'Semiconductor Blackhole' in China, Imports Plunge 13% This Year Due to US Pressure

IC Imports Down 12.8% from January to September This Year
Decrease Larger Compared to 23.7% Growth in Same Period Last Year
US Embassy Official Meets with China Naurah Executives During Week

[Image source=Reuters Yonhap News]

[Asia Economy Beijing=Special Correspondent Kim Hyun-jung] China, once boasting the world's largest semiconductor chip import volume, has seen nearly a 13% decline in imports this year due to the ongoing technology war with the United States. As China responds to the US's overt regulations and pressure, tensions between the two countries are further escalating.

According to the General Administration of Customs of China on the 24th, the cumulative import volume of semiconductor integrated circuits (ICs) from January to September was 417.1 billion units, down 12.8% compared to the same period last year (478.3 billion units). This contrasts sharply with the same period last year, which saw a steep growth of 23.7% compared to the previous year.

◆Both semiconductor imports and exports decline= Imports in September slightly rebounded to 47.6 billion units from 44.9 billion units in the previous month. However, import value during the same period recorded $316.9 billion, a 1.5% increase compared to the previous year. The Hong Kong South China Morning Post explained this as "China purchasing chips at higher prices." The cumulative export volume until September was 209.7 billion units, down 10% year-on-year, while the price-based value increased by 7.3%.

Separately, the National Bureau of Statistics announced that China's semiconductor production in September was 26.1 billion units, down 16.4% year-on-year. The cumulative production volume until September decreased by 10.8% to about 245 billion units. The semiconductor import and production volumes, originally scheduled to be released on the 14th and 18th respectively, were postponed due to the 20th National Congress of the Communist Party of China (Party Congress), the country's largest political event. Although the reason for the delay was not disclosed, major foreign media suggest it was to avoid dampening the event, which confirmed President Xi Jinping's third term, with negative figures.

China is the world's largest semiconductor importer, with surging demand for semiconductors used in electric vehicles, smartphones, and other electronic products that have recently been focusing on exports. However, official customs data shows that China's semiconductor imports have decreased this year, marking the first year-on-year decline since early 2020, when the COVID-19 pandemic began spreading.

The import decline appears to be influenced not only by the US's comprehensive regulations but also by a contraction in manufacturing activities within mainland China. The Caixin Manufacturing Purchasing Managers' Index (PMI) recorded 48.1 in September, falling for two consecutive months following 49.5 in the previous month. However, the official national manufacturing PMI exceeded expectations at 50.1 in September.

[Image source=Yonhap News]

◆US accelerates pressure on China... Summons Chinese company executives to embassy= Over the past two months, the US has unleashed measures to block Chinese semiconductor manufacturers from accessing advanced US technology, equipment, and services. At the end of August, the US Department of Commerce notified global semiconductor companies Nvidia and AMD of export restrictions on high-performance computing graphics processing units (GPUs) for artificial intelligence (AI) to China. Last month, US semiconductor equipment companies Applied Materials, Lam Research, and KLA were ordered not to export equipment necessary for semiconductor processes below 14nm to China.

US government officials have engaged with Chinese semiconductor companies. The SCMP cited sources familiar with the matter, reporting that US embassy trade officials in Beijing held talks last week with executives from NAURA Technology Group, a Chinese semiconductor and semiconductor equipment company. This meeting took place after a NAURA Technology Group subsidiary was included in the US Department of Commerce's Unverified List (UVL) of 31 companies.

The UVL is a list subject to stricter export controls because US authorities cannot conduct routine inspections and therefore cannot accurately determine the end users. According to updated rules announced by the US Department of Commerce's Bureau of Industry and Security (BIS) on the 7th, companies on the UVL may be added to the Entity List, a US trade blacklist, if they fail to provide necessary data.

The SCMP stated that if the meeting between NAURA Group and US officials is confirmed, it signals Chinese semiconductor companies' willingness to comply with the latest US regulations to avoid harsh trade restrictions that could cause unwanted disruptions or ruin their businesses. Many Chinese companies that complied with BIS's verification procedures have been removed from the UVL.

Meanwhile, Chinese companies are responding to US pressure by requesting key US employees to resign. According to major foreign media, Chinese memory semiconductor manufacturer Yangtze Memory Technologies Co. (YMTC) has asked key US staff to leave, and a significant number have already departed from the company.

This content was produced with the assistance of AI translation services.