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I heard TSMC gave their employees 12 months bonus this Chinese New Year. Is that true ? Can someone confirm that ? Thanks.
 
I heard TSMC gave their employees 12 months bonus this Chinese New Year. Is that true ? Can someone confirm that ? Thanks.

Not sure about TSMC but Lenovo has done this

Lenovo chief shares $3.25 million of bonus with staff | Statesman Journal | statesmanjournal.com

While in Germany we have these honours:

Chinese crime film wins top Berlin prize

The Berlin Film Festival's top prize has gone to the Chinese crime film
《白日焰火》"Black Coal, Thin Ice" directed by Diao Yinan. Best Director went to Richard Linklater for "Boyhood." Best Actress went to Japan's Haru Kuroki.


Diao Yinan director of the film

The Golden Bear top prize at the Berlin International Film Festival was awarded Saturday to the Chinese entry "Black Coal, Thin Ice." Diao (pictured) crafted a crime story about a suspended policeman turned detective investigating a mysterious series of killings.

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Photo Credit:hinews.cn
The film, whose Chinese title is 《白日焰火》 "Bai Ri Yan Huo," also captured the Silver Bear best actor award for its star Liao Fan (right).

"It's really hard to believe that this dream has come true which didn't come true for such a long time," a tearful Diao said during his acceptance speech.

The picture is set in the late 1990s in northern China and its mystery plot is told through a set of enigmatic flashbacks.


Scene from the winning film

Liao put on weight to play the alcoholic suspended police officer who falls hard for a mysterious murder suspect (Gwei Lun Mei).

Diao's winning entry was one of three Chinese films in Berlin's main 20-movie competition this year.

Strong Asian showing

Haru Kuroki of Japan was awarded Berlin's prize for best actress for playing a discreet housemaid in wartime Tokyo in Yoji Yamada's "The Little House" that was directed by veteran filmmaker Yoji Yamada.

"I will take this happiness and joy for winning the prize back to Japan," Kuroki said, wearing a kimono.

Best director for 'Boyhood'

Richard Linklater won the Silver Bear as best director for "Boyhood," an epic filmed over 12 years about a boy growing up with chaotic divorced parents. It follows a boy and his family from first grade to college.

"I accept it on behalf of the more than 400 people who worked on my movie," said Linklater, clutching the trophy. "This says best director but I want to think of it as best ensemble."

The festival's runner-up Silver Bear Grand Jury prize went to US director Wes Anderson for his nostalgic movie " The Grand Budapest Hotel," which was set against the backdrop of the buildup to the Second World War.

The picture starring Ralph Fiennes had opened the Berlinale on February 6.

Best screenplay

The Silver Bear for best screenplay went to the brother and sister team Dietrich and Anna Brueggemann for their film "Stations of the Cross." The German entry starring Lea van Acken is about a 14-year-old girl who falls victim to a fundamentalist Catholic sect.

The awards were decided by an eight-person jury headed by American director and producer James Schamus. Some 400 films were screened, with some 20 of them in the competition category.

The Ethiopian film "Difret", based on a real case of bride abduction in Ethiopia, took the audience award.

Now in its 64th year, the contest also known as the Berlinale is also one of the world's top three film festivals, along with Cannes and Venice. This year's Berlin lineup included more than 400 films overall.

Chinese crime film wins top Berlin prize | News | DW.DE | 15.02.2014
 
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I heard TSMC gave their employees 12 months bonus this Chinese New Year. Is that true ? Can someone confirm that ? Thanks.

Yes, it's true.

Not just TSMC, but most of Taiwan companies. We have a law to share company profit to the workers. And that including workers in the foreign countries as well.
 
Dongfeng deal buys PSA time, gives it new blood

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PARIS (Reuters) –
PSA/Peugeot-Citroen and China's Dongfeng Motor have agreed on a 3 billion euro ($4.1 billion) capital tie-up that buys the French carmaker more time to turn around its business, brings in new management and ends two centuries of family control.

PSA and Dongfeng said on Wednesday that they have signed a non-binding outline agreement in which Dongfeng and the French state will each pay 800 million euros for 14 percent of PSA to match the founding Peugeot family's reduced holding.

France's Industry Minister Arnaud Montebourg on Tuesday told Canal+ television that the deal would "prepare Peugeot's renaissance and the international development of a company that had become isolated."

PSA CEO Philippe Varin and former Renault executive Carlos Tavares, who will replace Varin when the deal is finalized, must now explain how the fresh capital can be used to improve the bottom line, analysts said. "Expectations are running high," London-based ISI Group analyst Erich Hauser said in a note. "PSA needs to show a new equity story to keep investors interested."

