China chip imports suffer steepest drop on record after US curbs

TAIPEI – China’s chip imports suffered their steepest drop on record in 2023, hamstrung by prolonged economic uncertainties and US export controls.

The value of integrated circuits imported by the world’s largest semiconductor market fell 15.4 per cent to US$349.4 billion (S$465.4 billion), the sharpest fall since Chinese customs data became available in 2004 and falling for the second straight year. Shipment volume also declined, dropping by 10.8 per cent.

The sharp downturn underscores persistent weakness in the global chip industry, which has been struggling to emerge from a deep trough. Chinese demand, in particular, has been hurt by stringent Covid-19 curbs and a tepid post-pandemic recovery.

In 2023, sentiment received a further blow when United States President Joe Biden’s administration escalated restrictions on China’s access to cutting-edge semiconductors capable of training artificial intelligence models, from the likes of Nvidia and other US suppliers.

Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, saw its sales drop 4.5 per cent in 2023, although management indicated that it still expects healthy growth in 2024.