Because the geopolitical panorama turns into more and more fraught, Hong Kong is positioning itself as a pivotal participant in China’s nationwide technique and the semiconductor improvement, significantly in circumventing U.S. export controls and driving technological innovation. The latest developments in Hong Kong’s investments in third-generation semiconductors spotlight a deliberate technique to align with China’s targets whereas exploiting gaps in U.S. rules.
Hong Kong’s Newest Funding in Semiconductors
In Could 2024, the Legislative Council’s Finance Committee discussed a big funding of two.83 billion Hong Kong {dollars} (HK$) to ascertain the “Hong Kong Microelectronics R&D Institute,” centered on third-generation semiconductors. This initiative includes establishing a pilot manufacturing line geared up with important instruments similar to I-line lithography tools, photoresist improvement instruments, high-temperature ion implanters, high-temperature annealing furnaces, and skinny movie instruments. The speedy approval of this funding, in simply 84 minutes, got here underneath the urging of Hong Kong Know-how and Innovation Secretary Solar Dong.
When requested by pro-Beijing lawmakers whether or not the expertise in query is banned by the U.S. authorities, Solar emphasised that I-line lithography instruments required for third-generation semiconductor manufacturing are happily not restricted underneath U.S. export controls but. Subsequently, the funding ought to be accepted quickly earlier than this loophole is closed.
In different phrases, Hong Kong is looking for to develop applied sciences that aren’t but underneath stringent scrutiny, aligning with China’s broader technique to realize technological self-sufficiency amid rising tensions with america.
Understanding Third-Technology Semiconductors and I-line Lithography Instruments
I-line lithography instruments are a kind of photolithography tools used within the semiconductor manufacturing course of. These instruments utilize ultraviolet gentle with a wavelength of 365 nanometers to sample intricate designs onto silicon wafers. Whereas I-line lithography is an older expertise in comparison with deep ultraviolet (DUV) and excessive ultraviolet (EUV) lithography, it stays important in manufacturing sure forms of chips. These embrace third-generation semiconductors like silicon carbide (SiC) and gallium nitride (GaN), that are utilized in high-performance purposes however don’t all the time require the extraordinarily fantastic decision supplied by newer lithography applied sciences.
These third-generation semiconductors, primarily composed of wide-bandgap supplies similar to SiC and GaN, supply important benefits over their first-generation (silicon-based) and second-generation (compound semiconductors) counterparts. These supplies boast increased effectivity, better thermal stability, and better energy density, making them supreme for purposes in electrical automobiles, renewable vitality programs, and high-frequency communication gadgets.
The selection to concentrate on third-generation semiconductors is a strategic transfer for China and Hong Kong to sidestep current U.S. export controls. By investing closely in much less superior applied sciences and tools that aren’t but topic to U.S. restrictions, Hong Kong is successfully making a buffer towards potential future sanctions.
Solar emphasised the need for speedy funding approval and procurement earlier than it was too late, reflecting an acute consciousness of the risky export management panorama and insurance policies of the Bureau of Business and Safety underneath the U.S. Division of Commerce. There’s a palpable sense of urgency to ascertain these capabilities earlier than any additional restrictions will be imposed.
Hong Kong’s Technological Blueprint and Its Strategic Implications
This technique will not be new. Way back to 2022, the Hong Kong Utilized Science and Know-how Analysis Institute (ASTRI) advocated for elevated assets to draw Chinese language American scientific expertise to Hong Kong, thus contributing to China’s semiconductor improvement. ASTRI CEO Ye Chenghui stated, “Mainland chip firms could discover it troublesome to recruit American Chinese language at current. If American Chinese language are keen to settle in Hong Kong, these applied sciences will be dropped at the nation, representing essentially the most superior and superior fields, finally driving the whole nationwide semiconductor improvement.”
This displays a long-standing operational mannequin the place China leverages nationalistic and united entrance methods to recruit abroad Chinese language expertise to additional its technological ambitions. In Hong Kong’s case, the hope is that its society and financial system – which, whereas much-constricted underneath the 2020 Nationwide Safety Legislation, are nonetheless freer than mainland China’s – will show extra engaging to the Chinese language diaspora.
Moreover, the institution of the Nationwide Engineering Analysis Heart for Software Particular Built-in Circuit System (Hong Kong Department) in 2012, endorsed by China’s Ministry of Science and Know-how, highlights a decade-long collaboration on semiconductors particularly. This middle focuses on analysis in areas like 3D built-in chips, third-generation semiconductors, and low-power wi-fi connectivity chips.
Hong Kong’s newest 2024/2025 coverage handle additional cements its grand technique to change into a global innovation and expertise hub. Town has outlined a complete plan to spice up its innovation infrastructure, analysis capabilities, and expertise pool. The institution of the Hong Kong Microelectronics R&D Institute is a major factor of this technique, geared toward fostering collaboration between universities, analysis facilities, and trade to advance third-generation semiconductor applied sciences.
A key pillar of this technique is the Hong Kong-Shenzhen Innovation and Know-how Park, positioned within the Lok Ma Chau Loop. This park is designed to combine Hong Kong extra deeply into the Higher Bay Space, thereby aligning with China’s nationwide improvement technique whereas connecting extra intently with world markets. The park’s first buildings can be operational by the tip of this yr, with efforts already underway to draw funding and expertise. The federal government’s ongoing help for the park’s improvement, together with the drafting of a improvement white paper, underscores its strategic significance.
Along with the park, Cyberport is establishing an AI Supercomputing Heart to fulfill the computational wants of analysis establishments and industries. The primary section of this facility is anticipated to be operational by the tip of this yr, with the middle projected to supply as much as 300 petaflops of computing energy by early 2026, equal to processing almost 10 billion photographs per hour. This initiative is a part of a broader HK$30 billion funding scheme to help AI improvement in Hong Kong, attracting world AI specialists and enterprises.
A notable side of Hong Kong’s technique entails leveraging its universities’ expertise switch workplaces. From the 2024/2025 fiscal yr, every of the eight sponsored universities will obtain as much as HK$16 million yearly to reinforce their expertise switch and market enlargement providers. This method suggests a dual-use technique the place educational establishments act as conduits for transferring superior applied sciences, probably benefiting China’s broader strategic targets. The minimal oversight and collaboration with worldwide establishments increase issues about these applied sciences ultimately falling into the palms of Chinese language authorities, aligning with the Chinese language Communist Occasion’s military-civil fusion targets.
Conclusion
At the moment, China considerably lags in producing first and second-generation chips, primarily silicon-based, that are essential for synthetic intelligence (AI) and graphics processing items (GPUs). These chips are the spine of contemporary computing, driving improvements in AI, large information, and high-performance computing. China’s lack of ability to domestically produce these superior chips leaves it depending on overseas expertise, making a strategic vulnerability. Whereas third-generation chips supply potential progress, their capacity to raise China’s place within the world semiconductor trade stays unsure and requires cautious remark.
Regardless of this, Hong Kong’s strategic investments in third-generation semiconductors and AI are noteworthy. These investments are a calculated response to the evolving geopolitical and financial panorama. By specializing in applied sciences not but closely regulated by worldwide controls, Hong Kong is positioning itself as a important participant in China’s nationwide technique for technological self-reliance. This method helps circumvent U.S. export controls and drives innovation in high-impact areas, aligning with China’s long-term targets. The state of affairs in Hong Kong ought to be intently watched by the U.S. authorities and related stakeholders.
