China's semiconductor ambitions are intensifying despite Washington's robust countermeasures. Huawei announced on the 25th that it will produce 1.4-nanometer (nm, one-billionth of a meter) chips by 2031 without extreme ultraviolet (EUV) lithography equipment, the ultra-fine process tool it has long relied on imports for. With U.S. sanctions on China making the equipment difficult to import, Huawei plans to overcome the ultra-fine process barrier through "logic folding," its proprietary technology that folds and stacks circuits. If this plan is realized, the technology gap with Korea's semiconductor industry, including Samsung Electronics (005930.KS), which plans to mass-produce 1.4nm chips in 2029, would narrow from the current five years to two.
China's momentum in accelerating advanced technology self-reliance amid U.S. trade pressure shows no signs of slowing. China's semiconductor technology independence is advancing across upstream and downstream industries, backed by large-scale government fiscal support. According to the Nihon Keizai Shimbun, as of February this year, three Chinese companies (Naura Technology, AMEC, and Shanghai Micro Electronics Equipment) have entered the global top 20 semiconductor manufacturing equipment makers. In the electronic design automation (EDA) software field, three companies including Empyrean have grown rapidly. In wafer manufacturing, firms such as Shanghai Silicon Industry are increasing their market share. In downstream industries, artificial intelligence (AI), electric vehicle, and electronics and telecommunications companies that have grown rapidly on the back of policy funds are supporting domestic demand for Chinese-made chips.
To respond to China's now-formidable rise, the nation must concentrate its capabilities on cutting-edge research and development (R&D) and infrastructure expansion. However, the Commercial Act revised last year under the ruling party's leadership expanded directors' fiduciary duties to cover not only "the company" but also "shareholders," posing an obstacle to corporate executives' long-term investment in semiconductors. Recently, a senior official even proposed using excess tax revenues collected from the semiconductor super-cycle as citizen dividends rather than reinvesting them in industry. The ruling party and government must squarely face the reality that the Chinese semiconductor industry has caught up to within striking distance and boldly lift semiconductor-related regulations. What the government must do now is provide all-out support so that companies can focus on technological innovation and management efficiency. In responding to China's fierce pursuit, K-semiconductors do not have much time left to firmly establish their super-gap stronghold.
