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In modern technology, chips play an important role, but their essence is a commodity, and their value should be determined by market demand. This article will delve into the sharp decline in Chinese chip demand caused by US policy intervention, and analyze the three reasons behind it. At the same time, we will study the strategies adopted by the US chip giants to regain the Chinese market, and the irreversible trend of chip substitution in China.
The chip market curve is soaring, but the intervention of US policy has forced China to fend for itself. In 2022, China's chip purchases fell by 60 billion, and import data is still declining, with a decline of 23% in the first three months of 2023, equivalent to a reduction of 32.1 billion chips. Behind this, American chip giants have announced major decisions.
The main reason is that the escalating sanctions of the United States have restricted the supply of American chip companies to China, causing serious losses to foreign companies. At the same time, China's chip manufacturing process has gradually emerged, reaching 14 nanometers, and will soon enter the 7-nanometer field. Domestic 14nm chips meet 80% of domestic demand and are no longer dependent on Western chips. In addition, consumer demand has declined, especially from Chinese companies, and foreign companies are not doing business.
In order to reverse this trend, American chip giants began to exploit loopholes in US policy. Indal took the lead in tailoring the A800 for China, replacing the A100 and H100, which are banned from export. Then, Intel launched a special model CPU for Chinese enterprises and GPU chips for China-specific data centers, which seemed inevitable. Qualcomm also said it can continue to export 4G products. U.S. companies have woken up, realizing the speed of China's chip research and development, and will miss the opportunity if they do not lay out the Chinese market in advance.
However, in the face of business, profit comes first. The U.S. warning is nothing to fear, free trade is shared globally, and no country can stop it. However, the current action of American companies seems to be a little late, the trend of domestic replacement of chips is irreversible, and some things cannot be regained once lost, such as the Chinese market. Foreign media have commented: Chinese no longer buy! Chip companies have a bumpy road ahead.
The above is the introduction, and the topic will be explored in depth next.
In the field of modern science and technology, chips are indispensable and are the core components of various electronic devices. However, despite its pivotal role in the application of technology, the essence of the chip is a commodity, and its value is ultimately determined by market demand. If the chip cannot meet the market demand, no matter how high the price is, it can only be piled up. With the rapid development of technology, the chip market came into being and flourished.
However, in recent years, the chip market has experienced unexpected fluctuations. The root cause of this fluctuation stems from US policy intervention. Specifically, escalating U.S. sanctions have had a huge impact on China's chip demand. Data show that in 2022, China's chip purchases will decrease by 60 billion compared with the same period, which is by no means a small number. More worryingly, chip import data continues to decline, falling by a staggering 23% in the first three months of 2023, equivalent to a reduction of 32.1 billion chips. In the face of such a huge market change, the American chip giants urgently need to take action.
So why did China's chip imports fall so sharply? There are three main reasons behind this problem.
First of all, the continuous escalation of US policy has set strict restrictions on the supply of US chip companies to China. As a result of this sanction, many foreign companies have suffered severe losses in revenue, so the Chinese market has become increasingly unattractive to these companies.
Second, China's chip manufacturing technology has made significant progress in a short period of time. China has reached 14nm process technology, and in the near future, it will enter the 7nm field. Domestically produced 14-nanometer chips are already able to meet 80% of domestic demand, which means that China no longer has such a strong dependence on Western chips.
Third, consumer demand is declining, especially from Chinese companies. As one of the largest markets in the world, China has always been a huge attraction for foreign companies. However, in recent years, the demand in the Chinese market has changed significantly, and foreign companies have felt the difficulty of sales.
In order to regain the Chinese market, American chip giants have taken action. Indal rate
Indal took the lead by tailoring the A800 for China, which is designed to replace the A100 and H100, which are banned from export by the U.S. government. This move shows the importance of Indal to the Chinese market and their willingness to invest resources to meet China's needs.
Subsequently, Intel also launched Chinese enterprise-specific CPUs and China-specific data center-oriented GPU chips. This series of operations seems to indicate that the US chip giants are bound to win in the highly competitive Chinese market, and they are unwilling to give up this huge business opportunity.
With the emergence of the leader, other American chip companies have also begun to join the competition. Qualcomm said it was willing to continue exporting 4G products, and this news attracted widespread attention in the market. U.S. companies are waking up to the speed and competitiveness of China's chip research and development. If you do not plan the Chinese market in advance, I am afraid that you will miss valuable opportunities.
However, the laws of business are cruel and profit comes first. U.S. government warnings and sanctions may have played a role, but for companies, the pursuit of profit and market share is the top priority. Free trade is a global consensus, and no country can hinder the development of the market forever. However, U.S. businesses now seem to be a bit late to act. The wave of Chinese chip substitution has become unstoppable, and once something is lost, it is difficult to regain it, such as China's huge market.
Foreign media commentators on this incident generally believe that Chinese consumers no longer buy American chips, which means that the chip industry may usher in a huge change. With the rapid development of China's chip industry and the continuous growth of market share, the US chip giants have had to rethink their strategies to adapt to this new reality. Nothing is more important than profit in front of businessmen, and American businesses must now find new ways to defend their interests and survive the fierce competition.
In short, changes in the chip market are inevitable, and the American chip giants must adapt to this new reality and rethink their strategies. The huge potential of the Chinese market will continue to attract the attention of global chip companies, but only those that can flexibly respond to market changes can be invincible in this highly competitive field. Today, Chinese no longer buy American chips, which means that the future of chip companies will face great challenges and opportunities.
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