China's semiconductor industry has made remarkable progress on almost all fronts in recent years. The Chinese government's implementation of strategic, favorable policies and incentives, from financial support to tax exemptions and talent attraction, has played a pivotal role in propelling the industry forward. These measures have borne fruit across the semiconductor production spectrum, including chip design, manufacturing, testing and packaging.

China's prowess in chip design has greatly improved, with domestic companies making breakthroughs in specific domains. Products such as Huawei's MATE60, equipped with the domestically developed Kirin 9000s chip, have underscored the Chinese semiconductor industry's capability to make competitive, cutting-edge products despite the global challenges.

While acknowledging these accomplishments, it is essential to recognize that certain gaps and challenges still exist when compared with some front-runners in the global semiconductor industry. To achieve breakthroughs and clear the bottlenecks, the Chinese semiconductor industry must strategically focus on multiple key areas.

A critical milestone in the global semiconductor landscape happened in December last year when Dutch lithography machine company ASML delivered the world's first 2 nanometer lithography machine to Intel. It is hoped this will pave the way for the global adoption of 2nm technology.

In stark contrast, China's mainstream lithography machines still hover around 28nm and 14nm, with 7nm chips achieved through the use of multiple exposure techniques. To close this technological gap, substantial efforts are required to achieve breakthroughs in advanced process technology, particularly in semiconductor equipment such as lithography machines. A proactive government approach, including increased support in terms of funding and policies, is indispensable to promote research and innovation in domestic chip equipment manufacturing.

The quality of materials used in chip manufacturing has a direct bearing on chip performance and reliability. There is a gap between Chinese semiconductor enterprises and leading global chipmakers in terms of both research and manufacturing capabilities, as well as in high-end materials. To narrow this gap, China needs to increase investment, augment research, and promote technological innovations.

The field of chip design relies on various electronic design automation (EDA) tools and software, a market traditionally dominated by industry giants such as Synopsys, Cadence and Siemens. While some domestic companies have taken big strides in tool coverage, the practicality, maturity and reliability of their tools still lag behind those offered by the industry behemoths. It is therefore imperative to bolster collaboration with EDA tool suppliers, and propel the development of domestic tools to raise China's standing in the global chip design industry.

Besides, the rapid growth of China's domestic chip industry in recent years has led to a surge in the number of enterprises, with many blindly following the trend of "domestic substitution". While the integrated circuit design industry is progressing toward higher-end applications, the mainstream still remains entrenched in the mid- to low-end spectrum. Some companies, in their quest for market share and expansion, may inadvertently neglect technological innovation and the development of high-end products.

This has given rise to internal competition within the mid- to low-end chip market. So, striking a balance between market expansion and substantial investment in research and development for high-end products is crucial to ensure sustainable growth.

In conclusion, China's semiconductor industry has undeniably made significant achievements, particularly in burgeoning sectors such as the internet of things and automotive electronics. And the collaborative efforts of the government, coupled with the tireless endeavors of chip enterprises, have borne fruit.

However, to achieve global leadership, Chinese enterprises have to increase investments and make sustained efforts. With the industry continuing to evolve, China is poised to make important technological breakthroughs and expand its market share. The future of China's semiconductor industry is promising, with the potential to make significant contributions to technological advancements not only in the country but on a global scale.

The authors are founders of Yanfen Online and integrated circuit specialists.

The views don't necessarily reflect those of China Daily.

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