Semiconductor imports to China shrink for first time in two years, but value jumps nearly 20 per cent

China’s integrated circuit imports fell 4.6 per cent in January and February to 91.9 billion units year on year
China has been trying boost to domestic production amid a chip shortage that has pushed up prices, but it still relies on imports for advanced chips

Semiconductors

Yaling Jiangin Shanghai

Published: 9:00pm, 8 Mar 2022

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China’s import volume of integrated circuits (ICs) in the first two months of 2022 fell 4.6 per cent compared with the same period last year, marking the first year-on-year drop since the beginning of 2020, according to official customs data.

China imported 91.9 billion IC units in January and February, according to data from the General Administration of Customs. However, the value of the imports jumped 19.2 per cent to US$68.8 billion, amid a global chip shortage that has pushed up semiconductor prices.

For the last two years, monthly year-to-date IC import growth has hovered around 25 per cent, with the highest growth coming in March 2021 at 33.6 per cent. Growth started to decline at the end of the year. China combines data for the first two months of the year because of factory closures during public holidays, including New Year’s Day and the week-long Lunar New Year holiday.

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“It is too early to determine whether this is a pattern or a rare instance, because the imports this year are not low,” said Li Yin, an assistant professor at Fudan University who studies China’s technology policies and innovation. The early date of this year’s Lunar New Year, which fell on February 1, may have contributed to the decline, he added.

“Judging from the cost of these ICs, the average price has risen,” Li said. “But we may need to review the make-up to decide whether the change is caused by rising prices. It is also possible that low-cost chips are taking up a lower percentage this time.” China’s Customs does not provide a breakdown of IC categories, which includes dynamic random access memory (DRAM) chips and more advanced microprocessor units (MPUs).

The Chinese government has been ploughing money into the semiconductor industry in an effort to boost domestic production amid an intensifying tech war with the United States. But the country has not yet been able to sever its reliance on imported ICs because domestic producers lack the skills and technology for designing and manufacturing the most advanced chips.

At the end of 2020, companies started stockpiling chips because of supply concerns related to US-China tensions and the Covid-19 pandemic, resulting in record highs for IC imports.

Aided by strong government support, China’s semiconductor manufacturers accounted for about 9 per cent of global sales in 2020, according to a January report from the Washington-based Semiconductor Industry Association. If China’s chip industry maintains a growth rate of 30 per cent, it would reach 17.4 per cent market share by 2024, placing it just behind the US and South Korea, the report said.

06:01

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The semiconductor industry has continued to be a topic of discussion at this year’s “two sessions”, China’s largest annual political gathering that kicked off Saturday. A number of related proposals were made by top political consultants.

Li Biao, a delegate to the National People’s Congress and the president of Shenzhen-listed IC producer Haite Group, told state media that private companies are “one of the most crucial but weakest links” of China’s IC industry, and Beijing could offer more industry support through procurement and tax benefits.