China races to stockpile US chips before Trump ramps up sanctions

China is accelerating its efforts to stockpile microchips from the United States, as it looks to hedge against a potential wave of sanctions from the incoming administration of president-elect Donald Trump.

Beijing’s appetite for US semiconductors has surged in recent months, with purchases reaching US$1.11 billion in October – a 60 per cent increase compared with the same period last year, according to customs data released on Wednesday.

Over the first 10 months of the year, China imported US$9.61 billion of microchips from the US, up 42.5 per cent year on year. Since June, China’s monthly chip purchases from the world’s largest economy have consistently surpassed US$1 billion.

“China has been increasing the imports of chips and chipmaking machinery in anticipation of the potentially heightened US chip sanctions,” said Liang Yan, a professor of economics at Willamette University in the US state of Oregon.

Of the nine categories of microchip imported from the US, China has been focusing primarily on buying up CPU-based processors and controllers, as well as chips designed for storage and signal amplification.

Without China’s demand, it is difficult for chip production to be profitable and sustainable

Liang Yan, Willamette University

China continues to face challenges in developing more advanced chips. According to a Bloomberg report published on Tuesday, tech giant Huawei Technologies is still relying on the 7-nanometre architecture for its next two Ascend processors, as US technology restrictions prevent the company from accessing more advanced lithography machines.

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