China gorging on silicon before Uncle Sam slams the door

China's semiconductor imports were up more than 14 percent in 2024 as companies in the country stockpiled ahead of widely expected fresh restrictions from Washington and pressure grows to develop local alternatives instead.

Between January and November this year, China imported a total of 501.47 billion chips, a 14.8 percent increase over the same period last year, according to the South China Morning Post. It was quoting figures released this week by Beijing's General Administration of Customs that showed the country spent $349 billion on imported silicon, up 10.5 percent.

This jump in the volume of semiconductors flooding into the country was attributed to fears from China-based businesses over what kind of new restrictions the US might impose, and just how severe they might be.

As it turned out, the outgoing Biden administration imposed an effective export ban on high-bandwidth memory (HBM), widely used in GPUs and other AI accelerators, as well as software tools for developing or producing semiconductors and certain types of chip manufacturing equipment.

The ramp up in buying activity around semiconductors and integrated circuits comes after previous reports suggested that the Chinese market saw its largest ever drop in imports last year, blamed on weakness in demand for semiconductors worldwide thanks to high inflation and a tepid post-pandemic recovery in China.

However, the volume of its chip imports and growing US restrictions are causing China to think again about its dependence on foreign silicon. Last week, several of the country's top industry bodies issued advice recommending that their members seek other sources than America for semiconductors.

The Semiconductor Industry Association, Association of Automobile Manufacturers, Association of Communication Enterprises, and China's Internet Society all published very similar opinions declaring that US suppliers were no longer secure or reliable sources and for companies to actively use chips manufactured by native corporations where possible.

• China strikes back with Nvidia antitrust probe as US tightens tech chokehold
• Beijing wants Chinese outfits to seek alternatives to US silicon
• Biden administration bars China from buying HBM chips critical for AI accelerators
• TSMC halts advanced chip shipments to Chinese AI companies

In response, China is already ramping up production of its own silicon, mostly in the form of everyday industrial chips manufactured using mature production process nodes. Its overall capacity is expected to increase by 6 percent in 2025. However, the country's semiconductor design and fabrication capabilities are still said to be lagging behind their Western competitors by several generations.

China has already struck back at the latest US restrictions with an antitrust investigation into GPU giant Nvidia, which could see the American megacorp stung with a $1 billion fine, according to some reports. Beijing also imposed its own block on exports to the US of key minerals for which China is a major source. These include elements such as gallium, germanium, and antimony, increasingly used in the semiconductor and automotive industries.

All of this points to the tech war between the US and China showing little sign of cooling off in the near future, especially with an incoming Trump administration likely to take a tougher line on China and more protectionist trade policies. ®