China’s chip imports post a steep decline in the first two months as US sanctions bite

March 8, 2023 8:30 am

China's customs data released on Tuesday show that the volume of chip imports fell by 27% in the first two months of 2023.

According to data issued by the General Administration of Customs, China imported 67.6 billion integrated circuits (IC) in January and February, a decrease of 26.5% from the same time in 2017. The reduction was more than the yearly dip in IC imports of the country of 15.3% that was reported for the entire year of 2022.

Moreover, the overall value of imports decreased by 30.5% to US$47.8 billion from US$68.8 billion in the previous year. A supply surplus and a weakening global economy are to blame for the decline in chip prices this year, which is the opposite of what happened a year ago when prices were still growing as the market recovered from the 2021 chip shortage.

In contrast to a 0.5% growth in the same period last year, China's IC exports decreased by 20.9% year over year to 37.3 billion units in the past two months. Exports decreased by 25.8% in value overall.

Semiconductor Manufacturing International Corp, the largest chipmaker in China, issued a warning in February that equipment shortages would cause the start of mass production at its new US$7.6 billion Beijing facility to be delayed by one to two quarters.

As the US has tightened export restrictions on advanced chips, particularly those with artificial intelligence applications like Nvidia's A100 graphics processing unit (GPU), China is also experiencing a decrease in its import options. At the same time, China has increased domestic semiconductor production using advanced process nodes.