Chinese Chip-Manufacturer Invests US$2.1 Billion in a Technological Park

The China-US war has made the competition between the two countries more intense than ever. Chinese President, Xi Jinping, is now pushing more and more private companies to make investments in local advance technology as the war intensifies. There’s no doubt that China has become more self-reliant in recent years but it still depends on other countries for a few resources.

Loongson Technology is a Chinese Chip manufacturing company that plans to make an investment of US$2.1 billion (15 billion Yuan). It plans on developing a new smart industry park in China to tempt smartphone producers and R&D enterprises to become more self-reliant. The Chinese Industry needs to introduce more advanced technologies especially as the USA tries to compete with China fiercely. The park is planned to be located in Jinhua city in the Zhejiang province. The total covered area of the park is estimated to be around 5.3 square kilometers and will comprise of about four research institutes.  About fifty-one companies have already entered an agreement with Loongson Technology for a place in the technology park. Tsinghua Tongfang Co., Ltd., a Chinese software company based in Beijing, plans to establish a computer-manufacturing business in the technology park. The expected annual income for the computer manufacturing enterprise is around 10 billion Yuan.

Loongson is considered as one of the few organizations in China that can design CPUs independently. Earlier this year, the US blacklisted Huawei, a Chinese phone-manufacturing giant. It prohibited US-based organizations from selling its products and services to them. Some of these products included technological chips. However, after the Presidents of the two countries met later this year, Donald Trump somewhat revoked the ban. A similar incident occurred in 2018 when a Chinese telecom company ZTE was imposed with a ban by the USA for breaching a sanction violation. Only after the payment of a fine worth US$1.4 billion was the sanction revoked. Since this incident Chinese President Xi Jinping has been compelling Chinese Tech companies to become more self-reliant specifically in the area of basic technologies such as conductor chips.

In 2017, China imported conductor chips worth $260 billion which was 50% higher than its crude oil imports. Chinese domestic companies are only able to meet the semiconductor industry requirements by 5% and rely on the USA for the rest. Hopefully, the US-China war will help put an end to China’s dependence on the US for semiconductor chips.