China’s chip output shrinks as India and US ramp up local production

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  • China witnessed the largest monthly drop in chip production ever in August.
  • The slump in chip manufacturing in China now comes as both India and the US step up their efforts to bolster local chip manufacturing.
  • The Government of Gujarat has entered into a partnership Vedanta and Foxconn, targeting an investment of ₹1.54 lakh crore to produce semiconductors.


While India and the US Double Domestic Shares semiconductor manufacturingIn August, China witnessed its largest-ever monthly drop in chip production due to Covid restrictions and dwindling demand.

Integrated circuit (IC) production fell 24.7 percent year over year to 24.7 billion units, according to the South China Morning Post, marking the largest single-month decline since 1997.

This is also the second consecutive month of decline for chip production. In July, production fell 16.6 percent to 27.2 billion units.

Local production of microcomputers fell 18.6 percent in August to 317.5 billion units.

In August, domestic manufacturing activity contracted for the first time in three months, the report said.

A record 3,470 chip makers “went out of business in the first eight months of the year,” according to statistics from business database platform Qichacha.

The slump in chip manufacturing in China now comes as both India and the US step up their efforts to bolster local chip manufacturing.

The government of Gujarat has partnered with Vedanta and Foxconn aiming to invest ₹1.54 lakh crore to achieve self-sufficiency in semiconductor manufacturing.

The Indian semiconductor components market is likely to reach $300 billion in cumulative revenues by 2026 as “Make in India” and manufacturing incentives (PLI) will drive local sourcing of semi-components in the coming years, according to the report from the India Electronics & Semiconductor Association (IESA) and Counterpoint Research.

The Government of India has announced an expenditure of ₹76,000 crore (approximately $10 billion), under its PLI scheme, separately to develop an electronics ecosystem for the production of semiconductors and displays.

Meanwhile, US President Joe Biden has signed the Chips and Science Act, which provides nearly $52 billion in incentives for semiconductor manufacturing.

Intel has begun work on its new $20 billion semiconductor plant in the state of Ohio in the US.

Samsung has floated the idea of ​​investing nearly $200 billion over the next two decades to build an additional 11 chip factories in the US.

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