Networks and Nations: The Interplay of Transnational Networks and Domestic Institutions in China's Chip Design Industry

Abstract

Using China's semiconductor design industry as a case, this article examines the claims made by global production network (GPN) and transnational technology community (TTC) scholars that transnational networks are driving technological development in emerging economies. Due to co-ethnic transnational technology networks and the politics of finance, China's firms experience distinct patterns of performance not well explained by either of these transnational network theories. The network explanations do not go far enough in recognising the domestic environment's importance in its interaction with transnational structures in determining the possibilities for development. This article argues that the state's relationship to firms structures the opportunities of financing for the firms thereby impacting their technological development behaviour. One type of firm, the hybrid foreign invested enterprise, combines foreign finance with commitment to China to drive China's technological development. Other firms, particularly those closely tied to the Chinese state, contribute less or even negatively to China's development.