‘Are your chips made locally?’ Xi Jinping prods construction vehicle maker about semiconductors amid self-sufficiency push

A ‘two sessions’ delegate from Xuzhou Construction Machinery Group said all the chips in its crane were made in China after the president asked
The exchange briefly thrust the company into the national spotlight, as semiconductors have become the focal point of a technological self-sufficiency drive

Semiconductors

Coco Fengin Beijing

Published: 6:00pm, 9 Mar 2023

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A Chinese construction vehicle maker briefly became a leading example of the country’s self-reliance drive in semiconductors when President Xi Jinping asked a delegate from the company whether all the chips it used were domestically produced.

In a meeting with the Jiangsu delegation group at the National People’s Congress (NPC) on Sunday, Xi interrupted the report by Shan Zenghai from the Xuzhou Construction Machinery Group (XCMG) to ask, “Are the chips in your crane all made locally?”, according to an account reported by the state-run Xinhua news agency on Monday.

In response, Shan said the “ratio of domestic parts” in its 220-ton all-terrain crane is now 100 per cent, up from 71 per cent in 2017, when Xi visited the company.

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Chips used in construction vehicles such as cranes and excavators are generally more mature than the highly advanced ones most consumers are familiar with in their smartphones and laptops. Semiconductors have become the focal point of China’s push for technological self-sufficiency, and the country has recently refocused chip-making efforts on mature process nodes amid escalating US export restrictions.

Washington’s October update to its export control regime greatly expanded restrictions on China’s access to advanced semiconductors and chip-making equipment. In response, Beijing has moved quickly to try to boost the ratio of domestic chips used in home appliances, vehicles and industrial devices.

China’s imports of integrated circuits slumped 27 per cent by volume in the first two months this year, according to customs data. The 15 per cent decline in imports last year was the first annual fall in two decades.

Xi’s exchange with Shan was widely picked up by state media as a strong signal from the Chinese leader regarding the country’s continued emphasis on shifting to domestically made technology.

Xi has emphasised technological self-reliance repeatedly during China’s “two sessions”, the annual parliamentary meetings of the NPC and the Chinese People’s Political Consultative Conference, according to comments published by state media outlets. On Monday, Xi levelled a rare targeted accusation against the US, saying it was leading other Western nations in “all-round containment and suppression of China”.

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Xi was also quoted by People’s Daily as saying China must ensure its food and manufacturing independence.

The website of the Central Commission for Discipline Inspection, China’s top anti-graft agency, mentioned XCMG’s progress in domestic sourcing and Xi’s remarks about “high-quality” development being “the primary task of comprehensively building a modern socialist country”.

China’s “whole-nation” approach to developing the local semiconductor industry and cutting reliance on imported devices has continued with Beijing’s blessing. Vice-Premier Liu He said at a symposium last week that China will continue to boost the local chip industry by leveraging both state and market power for growth.