In a strategic move to counter U.S.-led efforts hindering China’s semiconductor industry, the nation significantly increased imports of chip-making machinery, reaching nearly $40 billion, marking the second-highest value on record since 2015, according to Bloomberg data. This surge, despite an overall 5.5% drop in total imports last year, underscores China’s determination to achieve self-sufficiency in chip manufacturing. The heightened investments come as Chinese companies seek to advance semiconductor capabilities, circumventing export controls imposed by the US and its allies, which have impeded access to crucial chip-making equipment.
Chinese chip manufacturers are aggressively investing in new semiconductor factories, aiming to bolster the nation’s capabilities and navigate around the export controls that have limited access to cutting-edge chip manufacturing machinery. The hurdles imposed by the U.S. and its allies have made it challenging for Chinese companies to acquire the necessary equipment, slowing down the development of China’s high-tech sector, perceived as a potential threat by the U.S.
China’s increased chip-making machinery imports were particularly notable from the Netherlands, surging ahead of new export controls that further restricted companies like Semiconductor Manufacturing International Corp (SMIC) from acquiring the latest machinery. Last month witnessed a staggering 1,000% year-on-year jump in lithography equipment imports from the Netherlands, reaching $1.1 billion as companies rushed to secure purchases ahead of the enforcement of Dutch restrictions.
The heightened demand and urgency in acquiring machinery were exacerbated by export controls, with Dutch company ASML Holding NV cancelling shipments of some of its high-end machines to China at the request of the U.S. government. These cancellations occurred before the implementation of export bans on advanced chip-making equipment.
However, despite the surge in chip-making machinery imports, China’s overall chip imports experienced a significant decline, marking the steepest drop on record last year. Prolonged economic uncertainties and U.S. export controls played a pivotal role in this decline. The value of integrated circuits imported by China, the world’s largest semiconductor market, fell by 15.4% to $349.4 billion, the sharpest decline since Chinese customs data became available in 2004, and the second consecutive year of falling values. Shipments also saw a notable decline of 10.8%.
The evolving landscape of global semiconductor dynamics, coupled with geopolitical tensions and export controls, continues to shape China’s strategy for achieving self-reliance in chip manufacturing. As the nation intensifies investments and explores avenues to overcome barriers, the semiconductor industry remains at the forefront of the ongoing technological competition between nations.