Asia Sector Insights: Chinese Endeavor in Chipmaking

Asia Sector Insights: Chinese Endeavor in Chipmaking

24th September 2020




Q1: Why does China want to develop its own semiconductor industry?

China is the largest purchaser of semiconductor globally but has small presence in the supply side. China accounted for 34% of global semiconductor end-demand in 2018, the largest region globally. In 2019, China imported US$305.6Bn worth of integrated circuit (IC) products, which is one of our largest imported products. On the other hand, it only had 5% market share in the semiconductor industry in 2018. The need to develop a domestic semiconductor industry comes naturally due to the strong domestic demand. 

Q2: What are the US sanctions?

For sanctions on China semiconductor, the US has been more company-specific, mainly targeting Huawei. Under the current ban, companies cannot produce or sell chips to Huawei if they use any US technology in their manufacturing or design process.

Q3: What are the opportunities?

We think areas like chip design, foundry, assembly & packaging are relatively easier to localize, while chip design software, semiconductor production equipment still have high barriers.

For chip design, for example, a few developments in the industry lower the barrier for Chinese companies to catch up.

  • The development of the fabless model separates design and the production of chips, which greatly reduces the capital expenditure burden on chip design companies, and provides them with flexibility in capacity expansion.
  • ARM licenses its architecture and core design for fabless companies to innovate on top of their foundation. This lowers the barriers to enter the chip design business.  In 2014 there were only 681 chip design companies in China, by 2018 that number reached 1698.

Foundries also have high potential to localize. Domestic foundries are growing rapidly, with some companies breaking into advanced processes.

Q4:How can China develop its own semiconductor industry? 

We think talent, policy, and local demand are the three key factors to developing China’s own semiconductor industry.

  • Leading local semiconductor companies to continue to hire graduates, and vigorously develop vocational training locally. More experienced oversea Chinese/ethnic Chinese engineers join Chinese semiconductor companies.
  • China Integrated Circuit Industry Investment Fund (‘the big fund’) invests in chip manufacturing and designing in China. The government also introduced policies around capital market fundraising and tax breaks to support the industry.
  • Strong local demand for semiconductors as Chinese companies have high market share in PC, smartphone, telecom equipment, and other electronics.




The mentioned companies are strictly for educational and fund marketing purposes only. For more information on our product offering, please refer to our website.

This document is intended for Hong Kong investors only. This material is neither an offer to sell nor solicitation to buy a security to any person in any jurisdiction where such solicitation, offer, purchase or sale would be unlawful under the laws of that jurisdiction. Investment involves risk.
The information in this material is based on sources we believe to be reliable but we do not guarantee the accuracy of completeness of the information provided. This material has not been reviewed by SFC and shall only be circulated in countries where it is permitted.
This material is intended solely for your private use and shall not be reproduced or recirculated either in whole or in part, without the written permission of Mirae Asset Global Investments. This document has been prepared for presentation, illustration and discussion purposes only and is not legally binding. Whilst compiled from sources Mirae Asset Global Investments believes to be accurate, no representation, warranty, assurance or implication to the accuracy, completeness or adequacy from defect of any kind is made. The division, group, subsidiary or affiliate of Mirae Asset Global Investments which produced this document shall not be liable to the recipient or controlling shareholders of the recipient resulting from its use. The views and information discussed or referred in this report are as of the date of publication, are subject to change and may not reflect the current views of the writer(s). The views expressed represent an assessment of market conditions at a specific point in time, are to be treated as opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. In addition, the opinions expressed are those of the writer(s) and may differ from those of other Mirae Asset Global Investments’ investment professionals.
The provision of this document shall not be deemed as constituting any offer, acceptance, or promise of any further contract or amendment to any contract which may exist between the parties. The issuer of this article is Mirae Asset Global Investments (HK) Limited (“we”) which we may or our managed funds may hold the mentioned securities. It should not be distributed to any other party except with the written consent of Mirae Asset Global Investments. Nothing herein contained shall be construed as granting the recipient whether directly or indirectly or by implication, any license or right, under any copy right or intellectual property rights to use the information herein. This document may include reference data from third-party sources and Mirae Asset Global Investments has not conducted any audit, validation, or verification of such data. Mirae Asset Global Investments accepts no liability for any loss or damage of any kind resulting out of the unauthorized use of this document. Investment involves risk. Past performance figures are not indicative of future performance. Forward-looking statements are not guarantees of performance. The information presented is not intended to provide specific investment advice. Please carefully read through the offering documents and seek independent professional advice before you make any investment decision. Products, services, and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries, and/or distributors of Mirae Asset Global Investments as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction.
Hong Kong: This material is prepared by Mirae Asset Global Investments (HK) Limited (Mirae HK). Mirae HK is regulated by the SFC (CE reference: ALK083).
Australia: The information contained on this document is provided by Mirae Asset Global Investments (HK) Limited (“MAGIHK”), which is exempt from the requirement to hold an Australian financial services license under the Corporations Act 2001 (Cth) (Corporations Act) pursuant to ASIC Class Order 03/1103 (Class Order) in respect of the financial services it provides to wholesale clients (as defined in the Corporations Act) in Australia. MAGIHK is regulated by the Securities and Futures Commission of Hong Kong under Hong Kong laws, which differ from Australian laws. Pursuant to the Class Order, this document and any information regarding MAGIHK and its products is strictly provided to and intended for Australian wholesale clients only. By accessing this document and any information or content contained in it, you represent that you are a ‘wholesale client’ under the Corporations Act. This document is strictly for information purposes only and does not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances. Further, this document should not be regarded by investors as a substitute for independent professional advice or the exercise of their own judgement. The contents of this document is prepared and maintained by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Australian Investments & Securities Commission. No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission of MAGI HK. Copyright 2020. All rights reserved.




News and Press