Existing shareholders will get warrants entitling them to more stock at the same 7.50 euro price as the reserved issue, a 40 percent discount to their market value, raising up to a further billion euros.

The Peugeot family will see its 25.4 percent stake and 38 percent of voting rights diluted to parity with Dongfeng and the French state, ceding control of the company it founded in 1810 as a maker of tools and coffee mills.

The rescue deal and a new lending partnership with Banco Santander will help PSA survive the expiry next year of 7 billion euros in state guarantees keeping its lending arm afloat, sources say. It will also reinforce the PSA and Dongfeng Chinese joint venture with increased production, a new research and development center and expansion into southeast Asian markets.

Slow to adapt

Under Peugeot family control, PSA has been slow to adapt to competitive threats and missed opportunities to deepen partnerships with BMW Group, Toyota Motor Corp. and Mitsubishi Motors, insiders say.

Analysts say Dongfeng's cash buys time but does not address the European problems behind much of PSA's 3 billion euro cash burn and 5 billion net loss in 2012.

The company needs to scrap another plant and freeze investment to return to profit in the region, Max Warburton of Bernstein Research said on Feb. 14. While the remedy would be "risky, disruptive and stressful," Warburton said, "there's still a chance PSA can trade its way out of its current difficulties."

The French government, which initially obstructed last year's closure of the Aulnay factory near Paris, has already warned it is unlikely to accept further significant plant cuts in its new role as a major shareholder.

Further closures "are not on the agenda," Montebourg told France Inter radio on Tuesday. "The restructuring has already happened, and it was painful enough." PSA is expected to meet existing commitments to build at least one new model at each French site and produce 1 million vehicles domestically by 2016, Montebourg said.

Dongfeng is the latest Chinese carmaker to take a significant stake in a western peer after Zhejiang Geely Holding bought Sweden's Volvo Car Corp. in 2010 and SAIC Group acquired South Korea's SsangYong Motor Co.

Besides putting some of its 24 billion yuan ($3.96 billion) of cash reserves to work, some skeptics have questioned what the Chinese carmaker and its own Fengshen line of vehicles stand to gain from the tie-up.

According to people with knowledge of the agreement, the carmakers will roll out technology including PSA's fuel-saving HybridAir transmissions -- which store recovered energy in a compressed gas cylinder -- under both companies' brands.

The deal remains subject to a PSA shareholder vote and is likely to be signed formally during Chinese President Xi Jinping's visit to Paris in late March, sources say.

Dongfeng deal buys PSA time, gives it new blood
 
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you know what I noticed, if it's a developed country like US, Japan, or something, it's always, look revival in the economy if even the tiniest crap happens, when it goes south it's always, but it will pick back up soon.

With China it's always, China grew a robust ---, but.... China exceeds expectation, however......

lol, and the western media wonders why we don't like them. Maybe China should really create a 50 cent army just to post crap about the west, see how they like it.
 
Atkins and CSWADI secure $5.7bn Qingdao airport contract in China

18 February 2014

Atkins.jpg


UK-based architectural firm Atkins and China Southwest Architectural Design and Research Institute (CSWADI) have won a contract to provide the conceptual planning and terminal design of the new Qingdao airport.

Atkins said that Qingdao airport is one of the largest of five airports approved by the national development and reform committee (NDRC) for development.

The contract is valued at RMB35bn ($5.7bn), with the total budget for the development of all five airports estimated at around RMB150bn ($24.7bn).

Upon its scheduled completion in 2017, Qingdao airport will serve as a main regional hub and enhance the aviation capacity for both passengers and cargos.

Atkins and CSWADI will be responsible for all design aspects, including master planning, airfield design, transport planning, landscaping and water engineering.

Qingdao airport will have the capacity to process 38 million passengers per year in 2025 and 60 million passengers per year in 2045.

Atkins CEO for Asia Pacific Chris Birdsong said the company has been present in China in the planning, architecture and landscape business, for about 20 years.

"Our partnership with CSWADI, one of the leading design institutes in China and the largest in western China, will allow us to unlock opportunities to deliver our multi-disciplinary, high-end engineering services in China," Birdsong said.

CSWADI deputy dean Yang Guo said: "This contract win is the beginning of a productive partnership between CSWADI and Atkins."

Image: Qingdao airport will have the capacity to process 38 million passengers per year in 2025. Photo: courtesy of Atkins.

Atkins and CSWADI secure $5.7bn Qingdao airport contract in China - Design Build Network
 
Atkins and CSWADI secure $5.7bn Qingdao airport contract in China

18 February 2014

Atkins.jpg


UK-based architectural firm Atkins and China Southwest Architectural Design and Research Institute (CSWADI) have won a contract to provide the conceptual planning and terminal design of the new Qingdao airport.

