Hello, everyone, I am your old friend Watermelon, today I saw an American reporter on the Internet, he published a report on the development of China's semiconductor industry, roughly summarized, from 2019 to 2023 A detailed situation of the past few years, let us all understand, see what others say about our country's semiconductor industry, the following is the translation of the original text.
Amid the severe recession of China's semiconductor industry, more than 22,000 chip-related companies have ceased operations since 2019, and 2023 is a record year for company failures. This trend was highlighted by DigiTimes, citing a report by Chinese tech **TMTpost, which suggests that the industry is a challenging period, exacerbated by US sanctions and declining global demand for chips.
2023 has been particularly difficult, with about 10,900 chip-related companies failing, an average of about 30 companies failing every day. This peak surpassed the 5,746 companies that went out of business in 2022 and is part of a five-year trend impacting the chip design, semiconductor manufacturing, and fab equipment industries.
According to reports, in 2023, more than half of China's 3,243 chip design companies have annual revenues of less than 10 million yuan (about $1.4 million). Wei Shaojun, a leading figure in the China Semiconductor Industry Association and a professor at Tsinghua University, expressed concern about the trajectory of China's industry.
These companies are struggling with declining sales, not just declining sales. They are dealing with financial losses from unsold inventory due to market oversaturation and the broader recession affecting the semiconductor industry. There were major miscalculations in 2021 and 2022, when companies produced large quantities of chips, and the Covid-induced work-from-home trend is expected to bring about continued high demand. However, as the pandemic subsides, demand has fallen sharply, resulting in excess inventory in companies that are rapidly depreciating.
The investment dilemma and survival strategy of China's chip industry.
The situation is especially dire for small companies struggling to attract investment. U.S. restrictions on investment in China's semiconductor industry, combined with the reluctance of European investors due to U.S. sanctions, have exacerbated the problem. While large companies like YMTC and Huawei have invested heavily in finding alternative vendors and building clandestine factory networks, smaller companies lack the resources to adapt similarly. While China** is investing in the sector — recently pumping $1 billion into HLMC — it can't support every chip startup.
The record number of company failures in 2023 reflects the serious challenges facing China's chip industry: low demand, excess inventory, and financial difficulties. This has led to a major shift in the semiconductor landscape, with the industry now dominated by large companies as smaller businesses are increasingly forced out of the market.
Although I am not in the semiconductor industry, according to the information I know, although China's semiconductors have experienced decline and development, from our suppression to actively supporting domestic semiconductor companies to replace some equipment and technologies authorized by foreign companies, it is undeniable that we are making progress and relying on foreign companies.
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