Bob's Gutsy Leadership Blog

China’s Semiconductor Plans: A Lesson in How to Lead Change!

There is nothing quite as important in an organization as having a leader who is highly skilled in spotting vulnerabilities, developing the goals to fix things, telling the entire organization what you want to happen, developing the plan to achieve the goal, lining up the necessary talent, and then executing with excellence. While it is usually a company that you come across that is doing this well, it is highly unusual to see a country do this well, particularly a country of 1.4billion people; namely, China.

1.) The Vulnerability – China is the leading consumer of semiconductors (it consumes more the 50% of all semiconductors annually). And yet, Chinese manufacturers only meet around 30 % of their own demand. Given the continued explosive growth of technology application with new tools like robotics, big data, AI, 5G, etc., the Chinese government clearly saw the need for their country to have a greater domestic self-supply of semiconductors, and they viewed that need as a vital component of their future.

2.) Setting the Goal - Two years ago, the Chinese government publicly announced its intention to tackle this vulnerability. Specifically, the State Council of China, at the direction of President Xi Jinping, announced the National Guidelines for Development and Promotion of the Integrated Circuit Industry. This specifically set the goal of growing domestic production of core technology components, including semiconductors, to 40% by 2020, and 70% by 2025.

3.) The Plan – At the time of the announcement of the goal, an initial project fund was set up valued at US$21.8 billion to begin tackling the semiconductor technology gap between Chinese manufacturers and the global leaders in this area. Beneficiaries of this funding are organizations such as Semiconductor Manufacturing International Company (SMIC), China’s top foundry and currently the world’s fifth-largest chip maker. These efforts are well underway, and China is currently building 14 new chip foundries, and there may be others that are not yet public knowledge.

4.) The Talent – China has always had tons of raw talent, as evidenced by their domination of the international math and science tests for 15 year olds. Usually their best and brightest are sent to colleges in the USA or Europe. The majority would stay to work in places like Silicon Valley. Now, 80% of those students return to China after graduating, given all the attractive, high-paying jobs in China due to aggressive goals in semiconductors, AI, Quantum computing, robotics and big data.

Also, China has poured big money into strengthening its universities, and in the 2018 US News & World Report ranking of the top ten Engineering Schools in the world, China had three (including the top school –Tsinghua University), versus two for the USA ( MIT and Berkeley), two in Singapore, one in Malaysia, and two for Europe. Net, China now has plenty of strong technical talent.

As a US citizen, all of this is very disturbing, but when you step back and simply evaluate it as an example of a big organization tackling a problem, the leadership here is very impressive.   The Chinese leaders are following the age old formula for achieving change.

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