The trend stems from the effects of the pandemic and tensions between Beijing and Washington, the South China Morning Post has reported
A record number of Chinese semiconductor companies have gone out of business between January and August of this year, the South China Morning Post reported this week, citing data from the business database platform Qichacha.
According to the report, some 3,470 “entities that use the Chinese word for ‘chip’ in their registered names, brands or operations” deregistered in the reporting period. That number surpasses the 3,420 that closed in 2021. In 2020, only 1,397 chip-making firms shut their doors.
This comes as China has been heavily investing in semiconductor manufacturing to reach independence in the sphere amid souring relations with the US. In 2020 and 2021, about 70,000 new chip companies sprung up in the country.
However, according to industry experts cited in the report, newcomers to the country’s semiconductor business are now struggling due to high competition and the “harsh environment” prevailing in the market. Weak consumer sentiment caused by lingering Covid-19 lockdowns and other measures to combat the pandemic, as well as growing tensions between Beijing and Washington, are putting pressure on the sector, the news outlet states.
US attempts to curb the development of China’s chip industry are expected to put even more strain on the sector. Earlier this month, the New York Times reported that the administration of US President Joe Biden had imposed restrictions on the sale of a number of high-tech computer chips to Russia and China, claiming that they could be used for military purposes.
This week, further reports emerged that Washington plans to extend the curbs to include US-made semiconductors used for artificial intelligence and chip-making tools.
China's Foreign Ministry recently accused the US of waging a technological blockade with its measures to limit chip sales to the country.
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