm production technique for low-power logic and mixed-signal applications is the most advanced node. SMIC, on the other hand, has 14nm and 28nm technology in its portfolio, but thicker nodes account for 82 percent of its revenue.

While neither business makes complex high-end processors for international customers, they do produce a large number of small and inexpensive microcontrollers that are used in practically everything nowadays. Global chip supply restrictions could intensify and weaken global electronics supply if they cut supply to overseas clients to prioritize demands from local chip designers. “Our power supply has been stabilized,” a multinational firm with capacity in China told Nikkei, “but we were scrambling to negotiate with government authorities over our power supplies around the end of September.” “On the other hand, several significant Chinese suppliers, such as Luxshare, were exempt from power outages from the start.”

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