Atkins said that Qingdao airport is one of the largest of five airports approved by the national development and reform committee (NDRC) for development.

The contract is valued at RMB35bn ($5.7bn), with the total budget for the development of all five airports estimated at around RMB150bn ($24.7bn).

Upon its scheduled completion in 2017, Qingdao airport will serve as a main regional hub and enhance the aviation capacity for both passengers and cargos.

Atkins and CSWADI will be responsible for all design aspects, including master planning, airfield design, transport planning, landscaping and water engineering.

Qingdao airport will have the capacity to process 38 million passengers per year in 2025 and 60 million passengers per year in 2045.

Atkins CEO for Asia Pacific Chris Birdsong said the company has been present in China in the planning, architecture and landscape business, for about 20 years.

"Our partnership with CSWADI, one of the leading design institutes in China and the largest in western China, will allow us to unlock opportunities to deliver our multi-disciplinary, high-end engineering services in China," Birdsong said.

CSWADI deputy dean Yang Guo said: "This contract win is the beginning of a productive partnership between CSWADI and Atkins."

Image: Qingdao airport will have the capacity to process 38 million passengers per year in 2025. Photo: courtesy of Atkins.

Atkins and CSWADI secure $5.7bn Qingdao airport contract in China - Design Build Network

Great news for UK!
 
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A great way to celebrate the end of Chinese New Year is to note the progress in Shenzhen. My, how far you've come.

China Estimates 2013 Growth at 7.6% as Challenges Seen Ahead - Bloomberg

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Commercial and residential buildings stand illuminated at night in the Luohu district of Shenzhen, China. China’s GDP reversed a two-quarter growth slowdown in the July-September period, as Premier Li Keqiang spurred factory output and investment in the world’s second-largest economy to meet the expansion target. (Photographer: Brent Lewin/Bloomberg)
 
@Martian2

I really enjoyed reading your analysis on TSMC and IBM.
I am interested in your opinion regarding Chinese homegrown CPUs (to be precise, the Loongson MIPS family, and the Shenwei Alpha family). Do you think in the foreseeable future Chinese CPU can compete against the x86 processors?

Thank you Martian2 as always for your insight.
 
@Martian2

I really enjoyed reading your analysis on TSMC and IBM.
I am interested in your opinion regarding Chinese homegrown CPUs (to be precise, the Loongson MIPS family, and the Shenwei Alpha family). Do you think in the foreseeable future Chinese CPU can compete against the x86 processors?

Thank you Martian2 as always for your insight.


China designs and manufactures excellent computer hardware. As you have pointed out, the Loongson/Godson chip is an excellent example. There is more information about the Loongson/Godson chip in the citations below.

However, the fundamental problem in competing with the x86 processors is not matching their raw power. It is about software compatibility. Most of the world uses Microsoft Windows operating system. All of the software (e.g. Microsoft Word, Microsoft Excel, Microsoft Exchange, Microsoft PowerPoint, etc.) are written for Intel's x86 processors.

The lack of widespread software and the additional problem of most archived files in Microsoft format (ie. Microsoft Word's .doc file format) create a compatibility problem for any new non-x86 microprocessor. To run the x86-compatible software, a Loongson/Godson chip has to operate in emulation mode (e.g. pretend to be a x86 processor by creating a software emulation). Emulation significantly slows down the Loongson/Godson chip.

You have a chicken-and-egg dilemma. To promote the wider use of China's Loongson/Godson chip, you need native software programs written for the Loongson/Godson chip. To motivate software writers to create programs for the Loongson/Godson chip, you need widespread adoption of the Loongson/Godson chip.

Only the Chinese government can break the chicken-and-egg paradox. At some point, the Chinese government must mandate every single Chinese government entity to use the Loongson/Godson chip and software (by claiming a national security imperative to protect China from foreign electronic spying). From this massive base, the Loongson/Godson chip will migrate into the Chinese consumer sector. This is the only way to break the x86 monopoly, which is also known as the Wintel duopoly (for Windows software and Intel hardware).

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China's Homemade Supercomputer May be the Most Efficient Ever - Technology Review

"China's Homemade Supercomputer May be the Most Efficient Ever
Technology Review
Published by MIT
Christopher Mims 03/01/2011

As processors hit the power wall, performance per watt means everything.

China's home-grown supercomputer, the Dawning 6000, finally has a launch date: Summer 2011. In terms of raw performance, the machine is not going to be a record breaker, but it will be the first machine in the Top500 to be powered entirely by chips designed entirely by China's Institute of Computing Technology. Long term, they could be a major threat to Intel, AMD, NVIDIA and their ilk.

