The chip industry needs continuous investment of even more than hundreds of millions to upgrade and face high market risk. According to Moore’s Law, the integration density of the semiconductor technique improves 100% in 18 months while the cost decreases proportionally. In other words, corporations need ongoing capital infusions to upgrade facilities. Otherwise, they will be stuck in a passive state.

Some experts and industry insiders pointed out that it was not too late when China created the first integrated circuit product in 1965, just seven years after the US and 10 years before Korea. While for the next few decades, China’s chip industry fell into dire straits. You need to rely on the introduction of chips from Korea and Taiwan. There are several factors that cause this situation, which are summarized below:

First, the innovation system is not robust, so it does not generate intellectual property for the core technique. Although we attach great importance to chip research and development, we cannot break the circle of relying on introduction from abroad since the 1970s. Also, we are way behind in the chip industry. We import technology and absorb it, but why are we still lagging behind many countries in the chip industry? The reason is that we lack the innovation capacity to address technology upgrade issues.

Secondly, we lack forms of investment and financing and we are in a shortage of entry capital. As we know, the chip industry needs constant information for quick update to face high risk. However, most companies are not capable of sustaining a large continuous investment. It was reported that Japan and the United States invest in IC at $2.5 billion and $2.9 billion per year. Intel invests $6 billion in 2010. While mainland China only invested $2.4 billion in IC industry from 1965 to 2000.

Third, China has been in the situation of a lack of professional personnel for a long time. Specialists are important to the chip industry. A team of experts and professional staff is the most valuable for companies. The fact is that we have a great lack of specialists for the design and production of chips.

Therefore, if China wants to get rid of such a vicious circle, this situation must change instead of developing core technology on our own instead of continuing to play the role of foundry. The related integrated circuit is T-15505.