Context
The Mate 60 Pro, a smartphone from Chinese company Huawei that uses the Kirin 9000 CPU, has just been introduced. This processor was produced using a second-generation 7nm manufacturing process by Semiconductor Manufacturing International Corp (SMIC). This advancement demonstrates China's ability to manufacture 7nm devices, which has important implications for China's economic and strategic objectives. 
 
Obstacles for China’s dominance in semiconductor technology 
·         These CPUs are made utilising inefficient fabrication techniques, which results in a low wafer yield (less than 50%) when compared to Taiwan (over 90%). This is a barrier to China's dominance in semiconductor technology. 
·         Yield measures the proportion of wafers that were actually created to all wafers that were inserted into the manufacturing machinery. The productivity rises in tandem with the yield.
·         China's method is uncompetitive because it can cost up to ten times as much as other market players.
·         The 7nm production strategy represents the upper limit of China's capabilities using existing Deep Ultraviolet (DUV) lithography processes, which are less advanced than the Extreme Ultraviolet (EUVs) instruments used by the US and its allies. These tools are used to precisely etch designs in chip design. 
·         When employing DUVs, the yield is decreased since multiple rounds of layering on the wafer are needed.
·         It is unknown whether Huawei-SMIC can mass produce the current chipsets due to China's access restrictions to DUVs.
 
Comparison between the US and China systems 
·         Functional Specialisation -
-          Because it is a part of one of the most developed economies in the world, it is possible in the US-led ecosystem. 
-          With multiple nations specialising in different aspects of the chip production process, including as fabrication, lithography, EDA tools, and specialty materials, it is becoming more dispersed in nature.
-          China, on the other hand, has a difficult and expensive goal of achieving complete self-sufficiency along the full value chain. Beijing's potential is also constrained by its remote location and scarcity of resources.
 
·         Cost Allocation -  
-          The US-led ecosystem facilitates competition with a bigger pool of resources by spreading costs among participating countries.
-          China is under pressure to perform and deliver due to its limited resources and autocratic government, which lowers its tolerance for failure.
·         Human Resources -
-          The US-led ecosystem allows for the sourcing of talent from other locations thanks to its open immigration policy, whereas China predominantly relies on its domestic or global diaspora.
-          Moving human capital to China is becoming more and more difficult as a result of the intensifying competition in the high-tech sectors.
 
Conclusion  
China may have achieved some triumphs in specific areas of technological innovation due to the constraints of its isolated tech ecosystem and resource shortages, but it is unlikely that it will be able to reproduce these successes across all disciplines and along the whole value chain.

LTX Mains Question
Q. Discuss the potential for India's semiconductor industry while describing the US-China chip war.