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China, once the world's largest importer of chips, buys huge amounts of integrated circuits from abroad year after year. But since 2022, the situation has changed. This year, China has not only continued to reduce the number of chip imports, but also announced that SMIC's monthly production capacity has reached 170 million chips. Foreign media began to explore the consequences of cutting off Huawei's supply. For a long time, China has played a role as a consumer in the global chip industry chain, relying on semiconductor products provided by suppliers from various countries. However, China has a complete chip industry chain, covering all aspects from design to manufacturing to packaging and testing. Although there is still a gap with foreign countries in terms of manufacturing, independent production of mature chips has become possible.
SMIC, for example, has been able to mass-produce 14nm chips, capturing 74 percent of revenue in the Chinese market last year, with the remaining 26 percent coming from overseas. China is moving towards achieving a 70% chip self-sufficiency rate, which will provide SMIC with greater domestic market support. At the same time, China began to reduce its imports of chips. Last year, China's imports of integrated circuits fell 15.3 percent year-on-year, the first decline in 20 years. Entering 2023, the number of imports in the first two months decreased by 26.5% compared to the same period in 2022.
This downward trend is not only related to weak market demand, but also related to the increase in chip production capacity of domestic manufacturers. SMIC officially announced a monthly chip production capacity of 170 million wafers, along with four 12-inch fab projects under construction to produce mature chip wafers from 28nm to 180nm. Mature process chips account for 75% of the market, so SMIC is the right move to expand its production capacity in this area.
However, to produce high-end chips, you need to rely on extreme ultraviolet lithography machines, and the export of EUV lithography machines from the United States is restricted. SMIC decided to stick to its own development strategy, which will bring more orders and the ability to support domestic customers. Huawei's rules have had a negative impact on U.S. companies, not only leading to a sharp decline in sales, but also prompting companies to carry out large-scale layoffs and face problems such as continuous order reductions.
Bill Gates has pointed out that the United States will never be able to prevent China from achieving a strong position in the field of chips. China has been improving its chip self-sufficiency and overcoming many technical problems, including research in quantum chips, photonic chips and other fields, and achieving diversification of chip development.
In addition, the research team of Xi'an University of Posts and Telecommunications successfully prepared high-quality gallium oxide epitaxial wafers on 8-inch silicon wafers, which brought a major breakthrough in the field of ultra-wide bandgap semiconductor research. These news show that China will continue to increase chip research and development. The United States has been worried about the rise of its rivals, but it has not actively considered the needs and positions of its suppliers, ignoring the idea of free trade.
China reduced imports of 67.6 billion integrated circuits in January and February 2023, which means a significant loss of orders, with a huge impact on U.S. companies. If the fifth round of rules is introduced, it will have a major impact on many American companies that rely on chip sales. For them, it's like cutting off the source of money. China has shown its determination to continuously improve chip self-sufficiency, and the United States needs to re-examine its policies to safeguard its interests and international market order. With the continuous development and growth of China, the global chip industry structure will also undergo profound changes.
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