AZyW6.jpg

Dawning 6000 chassis with 10 Godson 3B-powered blade servers installed

Weiwu Hu, lead architect of the Loongson line of chips, announced the launch of the forthcoming supercomputer at the International Solid State Circuits Conference held last week. (Technology Review has been covering the development of this supercomputer for over a year, since the first intimation of its construction in January 2010.)

What's new as of Hu's latest announcement is the scale of the machine: 300 teraflops, achieved with 3,000 of the 1-Ghz, 8-core Godson 3B chips. That's a far cry from the #1 position on the world's list of the top 500 supercomputers, currently occupied by the 2.56 petaflop Tianhe-1A machine, also built in China, but with Intel CPUs and NVIDIA GPUs.

The absolute power of the machine might not matter much, however, because as the platform matures, performance per watt will become the dominant metric, as it has for all other high performance systems (and even the chips in your laptop and cell phone). As HPC Wire reports, "[T]he Godson-3B appears to be a very power-efficient design, and the upcoming Dawning machine could rival even Blue Gene/Q systems for performance per watt supremacy."

This efficiency is achieved because of the relatively low clock speed of the Godson 3B -- only 1.0 GHz -- and the chips reliance on the MIPS architecture, which is also used in set-top boxes and is making its way into the smartphone market.

Significantly, in June 2010 the Chinese government was rumored to be contemplating the purchase of a 20 percent stake in MIPS Technologies, holder of the rights to the MIPS instruction set.

Hu also announced the launch in 2012 or 2013 of the Godson 3C chip, which at twice the clock speed and twice the cores of the 3B, will be four times as fast. This chip will be used to build a petascale supercomputer. Were such system to debut today, it would likely be among the ten fastest supercomputers on earth."

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Godson: China shuns US silicon with faux x86 superchip

"Godson: China shuns US silicon with faux x86 superchip
Who needs GPU co-processors?
By Timothy Prickett Morgan
Posted in HPC, 25th February 2011 21:07 GMT

ISSCC If the Chinese government is scaring the world with its hybrid CPU-GPU clusters, what do you think the reaction will be when Chinese supercomputers shun American-made x64 processors and GPU co-processors and start using their own energy-efficient, MIPS-derived, x86-emulating Godson line of 64-bit processors?

Apoplexy? Disbelief? A polite bow of respect? A bunch of orders for Godson chips is more likely, once you see what China is up to.

One of the more interesting presentations at this week's International Solid-State Circuits Conference, hosted by the IEEE in San Francisco, was by Weiwu Hu, the lead designer of the Godson family of processors being created by Institute of Computing Technology at the Chinese Academy of Sciences.

China started developing its own processor since 2002, explained Hu, and the Godson family of chips, which is based on the MIPS architecture created by Silicon Graphics, is part of a holistic technology investment program. The Godson chip effort is one of 16 different projects, in fact, that are each funded with between $5bn and $10bn.

The massive projects focus on specific technology areas that China reckons are key for its technological independence and economic future, including processors and operating systems, chip process technology, 4G wireless networks, nuclear fission power plants, water pollution control and treatment, aircraft design and construction, high-resolution satellite imaging, and manned spaceflight and lunar exploration.

As El Reg reported a year ago when China's ICT was bragging about its plans to build a petaflops-scale supercomputer with server maker Dawning, ICT originally got access to MIPS technology through its partnership with wafer-baker STMicroelectronics. But in June 2009, as it got serious about its Godson chips (also known by the name Loongson) it licensed the MIPS32 and MIPS64 architectures straight from MIPS Technologies, the chip-designing division of Silicon Graphics that was spun out in an initial public offering in 1998.

The initial Godson-1 processors were 32-bit chips running at a mere 266 MHz, and the Godson-2 moved to 64-bits and was revved up to 1.2 GHz. With the Godson-2F chip in 2007 and 2008, ICT came out with a design that has a four-issue core running at 800 MHz, rated at 3.2 gigaflops. The Godson-3A chip was delayed nearly a year and was aimed solely at servers. ICT shifted a four-core design and also did something else very clever: it added x64 instruction emulation right into the hardware. Hu only alluded to this emulation capability, but as El Reg explained a year ago, the Godson-3 chips have instructions added to help the QEMU hypervisor (the one that's at the heart of Red Hat's KVM hypervisor) to translate instructions from x86 to MIPS format. According to early benchmarks, the emulation penalty is about 30 per cent.

