China’s total chip manufacturing in the first quarter of 2024 allegedly increased by 40% to reach 98.1 billion units, according to a story published in a renowned Chinese Daily recently.
This growth in China’s chip manufacturing was reportedly spurred by continued industry investment in development as well as state assistance.
This emphasizes even more China’s drive to accelerate advanced semiconductor development processes in the face of export limitations. The capacity for producing chips is also growing quickly.
China’s National Bureau of Statistics recently revealed figures indicating that the country’s chip output increased by 28.4% in March alone, hitting a new high of 36.2 billion units.
USA Sanctions Succour China’s Chip Manufacturing
One of the main causes of the spike is the easy trade on “mature chips,” or chips made with manufacturing technologies older than 28 nm with the USA. In order to maintain supply chain resistance, the U.S. government purposely excluded these chips from its sanctions list.
These older chips are widely used in many essential devices, including cars and basic electronics (such toasters, phones, and medical equipment), and any disruption in the supply chain could have a negative impact on the entire world. Furthermore, the US administration concluded that there is no risk to national security from these chips.
According to researchers, China may benefit unintentionally from U.S. export restrictions on advanced chip technology in the form of a surge of state-sponsored investments that might cause overproduction and possibly give China the upper hand in traditional chip production worldwide.
China’s Chip Manufacturing Rise
A significant portion of China’s reported rise in chip manufacturing can be ascribed to the robust demand from downstream sectors like new energy vehicles. According to data, China produced 9.587 million new energy cars in total in 2023, a 35.8% increase from the previous year.
This year’s first quarter saw a 29.2% growth in new energy vehicle manufacturing, reaching 2.08 million units. Furthermore, China produced 16.7% more smartphones in the first quarter of this year than the previous year.
Semi-Factories in a Rise in China
With semiconductor factories springing up all over the place in recent years, China has been able to produce more chips than ever before. Compared to the same period in 2019, the first three months of this year saw nearly twice as much chip output.
China’s Chip Manufacturing To Rule The World?
Reports indicate that if current trends continue, China will become the world leader in the manufacture of legacy chips. By 2027, China’s mature-process manufacturing capacity is predicted to account for 39% of the worldwide market, up from 31% the previous year.
If the United States keeps up its present regulatory enforcement, this tendency may last into 2027. With no viable way to compete with businesses like Intel and TSMC on cutting-edge process nodes, China has been forced to create chips using outdated technology. China is in a frantic attempt to become self-sufficient, but it lacks the means to acquire the advanced lithography equipment required to produce microchip processors.
China Still Waits for Chip Imports
China continues to rely significantly on chip imports despite its drive toward self-sufficiency. The General Administration of Customs last week revealed data indicating that integrated circuit exports increased by 3% to reach 62.4 billion pieces during the first quarter, while integrated circuit imports increased by 12.7% to 121.5 billion pieces.
Semiconductors continued to be the most popular import into Mainland China last year, surpassing even crude oil, according to customs data.
Inputs taken from: TrendForce | Disk Manufacturer
