The trend stems from the effects of the pandemic and tensions between Beijing and Washington, the South China Morning Post reported.
A record number of Chinese semiconductor companies went out of business between January and August this year, the South China Morning Post reported this week, citing data from the Qichacha business database platform.
According to the report, some 3,470 “entities that use the Chinese word for “chip” in their registered names, marks or operations” written off during the reference period. This number exceeds the 3,420 that closed in 2021. In 2020, only 1,397 chip manufacturing companies closed their doors.
It comes as China invests heavily in semiconductor manufacturing to achieve independence in the field amid sour relations with the United States. In 2020 and 2021, around 70,000 new chip companies have sprung up in the country.
However, according to industry experts quoted in the report, newcomers to the country’s semiconductor industry are now struggling due to stiff competition and “hostile environmentwhich prevails in the market. Weak consumer sentiment caused by ongoing Covid-19 lockdowns and other pandemic measures, as well as growing tensions between Beijing and Washington, are putting pressure on the sector, according to the outlet.
US attempts to curb the development of China’s chip industry are expected to put even more pressure on the sector. Earlier this month, The New York Times reported that US President Joe Biden’s administration had imposed restrictions on the sale of a number of high-tech computer chips to Russia and China, saying that they could be used for military purposes.
This week, other reports surfaced that Washington plans to expand restrictions to include US-made semiconductors used for artificial intelligence and chip-making tools.
The Chinese Foreign Ministry recently accused the United States of exercising a technology blockade with its measures to limit chip sales in the country.
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