Deng Zhonghan: The country must make every effort to promote domestic independent substitution in areas such as chips

According to NetEase Technology, Deng Zhonghan, an academician of the Chinese Academy of Engineering and founder of Vimicro Corporation, pointed out in his proposal at the two sessions that the country must make every effort to promote domestic independent substitution in "bottleneck" areas such as chips, and increase the "Big Fund"'s coordination and support for various fields of the semiconductor industry.

In addition, regarding the "United States intensifying its blockade of Huawei", Deng Zhonghan said that this move will directly lead to Huawei facing a supply cut of many major chips.

The following is the content of Deng Zhonghan’s proposal on semiconductors:

Recently, the U.S. Department of Commerce has upgraded its control measures on Huawei. Non-U.S. companies that use U.S. technology, software, and equipment to produce chips for Huawei will also be subject to control and must first obtain approval from the U.S. government. This move will directly lead to Huawei facing a supply cut of many major chips.

1. Current situation: Our opponents will not win quickly, and we will not lose quickly; but we do not have the ability to achieve a quick victory now, and we must persist in accumulating strength and fighting a protracted war.

The United States has always controlled the global integrated circuit industry chain. my country started late and gradually learned related technologies from foundry and joint ventures. However, there is a big gap between China and the United States and its industrial alliance countries in many cutting-edge core technologies, including lithography machines, cover film deposition (PVD, CVD, etc.), ion implantation, etching, rapid thermal processing, photoresist removal and cleaning, and chip automation design software EDA used in various scenarios. To be honest, this multi-faceted gap cannot be caught up in the short term by a team supported by a few countries. It requires the concerted efforts of several generations and many semiconductor companies.

However, we can also see that through years of accumulation, especially in the past two or three years, the central government and the public have become more and more aware of the chip "bottleneck" problem, and have invested heavily in the development of domestic independent semiconductor industries. The United States can no longer completely eliminate China's integrated circuit industry through export controls and technological blockades. As the channel length of semiconductor devices approaches the atomic diameter level, classical physical laws begin to be affected by quantum effects, Moore's Law is about to fail, and the United States' leading advantage in chip technology is facing collapse.

On the contrary, what really led to the slow progress of my country's integrated circuit industry as a whole, in addition to the previous technological blockade, was mainly the fact that domestic enterprises, in order to form product competitiveness in the short term, have long adopted the method of purchasing foreign cutting-edge chips or outsourcing to companies using American technology. This has made it difficult for domestic independent chip companies that lack the market to survive, and the competitiveness of their products has therefore been slow to improve. At the same time, it has also caused technology companies that use foreign technology chips to begin to slide into today's crisis. In particular, the United States did not implement the comprehensive control and blockade of Huawei today from the beginning, but instead used a series of measures such as fines, chip embargoes, and the use of no more than 25% of American technology to gradually approach it. This is a real version of the "threshold effect" and "the siege must be insufficient", which made Chinese companies pin their short-term survival hopes on the negotiations between the two countries, and then relaxed after reaching a superficial settlement.

The current situation is similar to the judgment made by Comrade Mao Zedong in "On Protracted War": the opponent will not win quickly, and we will not lose quickly; but we are not capable of achieving a quick victory now. We must persist in accumulating strength, take advantage of the opponent's weakness of inability to consume for a long time, fight a protracted war and a war of attrition, and win the final victory. The shortcoming of the United States is that its domestic chip companies and other companies rely on orders from the Chinese market to maintain huge scientific research investment and maintain their leading edge. The policy measures to implement regulatory blockades on Chinese companies can only achieve temporary benefits, but the wrong actions that violate the basic rules of international trade and seriously threaten the security of the global industrial chain and supply chain will ultimately only make American companies and citizens bear the consequences. What we should do now is to completely abandon the illusion of easing negotiations and make every effort to develop domestic independent substitution, so that our country will produce more independent technology companies that are successful in the world like Huawei in the future.

II. Countermeasures and Suggestions

1. Negotiations can continue, but we must not relax after reconciliation. It is recommended that we must first completely abandon the illusion of achieving easing through negotiations, and the state should fully promote domestic independent substitution in "neck-stuck" areas such as chips, better play the role of the government, and effectively make up for market failures. Increase the coordination and support of the "Big Fund" in various fields of the semiconductor industry, including raw materials, lithography machines, cover film deposition (PVD, CVD, etc.), etching machines, and various EDA software, etc., to reduce duplicate construction and funding barriers; further reduce and exempt value-added tax on domestic independent products; and strengthen intellectual property protection.

2. It is recommended that the state promote more state-owned capital to invest in the semiconductor field to serve the national strategic goals. According to the national chip security needs, state-owned capital will merge and reorganize private semiconductor companies; and provide researchers with flexible incentive mechanisms to guide them to combine personal development with national needs, and stimulate the creativity of talents with social respect and self-realization of social values.