World going through unprecedented chip shortage, China trade body says

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The world is going through an unprecedented chip shortage, Zhou Zixue, a senior official with the China Semiconductor Industry Association, said on Wednesday, after semiconductor sales grew 18% last year.

“If you are an experienced player, you will remember that in 1999 there was a similar crisis in this industry, but it was way smaller,” Zhou, chairman of Semiconductor Manufacturing International Corp (SMIC), said in remarks at SEMICON China.

“We have to deepen our cooperation, we have to give more attention to innovation. Only by doing that our industry can control the challenges facing us.”

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China is the world’s largest buyer of semiconductors, but domestic production is marginal. Sales in China grew 17.8% in 2020 from a year earlier to 891 billion yuan ($137 billion), according to CSIA.

China’s need to cut dependence on overseas chip companies became evident last year when U.S. sanctions on Shenzhen-based hardware maker Huawei Technologies Co Ltd prevented it from sourcing components, crippling a once-booming smartphone business.

Not long after that, the spread of COVID-19 disrupted supply chains and eventually caused a chip shortage. Once concentrated in the automotive industry, the crunch has now spread to a wide range of electronics and reached the uppermost parts of the chip supply chain. ($1=6.5 yuan)