Covid restrictions, US threat lead to fall in Chinese chip output

Hong Kong: Stringent Covid-19 measures had led to supply chain disruptions and caused a sharp fall in semiconductor output in China in July. Also, the United States has doubled its domestic chip manufacturing, seeking help from allies like South Korea, which also adversely affected Chinese output, IANS reported citing the media.

South China Morning Post reported that the National Bureau of Statistics had released data which suggests that integrated circuits (ICs) production fell 16.6 per cent year-on-year to 27.2 billion units last month. China reported 27.5 billion and 28.8 billion units in May and June, respectively.

China Morning Post said, "The weakness in chip production is a further setback for China's ambition to boost local semiconductor production and cut reliance on imported chips."

Last week, US President Joe Biden signed the historic $280 billion CHIPS and Science Act into law, which includes $52 billion to boost domestic semiconductor manufacturing.

The said act was a move the US made to decrease its dependence on China in the sector. However, China has slammed the same.

The Global Times reported on Sunday, "It is disturbing for global supply chains to see the US apply increasing administrative intervention in normal market competition when it comes to advanced technology areas such as semiconductors."

It warned that the US should be prepared for Chinese retaliation if it is determined to go forward with the "chip war".