Chinese semiconductor output has fallen down by 17% in 2023. The first two months of the year saw the country producing only 44.3 billion units of ICs (Integrated Circuits) as compared to the 53.7 billion units for the same period in the last year. The 17% drop in January and February alone is way more than the overall drop of 11.6 % recorded for the whole of 2022.
The US sanctions have crippled the Chinese semiconductor industry, the result of which can be seen in the sharp decline in semiconductor production. Dwindling consumer demand and the economic downturn have also contributed to the fall in the production of chips in the world’s largest semiconductor market.
In the first two months of 2023, Microcomputer shipments saw a drop of 21.9% whereas the smartphone output saw a 14.1% reduction year on year. When it comes to semiconductor imports, China saw a sharp drop of 26.5% which is way more than the 15% drop recorded in 2022. Last year the IC exports of China surprisingly showed an increase of 0.5%. However this year the IC exports also decreased by 20.9% year on year.
Effect of US Sanctions and Zero Covid Policy on semiconductor business:
China which is the largest semiconductor market in the world has generally shown an upward growth trajectory in its semiconductor business. However, the ongoing US sanctions combined with the zero covid policy and economic slump saw the country recording its biggest monthly decline ever. Last year in October the semiconductor output fell by 26.7% year on year making it a record-breaking fall for the sector.
However after Beijing changed its Zero Covid Policy, the overall economic situation has become better in the country. China’s manufacturing sector is now rebounding from the slump and showing an upward trend for January and February 2023. This year in February, the manufacturing purchasing managers’ index (PMI) beat all expectations by rising to 52.6, the highest reading since April 2012. Even the semiconductor industry which showed an overall decrease in output is performing slightly better as compared to its performance in October last year.
Related:
- China Sees Sharp Fall in Semiconductor Imports: US Sanctions Taking a Toll on the Industry
- China Said to Use Whole Nation Approach to become Self Reliant in Semiconductors and Combat US
- US Export Controls Could Cause Long-Term Harm to Global Semiconductor Industry: CSIA Warns
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