Liu He to lead chip battle against America

Finance | Bloomberg and Victor Zhong 18 Jun 2021

President Xi Jinping picked Vice Premier Liu He to lead China's chip battle against the United States.

Liu, whose sprawling portfolio spans trade to finance and technology, has been tapped to spearhead the development of so-called third-generation chip development and capabilities and is leading the formulation of a series of financial and policy supports for the technology, according to people with knowledge of the matter.

It's a nascent field that relies on newer materials and gear beyond traditional silicon and is currently an arena where no company or nation yet dominates, offering Beijing one of its best chances to sidestep the hurdles slapped on its chipmaking industry by the US and its allies.

The sanctions, which emerged during Donald Trump's presidency, have already smothered Huawei Technologies's smartphone business and will impede longer-term efforts by chipmakers from Huawei's HiSilicon to Semiconductor Manufacturing International to migrate toward more advanced wafer fabrication technologies, threatening China's technological ambitions.

"China is the world's largest user of chips, so supply chain security is of high priority," said Gu Wenjun, chief analyst at research firm ICwise. "It's not possible for any country to control the entire supply chain, but a country's effort is definitely stronger than a single company."

Shares of chipmakers climbed. In Hong Kong, Semiconductor Manufacturing International Corporation (0981) jumped 5.42 percent to HK$24.3 on the news yesterday.

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