Chip war: China's semiconductor imports expand ahead of tightened US restrictions

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China's semiconductor imports continued to expand this year, as mainland enterprises rushed to stockpile integrated circuits (ICs) from US suppliers ahead of the roll-out of fresh trade sanctions by Washington.

From January to November, China imported a total of 501.47 billion ICs, a 14.8 per cent jump in volume from the same period last year, according to data published on Tuesday by the General Administration of Customs.

The total value of IC imports recorded by the mainland in the past 11 months reached US$349 billion, up 10.5 per cent from a year earlier, customs data showed.

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The double-digit increase in terms of volume and value of IC imports reflects Chinese enterprises' concerns over the severity of tightened US semiconductor restrictions and the potential impact on their operations.

New measures, announced earlier this month by the US Commerce Department's Bureau of Industry and Security, imposed export restrictions on 24 types of chipmaking equipment and three categories of software essential for semiconductor development.

A significant focus of the updated restrictions is high-bandwidth memory (HBM) chips - used in data centres for artificial intelligence (AI) projects. It bars the export to China of US-origin and foreign-made HBM chips to prevent Beijing from building its AI capabilities for military applications.

The sweeping new semiconductor restrictions rolled out by Washington aims to curb China's ability to develop and produce advanced chips critical to military technologies, artificial intelligence and hi-tech weaponry. 

At the same time earlier this month, the Commerce Department added 140 Chinese semiconductor enterprises to its so-called Entity List, which generally bars them from doing business with US companies.

Meanwhile, China's semiconductor exports also recorded double-digit growth in terms of volume and value in the January-November period, according to the latest customs data, showing continued momentum in the country's production of so-called legacy chips.

The total number of IC exports hit 271.6 billion units, an 11.4 per cent gain over the same period last year. The value of these exports nearly reached US$145 billion, up 18.8 per cent from a year earlier.

China's October IC output - a broad measure of semiconductor production - grew 11.8 per cent from a year ago to reach 35.9 billion units, while the total IC output in the first 10 months of the year rose 24.8 per cent from the same period last year, according to data from China's National Bureau of Statistics.

Semiconductor giant Nvidia's founder and chief executive, Jensen Huang, delivers a speech at an event on artificial intelligence in Tokyo, Japan, on November 13, 2024.

In an apparent move to hit back at the US government's escalated chip restrictions, China's antitrust regulator on Monday launched an investigation into American semiconductor giant Nvidia. This was over the company's US$6.9 billion acquisition of Israeli networking products maker Mellanox Technologies, a deal that received China's approval in 2020.

Following the new US restrictions' announcement, China's state-backed bodies covering internet companies, semiconductor firms, automakers and communications network operators have called on their respective members to shun chips from US suppliers.

The China Semiconductor Industry Association declared that US chips were "no longer safe, no longer reliable".

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