A new report has revealed that the global chip sales had hit a record high last year. The market saw great performance in 2021, with China being the largest individual semiconductor market in the world.

The news arrives from SIA (Semiconductor Industry Association) earlier this week (Via LiveMint). As per the report, the chip sales across the globe reached 555.9 billion US Dollars last year. This marks a sizeable rise of 26.2 percent year on year. It further adds that the the semiconductor industry is projected to see another 8.8 percent growth this year as well as chipmakers continue to build up production capacity to meet the rising demand. China lead the market with a total sales of a whopping 192.5 billion US Dollars in 2021, marking an increase of 27.1 percent year on year.

SIA CEO John Neuffer stated that “It’s still really trending very strongly towards increased demand. We’re just not going to get this kind of slingshot effect that we had in the pandemic.” In other words, the industry may not maintain its explosive growth but will still see a steady rise year on year in 2022. Back in 2020, semiconductor sales were up by just 6.8 percent over the previous, but just a year later in 2021, chip sales crossed 1 trillion for the first time since 2018.

Notably, major chipmakers like TSMC (Taiwan Semiconductor Manufacturing Company), Samsung, and Intel have announced billions of dollars in investments to expand chip production through new facilities. Neuffer added that “We think in the foreseeable future that there’s going to be plenty of demand for us to do very, very aggressive plant construction.”

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Ever the US sanctions ended chip supply from TSMC to Huawei, the Chinese tech giant had placed its bets on various Chinese chipmakers and even started a few joint projects as well. However, it seems that the company might have just been abandoned by these semiconductor based companies in its home country.

For those unaware, the US had enforced new restrictions that cut off Huawei’s chip supply. Ever since then, rumors and reports had surfaced pointing at the company looking into alternatives through other companies like MediaTek and Qualcomm. But recent sanctions have reinforced the restrictions, as Huawei and its suppliers now are required to obtain a special license if they use American made technologies. This caused the company to go into “survival mode,” with the deadline being September 15.

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According to a DigiTimes report, Huawei had been aggressively stockpiling on chips just before the deadline. And now, any additional shipments have been suspended. But the issues for the Chinese smartphone maker doesn’t stop there as it is being reported that Chinese chipmakers have also quietly suspended shipments to Huawei. This ao includes all the joint development projects the companies had been working on together.

The reason for this is apparently due to fear of being targetted by the US for supplying Huawei. Industry sources close to the matter have revealed that the local chipmakers have suspended shipments since the US might also pressure them for being in breach of the US trade restrictions. If true, this would add another obstacle in Huawei’s operations that would deal a devastating blow that will be felt once its chip inventory finally dries up.

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China instituted a nationwide investment fund for the integrated circuit industry in January 2014 to encourage the development of the country’s integrated circuit industry. The fund known as National Integrated Circuitry Investment Fund or “Big Fund was managed by the China Development Bank  (CDB) and since then, the fund has made investment decisions in several projects aimed at boosting local chip production and technologies. Up to 50 companies in the chip industry have benefited from the funds so far, including Hong Kong-listed Semiconductor Manufacturing International Corp and Yangtze Memory Technologies, a 3D NAND flash chip maker.

There are indications now that CDB is closing in on fresh investments worth $19 billion in a bid to accelerate the development of the domestic chip market. ZTE‘s U.S sanctions and trade tensions with Washington acted as catalysts for this latest move.

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ZTE’s ban is said to have brought to the fore China’s heavy reliance on imported chips. China’s Ministry of Industry last week disclosed that the fund was raising its second investment round and that it welcomed foreign institutions to take part, without giving details. In the first instance, $22 billion was raised but this time around, the funding would raise up to $19 million for the project. The new funds will reportedly focus on three areas: memory chips, integrated circuit design and compound semiconductors such as silicon carbide and gallium nitride. The establishment of a viable local semiconductor industry will no doubt hurt the U.S chip giants like Qualcomm. But in this case, the U.S drew the first blood even though efforts in this regard had been in the works before now.

(source)

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