(Yicai Global) May 23 -- China’s central government has added four domestic semiconductor makers to its procurement list as it looks to increase support for locally-developed chips after ZTE Corp.’s near-miss in the United States.
The government has added local brands Loongson, Sunway and Phytium to the list, the Global Times reported today, citing a post on the Central Government Procurement Center website from May 17.
"The inclusion of Chinese local chip makers is a milestone for the industry," said Hu Weiwu, chief executive of Loongson Technology Co. Government departments were previously unable to buy Chinese server chips even if they wanted to, he added, saying the country is now showing more support for locally-producer semiconductors.
China’s chip market came into the spotlight when the US Department of Commerce hit telecoms equipment maker ZTE with a seven-year denial order preventing it from purchasing American technology. Though the ban has since been lifted, the prohibition highlighted gaps in the domestic semiconductor sector and the need for self-reliance.
Chinese server manufacturers which produce for government departments previously used Intel Corp. chips, Hu added. Though Loongson chips can replace those in some applications, it will not be until between 2020 and 2025 that China-made semiconductors can truly replace imported ones, he said.
Some central-government institutions have high data security requirements and need appropriate hardware, Liu Jiepeng, deputy general manager of marketing at Tsinghua Tongfang Co., said on May 22, adding that manufacturers across the country welcome the change. The procurement draft will be further adjusted, but it is unlikely that the government will remove domestic server chips given the need for data and network security, Liu added.
Editor: James Boynton