Source: ARK Disrupt Issue 123: May 7, 2018. By @jwangARK

China plans to invest $47 billion in its domestic semiconductor industry to enable disruptive technologies like artificial intelligence (AI) and autonomous driving. Focused on chip manufacturing and design, this state backed fund adds to a $22 billion fund raised in 2014.

Chip manufacturing requires large capital outlays and deep materials science expertise, creating formidable barriers to entry. Because a state-of-the-art chip fab costs billions of dollars, only three companies in the world –IntelTaiwan Semiconductor, and Samsung – can manufacture chips using the latest 7-10 nanometer (nm) process.

That said, Moore’s Law is slowing down, so semiconductor companies are manufacturing more chips using older processes, giving China a chance to catch up. Taiwan’s TSMC, for example, plans to open a 16nm fab in Nanjing this June, catapulting China’s chip manufacturing to a generation just short of the latest process.

Chip design demands software expertise. Startups in China seem to be making good progress in this arena: with just $100 million in funding, Cambricon has designed a number chips aimed at accelerating artificial intelligence applications. Last week, it unveiled two new AI chips that offer higher performance, at least on paper, than counterparts from Nvidia and Google. Real world performance and software support likely will tell a different story.

While China probably will find success in the manufacturing of more commoditized semiconductors, if history is any guide, it will find competing on the world stage to prove much more challenging.

View original article and other research here.

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Fred Pye

Frederick T. Pye


Frederick T. Pye is the Chairman, Chief Executive Officer and Director of 3iQ Corp. He is also the Chairman and Director of 3iQ Digital Holdings Inc. Mr. Pye is recognized for creating and promoting creative and unique investment products for the investment industry.

Mr. Pye has managed private client portfolios with Landry Investment Management and various other investment dealers. Prior to this Mr. Pye was Founder, President & Chief Executive Officer of Argentum Management and Research Corporation, a company dedicated to managing and distributing quantitative investment portfolios including the first long-short mutual fund in Canada.

He was also Senior Vice-President and National Sales Manager of Fidelity Investments Canada and an integral part of the team that saw assets rise from $80 million to over $7.5 billion in assets under management during his tenure. He also held various positions with Guardian Trust Company, which listed the first Gold, Silver and Platinum Certificates on the Montreal Exchange.

Mr. Pye obtained a Masters in Business Administration from Concordia University.