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US sanctions Made China’s chip industry thrive

The US sanctions against companies such as Huawei mean that the Chinese chip industry is experiencing a huge recovery. In terms of growth rates, local producers dominate current global statistics. As the US news agency Bloomberg reported, according to its own calculations, 19 of the 20 fastest-growing chip manufacturers in the world come from China. A year ago, only eight Chinese companies were in the top 20. For example, the world’s largest contract manufacturer TSMC can only dream of the turnover growth that is partly realized here, although it can also count on a fairly ideal business environment.

The reason for this is that the device manufacturers from China are forced by the sanctions to use chips from domestic production. In some cases, the Chinese providers cannot provide the same top quality as some providers from the US or South Korea, but in many areas, there have been equivalent substitutes for a long time. In addition, the now bubbling income also helps to advance our own research and development.

Covid blockade also helped

In addition to the American sanctions, the Covid measures also played a role in the development. Foreign trade came to a standstill here due to the closures of important deep-sea ports and the technology companies in the country, which still used components from abroad, had to switch to domestic products. Last year, imports of semiconductor products to China reached a trading volume of $430 billion.

The majority is then processed into finished products, which are in turn exported. Beijing’s efforts to expand parts production domestically and thus further improve foreign trade are accordingly intensive. Given the situation, it appears that this pursuit will eventually be supported by US sanctions.

Mark Goodman

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