U.S. Restrictions on Huawei Expose a High-Tech Achilles’ Heel for China – Smart Media Magazine

U.S. Restrictions on Huawei Expose a High-Tech Achilles’ Heel for China

Local governments in China “don’t understand the industry,” Mr. Gu said. They are merely using up resources that private companies know how to spend more effectively, he added.

China’s role as the world’s leading assembler of electronics, and its vast consumer market for electronics, has convinced some observers that given enough time, the country would inevitably attract or foster the knowledge for producing advanced chips. If China could catch up in making toys and then in producing cellphones, the thinking goes, then why not in semiconductors someday?

For now, surviving without American chips promises to be the ultimate test for Huawei, despite the company’s recent strides in developing its own processors.

In an interview with Chinese media on Tuesday, Huawei’s founder and chief executive, Ren Zhengfei, said that in “peaceful times,” half of Huawei’s chips came from American companies, and the other half it developed itself. Huawei has stockpiled chips for emergencies like this, Mr. Ren said.

But the company could never entirely reject American technology, he said. Even his own family members, he said, were iPhone users.

“We will not recklessly get rid of American chips,” Mr. Ren said. “We need to grow together.”

Beijing’s angst over foreign semiconductors has a long pedigree.

As Japan, South Korea and Taiwan emerged with formidable chip industries in the 1980s and ’90s, China experimented with various forms of state planning to develop its own capabilities. In 2014, Beijing set a goal of becoming a global leader in all segments of the chip industry by 2030, and national and local government semiconductor investment funds began springing up across the country.

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