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ICT's Godson family of chips for servers, PCs, and consumer electronics

The Godson-3A chip was implemented in a 65 nanometer process and ran at 1 GHz to deliver 16 gigaflops of floating point oomph. The chip has 425 million transistors, an area of 174.5 square millimeters, and burned only 10 watts under load. The chip included two 16-bit HyperTransport ports (licensed from Advanced Micro Devices), 4 MB of L2 cache, and two on-chip memory controllers that support either DDR2 or DDR3 main memory.

Oh Godson!

With the Godson-3B, which is what Hu was there to talk about in San Francisco, ICT is sticking with the same 65 nanometer CMOS process and running the chip at the same 1 GHz. But the chip is bumped up to eight cores from four and has two 256-bit vector co-processors per core. The chip has two HyperTransport ports and two DDR3 memory controllers, and weighs in at 583 million transistors in a 300 square millimeter area. Running at 1 GHz, peak performance on those vector units is 128 gigaflops, with the chip only emitting 40 watts. According to early tests, the cores burn about 28.9 watts, while the uncore parts of the chip (HT, memory controllers, and crossbar switches for linking chips together) consume 11.1 watts.

According to Hu, the vector extension unit in the Godson-3B and Godson-2H processors have 128-entry, 256-bit register files and have more than 300 SIMD instructions that have been added to the MIPS architecture.

Here's what the Godson-3B chip looks like:

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ICT's Godson-3B MIPS processor, x86 emulation included

The Godson-3B processor will be used in the Dawning 6000 petaflops supercomputer, which China will be tweaking in 2012. Here's an early version of the blade equipped for the Godson-3B chips:

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Dawning's two-socket Godson-3A and Godson-3B blade server

And this is what the blade server chassis looks like for the Dawning 6000:

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The Dawning 6000 supercomputer blade server chassis

The Dawning 6000 blade design is used by the National Supercomputing Center in Shenzhen for its hybrid Xeon 5650-Nvidia M2050 system, which ranked number three on the Top 500 list from November 2010. That machine had an aggregate 1.27 petaflops of sustained performance running the Linpack Fortran benchmark test.

Another Dawning 6000 blade cluster with 3,000 of the Godson-3B chips, and rated at around 300 sustained teraflops, is expected to be up and running this summer, Hu said. (That would be about 384 peak theoretical teraflops just counting the vector units, not the cores.)

Those Dawning 6000 blades are by no means the highest density that ICT can come up with. Check out this system board for a 1U rack server that Hu showed off at ISSCC this week:

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ICT's 1U2T Godson-3B system board

This IU2T system board packs 16 of the eight-core Godson-3B processors onto a single board, rated at 2 teraflops. So a rack of these puppies would yield 42 teraflops. So instead of hundreds of cabinets to reach 1 petaflops of raw number-crunching performance, as it can take with big x64-based machines, ICT could, in theory, do it with 24 racks.

ICT is not going to stop here. The Godson-3C design will shift to a 28 nanometer process and will come in eight-core variants like the Godson-3B as well as a 16-core variant. The Godson-3C will have faster clock speeds, too, running at between 1.5 GHz and 2 GHz. The roadmap says the chip is also capable of expanding up to 16 cores, too. ICT says the Godson-3C will deliver 512 gigaflops of raw performance on math work, and the way the math works, that is twice as much math moving from 1 GHz to 2 GHz and then a doubling again as the core count goes from 8 to 16. This chip is expected sometime around late 2012 or early 2013.

Wouldn't it be funny if Silicon Graphics started building systems with these Godson-3 chips? They could dust off Irix and take it out for a spin on some new iron and allow it to run x64-based Linux applications in emulation mode."
 
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@Martian2

Thank you for your detailed analysis. I sincerely agree with you on the positive role that Chinese Central Government can play in this game. In my view, x86 processor is really the worst CPU architecture. I guess I am not alone in this statement.

[ go to this website vr-zone and check an article with this title "Chinese high end cpus are now in the game details part 1" - this is 3 part series ] I am not alone making this statement regarding x86 processor.

There are some other chips in China that are truly impressive. The link below is another example of how China can successfully develop competitive chips.

[again, go to this website vr-zone and search an article with this title "China's rockchip dual core ARM beats Qualcomm Snapdragon Nvidia Tegra Samsung Exynos"]

I also share your optimism regarding Chinese economy. Destroying your exchange rate to support export sector is detrimental to our economy. Unlike some neighbors ( South Korea - a country that destroyed its exchange rate during the global financial crisis and Japan - a country that despite its massive debt burden still maintained one of the most stable exchange rate in the past decade until now), as long as China realizes that export is the cost and import is benefit and diminishing the reliance on Western technology and know - how, China will become the most powerful country in the next 10 to 20 years and its influence will be even greater than that of the US after 1950s (when US's GDP equals to 50% of world GDP).

