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The Semiconductor Industry in China Essay

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Updated: Jul 12th, 2022

The article published by Forbes and written by Kenneth Rapoza focuses on the technology industry trends, specifically the semiconductors. The article title is “China turns semiconductors into the ‘new oil’ while GM runs out of chips,” and Rapoza (2021) showcases how China was able to overcome reliance on foreign semiconductor chips. Rapoza (2021) discusses an important trend in the tech industry because semiconductors were previously produced only by several businesses, most of which resided outside China.

The semiconductor industry is in shortage of products, while demand for car manufacturers is consistently increasing. Rapoza (2021) argues that car companies have become essential semiconductor purchasers as they integrate advanced technology into their vehicles. The main message of this article is that the global technology industry should prepare for changes because China will become less reliant on foreign semiconductors. The only barrier for the Chinese is the lack of equipment and knowledge base needed to produce machines that would manufacture the semiconductors (Rapoza, 20210). However, it is possible that Chinese manufacturers will soon address this problem, which will mean that they will no longer rely on purchasing this equipment from the United States.

The issue is that most business articles and discussions are currently focused on Bitcoin and solar energy and their impact on the markets. Rapoza (2021) that semiconductors have become the gold of the technology industry, and China is becoming the leading supplier of it. Moreover, the demand for these semiconductors also surged from China’s Greater Bay Area, a region where most technology producers reside.

The change in the semiconductor production capacity and origin is a part of the Chinese government’s strategy to surpass the United States. This strategy significantly affects the United States’ semiconductor producers since Chinese policies provide manufacturers with subsidies and other support that allows the latter to lower production costs. The United States manufacturers, such as Intel, do not have this advantage (Rapoza, 2021). Moreover, recently Intel’s CEO wrote a letter to the President to ask for aid and create a national strategy for supporting the semiconductor production industry.

The United States is not the world’s most significant semiconductor producer, but the ability to manufacture them is vital. Rapoza (20201) argues that only 12% are produced in the United States, while 80% are manufactured in China. However, the United States companies have better know-how and strategies for designing and producing semiconductors. Despite this, the problem with rising costs, lack of governmental support, and technology production created in the United States in China may allow the latter to copy this know-how.

Many of the technology manufacturers from the United States use Chinese factories for production. With these partnerships, the former provide China with information and documentation, which allows them to mimic technology and produce similar ones (Rapoza, 2021). Hence, with the global shortage of semiconductors, the Chinese strategy to overcome the United States’ leadership, and with equipping Chinese companies with technology-related information, the United States’ may be surpassed.

In summary, the article by Rapoza (2021) allows one to comprehend the importance of semiconductors to the technology industry and the changes that will occur within it soon as China becomes less reliant on foreign producers. Semiconductors are essential for technology manufacturing, and the United States’ producers have a superior design. However, as China announced its plan to surpass the United States, the former began to support this industry more. Additionally, car manufacturers created a shortage of semiconductors on the market. This article points to an issue of the technology competition between China and the United States and the need to develop a national strategy to support local semiconductor producers.

Reference

Rapoza, K. (2021). ​China turns semiconductors into the ‘new oil’ while GM runs out of chips. Forbes. Web.

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IvyPanda. 2022. "The Semiconductor Industry in China." July 12, 2022. https://ivypanda.com/essays/the-semiconductor-industry-in-china/.

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IvyPanda. (2022) 'The Semiconductor Industry in China'. 12 July.

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