In recent years, chips are one of the most important infrastructures in the global information technology industry, which not only supports the normal operation of various electronic devices such as our computers, mobile phones, and tablet computers, but also has an important impact on the development of various fields such as automobiles and smart homes. Due to the global monopoly phenomenon of the chip industry, the current chip prices on the market have been running at a high level. However, the recent sharp decline in US chip prices, why is this?
The reason for the decline in US chip prices is mainly due to the double whammy of the global epidemic and the Sino-US trade war. The pandemic has caused severe disruptions to global supply chains, especially in China, the world's largest chip market, where chip prices have skyrocketed due to factory shutdowns and insufficient supplies of raw materials. Under the influence of the Sino-US trade war, the United States will impose sanctions on Chinese technology companies such as Huawei, causing these companies to be forced to stop using American chips and instead look for chip supplies from other sources. This also indirectly caused the US chip export market to be hit hard, and prices began to fall.
However, despite the decline in U.S. chip prices, whether the Chinese market will continue to buy these cheap chips needs to be analyzed.
First of all, China, as one of the world's largest chip markets, has a very large demand, but in the Sino-US trade war, China has to strengthen its ability to independently develop chips and find more alternatives at home. Today, China already has considerable chip manufacturing technology and production capacity, and can produce high-quality chips. Therefore, the Chinese market will not be too interested in those American chips that are cheap but not of good quality.
Second, the Chinese government is also actively promoting the development of the local chip industry, encouraging local chip companies to strengthen technology research and development, improve product quality and performance, and reduce dependence on imported chips. China's Huawei has begun to develop chips on its own to reduce its dependence on American chips and gain more share in the domestic market. Therefore, the dependence of the Chinese market on American chips is gradually decreasing, and the impact of the decline in the price of US chips on the Chinese market will be relatively small.
Since the US government included China's Huawei in the Entity List, the trade friction between the United States and China has been intensifying. As a trade commodity between the two countries, the chip industry has been greatly affected. U.S. chip giants once restricted the sale of chips to Chinese companies such as Huawei, and Chinese companies are also accelerating the development of local chip industries. However, recently, the price of US chips has declined, and some insiders believe that even if the price of US chips is reduced, the Chinese market will not necessarily buy it.
First of all, the reasons for the decline in US chip prices are many. From the perspective of supply and demand, the demand for the global chip market continues to grow, but due to the impact of the new crown epidemic, the global chip production capacity has encountered a bottleneck, resulting in tight supply in the chip market and rising prices. However, recently, affected by the control of the epidemic, chip production capacity has gradually recovered, and supply has begun to increase, resulting in a decline in prices. In addition, after the United States increased its pressure on Chinese technology companies, the demand for American chips in the Chinese market also began to decline, resulting in an oversupply of American chips and further falling prices.
Second, the Chinese market also has some restrictions on the price reduction of US chips. Although price reductions can stimulate market demand, there are also many problems in actual operation. First of all, the price of the American chip itself is already higher than the domestic chip, even after the price reduction, it will still be more expensive than the domestic chip, which is not attractive to Chinese consumers. The demand in the Chinese market is gradually shifting to local chips, especially with the support and encouragement of government policies, and local chips are gradually maturing and stable. As a result, the Chinese market's demand for U.S. chips is decreasing, and even price cuts are difficult to reverse this trend.
Finally, the US government's policy of suppressing Chinese technology companies has also become an important factor affecting the purchase of US chips in the Chinese market. In recent years, the US government has increased its pressure on Chinese technology companies, and Huawei and other companies have been included in the Entity List and prohibited from doing business with US companies. These policies have not only caused great distress to Chinese companies, but also reduced the trust of Chinese consumers in American companies.