China’s integrated circuit (IC) output rose 4.1 per cent in July, a slowdown from the previous two months, as the semiconductor industry continues to struggle with economic headwinds and escalating tech rivalry between Washington and Beijing.
Production of ICs reached 29.2 billion units in July, the fourth consecutive month of positive growth this year, according to data released by the National Bureau of Statistics (NBS) on Tuesday.
The growth rate, however, was slower compared with that in May and June, which showed increases of 7 per cent and 5.7 per cent respectively. The data covers companies with an annual turnover above 20 million yuan (US$2.9 million).
Despite continued monthly growth, IC output in the first seven months of this year was down 3.9 per cent from the same period of last year, totalling 191.2 billion units, the NBS data showed.
China says chip output picked up in June but remains down in first half of year
China says chip output picked up in June but remains down in first half of year
In April, China’s IC output recorded 3.8 per cent year-on-year growth to 28.1 billion units, the first monthly increase in 16 months. This year’s recovery comes as China’s economy continues to recover from strict Covid-19 restrictions and as it weathers the US-China tech storm.
The slower IC output trend in July comes as the domestic chip market struggles with weak consumer demand and high inventories. China’s smartphone sales fell 4 per cent year on year in the second quarter, the lowest second-quarter sales data since 2014, according to data from research firm Counterpoint.
Last month, Japan imposed export controls on 23 items including lithography equipment required for manufacturing advanced semiconductors, dealing another major blow to China’s semiconductor industry.
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The move was just the latest in a series of export controls imposed by the US and its allies to curb China’s technological progress.
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Last October, the Biden administration tightened export controls to curb China’s access to advanced chips, chip-making equipment and US talent.
That was followed by a joint agreement with Japan and the Netherlands in January to coordinate export controls covering certain advanced chip-making equipment.
Meanwhile, China has doubled down on its self-sufficiency drive to boost the domestic output of chips.
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In the first seven months of this year, China imported a total of 270.2 billion IC units, down 16.8 per cent from the same period last year, according to data published by the General Administration of Customs this month.
Last year, China churned out 324.2 billion ICs, down 9.8 per cent from 2021. The biggest monthly decline was last October, when IC production volume slumped 26.7 per cent to 22.5 billion units.
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