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Top China Chipmaker Warns of Growing Shortfall as U.S. Decouples

  • SMIC says customers want to secure local China supply
  • Industry is fragmenting as governments prioritize local supply

Manufacturers in China are increasingly looking to source chips locally because they fear the U.S. and other governments may prioritize domestic users of the semiconductors vital to national security, a senior executive at the country’s top chipmaker said Friday.

Customers are telling Semiconductor Manufacturing International Corp. they need to secure a certain amount of capacity within China itself because of concerns the industry could become more fragmented, disrupting inflows from abroad, co-Chief Executive Officer Zhao Haijun said. Companies in China, the world’s factory floor for everything from Apple Inc. iPhones to Volkswagen AG cars, have turned more and more to local component suppliers and assemblers.