China’s Rising Semiconductor Industry Puts Pressure on Korea Amid US Restrictions

The U.S. is increasingly tightening its export regulations on semiconductors to China. However, China’s semiconductor processing technology is growing rapidly, rendering U.S. sanctions almost ineffective. Last year, China increased its self-sufficiency by equipping its latest smartphones and laptops with domestically produced advanced process semiconductors. As China plays a significant role in our country’s semiconductor market, there are calls for a new strategy amidst the escalating U.S.-China rivalry.

According to industry sources on the 4th, China’s Huawei equipped its business laptop, Qingyun L540, launched in December last year, with a high-spec 5-nanometer semiconductor, Kirin 9006C processor.

The Kirin 9006C is the first semiconductor in a laptop released by Huawei in 2021. Until now, Huawei could only produce through Taiwan’s TSMC’s 5-nano process, but after U.S. regulations, it could no longer use TSMC. The Kirin 9006C processor installed this time was reportedly produced by China’s largest foundry company, SMIC.

SMIC also produced the 7-nano chip Kirin 9000S installed in the 5G smartphone Mate 60 Pro launched by Huawei in August last year. The number in front of the nano represents the circuit line width specification of the semiconductor chip. The lower the number, the more advanced the micro process. Despite strong U.S. sanctions, SMIC significantly improved its technology in just a few months.

According to Politico, there’s growing market buzz about Huawei’s new laptop model featuring a chip that’s a generation ahead, prompting questions about the effectiveness of the current U.S. regulatory strategy.

China’s largest search company, Baidu, bulk ordered Huawei’s AI semiconductor 910B Ascend in November last year. Huawei developed this chip as a substitute for Nvidia’s A100. The fact that Baidu, which has been insistent on Nvidia, has teamed up with Huawei proves that it trusts domestic technology. Chinese AI software company iFlytek is also known to be using this chip to train AI models.

This way, Chinese semiconductor companies are enhancing their technological capabilities and self-sufficiency despite U.S. regulations. It is almost certain that the U.S. will impose stricter additional rules in the future. In this case, there are concerns about damage to our country’s companies.

Samsung Electronics produces 40% of its NAND flash production at its Xi’an factory in China. SK Hynix is responsible for 40% of the total DRAM and 20% of the NAND flash at its Wuxi and Dalian factories. If the U.S. decides to strengthen sanctions against China, our companies’ semiconductor production could take a direct hit.

Experts say that this year, it is necessary to adopt a strategy to reduce dependence on both countries in the semiconductor market. Major countries are pulling semiconductor technology toward their own countries, while our country is becoming more dependent on foreign countries.

Lee Kyu Bok, Vice President of the Korea Electronics Technology Institute, emphasized, “Currently, the semiconductor production network of domestic companies is biased towards China. Above all, we must first complete commercializing advanced processes domestically and then export to countries such as Europe and Japan.” He added, “The government needs to strengthen further sanctions to prevent the outflow of domestic technology and personnel overseas.” Also, he said that talent should be systematically nurtured under the government’s firm policy.

Vice President Lee said, “The government needs to train semiconductor personnel domestically in practical, operation and execution, design and advanced process, and other specific areas.”

By. Min Woong Park