Growth, Upgrading, and Limited Catch-up in China’s Semiconductor Industry

Douglas B. Fuller*

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingBook chapterResearchpeer-review


Semiconductors represent a major building block of high-tech industry. This chapter analyzes the trajectory of China’s rapidly growing semiconductor sector, focusing on the interplay among global technology developments, Chinese government policy, and three groups of firms: purely domestic manufacturers, Chinese operations of multi-national corporations, and hybrid firms based in China but with offshore ownership and financing. China has pursued policies aiming to build a globally competitive domestic industry. Policy instruments include outlays on technical education, and more focused initiatives that channel investment funds, imported technology and product demand toward domestic firms, mostly state-owned ones. Despite strong government backing, domestic state-owned firms have generally failed to generate technological dynamism. Only the hybrids have delivered substantial technological advance. Recent policy initiatives continue to lavish resources on state-owned firms while limiting the capacity of potentially more innovative hybrid and domestic private operators to expand and upgrade. As a result, China’s semiconductor industry appears locked into a path that combines quantitative expansion with low financial returns and limited qualitative improvement. This trajectory offers little prospect for attaining China’s long-term objective of propelling domestic semiconductor manufacture toward the global frontier of technology and innovation.

Original languageEnglish
Title of host publicationPolicy, Regulation and Innovation : In China’s Electricity and Telecom Industries
EditorsLoren Brandt, Thomas G. Rawski
Number of pages42
Place of PublicationCambridge
PublisherCambridge University Press
Publication date2019
ISBN (Print)9781108480994, 9781108703697
ISBN (Electronic)9781108645997
Publication statusPublished - 2019
Externally publishedYes


  • Semiconductor
  • Integrated circuit
  • Industrial policy
  • China
  • State-owned enterprise
  • Hybrid
  • Technology

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