SHENZHEN has become an important national distribution, application and design center for semiconductor and integrated circuit (IC) products, according to an industry summit held in the city last week.

The city’s integrated circuit industry has exploded to become one of the country’s largest in recent years, officials said at the 2023 China (Shenzhen) Integrated Circuit Summit, which was held in Bao’an on Thursday and Friday.

As of the end of 2022, Shenzhen had 587 integrated circuit firms, an increase of 69 compared with a year ago. The integrated circuit industry’s revenue in 2022 reached 160.89 billion yuan (US$22.04 billion), according to a Shenzhen Special Zone Daily report.

The newspaper said that Shenzhen has the advantages of prominent upstream design capabilities, abundant downstream applications and rich resources for innovation in the integrated circuit industry, which consists of IC design, IC manufacturing, and packaging and testing.

According to the newspaper, more efforts are needed to build Shenzhen into an internationally influential semiconductor and integrated circuit industrial hub.

Wei Shaojun, chairman of the IC design branch of the China Semiconductor Industry Association and a professor at Tsinghua University, said that the globalization of the semiconductor industrial and supply chains will be based on cooperation.

Shenzhen, as an important base for China’s semiconductor industry, should continue to improve the industrial chain and continuously boost its innovative capabilities, Wei said.

To stymie China’s technological advancements, the U.S. government has over the past years imposed rounds of chip export restrictions on China, the world’s largest semiconductor market and a key link in U.S. chip companies’ supply chain.

Last year, China’s semiconductor purchases totaled US$180 billion, accounting for around a third of the worldwide total of US$555.9 billion, consolidating the country’s status as the largest single market for semiconductors, according to U.S.-based Semiconductor Industry Association. But China’s high-end chips have a high degree of external dependence.

To thwart U.S. attempts to exclude China from the global chip industrial chain, China needs to rely on long-term input in research and development to achieve self-reliance in key chip technologies, China Daily quoted Li Xianjun, an associate researcher at the Institute of Industrial Economics, which is part of the Chinese Academy of Social Sciences, as saying earlier this month.

Known as China’s “Silicon Valley,” Shenzhen is currently one of China’s main centers for semiconductor sourcing, applications and design. Although the city is home to some of the country’s biggest tech firms, such as Tencent Holdings, Huawei Technologies and drone giant DJI, the city lags behind Shanghai and Beijing when it comes to semiconductor design and production.

But with its deep pockets and desire to climb the industrial value chain, Shenzhen has long harbored ambitions to take a bigger share of the semiconductor market and become a semiconductor hub.

The city announced an action plan in June last year to double the value of its existing chip sector within three years to 250 billion yuan in annual sales, compared with the 110 billion yuan in revenue in 2021.

It also aims to nurture at least three integrated circuit design firms with annual sales exceeding 10 billion yuan each and three chipmakers with 2 billion yuan in annual revenue each.

The action plan noted that Shenzhen’s semiconductor industry’s small size and reliance on foreign technology such as software, production equipment and key materials are challenges that need to be addressed.

To help achieve the goals, the city government will allocate more money to the IC industry and support the development of key firms and startups in the sector, according to the action plan.

The semiconductor plan is part of Shenzhen’s “20+8” industrial policy introduced last year 2022 to cultivate and develop industries with huge growth potentials in a bid to improve the city’s industrial landscape and make advanced manufacturing a core driver of the local economy.

According to the blueprint, Shenzhen will focus on fostering 20 strategic emerging industry sectors from semiconductors and telecommunications to robotics and biotech, and at the same time, strategically investing in eight emerging but promising industries. (Yang Yunfei)