In the first two months of 2023, China’s chip production fell 17% year-on-year, driven by the global economic downturn and the tightening of U.S. trade sanctions affecting the country’s semiconductor industry.
Image Source: smics.com
According to the results of January and February, 44.3 billion units of integrated circuits were produced in the PRC, which contrasts sharply with the figures for the same period last year, when 57.3 billion units were produced, and the decrease was only 1.2%. At the same time, for the whole of 2022, the drop in production amounted to 11.6%, according to the South China Morning Post, citing data from the National Bureau of Statistics of the PRC. Typically, statistical agencies in the country combine data for January and February due to the Chinese New Year, when manufacturing activity noticeably slows down.
The fall in production over the first two months clearly reflects the effects of US sanctions on the world’s largest semiconductor market. The business was not limited to microcircuits alone: deliveries of microcomputers fell by 21.9% year on year, amounting to 46 million units, and smartphones were shipped 14.1% less during the same period. Following the United States, restrictive measures against China were introduced by Washington’s partners Japan and the Netherlands, which produce manufacturing equipment for the semiconductor industry.
In January and February, Chinese imports of chips also collapsed by 26.5%, amounting to 67.6 billion units, according to the statistics bureau, customs data – at the end of 2022, the decrease was 15.3%. Exports fell by 20.9%, while a year earlier the decline was only 0.5%. But in comparison with October last year, when Beijing has not yet canceled tough anti-pandemic measures, January and February still show an increase in production: in October, the production of chips fell by 26.7% year on year, and this is generally an anti-record. Moreover, it was the first decline in Chinese export growth in more than two years. In December, Beijing relaxed its anti-pandemic control measures, so the January and February figures predictably responded with growth.
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