With Cash, and Waste, China Fights for Chip Independence


“There have been some amazing absurdities that defy logic and common sense,” said China Economic Weekly.

However, progress has also been made. Two companies, Yangtze Memory Technologies and ChangXin Memory Technologies, are preparing to put China on the map in memory chips that store data. Local logic chip manufacturers who perform calculations are expanding production mainly for Chinese customers.

These manufacturers may have no choice but to serve domestic customers. Some multinational chipmakers are starting to think twice about working with Chinese suppliers and partners because of concerns about intellectual property theft, said Randy Abrams, a tech analyst at Credit Suisse.

“International companies are increasingly concerned about the IP leak in China,” he said.

Mr. Liu, the founder of the Shenzhen start-up, does not deny that he is motivated by any particular patriotic cause. His company’s website, Tsinghon, proudly mentions the Mao-era project that created China’s first atomic bomb, ballistic missile and satellite:

Inherit the spirit of “two bombs, one satellite”

Be independent and courageous in forging

Mr. Liu says the sense of national mission does not conflict with his job of serving customers and bringing out competitive products. He admits, after looking at the sky-high ratings of some chip startups, that irrationality has crept into the market.

“There is definitely a bubble in China,” he said. “But you can’t over-generalize.”

The government, he said, is trying to hold local authorities more accountable for bad investments. And the flow of money could at least get more skilled engineers in China to work on chips rather than video games and food delivery apps.

“There’s got to be a build-up, whether it’s equipment, talent or factories, right?” Mr. Liu said. “If not you or the other, someone else will end up using it. I think that could be the logic of the government. “