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US restrictions see China's chip imports plummet 27% in first two months of 2023 | Insider Feeds %

US restrictions see China’s chip imports plummet 27% in first two months of 2023

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In brief: The United States’ restrictions against China’s semiconductor industry have seen the Asian nation’s chip imports crash by 27% in the first two months of 2023. That’s even higher than the total decline for all of 2022, and illustrates the effectiveness of US sanctions.

According to China’s General Administration of Customs data published Tuesday (via The South China Morning Post), the country imported 67.6 billion integrated circuits (IC) in January and February. That’s down 26.5% from the same period last year, and higher than the 15.3% fall recorded for the entirety of 2022.

The total value of these imports also declined, from $68.8 billion last year to $47.8 billion, a drop of 30.5%. That’s partly due to chip prices that have fallen due to oversupply and the general economic downturn.

China’s IC exports also fell in the first two months, down 20.9% to 37.3 billion units, while the total value of the exports dropped 25.8%.

The US has been tightening its restrictions on China’s chip industry over the last 12 months, which the United States says will prevent its global rival from developing semiconductors for military applications, including supercomputers, nuclear weapons modeling, and hypersonic weapons.

October’s restrictions on chipmaking tools from the Bureau of Industry and Security were some of the harshest, designed to cap China’s logic chips at the 14-nanometre node, DRAM at 18nm, and 3D NAND flash at 128 layers. The US has also prohibited AMD and Nvidia from selling some of its high-performance AI-focused GPUs to China, including team green’s A100 GPUs.

It’s not just the US that is hampering China’s plans to make its own advanced chips. In January, the Biden administration completed two years of negotiations with Japan and the Netherlands that will see the countries ban the export of advanced chipmaking devices to China. When the bans will come into effect is unclear, but Chinese chip firms are preparing for the new restrictions by stockpiling chipmaking equipment, components, spare parts, and materials in warehouses.

There was some good news for China’s economy as the end of zero-Covid policies caused a rebound in other manufacturing sectors. Whether that will be enough to offset the damage chip sanctions are causing is unknown. What is clear is that these restrictions are having an impact. In addition to the latest figures, China saw its first annual fall in IC imports in two decades last year, and the country’s semiconductor production industry experienced its largest-ever decline in August.

Despite the Biden administration restricting China’s chipmaking abilities, a recent report claimed it is still ahead of the US when it comes to research in 37 out of 44 crucial and emerging technologies, including AI, defense, and key quantum tech areas.

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