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China’s chipmaking just hit a record high, but self-sufficiency is still far away

The country has invested $50 billion in chipmaking over the last 20 years, but it still imports far more than it produces
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Francis Scialabba

less than 3 min read

Beijing has wanted China to become self-sufficient in semiconductor manufacturing since before it was cool a global imperative driven by shortages. The government has invested $50 billion in the industry over the last 20 years. And the country has a lot of growth to show for it:

  • China’s semiconductor output hit a record high in June, in which it produced 30.8 billion chips—a 44% increase from last June.
  • And in H1 2021, China produced 171.2 billion units, up 48% year over year.

But, but, but: This record output still isn’t enough to meet demand. The country imported 51.9 billion chips in June alone, and 310 billion chips in H1 2021, a 29% annual increase.

Elsewhere in the world, governments are investing in their own onshore chipmaking capacities. In the US, a $52 billion semiconductor subsidy got through the Senate (TBD on the House). The EU has pledged $150 billion by the end of this decade, and South Korea plans to spend a whopping $450 billionthrough 2030.

Looking ahead: Self-sufficiency is a long and bumpy road, and one that might wind up being a dead end. For China, ASML’s extreme ultraviolet machine—a massive, $150 million chip-etching machine necessary for producing the most advanced chips—presents a major pothole. ASML, a Dutch company, has a near monopoly on the machines, and the US has asked it not to sell to China.—DM

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Keep up with the innovative tech transforming business

Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.