Tech war: China chip imports shrink as trade ties with Japan, South Korea and Taiwan weaken in the face of US restrictions

China’s chip imports continued to slump in the first four months of 2023 amid a global semiconductor industry downturn and continued value chain adjustments in the face of ongoing US restrictions on the export of advanced chips and semiconductor equipment to the country.

China imported 146.8 billion integrated circuits (IC) between January and April, down 21.1 per cent from the same period last year, according to data published by the General Administration of Customs on Tuesday. The total value of chip imports slumped 25.6 per cent to US$105.6 billion, down from US$141.9 billion last year, according to the customs data.

In contrast, in the first four months of 2022, the total quantity of China’s chip imports dropped 11.4 per cent year-on-year to 186.1 billion units while the total value increased 12.2 per cent amid a global chip shortage at that time.

The global chip market has seen a shortage turn into a glut since late last year, and China continues to be pressured by US sanctions on the export of advanced chips and chip-making equipment to the country, as the US-initiated Chip 4 Alliance – which includes South Korea, Japan and Taiwan – comes into shape.

China’s total imports from South Korea tumbled 27.7 per cent in the first four months, in the steepest drop among China’s major trade partners, according to Chinese customs data. Imports from Japan and Taiwan dropped 18.5 per cent and 27.5 per cent, respectively, according to the customs data on Tuesday. In comparison, China’s overall imports dropped 7.3 per cent.

Meanwhile, Taiwan shipped US$151 million worth of chip-making machines to the mainland and Hong Kong in April – a 26 per cent drop from a year earlier, according to figures from the Ministry of Finance in Taipei released on Wednesday.