A factory in Nanjing, China will produce 3D NAND flash and DRAM chips at a rate of 100,000 chips per month. The plant is huge, covering about 2.34 square miles. Tsinghua Unigroup is investing $10 billion in the plant and eventually will contribute a total of $30 billion. $4.3 billion will go to build an integrated circuit international city consisting of a technology park, apartments, and commercial facilities. This would boost China’s chip-manufacturing infrastructure and end their dependency on other countries for chips.
In 2014, China announced that it plans to invest $150 billion to subsidize chip development over 10 years. Their goal is to have 70 percent of devices using China-made chips by 2025.
Tsinghua Holdings, a Chinese, state-owned company, is a majority shareholder (51%) in Tsinghua Unigroup. Beijing Jiankun Investment Group owns 49% of Tsinghua Unigroup. The push for more chips has put China in competition with the U.S., and the U.S. is accusing China of manipulating the semiconductor market, leading to low-cost chips. Many companies will be affected including Intel, Samsung, TSMC, and GlobalFoundries.
The U.S. Response
To counter China’s semiconductor investment, a White House working group has recommended that the U.S. invest in innovation and education. They also recommend creating neuromorphic and quantum computers.
The U.S. banned shipments of supercomputing chips to China in the past. China has the world’s fastest supercomputer – TaihuLight.
The new investment from China would lead to low-cost semiconductors that other countries would purchase. The U.S. alleges these chips are inferior and reduce the quality of the device. U.S. companies are taking advantage of the low-cost environment by moving factories to China. Intel has a plant in Dalian, China.