Chinese companies continue to increase investment in domestic chip production as Beijing keeps focus on self-sufficiency
- China’s IC sales hit 1.05 trillion yuan in 2021, up 18.2 per cent from a year earlier
- Chinese companies are lining up to invest in semiconductor sector amid Beijing’s efforts to spur greater self-sufficiency amid US tech rivalry
Spurred on by Beijing, Chinese companies are upping their investment in the domestic semiconductor sector, after a year that saw sales of integrated circuits (IC) in the country surge 18 per cent to the highest growth rate in three years, according to Chinese media reports and industry data.
China’s IC sales hit 1.05 trillion yuan (US$158.6 billion) in 2021, an 18.2 per cent jump from a year earlier, according to data released on Wednesday by the China Semiconductor Industry Association, which represents 744 companies in the industry. It is the fastest pace in the past three years.
Providing a breakdown, the association said sales of the manufacturing sector increased 24.1 per cent to 317.6 billion yuan, higher than the growth rate of the design sector and the packaging and testing sector, which were up 19.6 per cent and 10.1 per cent respectively.
“The growth rate in 2021 sales shows signs of significant potential for future growth in China’s semiconductor device market”, said Wang Lifu, a Shanghai-based analyst at semiconductor consultancy ICWise.
Future momentum will depend on three main factors – whether the US will impose new sanctions on Chinese chip companies, whether Japan will restrict China’s access to semiconductor materials and equipment under US pressure, and whether domestic policies will be eased to support private-owned chip making companies, according to Wang.
As of Thursday, 81 companies listed in mainland China have set up industrial funds this year, and more than 60 per cent of them are targeting mergers and acquisitions in the semiconductor and new energy sectors, according to state-owned newspaper Securities Daily.
The numbers highlight the growing interest of Chinese companies in the semiconductor sector amid Beijing’s efforts to spur greater self-sufficiency in the production of ICs amid intensifying tech rivalry with the US.
China produced 359.4 billion ICs in 2021, up 33.3 per cent year-on-year, doubling the rate seen in 2020, according to data released by China’s National Bureau of Statistics in January.