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Chip Charge: Chinese Phone, Car and Home Appliance Companies Join Semiconductor Rush

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SHANGHAI: Smartphone maker Xiaomi has joined a rush of Chinese tech companies venturing into the semiconductor industry, announcing a new chip on Wednesday to help smartphone cameras process images.

Xiaomi’s Surge C1 chip was developed after a previous unsuccessful attempt to produce a smartphone processor and comes as Chinese internet giants, car makers and even home appliance companies invest heavily in research and the development of semiconductors.

While all are still in the early stages, their will goes hand in hand with the Chinese government’s policy to boost the domestic semiconductor industry as demand for chips increases.

The initiative has become increasingly critical, with a global shortage of crimping chips and US sanctions hampering Huawei Technologies Co Ltd, once the largest smartphone maker in China and for a time the only company capable of producing processors from high-end smartphones.

The trend is global, with large US companies including Google, Amazon.com Inc, and Alphabet Inc’s Facebook Inc, also investing in their own chip-making efforts.

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In addition to Xiaomi, Chinese Android phone maker Oppo is following the lead of Huawei and Apple Inc in developing its own phone chips.

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The company says it has developed power management that it uses for a range of internal flash chargers, and is currently conducting R&D for radio frequency (RF) and Bluetooth chips.

Large Chinese internet companies, by comparison, have focused their efforts on cloud computing and artificial intelligence, targeting a market dominated primarily by Intel Inc and Nvidia Corp.

Research provider Baidu Inc, the leading chip maker among Chinese web giants, has two chip projects.

The company established its Kunlun division for intelligent vehicle chips in 2018 and is expected to mass-produce its Kunlun II chip this year, according to its technical director. The unit recently secured funding valued at around US $ 2 billion, according to Reuters.

Honghu, a unit making voice recognition chips, placed its first component in a Baidu smart speaker in 2020.

The Alibaba Group, meanwhile, launched its Pingtouge chip division in 2018 after acquiring a national startup. In 2019, it released its first AI chip, the Hanguang 800, which the company said it wanted to use in its own cloud computing ecosystem.

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Social media competitors Tencent Holdings and ByteDance entered the industry more slowly. Tencent has made regular investments in starting Enflame chips, while ByteDance has stepped up recruitments for the development of Arm-based server chips, Reuters reported.

The internet giants’ forays into chips mirror similar moves by Google, Amazon and Facebook in chip building, both in terms of opportunities and dilemmas, analysts said.

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While self-developing chips could help companies cut costs and improve performance, they could pose long-term economies of scale issues, says Stewart Randall, who follows the semiconductor industry within the consulting firm Intralink.

“They are among the biggest buyers of chips in the world, so it makes sense to make their own. They will either be forced to sell to their competitors or will only be able to sell to themselves.”

As cars get smarter, chips have become a key part of products, from sensors to control units. The Chinese auto industry, which has suffered from the chip shortage in recent months, is also developing its own chip products.

ECARX, an automotive technology start-up backed by the chairman of Geely and Baidu, plans to deliver products with a 7-nanometer (nm) chip as early as next year through its joint venture with Arm China.

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Chinese auto chip start-up Horizon Robotics has raised US $ 900 million from BYD, Great Wall and others in the industry.

Even home appliance makers have started their own chip divisions.

Air conditioner makers Midea Group Co Ltd and Zhuhai’s Gree Electric Appliances, as well as microwave maker Galanz and refrigerator maker Haier Smart Home Co have R&D units for chips, and in some cases already have them. placed in products.

More than tech companies, home appliance makers can benefit from designing their own chips because they rely on comparatively more mature technology, which can both lower purchasing costs and maintain their chain. localized supply.

“The scarcity made them realize that some of their products can be made entirely on the continent and it won’t be that expensive,” said Ivan Platonov, analyst at research firm Equal Ocean.

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(Reporting by Josh Horwitz and Yilei Sun, additional reporting from Shanghai Newsroom; Editing by Lincoln Feast.)


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