China's chip industry has fallen into a "black hole", and 400 billion profits have come to naught
China's chip industry is suffering an unprecedented blow, with profits plummeting by 400 billion yuan, and foreign media in an uproar saying that it has been hit "hard". The industry is facing severe challenges, with overcapacity, weak demand, domestic enterprises struggling, and the pressure on foreign-funded enterprises increasing sharply.
The current situation of the industry is worrying
In recent years, the rapid development of China's chip industry has strongly supported the country's informatization construction, but it has also exposed some drawbacks. Affected by the global economic downturn, weak terminal demand, coupled with the rapid expansion of domestic production capacity, the oversupply situation of the industry has intensified.
Domestic chip companies are struggling to survive, and foreign-funded companies are also in trouble. According to statistics, in the first half of 2023, the capacity utilization rate of domestic chip companies will generally be less than 70%, and even less than 50%. Overcapacity, weak demand, profits fell sharply by 400 billion yuan, and the industry suffered a heavy blow. Foreign media questioned the prospects of China's chip industry, saying that it had been "hit hard".
The U.S. has imposed severe sanctions on Chinese companies such as Huawei, making it difficult for them to obtain advanced chips and process equipment, further exacerbating the industry's woes. Multinational companies such as South Korea's Samsung Electronics and the United States' Kelei have asked their employees to stop providing services to Chinese customers.
Policy support has been strengthened
In the face of the severe situation, the Chinese government has introduced a series of supportive policies to increase investment to help the chip industry tide over the difficulties.
The first is to increase the intensity of tax cuts for enterprises. For chip manufacturers or projects with a line width of less than 28 nanometers, corporate income tax is exempted from the first to the tenth year; For those with a line width of less than 65 nanometers, the tax exemption will be reduced for the first 5 years and halved for the next 5 years.
The second is to strengthen infrastructure construction. The chip industry chain is long, and the government will increase support for basic materials, processes, equipment, etc., and optimize the industrial ecological environment.
The third is to encourage enterprise innovation. The government will organize major core technologies, support enterprises to apply for national science and technology projects, and cultivate innovative enterprises.
Fourth, strengthen personnel training. The chip industry is highly dependent on talents, and the government will introduce measures to increase the introduction and training of talents.
Fifth, strengthen international cooperation. The chip industry is a global industrial chain, and China will strengthen cooperation with other countries in education, scientific research, and development.
The outlook is divided
Experts, it is difficult to reverse the decline in the short term, and the industry reshuffle is inevitable. However, in the long run, China's chip industry still has huge potential, and the crisis may accelerate the survival of the fittest.
On the one hand, China's chip industry started late, and there is a significant gap with the international advanced level. SMIC's current state-of-the-art process is only 14nm, a far cry from TSMC's 3nm process. The self-sufficiency rate of key equipment and materials is insufficient, and the talent pool needs to be strengthened urgently.
On the other hand, China is the world's largest chip consumer market, and domestic demand is strong. Emerging fields such as 5G communications, artificial intelligence, and new energy vehicles provide a broad space for the development of the chip industry. As long as we adhere to independent innovation and increase policy support, China's chip industry will be able to regain its shine and shine on the world stage.
China's chip industry is in a period of deep adjustment, but it is also in the throes of recovery. Although the status quo is bleak, as long as we adhere to independent innovation, increase policy support, and improve the industrial ecology, China's chip industry will be able to regain its shine and shine on the world stage.