Arab Press

بالشعب و للشعب
Sunday, Apr 26, 2026

How China plans to lead the computer chip industry

On a university campus on the outskirts of Hong Kong a group of engineers are designing computer chips they hope will be used in the next generation of Chinese made smart phones.

Patrick Yue leans back in his chair in a coffee shop on the campus, sporting a Stanford University t-shirt. He is the lead engineer and professor overseeing the project.

His research team designs optical communication chips, which use light rather than electrical signals to transfer information, and are needed in 5G mobile phones and other internet-connected devices.

He tells me about the challenges China faces in developing a world-beating computer chip industry.

"I actually think the actual designers will be as big a bottle neck as the manufacturing. We don't have nearly as many research institutes and industry bases to train the designers," he says.

His department is part-funded by Huawei, the Chinese communications and telecom giant at the centre of an international political storm.

In May the US added Huawei to a list of companies that US firms cannot trade with unless they have a licence, blaming security concerns.

Rivals is a season of in-depth coverage on BBC News about the contest for supremacy between the US and China across trade, tech, defence and soft power.

Many industry observers fear that the US-Chinese trade war, risks unravelling the global technology supply chain.

In particular, China relies on overseas companies for computer chips (or semiconductors), the tiny devices used in everything from consumer electronics to military hardware.

"Politically everything can be used as a bargaining power," says Mr Yue.

"If these companies and countries start to hold back on technology then everyone will get hurt. It's not good from a technological point of view," Mr Yue says.

China has made no secret of its desire to become self-sufficient in technology. The nation is both the world's largest importer and consumer of semiconductors.

It currently produces just 16% of the semiconductors fuelling its tech boom.

But it has plans to produce 40% of all semiconductors it uses by 2020, and 70% by 2025, an ambitious plan spurred by the trade war with the US.

In May 2018 China's President Xi Jinping met with the country's leading scientists and engineers, calling for specialists to work towards self-reliance in the production of core technologies.

That meeting was just a month after the US government banned US firms from selling components to ZTE, China's second-largest maker of telecom network equipment.

The ban highlighted to China's leaders that the nation's tech boom was dependent on foreign technology.

In October this year, in its latest bid to help wean the nation's tech sector away from US technology, the Chinese government created a $29bn (£22bn) fund to support the semiconductor industry.

"There is no question that China has the engineers to make chips. The question is whether they can make competitive ones," questions Piero Scaruffi, a Silicon Valley historian, and artificial intelligence researcher who works in Silicon Valley.

"Certainly, Huawei can develop its own chips and operating systems, and the government can make sure that they will be successful in China. But Huawei and other Chinese phone makers are successful also in foreign markets, and that's a totally different question: Will Huawei's chips and operating systems be as competitive as Qualcomm's and Android? Most likely not. At best, it will take years before they are," Mr Scaruffi adds.

Mr Scaruffi estimates that China could be as many as 10 years behind the leading producers of high-end computer chips. The majority of chips made for high-end electronics are manufactured by specialist foundries like the Taiwanese Semiconductor Manufacturing Company (TSMC). It produces more than 70% of chips designed by third party companies.

Just securing the best machinery needed to make high-end chips is difficult.

"To start out with equipment, its very high precision equipment. You need to print very fine features. The equipment that is needed to have this kind of technology is controlled by a few companies in the world," says Mr Yue.

He believes that Chinese technology is three to four generations behind companies like TSMC. China lacks the industry experience to manufacture high end chips, he says. But he believes that companies like Huawei are already competitive when it comes to designing chips.

Where does this leave the tech giant Huawei?

Mr Yue argues that Huawei is trying to replicate the successful business models of firms like Samsung, which produces its own computer chips - rather than trying to fall into line with Beijing's industrial ambitions.

"You can almost view them as an integrated company with the expertise of what Apple or Qualcomm has," says Mr Yue.

Li Changzhu is a lifelong employee of Huawei and president of the company's handset business. He joined the company 23 years ago as a fresh graduate and has watched it grow into the international tech giant. He claims that the goal of companies like Huawei is simply to satisfy consumer needs.

"We are open to use other vendors chipsets. Every year we purchase a lot of chips from Qualcomm. We are open to that. We use the best chipsets to satisfy our customers," he says sitting on the side of a tech conference in Macau, a semi- autonomous southern Chinese city.

Growth in the semiconductor industry is typically driven by disruptive new technologies. In the late 2000s the introduction of smartphones boosted demand for the tiny integrated circuits that control everything from memory to Bluetooth and wifi.

But today China's ambition to dominate sectors such as artificial intelligence and 5G is expected to further ramp up demand for high-end chips.

Industry analysts like Mr Scaruffi question China's ability to truly innovate. "Every Chinese city wants to build its own Silicon Valley. It tends to be more driven from the top. Silicon Valley had a big advantage, that it was very far away from the political power," says Mr Scaruffi.

