Chinese firms are into developing their own chips

China is preparing itself to bring out its own semiconductor industry on the backdrop of the U.S.-China trade war. The Chinese firms’ fear of being eliminated from using American technology hence, they made this move.

Ben Harburg, managing partner of MSA Capital, a Beijing-based venture capital firm quotes, “Huge amounts of capital and talent are going to be thrown at building self-reliance and establishing a kind of parallel ecosystem here without dependence on U.S. chips, operating systems.”

Harburg said that earlier there was no demand for creating the chip whereas the situation now is such that the necessity arose. Chinese firms completely relied on U.S. chips and there was no alternative to it.

Harburg said, “That has changed now where there was a moment of complete desperation where there wasn’t an alternative to U.S. chips,” said Harburg.

In the previous month, Huawei was in trouble and was included in the U.S. blacklist which required American companies to seek permission of the government before selling the company.

ZTE, Huawei’s opponent also was in the same situation last year which was a major reason for the company’s downfall.

A homegrown Chinese semiconductor industry will likely hurt American chip makers as China will aggressively push their chips not just domestically but to other markets, said Harburg.