China’s semiconductor output posts biggest ever monthly decline in October amid weak demand, fresh US tech export controls

China’s integrated circuit (IC) output in October contracted by 26.7 per cent from a year ago, marking the biggest monthly decline on record for the domestic semiconductor industry, amid weak demand that mirrored the country’s first export growth decrease in more than two years.

Production of ICs last month, which totalled 22.5 billion units, showed a larger percentage drop in volume compared to the 24.7 per cent slump in August, according to data released by the National Bureau of Statistics (NBS) on Tuesday. October saw the largest single-month decrease since records began in 1997.

October’s chip output was also lower than the 25.9 billion units produced in April, when citywide Covid-19 lockdowns disrupted manufacturing activities in Shanghai and other mainland production hubs. China’s total IC output for the first 10 months of 2022 reached 267.5 billion units, down 12.3 per cent from the same period last year, NBS data showed.

This fall in monthly semiconductor production echoed the state of factory activity across the country because of weak demand, as the official manufacturing purchasing managers’ index fell to 49.2 in October, from 50.1 in September, according to NBS data. The 50-mark separates growth from contraction on a monthly basis.

Semiconductor Manufacturing International Corp (SMIC), mainland China’s top contract chip maker, last week warned that weaker demand for consumer electronics products is expected to weigh on its business outlook through the first half of 2023.