At Unisoc's Shanghai Showroom, China's Chip Ambitions Remain Strong In The Mature Technology Arena

Unisoc, a legendary Shanghai-based chip company expanding its market share in smartphone chips, is an example of how Chinese semiconductor companies can survive and perhaps thrive under US trade sanctions.

At the company's 2,200-square-meter showroom in the Zhangjiang Hi-Tech Zone, which the South China Morning Post visited recently, Unisoc showcased its achievements, including the technology team assembled last year to develop its own 5G chip designed for Covid restrictions.

According to a company representative, more than 200 engineers slept in the office for nearly three months to make the chip possible, and a team photo celebrates their efforts. According to a caption above the photo, "There are no superheroes, just a shining [example] of many people working together."

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The company then launched the -T820- chip in November 2022. UNISOC launched a 5G communication solution at the Mobile World Conference 2023 in Barcelona in March.

Although the United States continues to restrict exports of chips and advanced equipment to China due to national security concerns, the domestic semiconductor industry is still alive and kicking, especially in segments that focus on more mature chip technology.

According to the China Chip Design Industry Association, there were 3,243 chip design companies in China at the end of 2022, up 15% from a year ago, and their sales will increase by 16% in 2022.

UNISOC is a leading designer of communication chips. According to market research firm Counterpoint, Unisoc's share of the smartphone chip market in the third quarter of 2022 was 10%, behind Taiwan's MediaTek, US Qualcomm and Apple, but ahead of Samsung Electronics.

Bai Shenghao, a Counterpoint analyst, said in an interview with the Post that UNISOC has so far remained relatively unaffected by US sanctions because of its focus on less advanced chips.

However, Bai warned that the company faces the risk of weak consumer spending, particularly on low-end and entry-level smartphones, amid global economic headwinds.

According to company information, Unisoc's business covers more than 133 countries and 80% of its products are sold in overseas markets. Private equity firm Unisoc is pursuing a new fundraising round of 10 billion yuan ($1.45 billion), Reuters reported last month.

90% of Unisc's 5,000 employees are dedicated to research and development, which is "core" to the company's capabilities, a company official said on the show.

Unisoc, a subsidiary of state-backed Chinese semiconductor conglomerate Tsinghua Unigroup, reported 20% year-on-year growth to 14 billion yuan last year.

However, despite the success of 5G, Unisoc remains subject to US sanctions because China does not yet have a state-of-the-art manufacturing facility.

For example, HiSilicon, the chip design unit of Huawei Technologies Co, was hit by US trade sanctions against advanced chip exports - a move that forced the Taiwanese semiconductor maker to close its world's first foundry.

Unisoc introduced three 5G chips using a 6-nanometer ultraviolet lithography process last year, including the recently released T820. The company has not presented plans for mass production of the chips.

Two more chips, the T760 and T770, entered mass production and were adopted by low-end Chinese phone brands such as China Telecom, ZTE and Hisense.

UNISOC has also increased efforts to diversify its operations to reduce risk.

This includes expanding the application of 5G chips beyond consumer electronics to industrial solutions such as medical services, logistics, energy, mining, etc. The company's shipments of 5G Internet of Things (IoT) chips and modules also rose 146% last year.

This article appeared in the South China Morning Post (SCMP), the most authoritative voice in China and Asia for more than a century. For more SCMP stories, browse the SCMP app or visit the SCMP Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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