Furthermore, combined with Taiwan's total dominance in foundry markets and China's growing dominance in architecture of processors and in foundry markets, I categorically share your optimism on China.

Thank you Martian2 for your detailed and insightful analysis attested to evidences.

P.S. Originally, I have failed to insert two links in this post, since I do not meet the minimum requirements. If you want to see that articles attesting to my statement, you can follow the instructions I have stated in the bracket.
 
WHY DOES CHINA STILL PLAY A LIMITED ROLE IN SEMICONDUCTOR INNOVATION?

by Dieter Ernst, EWC Senior Fellow

HONOLULU (July 24, 2013) -- In recent years, fears have become widespread in the U.S. that China’s rise in industrial manufacturing and innovation will challenge America’s leadership in advanced manufacturing. An important concern is that China’s indigenous innovation policy gives rise to a model of state capitalism that unfairly favors domestic producers at the expense of foreign firms, undermining innovative capacity and competitiveness and harming the prosperity of business and workers.

A different story emerges, however, when we examine the state of China’s semiconductor industry. The global semiconductor industry critically depends on sales to China, where many electronic products are manufactured, yet China’s own role in semiconductor production remains limited. The gap between China’s semiconductor consumption and production keeps growing, from $5.7 billion in 1999 to a record $100.5 billion in 2011. And China’s semiconductor trade deficit more than doubled since 2005 to $138 billion in 2011, due to growing imports of advanced microprocessors for the manufacture of wireless communications products, especially from U.S. firms.

As for microprocessor innovation, China remains way behind the technology frontier in both fabrication and design, reflected in a weak portfolio of essential semiconductor patents. China still has a long way to go before it can shape, or even co-shape, the industry’s technology trajectory.

This poses an interesting advanced manufacturing puzzle: Why is it that, despite massive government efforts to build indigenous innovation and production capabilities, China still plays a limited role in semiconductor design and production?

One popular explanation provided by trade economists points to state direction of industry as the main culprit, arguing that “technology nationalism” and “infant industry protectionism” prevent China from reaping the “gains from trade” that would facilitate learning and productivity improvements.

That explanation fails to convince, however. Joseph Stiglitz and Bruce Greenwald offer a sophisticated theoretical critique arguing that, for developing countries, the benefits of broad trade restrictions may outweigh their costs. And former World Bank Chief Economist Justin Yifu Lin, one of China’s most respected economists, highlights fundamental flaws in economic theories that neglect to analyze how institutions and industry structures in developing countries differ from those that have facilitated economic growth and prosperity in developed nations. For Lin, government policies can make companies more competitive in an open market, provided they reflect the economic structure and institutions of a particular country and industry.

A defining characteristic of China’s semiconductor industry is its deep integration into the global semiconductor value chain through markets, investment and technology, but China’s leadership views such deep global integration primarily as a threat to its domestic innovation capacity, rather than an opportunity. An important concern is that foreign firms with manufacturing plants in China dominate the country’s semiconductor consumption, and that these foreign firms retain control over key technologies, core components and capital equipment, as well as chip design and system integration capabilities and process know-how.

The semiconductor industry is one of the priority targets of Beijing’s indigenous innovation policy, including a plan to create a group of globally competitive semiconductor firms that will develop into global leaders in market share, manufacturing excellence and innovation capacity. Indigenous innovation in semiconductors is based on the idea that access to foreign core technologies may be too costly or restricted, and hence China needs to shift the balance from technology imports to domestic R&D and innovation in advanced manufacturing. The overriding concern is to replicate as much as possible of the semiconductor value chain in China and to use foreign technology only to create new technologies based on intellectual property rights owned by Chinese companies.

Much of the official indigenous innovation policy doctrine remains married to the idea that China needs to develop leading-edge process technology at home, but this approach neglects the critically important demand side of innovation and, most importantly, China’s dearth of complementary “soft” capabilities related to patenting, licensing and the capacity to coordinate multi-layered international innovation networks.

China’s indigenous innovation policy thus tends to neglect that the integration of Chinese firms into the global semiconductor value chain enables them to source foreign technology and complementary capabilities that would be too costly and time-consuming to develop at home. As the CEO of Spreadtrum, one of the few successful Chinese chip design companies, told me recently: “The availability of circuit design tools, semiconductor fabrication services and open-source smartphone software allows Chinese firms to circumvent their weak spots and develop their strengths in hardware, design, and integration.”

In fact, Chinese semiconductor firms are exposed to intense competition that is driving down profit margins, reducing funds available for capability development, R&D and innovation. These firms are eager to reap the benefits of global production and innovation networks. Global technology sourcing through returnees from the U.S. or Chinese expatriates who are U.S. citizens often plays an important role in accelerating the speed of learning and the exposure to international management practices.

