The China Semiconductor Industry Association, which represents 744 companies, released 2021 figures for the industry on March 9. The chip sector reached 1.05 trillion yuan (about 150 billion euros), in 18.2% increase compared to 2020. The highest growth for 3 years, yet China’s weaknesses in the field remain.
Semiconductors booming!
In detail, manufacturing is growing the fastest, 24.1%, with 317.6 billion yuan in sales (45 billion euros). The design and packaging sectors grew by 19.6% and 10.1% respectively. On the production side, China’s National Bureau of Statistics put the figure at 359.4 billion chips in 2021, up 33.3%.
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the South China Morning Post reports, from Hong Kong, the existence of a real bubbling of the Chinese world of semiconductors. Driven by trade tensions with the United States, China has set itself the goal of achieving self-sufficiency in a time of global parts shortages.
A proactive policy is being pursued in this direction. Subsidies, advantages on supply, preferential policies, have sparked an investment boom and could, in the long term, promote the emergence of major local suppliers. By 2020, 50,000 semiconductor-related enterprises had been established.
81 listed companies in China have set up industrial funds in 2021. In more than 60% of cases they aim to acquire or merge with semiconductor companies. In the past year, the government proudly announced 28 new factory projects, worth a whopping $26 billion.
China’s Deep Weaknesses
This good news for China, however, has a hidden side. First of all, the profusion of new opportunistic players can lead to the dispersion of the country’s energy and its money in the race for self-sufficiency.
Above all, factories built in China mainly manufacture low-end semiconductors. The trade conflict with the United States has closed the Middle Kingdom access to advanced production technologies and the most advanced chips on the market.
This delay is felt in the Chinese trade balance in the sector, which is very negative. The value of the country’s exports increased by 32% in 2021, reaching $153.8 billion. Far from imports, also up, by 23.6%, the value of which is 432.6 billion dollars according to official figures from local customs.
Until China manages to obtain sufficient technological know-how to create the most advanced semiconductors, self-sufficiency will remain a sweet dream. Well aware of the weakness of their great rival, the United States is doing everything to complicate Beijing’s task.