Over 5,700 Chinese Semiconductor Companies Closed Last Year... Did US Sanctions Work?

[Asia Economy Reporter Hyungsoo Park] About 5,700 Chinese semiconductor companies closed down last year. This appears to be influenced by the impact of U.S. export controls on advanced semiconductor equipment to China.

According to local Chinese media, 5,746 wafer companies in China either canceled their registration or were deregistered last year. This is a 68% increase compared to 3,420 closures in 2021.

The Chinese semiconductor industry is analyzed to have seen reckless entrants into the semiconductor business suffer losses and exit. This is due to the global semiconductor market downturn combined with the U.S. export controls on semiconductors to China.

China's largest semiconductor foundry company, SMIC, saw its Q4 revenue last year decrease by 15% compared to the previous quarter. Its Q1 revenue this year is expected to decline by 10-12% compared to Q4 of last year.

China's largest memory semiconductor company, YMTC, made decisions such as a 10% workforce reduction and suspension of a new factory in Wuhan just one month after being placed on the U.S. Department of Commerce's export blacklist.

In October last year, the U.S. announced export control measures that effectively prohibit the export of semiconductor equipment to Chinese companies producing ▲18nm (nanometer, one billionth of a meter) or smaller DRAM ▲128-layer or higher NAND flash ▲14nm or smaller logic chips. In December last year, 36 Chinese companies including YMTC were added to the export control entity list.

The digital economy accounts for 39.8% of China's gross domestic product (GDP). High-end wafers are essential for China's economy to continue growing.

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