Market Intelligence- China & Semiconductors

Updated: May 29, 2021


by Bertrand Viala

The China Electronics Standardization Institute (CESI) proposed to create a new semiconductor standardization committee in January 2021, in an effort to bypass US sanctions and in the hope of overturning the central position of its rivals, Taiwan and US, in this essential component of 21st century. The case of semiconductors is particularly relevant as it one of the very few technological areas where China has not superseded its competitors and has remained dependent on them. The point is for China, as it did with its diverse and powerful tech scene, to create global alternatives to the current GVC , opening new opportunities for its own industries, securing its own supply chains, which by reinforcing its global leadership position, will create a new and strong vulnerability for the US. China's government agencies were quick in following suit and mobilizing corporate and government forces to Top tech Chinese firms such as Huawei, Ali Baba, Xiaomi or Tencent have been mobilized along with 90 such companies to join this committee. In February, China’s Ministry of Industry and Information Technology (MIIT) stated that China's vigorously supported its semi-conductor industry. The objective is to reduce the dependency on foreign supplies from currently 70% to 30% in the next 5 years.

Sadly enough, and rather not unexpectedly, the EU, despite its inherent strength as a norms and a standards provider, seems to still be struggling to take a relevant part in this competition, as it is not located anywhere near the central position on this GVC. It nevertheless issued a joint declaration by Member States on processors and semi conductor technologies in December 2020. It took place in the wake of the Video conference of the Ministers of Telecommunications.

What To Monitor :

Analysts and strategists will need to verify how the new committee will reformulate the standards and norms of the International Electrotechnical Commission (ICE) to create a Chinese owned norm system, used later as a leverage to impose it in the semiconductor GVC, with the expected spill over effects in diplomacy, trade and industrial partnership policies. Though not a tangible perspective immediately, this may imply future pressure on industrial players and manufacturers which may need to choose a US or China led GVC. They could also choose the more expansive options of developing a set of double technical standards and norms.


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