China stocks up on integrated circuits
16 October 2020 | Melanie Mingas
China has embarked on a multi-billion dollar buying spree as it prepares for US sanctions on its tech and communications industry to come into effect.
The world’s second largest economy, China’s private sector tech firms procured integrated circuits valued at US$37 billion in September, according to data released by the country’s General Administration of Customs.
The figure equated to 53.7 billion integrated circuits, a 12% increase on August figures and an all-time high, the authority said.
In the first nine months of the year, China imported 387.2 billion integrated circuits, an 23% leap on 2019 figures. Analysis by Bloomberg named Taiwan and South Korea as the main exporters.
However, integrated circuits aren’t the only thing on the shopping list. China’s total imports are increasing rapidly across all categories, showing a 15% gain in August. US imports alone were valued at $13 billion in September, up 24.7% to reach the highest value since 2018.
The ability of Chinese companies to procure specialist technological components for communications equipment is about to be curtailed as US sanctions are introduced. These state that China can no longer purchase chips using US technology, however due to the nature of global supply chains, this is easier said than done.
The US banned American chip suppliers from selling to Huawei in 2018 and in May this year extended the ban to include non-US companies that use US-based IP under licence.
Commenting in May, Huawei said this undermined the global telecoms industry, and in July the company it would take months to assess the impact of tighter restrictions.
In its report this week, Bloomberg said the latest trend emerging around imported tech components “wasn’t just about Huawei”, and that it “reflected the rational actions of other companies worried that the tech confrontation will broaden and affect them, too”.
In the US, regulator the FCC officially declared Chinese vendors Huawei and ZTE as national security threats in July. This move banned both from supplying rural US carriers via the universal service fund. The following month Huawei – and its affiliates in the UK and Australia – was added to the US entity list, restricting the firm’s access to items produced domestically and abroad from US technology and software.
The UK announced its U-turn in July and ordered all Huawei equipment to be removed from networks by 2027.
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