China Chips Away at the US Chip Wall

Can't make the most hi-tech chips but the production of low and medium-range ones is up 50% from last year

Marching forward to self-sufficiency

China’s output of integrated circuits (IC) in May reached an all-time, single-month high as the country pulled out all stops to produce chips amid a severe global shortage of semiconductors, according to data released by the central government on Wednesday.

China’s IC output in May surged 37.6 per cent from a year ago to 29.9 billion units, the National Bureau of Statistics data showed.

Separately, the nation’s automobile output for last month slid by 5 per cent year on year, according to the bureau’s data.  Carmakers have been particularly hard hit by the chip shortage.

May’s output of chips marked an increase from 28.7 billion units in April and 29.1 billion in March, showing that Chinese IC producers have been running at full capacity.

While China’s chip makers are not able to produce high volumes of advanced 14-nm node chips – the type needed to power the latest iPhone models – the country’s chip designers and manufacturers can produce mature technology ICs for home appliances and automobiles.

In the first five months of this year, China produced 139.9 billion IC units, a 48.3 per cent surge compared to the same period last year, the statistics bureau data showed.

At the same time, the chip shortage is still hurting in China as downstream buyers rushed to hoard semiconductors. China’s automobile output dropped 4 per cent in May from a year ago to 2.1 million units, even though new energy vehicle output surged 166.3 per cent to 237,000 units last month.

The latest data confirms that China is sparing no effort in its pursuit of self-sufficiency in semiconductors, for which the country relies heavily on imports and US technologies to satisfy domestic demand.

A report earlier this month shows that the number of newly registered chip-related companies in China more than tripled to 15,700 in the first five months of the year from the same period in 2020.

The surge in new chip companies and output comes on the back of a wave of investments in the sector, thanks in part to Beijing’s generous subsidies and other incentives.

China’s semiconductor industry has been hit with a slew of US sanctions imposed by Washington over national security concerns.

Mainland foundry Semiconductor Manufacturing International Corp (SMIC), which has been sanctioned for its alleged ties to the military – a charge it denies, is far behind Taiwan Semiconductor Manufacturing Co (TSMC) in fabrication of advanced chips, while China has been blocked from acquiring advanced lithography tools from Dutch industry leader ASML.

However, the country is seeing progress in more mature areas like manufacturing of chips using older process nodes, and in the fabrication of memory chips.

Although IC production is up in China, the country is still importing more to meet industry demand.

IC imports rose 30 per cent in the first five months of the year over the same period in 2020, reaching 260.35 billion units, or nearly double China’s domestic output in the same period.

In March, Beijing moved to waive levies on imported semiconductor parts and materials until 2030, as the world’s second-largest economy doubled down on efforts to turbocharge chip development amid the US-China tech war.

Source: The South China Morning Post

1 Comment
  1. Eddy says

    Make no mistake, China WILL gear up to manufacture the chips it needs. If it hasn’t the equipment, it is more than capable of manufacturing its OWN. When that happens, watch out World. L.O.L.

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