State Supported Silicon: Reconceptualizing China’s Semiconductor Industrial Policy
Abstract/Contents
- Abstract
- China’s industrial policies in emerging technology industries have received significant criticism due to their inefficient resource allocation and propensity for corruption. The recent failures of Tsinghua Unigroup and Wuhan Hongxin Semiconductor Manufacturing (HSMC), both of which received tremendous state support, are two notable instances of such failed industrial policy in China’s semiconductor industry. Semiconductor Manufacturing International Corporation (SMIC), however, similarly received vast swaths of state resources, but rather than collapse, SMIC exceeded international expectations with its advancement into 7nm manufacturing despite facing U.S. export restrictions. SMIC’s achievement, although still behind the internationally competitive cutting edge, was notable for the Chinese semiconductor industry, which is dependent on foreign technology at several points along the supply chain. This thesis conducted a regression analysis on financial data from SMIC between 2007 and 2022 that showed government funding had a positive impact on SMIC’s R&D capabilities and asset accumulation. The thesis argues that in light of these positive effects, where many see economic inefficiencies—such as in the failures of Tsinghua Unigroup and HSMC—the Chinese leadership may instead see the ancillary cost of pursuing political economy and national security goals, such as reducing or eliminating China’s foreign semiconductor dependency. This is similar to observations in venture capital markets, where the pursuit of remarkably successful firms inevitably entails the loss of some capital in other, less-promising investments. The notable distinction being that the Chinese leadership’s calculus does not optimize for financial return, but rather for the achievement of political economy goals. Thus, we should adopt a corresponding lens and consider this alternative understanding of the goals of industrial policy in China that redefines measures of “success” as achieving broader political economy and national security objectives rather than attaining economically optimal resource allocation.
Description
| Type of resource | text |
|---|---|
| Date created | May 21, 2024 |
| Publication date | May 21, 2024; May 20, 2024 |
Creators/Contributors
| Author | Shore, Robert |
|---|---|
| Degree granting institution | Stanford University, Stanford Global Studies, Center for East Asian Studies |
| Thesis advisor | Oi, Jean |
Subjects
| Subject | Stanford Global Studies |
|---|---|
| Subject | East Asian Studies |
| Subject | China |
| Subject | Industrial policy |
| Subject | Semiconductors |
| Genre | Text |
| Genre | Thesis |
Bibliographic information
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- Use and reproduction
- User agrees that, where applicable, content will not be used to identify or to otherwise infringe the privacy or confidentiality rights of individuals. Content distributed via the Stanford Digital Repository may be subject to additional license and use restrictions applied by the depositor.
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 4.0 International license (CC BY-NC).
Preferred citation
- Preferred citation
- Shore, R. (2024). State Supported Silicon: Reconceptualizing China’s Semiconductor Industrial Policy. Stanford Digital Repository. Available at https://purl.stanford.edu/gt290jm9978. https://doi.org/10.25740/gt290jm9978.
Collection
Stanford Center for East Asian Studies Thesis Collection
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- Contact
- rshore@alumni.stanford.edu
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