China Begins Stockpiling Chips, Chip-Making Machinery

Currently, many manufactures are dealing with a shortage of semiconductors, which are especially vital for tech manufacturing. China, dealing with both the current shortage and increasing tech bans from the U.S., is now taking steps to ensure it will have enough available domestically.

Last year, Chinese companies bought nearly $32 billion of equipment for computer chip manufacturing from Japan, Taiwan, South Korea, and other nations. This was an increase of 20% compared to how much was spent in 2019. Additionally, companies like Huawei Technologies have been stockpiling chips in anticipation of further U.S. sanctions, which led to imports of computer chips climbing to almost $380 billion. This alone made up 18% of all of China’s imports for 2020.

In recent years, the U.S. government under President Trump has taken more measures to restrict Chinese firms’ access to American tech. Huawei has been a prime target, as they were first prevented from buying chips and other components for smartphones from American companies. Soon after, further restrictions were put in place which meant no company that uses American equipment could supply Huawei. Measures like these have caused the Chinese government to invest more into domestic chip production. Even with President Biden now in office, the Chinese government is still committed to growing the industry, as they feel the actions taken by the Trump Administration exposed a vulnerability in what is such an important sector.

According to Dan Wang, a technology analyst at Gavekal Dragonomics in Shanghai, China is still currently “dependent on imports to advance its semiconductor manufacturing.” While the country is making such heavy investments now, Wang believes that “success will require more than a decade-long effort.” As such, it’s expected that chip manufactures will continue to see big profits from China, until the country can fully support high-quality domestic chip manufacturing.

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