China is expected to undergo “explosive growth” in its chip industry in the next three to five years, top semiconductor industry executive Chen Nanxiang said on the upcoming advancement that would combat the United States’ technological sanctions due to its advantageous applications and packing technologies.

“[Today’s focus] is on innovation in industry, products, services, and business models, which ultimately will have to bring value,” the China Semiconductor Association (CSIA) chairman and head of Yangtze Memory Technologies Corporations (YMTC) said an interview with CGTN, the English channel of China Central Television (CCTV), which aired over the weekend.

Chen also emphasized the country’s new exploration of a market-driven approach to the industry, abandoning the previous model of depending on universities and research institutes.

A visionary industry

Semiconductors have been the core of the US-China technology war. Although the US is attempting to restrict China’s access to sophisticated chips and foundry technologies, Chen highlighted that advanced packaging may play a significant role in the future.

“For example, the hottest AI chips are in need of state-of-the-art foundry and packaging technologies,” he said. “It can be predicted that, in the very near future, the importance of packaging technology may exceed the importance of foundry technology.”

Chen also noted the lack of agreement regarding chip development, comparing the differences between Samsung Electronics’ 3-nanometre process to Intel’s. The top tech executive also expressed his confidence in the specialized chips since chips are often used for the development of specific applications.

US technological sanctions on China

The US’ series of sanctions imposed on China has resulted in the Asian country’s technology companies and semiconductor foundries strengthening their relations and uniting behind state support for advancement.

The YMTC head urged the industry to unite to tackle US sanctions, highlighting that China’s policymakers and industry players continue to search for the best strategy to progress, adding that a prolonged period of trial and error has revealed which models are prone to failure.

Technological advancements at YMTC and other Chinese semiconductor manufacturers are closely monitored as significant indicators of China’s overall technological advancement amid the US’ frequent sanctions.

Chen suggested that the slowing of Moore’s Law, the concept where the number of transistors in an integrated circuit doubles every two years, may enable China to reach the US’s chip-making pace, especially since it may be beneficial for the industry’s innovation.

China condemns US efforts to disrupt semiconductor industry

The Chinese Foreign Ministry criticized the US on June 19 for working to disrupt the growth of China’s semiconductor industry to maintain its own technological dominance.

The remarks come after Bloomberg reported that US Under Secretary of Commerce for Industry and Security Alan Estevez is scheduled to visit Japan and the Netherlands to urge these countries to impose restrictions on China’s semiconductor sector. But Tokyo and Amsterdam reportedly resisted Washington’s pressure, preferring to await the outcome of the upcoming US presidential election this autumn.

When asked to comment on the report, Chinese Foreign Ministry spokesman Lin Jian responded, “The US has been inciting bloc confrontation and even extending it to trade and technology, and coercing other countries to go after China’s semiconductor industry. China firmly opposes it.”

The US aims at “perpetuating its supremacy and denying China’s legitimate right to grow and thrive,” he added, and hoped that “relevant countries” would be able to see things for what they are, “firmly resist coercion, and jointly uphold an open and fair international trade in order to protect their own long-term interests.”

In October 2022, the US implemented regulations aimed at restricting the export of equipment and components crucial for manufacturing advanced chips to Chinese firms. A year later, the Commerce Department imposed further limitations on semiconductor exports. This included redefining artificial intelligence chips and broadening licensing requirements to prevent their resale to China in over 40 countries.