Manufacturers in China are increasingly looking to source chips locally because they fear the U.S. and other governments may prioritize domestic users of the semiconductors vital to national security, a senior executive at the country’s top chipmaker said Friday.
Customers are telling Semiconductor Manufacturing International Corp. they need to secure a certain amount of capacity within China itself because of concerns the industry could become more fragmented, disrupting inflows from abroad, co-CEO Zhao Haijun said. Companies in China, the world’s factory floor for everything from Apple Inc. iPhones to Volkswagen Group cars, have turned more and more to local component suppliers and assemblers.
“What we can make here is less than 10 percent of what they need. They are worried,” Zhao told analysts on an earnings call. “In the future, we may see that there is an oversupply of chips of certain nodes in some markets, but there will still be a shortage in some other markets.”
Governments from Tokyo to Washington and Brussels are racing to bolster chip ecosystems at home, wary of a heavy reliance on manufacturing in Taiwan and South Korea after a global component shortage walloped the auto and electronics industries. The U.S. has also sought to limit flows of technology to China, which it considers a geopolitical rival, especially if it ends up for military use.
