ChinAI Newsletter #27: "China Chips" - An Industrial Strategy

Welcome to the ChinAI Newsletter!

These are Jeff Ding's weekly translations of writings on AI policy and strategy from Chinese thinkers. I'll also include general links to all things at the intersection of China and AI. Please share the subscription link if you think this stuff is cool. Here's an archive of all past issues. *Subscribers are welcome to share excerpts from these translations as long as my original translation is cited.

I'm a grad student at the University of Oxford where I'm the China lead for the Governance of AI Program, Future of Humanity Institute.

Breaking Open New Prospects for "China Chips"

Pushing all the chips into the table this week with an essay translation even longer than Li Guofei's epic on Tencent from two weeks ago. This essay was published in the wake of the ZTE sanctions in April of earlier this year, and it offers an overview of China's dependency on chip imports as well as a pathway for China to control the "electronics industrial chain." The author goes by the handle Saidong (塞冬), who has a background in the semiconductor field (studied in a lab at Peking University) and contributes to 黔财有话说, a WeChat platform that publishes weekly data/stats-packed posts on the Chinese economy.

It's a long essay with too many takeaways to pack in this post, but here's an outline of what you'll read in the full translation below:
- Pages 1-6: Outlines why China needs to develop an independent chip industry, "Most of the more than 200 billion USD of chips imported by China last year came from these two areas (South Korea and Taiwan) that are geopolitically hostile to us."

- Pages 7-13: Examines display panel end of the electronics industrial chain and argues how, with BOE in the lead, the Chinese panel industry has made vast advances, asking the question, "Since we can successfully catch up in LCD panels, what about the chip field?" 

-Pages 14-18: Lays out key aspects of China's chip industry: 1) 74% of China's total capacity of 12-inch chip foundries come from factories that are foreign/joint ventures, 2) SMIC, the largest and most advanced chip foundry in the mainland, has an annual revenue of only 1/10 of TSMC and a technology gap of 5-6 years, 3) the two most important aspects of China's future electronics industrial chain (chips and panels) will be concentrated in a series of provincial capitals in the inland of the Yangtze River Basin (Chongqing, Wuhan).

-Pages 19-20: Warns against relying too much on foreign-funded enterprises in this field

-Pages 21-34: Meat of the essay is a roadmap for building up China's chip industry, around two frames: 1) When there are big changes going on in the field (opportunities presented by chips that power customized AI algorithms) go all in, 2) Until then, support chip companies like SMIC with government funds to extend debts/depreciation/dilute costs (an approach with "Chinese characteristics")

Full translation linked below, I'm not an expert in the semiconductor industry, so could use some help with the technical terms:
 

Translation: Breaking Open New Prospects for “China Chips”

This Week's ChinAI Links

Chinese Idiom of the Week:  寄人篱下 (ji4ren2li2xia4) – to live under someone else's roof, fig. is to rely on someone else's charity and goodwill. Used in the essay's concluding section in the context of China being dependent on chip imports.

I first came across Saidong's essay while reading Chublic Opinion, a monthly digest of events that are shaping public opinion in China, in the highly recommended article "Brave the enemy’s gunfire, rejuvenate!"

DigiChina article from this past spring on China's AI plan has a really good section on China's ambitions for AI chips contextualized with overall chip industry.

My boss Allan Dafoe at the Governance of AI Program recently put out a Research Agenda document for those interested in the field of AI Governance, touches on China as a potentially pivotal actor.

My short piece on China's approach to international governance of AI for the Global Challenges Foundation is up.





 

Thank you for reading and engaging.

Shout out to everyone who is commenting on the translations - idea is to build up a community of people interested in this stuff. You can contact me at jeffrey.ding@magd.ox.ac.uk or on Twitter at @jjding99