My argument, in a nutshell, is that in China’s semiconductor industry two innovation strategies co-exist, but with only limited interaction: the government’s emphasis on indigenous innovation and firm-level efforts to enhance global technology sourcing. China’s fundamental advanced manufacturing challenge is to find ways to combine the benefits of both innovation strategies.

There is no doubt that for a latecomer to advanced manufacturing like China, strengthening domestic innovative capacity is the key to a sustainable economic transformation beyond the export-oriented “global factory” model. Without smart innovation policy in support of domestic capabilities, China will find it difficult to catch up with the productivity and income levels of the United States, the European Union, and Japan.

In addition, China’s leadership feels that intellectual property and technical agreements that are part if its World Trade Organization membership constrain options for national industrial and innovation policies that were available earlier to Japan, Korea and Taiwan as they developed their economies. Attempts to wriggle out of some of those compliance constraints may lead to a sharpening of China’s indigenous innovation policy.

Furthermore, Beijing fears that America’s push for an advanced manufacturing renaissance, as laid out in the administration’s Advanced Manufacturing Partnership strategy, will erode China’s competitiveness in manufacturing, implying that China needs more than ever to strengthen its domestic innovation base in order to upgrade its manufacturing – which it has been doing in specific target industries such as lasers, nanotechnology, advanced computing and new energy technology.

Yet, while strengthening domestic R&D and innovation is necessary, it is not likely to be sufficient for bootstrapping China’s semiconductor industry into the primary league. China has reached a level of development in this industry where indigenous innovation needs to be combined with sophisticated global technology sourcing. Now is the time for China to identify and counter unintended negative consequences of an indigenous innovation policy that places too much emphasis on technology autonomy.

As long as indigenous innovation policy and the real-world practice of global technology sourcing co-exist in isolation, the result will be a fragmented innovation system that is ill-equipped to address both the opportunities and the challenges that result from China’s deep integration into the global semiconductor value chain. In addition, this fragmentation adds further to China’s deeply entrenched innovation barriers that reflect its status as an industrial latecomer and the legacy of the planned economy.

It will take time to overcome those barriers, which include severe quality problems in education; plagiarism and derivative research in science; and a fragmented innovation system that reflects intense rivalries between the central and regional governments, as well as between different government agencies. In addition, government R&D support and procurement aids state-owned enterprises and neglects small, innovative private firms, while a still weak intellectual property rights regime stifles entrepreneurship, innovation and private R&D investment. Most importantly, China lacks capabilities that are necessary to transform new ideas, discoveries and inventions into commercially successful innovations, such as sophisticated approaches to patenting, licensing, and standardization.

China’s persistent innovation gap in core sectors of the information and communications technology industry implies that Chinese firms need access to American technology, whether in terms of equipment, core components, software or system integration. Thus, China’s upgrade of its semiconductor industry could create significant new markets for American firms, provided they stay ahead of the innovation curve. Not only is such U.S.-China cooperation in the semiconductor industry possible, it could become a powerful “win-win” proposition. The Chinese would get more of the technologies they want and in some instances still desperately need, and the U.S. would get new quality jobs resulting from exports of U.S. technology to China.

Such cooperation, however, needs to be on an equal footing, with reciprocity of rights and obligations on contentious issues, such as the right balance between the protection of intellectual property rights and China’s interest in technology diffusion. China needs to put something more substantial on the table, providing safeguards against forced technology transfer though policies such as compulsory licensing, information security standards and certification, and restrictive government procurement policies. The U.S., in turn, needs to acknowledge that Chinese firms feel disadvantaged by restrictions on Chinese foreign direct investment and on the export of so-called dual-purpose technologies to China.

Establishing such reciprocity between countries at such different stages of development will not be easy, but progress toward adjusted rules of reciprocity should be possible if the United States and China accept that while their economic institutions and innovation systems are different, they are deeply interdependent.

Dieter Ernst is a Senior Fellow in economics at the East-West Center in Honolulu, Hawaii, focusing on gobal production networks and R&D internationalization in high-tech industries.
 
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China's semiconductor imports exceed $160B, industry still nascent
Summary: China's domestic chipmakers remain heavily reliant on foreign technologies, and supply less than 10 percent of products for the local market's needs.

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By Liau Yun Qing | March 13, 2013 -- 10:53 GMT (21:53 AEST)

China is over-reliant on imported goods for its semiconductor industry, and local chip companies supply only about 10 percent of its domestic needs as they remain in the development stage despite years of investments.

