Electronics

US sanctions hit China’s semiconductor industry: 22,000 companies shut down between 2019 and 2023

China's semiconductor industry

China’s semiconductor industry is undergoing a major transformation as over 22,000 semiconductor companies shut down between 2019 and 2023. The closures are a direct consequence of stringent U.S. sanctions, which have stifled China’s access to advanced chip technologies, impacting industries like artificial intelligence, 5G, and high-performance computing.

The Driving Force: US Sanctions

The United States has implemented sweeping restrictions to limit China’s technological progress. Key measures include:

  • Blocking exports of advanced chip designs and manufacturing tools to Chinese firms.
  • Blacklisting major corporations like Huawei and SMIC.
  • Tightening global control over U.S.-developed semiconductor technologies.

These measures primarily target large corporations but have had a cascading effect, crippling small and medium-sized businesses (SMEs) that form the backbone of the semiconductor supply chain.

Also Read : China Bans Intel and AMD Chips in Government Computers

The Fallout on China’s Semiconductor Industry

China’s reliance on imports for high-end chips and equipment has been exposed by these sanctions. Despite ambitious government programs promoting local manufacturing, the country’s semiconductor sector faces severe challenges:

  1. Widespread Shutdowns: Thousands of SMEs, unable to adapt to sanctions, have exited the market.

  2. Investment Freeze: Heightened geopolitical risks have deterred global investors from supporting Chinese semiconductor ventures.

  3. R&D Hurdles: Limited access to cutting-edge technologies has slowed innovation and competitiveness.

China’s Fight for Self-Reliance

In response, the Chinese government has ramped up initiatives like the “Made in China 2025” strategy, which aims to reduce dependency on foreign technologies. However, achieving self-sufficiency in high-end chip production remains a formidable task. Advanced semiconductor manufacturing requires intricate machinery and expertise, much of which is still dominated by U.S. and European firms.

Ripple Effects on Global Tech Supply Chains

The U.S.-China tech rivalry is reshaping the global technology ecosystem. Companies worldwide are diversifying supply chains, seeking alternatives to reduce reliance on Chinese manufacturing and indirectly guiding defining new geopolitical moves. For China, the inability to produce advanced chips could hamper its progress in emerging technologies, including AI, 5G, and autonomous systems.

What Lies Ahead?

The mass shutdowns of semiconductor companies mark a pivotal moment for China’s tech aspirations. While the sanctions have dealt a heavy blow, they also underscore the need for structural reforms and innovation. Whether China can overcome these challenges and emerge as a semiconductor leader remains uncertain, but the stakes for the global tech industry are higher than ever.


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Senior Writer
Abhinav is a graduate from NIT Jamshedpur . He is an electrical engineer by profession and analog engineer by passion . His articles at WireUnwired is just a part of him following his passion.

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