China to follow Taiwan’s playbook
It’s well known that the Chinese government isn’t happy about the widening gap between the number of chips China imports from multinationals and the volume China produces on its own.
If history is any indication, every nation has harbored similar concerns. In other countries, the solution has been a national industrial policy to develop home-grown semiconductor production.
Lu observes that China has decided to follow Taiwan’s playbook, rather than pursuing models practiced by Korea, Japan, Europe, or the United States.
The Taiwan playbook, in a nutshell, is about creating a service model, says Lu. Taiwan first launched the foundry business, including such companies as Taiwan Semiconductor Manufacturing Co. (TSMC) and UMC, as a mother ship. Taiwan, in parallel, developed additional service-related businesses ranging from design services to packaging, equipment maintenance, and wafer-level testing companies. The mother ship, then, spawned a cluster of IC design houses -- described by Lu as “a fleet.”
It took Taiwan 15 years before consumption and production of chips got even, says Lu. Back in 1990, Taiwan's National Sub-micron Project, led by Taiwan’s Ministry of Economic Affairs, began. The project enabled Taiwan to build 8-inch wafer technology for design and manufacturing, thus facilitating growing investment in the semiconductor industry in Taiwan. In 2005, the semiconductor exports exceeded the country’s total imports.
In 1990, Taiwan's National Sub-Micron Project, led by the Ministry of Economic Affairs, began. However, it wasn't until 2005 that semiconductor exports from Taiwan exceeded the country’s total imports.
(Source: Etron Technology)
Click here for larger image
Lu predicts that it will only take 10 years for China to reach that break-even point. The next couple of years, however, will be critical, he feels. China’s policymakers hope to show early signs of growth in a key business, in employment and technology, that matters to China’s economy.
Next page: Who's behind the national plan?