US-China tech war: China stockpiles chips and chip-making machines to resist US
- China’s imports of chips and chip production equipment soared last year despite Beijing’s call for self-reliance in technology
- Work-from-home arrangements during the coronavirus pandemic also raised demand for smartphone and computer chips
China is taking decisive steps to protect itself from a widening US technology ban, with imports of computer chips and the machines that make them surging last year.
Chinese businesses bought almost US$32 billion of equipment used to produce computer chips from Japan, South Korea, Taiwan and elsewhere, a 20 per cent jump from 2019, a Bloomberg analysis of official trade data shows.
And with companies like Huawei Technologies Co stockpiling supplies ahead of US sanctions, imports of computer chips climbed to almost US$380 billion – making up about 18 per cent of all of China’s imports for the year.
The US has steadily restricted Chinese firms’ access to American technology, pushing Beijing to redouble efforts to develop a domestic chip industry after years of slow progress. The Trump administration’s actions exposed China’s vulnerability in this key sector – and even with President Joe Biden now in office, Beijing is pushing ahead with a sweeping new plan to become self-sufficient in semiconductors.
“In the near term, China is dependent on imports to advance its semiconductor manufacturing,” said Dan Wang, a technology analyst at Gavekal Dragonomics in Shanghai. “China does not yet have the capability to produce the advanced chipmaking equipment it needs. The country is investing heavily, but success will require more than a decade-long effort.”
Chinese companies like Semiconductor Manufacturing International Corp (SMIC) have ramped up their purchases of the machines needed to make silicon wafers and computer chips. China became the largest market for such equipment in 2020, according to a December report from SEMI, an industry association.