Despite 20-odd years of trying to grow a domestic IC industry, China’s IC trade deficit gets worse and worse.
In 2000, the deficit was under $10 billion. In 2010 it was over $100 billion, according to China’s Ministry of Industry and Information Technology.
That’s a stupendous figure when you take into account that the entire world market for ICs is only $310 billion.
iSuppli reckons that half the world’s production of ICs go to China to be assembled into systems products.
So that means China imported $150 billion worth of ICs last year.
And China only manufactured $21.6 billion of ICs last year says the Ministry.
So the deficit was nearer $130 billion.
The Ministry says that the lack of innovation is a threat to national security and the industry’s sustained development.
Consequently the Ministry will invest more money in the IC industry.
Of course the stock Western response to this is that money won’t deliver innovation.
Innovation comes from free-thinking people with disruptive ideas, is the stock Western view.
And freethinking disruptive ideas men are not the sort of people encouraged by a Communist dictatorship which – whatever its capitalistic business practices – China still is politically.
Now China has loads of design houses – and successful design houses elsewhere can transition to the fabless model and grow into significant companies. But that hasn’t happened in China.
Although Chinese engineers have contributed hugely to the success of Silicon Valley companies.
t’s not just China’s failure. Japan has seen hardly any IC start-up activity. Nor has Korea.
Taiwan is the only Asian country which has grown significant IC companies from scratch.
And the Taiwanese have developed a free-thinking society.
So maybe there’s something in the Western belief that innovation requires a free people.