Chips are a vital product to China because they are fundamental to any technology-led growth, and for making weapons
makes chunks of metal. Hulking sheets of it are cut with millimetre accuracy using robot arms in room-sized enclosures bearing the brand of their German or Japanese manufacturers. The white spray of cooling lubricant makes the process look like an industrial-strength shower for some post-modern Cleopatra.
Failure to make cutting-edge chips is not exactly China’s fault. It is a difficult industry to kick-start. The factories that produce the chips are phenomenally expensive. The technology itself is even more complex than an internal-combustion engine. The intellectual property behind cutting-edge processes is fiercely guarded. In many ways the manufacturing of chips represents the supreme technological challenge for China, an amalgamation of all the other challenges presented in this report.
Chips are a vital product to China because they are fundamental to any technology-led growth that the country desires for its future, as well as for making weapons., a consultancy, estimates that the global market for chips will grow by 4.6% a year, to be worth $575bn in 2022, driven by the requirements of cars,Currently a huge share of that market value moves through China, but is not captured by it.
Whereas Fortune’s more industrial flavour of success in the manufacturing supply chain took a traditional route for Chinese firms—start at the bottom and work up—Alibaba’s success in designing a chip is more interesting. It is rooted in its wide deployment of machine-learning systems across its business, both in its Taobao online market and its Hema shops on the high street.
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