US wants to contain China’s chip industry

Last year, a veteran Silicon Valley software executive took the helm of a startup in his native China, company records show. The startup told potential investors it would sell microchip design software that is mostly available from just a handful of large Western companies. The coveted and highly specialized software tool, known by its initials of OPC, is used in the design of many microchips and is crucial to the design of advanced chips. The production of advanced chips is one of the most contentious technological struggles now dividing the United States and China as they vie for economic and military supremacy. Washington is trying to curb China’s access to sensitive microchip design tools. The strategy behind the startup, dubbed SEIDA, shows why that containment effort is so challenging. Before becoming chief executive of SEIDA, Liguo “Recoo” Zhang had lived in the United States long enough to secure permanent residency and purchase a Silicon Valley home, according to people familiar with his career and public records reviewed by Reuters. He was employed by Siemens EDA, a U.S. unit of German industrial giant Siemens AG that dominates the market in China for the very technology SEIDA told investors it planned to sell there. At least three other Chinese-born colleagues from Siemens EDA joined Zhang at SEIDA. In a 2022 business-plan presentation prepared for investors, SEIDA called OPC “indispensable technology” and said it would offer the tool by early 2024. A Chinese version of the product, SEIDA said, would “break through the foreign monopoly,” helping China become self-reliant in chip technology. SEIDA’s ultimate goal, according to one slide: “Become OPC leader in the world.” The pitch attracted powerful Chinese investors. One backer, recent corporate filings reviewed by Reuters show, is an investment arm of Semiconductor Manufacturing International Corp, or SMIC. The state-backed, Shanghai-based company is China’s leading maker of microch