China to spend $300 bn on semiconductor imports as chip supply stops

China has reportedly announced plans of importing approximately $300 billion worth of semiconductors, as per an official statement at the World Semiconductor Conference held in Nanjing. The decision of China came in as the U.S. has put pressure on the supply of chips.

Wei Shaojun, VC, CSIA, stated that China is known to be the largest importer of chips across the globe. Last year, the region imported approximately $301 billion worth semiconductors.

The norm is rapidly changing since China-U.S relations have considerably weakened. The Trump administration progressively utilized its dominance in the semiconductor industry mainly to cut off Chinese organizations especially Huawei Technologies from global supplies.

The Department of Commerce, in May, regulated that custom-built semiconductors could not be sold to Huawei, if the U.S technology is being utilized in manufacturing. The rule further disconnected the business ties between, TSMC and Huawei, since both utilize American tools and software.

In the previous week, the U.S. further banned manufactures from selling semiconductors to Huawei, which included generic, and immediately available models, if at all the U.S technology was utilized during production. This rule has now limited the sourcing options of Huawei, making it improbable the organization can secure top-level chipsets.

Xi Jinping, Chinese President, has further re-highlighted a policy initiative named “dual circulation” which was announced in May for protecting its domestic businesses from external disruption.

The basic idea is to strengthen the internal supply chain of China, further maintaining a main role in international exports. The region’s reliance on foreign semiconductors is both a key incentive as well as an obstruction for accomplishing the desired goal.

Additionally, the region is spending huge amounts in trying to make its own top-class manufacturer. Last month, SMIC, a renowned chip maker in China, raised approximately $7.6 billion in a secondary listing in Shanghai, though capabilities are still far behind. Likewise, Wuhan-based HSMC, valued nearly $18 billion and is at the point of being bankrupt after construction stopped owing to a land dispute.

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