China, which for nearly two decades has aimed to make semiconductor manufacturing one of its pillar industries, may realize the dream in the next 10 years, according to executives and analysts surveyed by EE Times.

China’s initiative comes as the nation imports more than 90 percent of the semiconductors it uses to assemble mobile devices such as Apple’s iPhone and iPad. The nation’s chip imports, exceeding US$160 billion in value, cost more than its oil imports.

China is targeting a compound annual growth rate (CAGR) of 20 percent for the domestic chip industry between now and 2020, with potential financial support from the government of up to RMB 1 trillion (US$170 billion) over the next five to 10 years, according to a report this year by market consulting firm McKinsey & Co. After years of failed attempts, China’s industry is poised to lead global production growth.

“China's chip production will grow much faster than the overall IC market,” says IC Insights president Bill McClean. “Government programs and incentives are going to help.”

The expectation has been a hot-button issue for the chip industry in Taiwan, which accounts for nearly a third of the world’s production and shares language and cultural ties with China. Taiwan, which China considers a renegade province, has restricted investment in China by its domestic chip companies on fears it will lose jobs and technology to its political rival.

Be that as it may, industry executives from Taiwan started the biggest foundries in China, Semiconductor Manufacturing International Corp. (SMIC) and Shanghai Huahong Grace Semiconductor Manufacturing Corp., more than a decade ago to tap into the world’s biggest electronics market. The Chinese foundries have so far failed to grab much business from Taiwan Semiconductor Manufacturing Co. (TSMC), which has about half of the global market. China’s biggest foundry, SMIC, has a 5 percent share.

SMIC is likely to grow, according to Randy Abrams, an analyst with Credit Suisse in Taipei.

“We are seeing [Chinese] foundries receive favorable government grants, equipment subsidies, equity stakes from state-backed enterprises, opportunities for joint-venture fab investments to share capex with local governments and foreign suppliers manufacturing locally, as we saw with Qualcomm’s sourcing at SMIC,” Abrams says.

This story was originally published on EE Times.