The Purges That Upended China’s Semiconductor Industry

This piece was originally published in American Affairs.

Once a technology star, Zhao Weiguo rose fast and fell hard. For the last eight years, Zhao’s semiconductor manufacturer, the Tsinghua Unigroup, had fanfare, ambition, large-scale state backing, and an affiliation with China’s most prestigious institution of higher learn­ing, Tsinghua University. All this made Zhao the face and future of China’s semiconductor industry. Frequently appearing alongside Presi­dent Xi Jinping, he helped convince the nation that China would rise as a technological superpower that could rival American hegemony.

In 2014, the Chinese government accelerated its semiconductor industrial policy with the formation of a massive investment consortium, the National Integrated Circuit Industry Investment Fund, or the “Big Fund.” Zhao, whose childhood was spent herding goats and who made an early fortune in coal and real estate, was suddenly leading a national champion. The consortium gave him a blank check to transform Tsinghua Unigroup from an obscure seller of herbal medicine drinks and computer scanners into a semiconductor maker that the government hoped would rival Intel, AMD, and Samsung.

“When your heart isn’t strong, no matter how big you are, you’re not really strong,” President Xi told semiconductor manufacturers, ac­cording to state media. He often called these core technologies the “heart” of China’s industrial efforts. In 2015, Xi declared the goal of “Made in China 2025,” demanding that China become a leading pro­ducer in self-driving cars, microchips, and automation technologies.

Click here to read the full piece in American Affairs.


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