Tech war: China chip imports fall in 2023 but semiconductors remain country’s largest item ahead of crude oil
China’s imports of integrated circuits (IC) plunged by both volume and value in 2023, although semiconductors remained the mainland’s largest import item ahead of crude oil, according to customs data released on Friday.
In 2023, China imported a total of 479.5 billion IC units worth US$349.4 billion, down 10.8 per cent by volume and 15.4 per cent in value from 2022, official data showed. By comparison, the country spent US$337.5 billion importing crude oil last year, a fall of 7.7 per cent.
The weaker imports of ICs and semiconductor devices reflect economic headwinds in the world’s second-largest economy last year, in particular China’s weak smartphone and laptop sales. Meanwhile, the data was also affected by China’s efforts to boost local output to cut reliance on imported chips.
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Under rigid US export control measures, China is unable to directly buy advanced chips, such as the H100 and A100 graphics processing units designed by US-based Nvidia. However, the country is making solid progress in boosting local output of legacy chips, including those being used in cars and home appliances, to satisfy domestic demand.
According to the customs data, China’s imports of diodes and similar semiconductor devices, a proxy of garden-variety commodity chips, were also down by 23.8 per cent in volume terms last year.
The US intensified its export controls on China in October 2022, which caused widespread disruption for global fabless and semiconductor tools companies in their China-related businesses. In October last year, the US further tightened the noose, cutting China’s access to workaround chips that Nvidia had tailor-made for mainland customers.
In a state-backed drive to build a more resilient domestic chip supply chain, China’s semiconductor players have upped their localisation efforts with closer cooperation between the biggest companies. These efforts may also have contributed to the decline of imported chips as China added mature capacity to enable production of the vast majority of chips locally.
China currently has 44 semiconductor wafer fabs in operation and a further 22 under construction, Taiwan-based IC research company TrendForce said in a recent note. By the end of 2024, the capacity for mature chip production – defined as 28-nanometre and older technologies – will be expanded at 32 Chinese fabs.
The massive expansion, which has caused alarm in the US and EU, will see China’s global share of mature process capacity reach 39 per cent by 2027, up from 31 per cent in 2023, with room for further growth if equipment procurement proceeds smoothly, the TrendForce note said.
