Shanghai -- State-of-the-art semiconductor technology has a taken a slow boat to China. Despite a decade-long government campaign and massive funding, much of the domestic chip industry remains in trailing edge technology, with a few exceptions.
Moreover, a bevy of fabs in which the government has a strong hand are largely content to continue production with quarter-micron and larger process technology. These chipmakers are now either pure play foundries or converting to a foundry model as fast as possible -- and have found a customer base for logic ICs, analog and power devices that doesn't need bleeding edge semiconductors.
A notable standout is free-wheeling Semiconductor Manufacturing International Corp. (SMIC) in Shanghai, which is producing chips with 0.18-micron design rules, and doing early spadework on 0.13-micron technology. But SMIC seems to have little obvious government involvement beyond the traditional tax and economic incentives. Perhaps they make the case that Chinese government industrial policy, like similar string pulling in other parts of the world, should be deferred to free enterprise.
The Chinese government's early initiatives to jump-start a state-of-the-art domestic semiconductor industry, the heralded Project 909 that spawned Hua Hong NEC Electronics Corp. fab in Shanghai, will continue at quarter-micron processing. Largely converted to foundry use now, the fab makes chips for government identity cards and logic devices that don't need more advanced processing.
The government's goal to make Chinese semiconductor technology competitive with the rest of the world bumped up against business realities. Even government-orchestrated fabs need to fill production lines, and that has meant sticking with mature lower-end volume ICs.
Even a lot of the new fab construction won't have new production gear. Some government-related chipmakers are building new 8-inch fabs at lower cost by using refurbished older manufacturing equipment off the second-hand market.
This includes Advanced Semiconductor Manufacturing Corp. (ASMC), Shanghai Belling, and Shougang NEC Electronics Corp. of Beijing. That relegates the chipmakers to trailing edge chip nodes for some time, until they can afford upgrading to other processes past their zenith in the rest of the world.
Even the influx of new fabs slated to be built in China by Taiwan foundries will be forced to use older process technology. The Taiwan government finally approved chipmakers from that country putting fabs in China but limited them to quarter-micron processing.
In stark contrast to the technology plateauing of commercial chips, Chinese academic semiconductor research can often rival Western efforts. Scientists at Tsinghua University Nanotechnology Research Center, Beijing, have fabricated carbon nanotubes, an area of intense aemiconductor R&D activity around the world.
But as the semiconductor world ramps up 0.13-micron node semiconductors and prepares to shift to 90nm (0.09-micron) devices in another year, China may find itself again lagging behind.
The government connection is an inter-twining network of ownership among many domestic fabs. Hua Hong is a state investment body formed jointly by the central government and Shanghai authorities, and has a 70% interest in Hua Hong NEC and a majority 38% control of Shanghai Belling. In turn, Shanghai Belling has a 34% interest in ASMC.
Because of their government connections, these chip firms also run into extreme problems trying to get export control clearance from the U.S. and its allies to obtain any process technology below quarter micron.
SMIC claimed it hasn't been subject to as tight an export control straight-jacket because of its independent status. For other foundries, the export control barrier could become a major challenge if customers want to move increasingly to design rules below 0.25-microns
All this can warm the hearts of U.S. export curb hardliners, who fear any increased Chinese semiconductor technology might find its way into that country's military-industrial complex and weapons.
But the present control limits are not as solid safeguards as the U.S. would like to believe. After all, a huge portion of decades-old U.S. weapon systems still depend on semiconductors built at quarter-micron and above -- the same level of chip technology that is allowed to be exported to China.
For now, China's long-standing ambition to become more self-sufficient in its domestic semiconductor production is heavily tilted to trailing-edge products. That can be a good market, but doesn't do much to keep up with the rest of the semiconductor world.