Women wearing face masks walk past the offices of Chinese e-commerce firm Alibaba in Beijing, Monday, Dec. 13, 2021. To help make China a self-reliant "technology superpower," the ruling Communist Party is pushing the world's biggest e-commerce company to take on the tricky, expensive business of designing its own processor chips -- a business unlike anything Alibaba Group has done before.
Chips are a top priority in the ruling Communist Party's marathon campaign to end China's reliance on technology from the United States, Japan and other suppliers Beijing sees as potential economic and strategic rivals. If it succeeds, business and political leaders warn that might slow down innovation, disrupt global trade and make the world poorer.
"It's hard to imagine any one country rebuilding all of that and having the best technology," said Peter Hanbury, who follows the industry for Bain & Co. China's factories assemble the world's smartphones and tablet computers but need components from the United States, Europe, Japan, Taiwan and South Korea. Chips are China's biggest import, ahead of crude oil, at more than $300 billion last year.
But when it comes to making them, foundries such as state-owned SMIC in Shanghai are up to a decade behind industry leaders including TSMC, or Taiwan Semiconductor Manufacturing Corp., which produces chips for Apple Inc. and other global brands. China "lags significantly" in tools, materials and production technology, the Semiconductor Industry Association said in a report this year.
Alibaba's Yitian 710 is based on architecture from Britain's Arm, highlighting China's enduring need for foreign know-how. Alibaba said it still will work closely with longtime foreign suppliers Intel, Arm, Nvidia Corp. and Advanced Micro Devices, Inc. China is trying to buy experience by hiring engineers from TSMC and other Taiwanese producers. Taiwan, which Beijing claims as part of its territory and has threatened to attack, has responded by imposing curbs on job advertising.
While we talk about banning Huawei. Indeed.