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China's yearly spending on semiconductor imports exceed US$160 billion, and is a heavy burden on the development of the local industry.
A Xinhua report Tuesday said China's yearly spending on semiconductor imports such as equipment and raw materials surpasses US$160 billion, which is more than its spending on petroleum goods. This is despite the country being the largest consumer of semiconductor products, it added.

The heavy dependence was due to the local semiconductor market starting out later than other countries, which led to companies' reliance on foreign technologies, the report said.

Zhou Xuecheng, department head of Wuhan Research Center for Integrated Circuit Design, added in the report that the lack of capital is slowing the development of China's chip industry. He pointed out that using the licensing fees for foreign-based software would cost about US$1 million, but did not indicate whether this was a one-off cost or an annual license.

Most of the local factories manufacturing semiconductors are contract manufacturers for foreign companies while domestic chipmakers could only supply less than 10 percent of the country's needs, it stated.

Domestic chipmakers in Beijing, Shanghai, Wuhan and Xi'an have made investment in the industry with the help of domestic banks and local governments. Despite the years of work invested, local chipmakers remain in the development stage, the report noted.

Xinhua said even Semiconductor Manufacturing International Corporation (SMIC), which is one of the bigger Chinese chipmakers, is far behind chip giants such as Intel, Samsung Electronics and Taiwan Semiconductor Manufacturing Company (TSMC).

Li Ping, vice president of Wuhan Xinxin Semiconductor Manufacturing Corporation, said China has developed its own "first class semiconductors" but the country was not able to mass manufacture these chips.

Local companies are now actively supporting the country's chip industry though. The city of Wuhan, for instance, invested US$1.3 billion in SMIC to boost its manufacturing efforts in 65 nanometer and 40 nanometer flash memory, it added.
 
BEIJING (Reuters) - Activity in China's factory sector slowed to an 8-month low in February, a government survey showed, reinforcing signs of a modest slowdown in the economy as demand weakens.

The official Purchasing Managers' Index edged down to 50.2 in February from January's 50.5, the National Bureau of Statistics said on Saturday, just ahead of market expectations of 50.1.

A PMI reading above 50 indicates expanding activity while one below that level points to a contraction.

A preliminary survey released last week by HSBC and Markit Economics showed that the factory sector activity hit a seven-month low of 48.3 from 49.5 in January.

The index for new orders dropped below 50 and employment reached its lowest point since the global financial crisis.

The new orders sub-index in the official PMI China fell to a 8-month low of 50.5 in February from 50.9 in January and the sub-index for export orders fell to 48.2 last month, also a 8-month low, from 49.3 in January.

"Judging from market demand and production in some industries, we expect economic growth to remain steady in the future," said Zhang Liqun, an economist at the Development Research Centre, which helps compile the PMI.

"We should fully consider possible risk factors and further improve macroeconomic policy reserves to help consolidate the steady trend in economy growth," he said.

The official PMI, which is weighted towards large and state-owned firms, has usually been rosier than the private survey, which covers more smaller and private companies. The official PMI has stayed above the 50-point level since October 2012.

The China report kicks off a round of monthly reports on the health of the global manufacturing industry, with similar surveys from the rest of Asia, Europe and the United States expected on Monday.

CONCERNS OVER US, CHINA

In recent weeks, investors have been more concerned that the Chinese and U.S. factory sectors are dragging on global activity, even as European manufacturers enjoyed a solid start to the year.

Although both the official and HSBC PMI surveys are seasonally adjusted, some analysts cautioned against reading too much into last month's data, given the possible impact from the long Lunar New Year holiday, which began on January 31 and covered early February. Many plants and offices shut for extended periods during the festival.

To smooth out seasonal distortions, the statistics bureau is scheduled to release combined January-February growth figures on factory output, fixed-asset investment and retail sales in March.

Despite signs of firmer global demand, a drive by Chinese regulators to rein in the shadow banking sector could hurt investment growth, while Beijing's continuing anti-corruption campaign could hurt consumption, analysts say.

On Monday, the statistics bureau will release the official services PMI at 0100 GMT, ahead of the final HSBC/Markit PMI due out at 0145 PMI.

China's annual economic growth slowed to 7.7 percent in the fourth quarter from 7.8 percent in the previous quarter, and economists polled by Reuters expected growth to slow further to 7.6 percent in the first quarter of 2014.

In 2013, China's economy grew 7.7 percent, steady from the previous year and fractionally above market expectations of 7.6 percent, which would have been the slowest since 1999.

Premier Li Keqiang is widely expected to stick with the 7.5 percent economic target for 2014 at the annual parliament meeting due to open on March 5

China official PMI hits eight-month low, adds to slowdown signs - The West Australian
 
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