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Technology Stocks : Investing in Exponential Growth
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From: Paul H. Christiansen8/24/2016 1:34:58 AM
   of 1084
 
China’s $100 Billion Chip Supremacy Bid Unrealistic: Bain

China’s ambitions of spending more than $100 billion to become the global leader in computer chips is likely to fail because of a lack of technological know-how and talent, according to an analysis by Bain & Co.

China is one of the world’s largest consumers of semiconductor devices thanks to its manufacturing might. The global consultancy estimates that by 2020, almost 55 percent of the world’s memory, logic and analog chips will flow to or through the country. But the vast majority of the microchips that act as the brains of products like Apple Inc.’s iPhone are largely imported from companies like Intel Corp. and Samsung Electronics Co.

The government in 2014 moved to change this with plans to invest more than $100 billion and become a leading global player by 2020. It’s also driven consolidation among domestic suppliers to maximise its investments, including the $2.8 billion merger of Tsinghua Unigroup Ltd. and Wuhan Xinxin Semiconductor Manufacturing Corp. announced last month.

But financial investment will not be enough to buy leadership of the semiconductor sector, which is worth around $1 trillion according to Singapore-based Bain partner Kevin Meehan. It currently makes just 15 percent of the semiconductors it consumes, Bain said in a report.

“China is coming at it in a pretty smart and intelligent way,” he said. “But I don’t see a path for them to own leading-edge processor technology and that is the foundation of Intel, the foundation of Samsung’s success.”

bloomberg.com



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