Employees operate at Semiconductor Manufacturing International Corp. (SMIC) in Shanghai. (Photo : Getty Images)
China downplayed U.S. concerns over the country's ambitions in the semiconductor industry, saying that those concerns are overblown, China's technology ministry said.
Peng Hongbing, vice director of information technology at the Ministry of Industry and Information Technology, said that Chinese officials were worried at the U.S. criticism of its efforts, considering that many of its programs are still being planned.
"There's been unnecessary panic," Peng said in an interview. "We don't want the U.S. and China to have these conflicts."
Peng is involved in drafting plans for the country's semiconductor industry.
According to The Wall Street Journal, Peng's remarks echo the Chinese government's sentiment as China tries to talk down the economic rivalry with the U.S. amid Trump's strong criticism of some Chinese trade policies.
In recent weeks, Chinese officials have been meeting with U.S. trade groups and speaking to the Western media, in a bid to send a message to the new administration.
For both countries, the technology of building semiconductors is crucial to national security and economy. According to Nathaniel Ahrens, director of China affairs at the University of Maryland, semiconductors are considered "the holy grail for both sides."
In its final year, the Obama administration took a more serious look at Chinese money flowing into the sector and blocked one deal in December. The former administration estimated that China had invested nearly $150 billion for the next decade to bolster its chip industry.
Wilbur Ross, Trump's Commerce secretary, said in a confirmation hearing last week that it can be expected that the U.S. will continue with its hard stance against China's chip efforts as Trump is "very, very concerned" about the Chinese investments in the sector.
Peng, however, said that the $150 billion estimate exceeds the actual amount that the government is spending as the estimate includes projects that may never be funded.
He added that the development of the chip sector is needed by the country to reduce its dependence on imports. China imported about $228 billion worth of integrated circuits last year, customs data showed.
According to the White House report, the $150 billion estimate included all of China's planned chip investment over the next decade, such as money for building plants and overseas acquisitions of chip technology. It also includes investments by private groups with government links.
But analysts said that although China is planning significant investments on semiconductors, the reality should match official pronouncements.
"Many of the pledges continue to be more on paper than real dollars spent," Randy Abrams, an analyst at Credit Suisse, said.
Meanwhile, Ahrens said that the trade conflict between the U.S. and China may be expected to escalate as U.S. plans to recover its manufacturing jobs and China gets into advanced technologies.
For companies with investments in both countries, it would be a difficult choice as leading U.S. chip manufacturers often partner with the same Chinese companies that U.S. regulators are trying to foil.
This includes Intel Corp, which bought a 20-percent stake in the chip-design unit of China's Tsinghua Unigroup in 2014. The same Chinese company tried to buy Micron Technology Inc. in 2015. Tsinghua Unigroup said that it will invest $53 billion to build two chip factories, after it failed to buy one.
Last year, Intel also said that it would spend $5.5 billion to transform its old factory in Dalian into a "leading-edge" memory-chip plant.
Qualcomm Inc. has partnered with Guizhou Province in a joint venture to develop China-customized server chips, with the Chinese government having 55 percent ownership of the company.
"Most of these firms want to succeed in both China and the U.S.," Ahrens said. "It's going to be very hard for these companies to please two masters with conflicting goals."