He believes that China's technological success lies in the implementation of technology rather than its creation.

"If your metric is how many people use smart phones to go shopping then China wins big time. But if your metric is Nobel Prize winners, then China is losing badly. China of course has been very successful in implementing technology in a way that dramatically alters society," he says.

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
News Roundup
Strategic Saudi-Bahrain Causeway Closed Amid Security Concerns as Trump Deadline Approaches
Saudi Arabia Keeps Red Sea Oil Exports Flowing Despite Regional Tensions
Pipeline Attack Cuts Significant Share of Saudi Arabia’s Oil Export Capacity
Saudi Business Leader Abudawood Appointed Chairman of Merit Incentives Group
TotalEnergies Confirms Damage at Saudi Refinery Following Security Incident
Saudi Arabia Launches Early Construction Phase for King Salman Stadium Project
Saudi Shift Away from Longstanding Dollar Oil Framework Gains Attention Amid Iran Conflict
Türkiye and Saudi Arabia Resolve Long-Running Transit Visa Dispute
Saudi Oil Capacity and Pipeline Flows Reduced as Supply Risks Intensify
TotalEnergies Reports Damage to Saudi SATORP Refinery Following Security Incidents
Gulf States Assess Prospects of U.S.-Iran Truce as Regional Stability Efforts Intensify
South Korea Resumes Honey Exports to Saudi Arabia Following Sanitary Approval
Saudi Arabia Carries Out Sentences in Eastern Province Following Security Convictions
Saudi Sovereign Wealth Fund Backs King Street’s Regional Credit Strategy
Saudi Arabia Secures World Cup Return as Egypt Celebrates Landmark Qualification
Iran and Saudi Arabia Intensify Diplomatic Engagement Amid Regional Tensions
Russia and Saudi Arabia Open Visa-Free Travel Corridor for Citizens
Saudi Oil Output Capacity Reduced by 600,000 Barrels Per Day Amid Regional Conflict
Saudi Arabia Suspends Operations at Select Energy Sites as Precautionary Measure
Saudi Arabia Halts Operations at Multiple Energy Facilities Amid Heightened Tensions
Global Markets Jolt as Iran Signals Ceasefire Breakdown and Rising Regional Tensions
King Street Aligns with Saudi Sovereign Wealth Fund to Expand Alternative Investments in Middle East
Attack on Saudi Arabia’s Jubail Petrochemical Hub Raises Global Supply Concerns
Debate Emerges Over Saudi Strategic Decisions as Gulf Cooperation Council Dynamics Come Into Focus
Saudi Arabia Expands Full Workforce Localisation to 69 Professions in Major Labour Reform
Emerging Alliance of Pakistan, Turkey, Egypt and Saudi Arabia Signals New Regional Power Dynamic Amid Iran Conflict
Iran Linked to Strikes Across Gulf States Following Refinery Attack Escalation
Saudi Arabia Voices Concern Over Fragile US–Iran Ceasefire Stability
Starmer Warns Sustained Effort Needed to Ensure US–Iran Ceasefire Holds
Saudi Arabia’s Key East-West Oil Pipeline Targeted Following Ceasefire Announcement
Iran Targets Saudi Arabia’s East-West Oil Pipeline in Escalating Regional Tensions
Trump Warns of Civilizational Stakes as Iran Halts Negotiations
Saudi Companies Expand Remote Work Measures Ahead of Iran-Related Security Concerns
Iran Warns of Strikes on Saudi Energy Infrastructure if US Targets Its Facilities
Iran Urges Civilians to Form Human Shields Around Nuclear Sites as Diplomatic Deadline Approaches
Saudi Arabia Raises Oil Prices to Record Premiums Amid Supply Pressures Linked to Iran Conflict
Key Saudi-Bahrain Causeway Closed Amid Heightened Security Concerns Linked to Iran
Formula One Calendar Gap Explained as Fans Await Next Grand Prix
Growing Strain on the Petrodollar System Comes Into Focus Amid Iran Conflict
Reported Strike on Saudi Arabia’s Jubail Complex Raises Global Energy Supply Concerns
FedEx Introduces New Digital Tool to Streamline Imports into Saudi Arabia
Iran Claims Strike on Saudi Arabia’s Jubail Petrochemical Complex Amid Rising Regional Tensions
Taiwan to Source Oil Shipments from Saudi Arabia’s Red Sea Ports
Saudi Arabia Evacuates Riyadh Financial District as Precaution Amid Regional Tensions
Saudi Arabia Balances Ambitious Economic Vision Amid Regional Tensions and Financial Pressures
Budget Saudi Arabia Reports Strong Full-Year 2025 Financial Performance
Saudi Arabia Expands Investment in Capcom With Stake Reaching Six Percent
Saudi Arabia Assesses Significant Economic Impact From Regional Conflict Involving Iran
US Beef Secures Expanded Market Access in Saudi Arabia
×