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China beefs up its chip production – grew 40% in 1Q24

Backed by official support and continued industry investments, China's total chip production reportedly surged by 40% during the first quarter of 2024 – reaching 98.1 billion units.

South China Morning Post was the first to report on the increased production, stating further that the increase highlights the country's shift towards ramping its focus on mature processes, in the face of export restrictions. Furthermore, chip production capacity is continuously increasing.

Market intelligence provider Trendforce points to data released by China’s National Bureau of Statistics showing that China's chip production increased 28,4% in March alone – and achieving a record high of 36.1 billion units.

China's significant expansion in chip manufacturing is being driven in part by high demand from downstream industries like new energy vehicles. According to data, China's new energy vehicle manufacturing reached 9.587 million units in 2023, a 35.8% increase over the previous year. The first quarter of this year saw a 29.2% growth in new energy vehicle manufacturing to 2.08 million units. In the first quarter of this year, China's smartphone output climbed by 16.7%.

As previously reported by Evertiq and analysts like Trendforce, China's chip production capacity has been steadily increasing in recent years – with the establishment of semiconductor plants across various regions. Chip production output has – according to Trendforce – nearly doubled in the first three months of this year compared to the same period in 2019.

When the industry association SEMI released its global fab forecast report at the end of last year, it became clear that China is looking to increase its share of global semiconductor production – boosted by government funding and other incentives. As stated by SEMI, Chinese chip manufacturers are forecast to start operations of 18 projects in 2024, increasing their capacity from 7.6 million wafers per month in 2023 to 8.6 million wafers per month this year.

Due to US restrictions on advanced chip technology and equipment exports to China, new investment projects in China's semiconductor manufacturing are concentrating on mature process chips. According to TrendForce, China's fabs have reached 77, with the majority of them focusing on mature processes.

© TrendForce

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May 14 2024 7:33 am V22.4.46-2
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