The trade war between China and the United States continues, with the United States pressing on the enemy more and more, which affects the ability of the Celestial Empire to implement a plan to import substitution of electronic components. In order for the manufacturers of laptops, smartphones and other electronic systems to work normally, China needs to establish its own production of processors and other chips.
So far, everything has been more or less successful. For example, the Chinese company Zhaoxin Semiconductor recently announced modern graphics accelerators made on the 7nm process technology. In addition, the country is expanding the production of other chips, creating the necessary equipment and technologies. Created its own unique processor architecture. But in order to continue to operate successfully, the Celestial Empire needs high-level specialists, and there are just not enough of them. Now the “bounty hunt” has become much more complicated – Taiwan decided to prohibit China from poaching engineers and scientists.
Just take – and forbid
Earlier we wrote that China satisfied its staff shortage in the production of electronic components at the expense of Taiwan and its companies.
Two Chinese companies are on the hunt for talent: Quanxin Integrated Circuit Manufacturing (QXIC) and Wuhan Hongxin Semiconductor Manufacturing Co (HSMC). They have already managed to lure over a hundred employees by making them an offer that they do not refuse. Namely – the salary is exactly twice as much as in TSMC.
In general, hunting and poaching of specialists is a common practice in the IT industry. But for TSMC, this is a huge problem, since there are not many professionals in the company who are able to develop new chips. Yes, TSMC employs about 6,000 engineers, but only 150 of them are PhD. In the fall of 2020, the Chinese managed to entice two-thirds of valuable personnel from TSMC.
The Chinese have big plans for them, since HSMC is building a plant for the production of 14nm processors, having invested $ 18.4 billion in it. In the near future, the country hopes to master the 7nm process technology.
It is clear that Taiwan sees what is happening and understands the threat very well. TSMC began to take urgent measures to liquidate it in the fall. In particular, equipment suppliers were forbidden to share with Chinese partners technological solutions that were developed by the order of the company. Also, the engineers began to raise wages so that the conditions in China were not too attractive for them.
Attempts by TSMC executives to prevent staff drain the government joined… It issued a document instructing recruitment agencies to remove job listings from Chinese companies. Taiwan’s Labor Department has notified the country’s recruiting agencies that they can no longer post job vacancies for Chinese companies, especially for critical industries such as semiconductor chips.
Companies that violate these terms will be punished with a heavy fine. The punishment for organizations that continue to cooperate with Chinese partners in the field of chip production is even more severe.
Why is everything so difficult?
The fact is that things in Taiwan are doing just fine – now companies from this country produce about 92% of the chips made using the 10nm process technology and newer technical processes. If China continues to lure away specialists, then Taiwan may lose its dominance, which the country, of course, does not want.
The Taiwanese government commented on China’s actions as follows: “Due to geopolitical tensions between the US and China, the development of the semiconductor industry in China has slowed down. As a result, China has begun to implement more aggressive tactics in the matter of poaching and recruiting the best Taiwanese specialists in the field of development and production of chips in order to build a self-sufficient technological chain. “
The measures taken will help to avoid this threat, plus Taiwan will establish closer relations with the United States. It is this country that can now indicate which technologies to whom to use and to which chip companies, with whom to cooperate.
Is the USA coming and winning?
So far, China has been more or less successfully resisting US sanctions. But the enemy of the Celestial Empire continues the policy of pressure, which reduces the chances of China to implement a strategy to create its own production chain for modern chips. So, recently the largest supplier of chips TSMC was simply banned from producing processors for Phytium. This was explained by the fact that Phytium developments are used in China’s supercomputers, the power of which is used, in particular, by the Chinese army.
The company has close ties to the Chinese military, according to US sanctions officials. Huawei received the same charges when it was sanctioned. Phytium is developing processors on the ARM architecture, and the suspension of cooperation with TSMC means a complete stop of development at Phytium. There is simply no one else to produce such processors.
At the moment, the release of products for the former partner by TSMC has been discontinued. True, TSMC has not yet said anything about plans to work with other Chinese companies, which also came under sanctions. Whether relations with them will be terminated or not is not yet clear.
There is another unpleasant moment for China – in mid-April, Congressmen asked the US President to ban the sale of software for the development of semiconductor chips to China. The Americans, not without reason, believe that if the Chinese are denied access to modern technologies for the production of semiconductor chips, then the PRC will be thrown back in this industry for many years.
China’s own hardware and software tools are morally outdated – they are 8-10 years behind modern ones. If access to EDA is closed, China will have to work very hard to reach the current level of development of semiconductor electronics in the United States. But if everything works out, then there will probably be several companies in the world that will be able to produce modern chips.
The main problem in China is the lack of access to modern deep ultraviolet photolithography technology, which is key in the production of modern processors. This equipment is manufactured by the Dutch company ASML using American technology. Well, the United States has banned their supply to China, so the equipment that uses the developments of the Americans falls under this ban.
In general, this whole system of prohibitions and restrictions is becoming more and more powerful, China is having a hard time. Only time will tell whether the country will cope with the task set – to launch the production of chips, which is as technologically advanced as in the United States, in a few years. China has proved more than once that it is capable of miracles – both economic and technological. But the current challenge is far more serious than many others.