According to Bloomberg, China's quarterly semiconductor production has shrunk for the first time since the beginning of 2019, mainly due to weak demand for consumer electronics and the disruption of production in regions including Shanghai due to the lockdown caused by the new crown epidemic.
According to China's National Bureau of Statistics, ic production fell 4.2 percent in the first three months of the year, as chipmakers saw a sharp drop in march. It was the worst quarterly performance since the country's chip production fell 8.7% in the first quarter of 2019.
At present, in order to prevent and control the spread of the epidemic, Shanghai has been locked down for nearly a month. From SMIC to Huahong Semiconductor, some large semiconductor manufacturers struggled to get components, with chip production down 5.1 percent in March.
Separately, executives at Chinese auto and hardware companies expressed concerns about supply chain disruptions last week as more and more regions announced stricter precautions after reporting local coronavirus cases, including Kunshan and Zhengzhou, home to large iPhone factories.
Yu Chengdong, executive director of Huawei Technologies Co., Ltd., wrote on WeChat last week that if suppliers in Shanghai continue to shut down, technology factories across the country could be forced to shut down after May.
Despite the lingering COVID-19 infection in Shanghai, China's Ministry of Industry and Information Technology has sent officials to help Shanghai's chip companies resume production. For years, China has seen the local chip industry as a strategic industry and a key component of its struggle for technological hegemony. According to the China Semiconductor Industry Association, although China still imported more than $432 billion worth of chipsets in 2021, its chip production has maintained double-digit growth for many years in the trade war with the United States.
Weak demand in the consumer electronics sector does not bode well for the chip industry, with demand for smartphones, PCs and TVs all affected by China's lockdown.
Jefferies analyst Edison Lee wrote in the report that demand for smartphones and some consumer electronics products is very weak, chips are an important part of smartphone parts, and how long it will take for this weakness to reach the wafer foundry industry is still uncertain.