PRC industrial policy prioritizes the virtue of market share – even at the expense of optimizing for profit and technological progress as Western economic orthodoxy might dictate for firm behavior. Profit and technological progress do not necessarily register as metrics of success within the PRC industrial policy rubric; more so as inputs for accruing outsize influence and leverage across industry chains as reflected in dominance of market share.
The threat of US regulatory actions and sanctions against PRC semiconductor champions is interpreted through this lens. And that’s why Huawei’s Mate60 and related SMIC 7nm developments are framed not simply as technological leaps but also as steps to overcome geopolitical competition and to guarantee a continued march toward gaining global market share.
“Huawei breaks through the US blockade!”
Chinese press this month has touted progress by these players operating under the harm of US sanctions and the attempt to encircle China with pressure from US allies and partners. The breakthroughs of September 2023 have been framed as essential to ensuring that Chinese champions can compete with international peers on a global stage – and timed to refute any Western assumptions about the potential efficacy of export restrictions. This progress is not technological progress for technology’s sake or simply to stand at the cutting edge; the point is to compete and to overtake the global leaders all along the industry chain in a battle for global market share in downstream devices as well as in the integrated circuits that animate them:
Huawei announced that it has successfully built an unprecedented global information industry chain. This is not just competition in various fields, but also a brand-new ecosystem that organically connects various fields together. This new information industry chain has a high degree of interoperability. Huawei will challenge Cisco, Apple, Qualcomm, Xindian, Nvidia, Google and Microsoft … From now on, Huawei will no longer be limited to communication equipment manufacturing or mobile phone manufacturing, but will become a leader in the global information industry chain, covering all-round technical capabilities from hardware to software, from communications to cloud computing. This will provide unprecedented opportunities for Huawei’s future development.
By virtue of this breakthrough and its market implications, Huawei and SMIC both score as an increased risk for their global profile.