China imported $350 billion worth of semiconductors in 2020—more than the value of the crude oil it imported the same year, according to the country’s customs data. Importing semiconductors also accounts for the country’s largest categorical trade deficit, where the difference between what China imports and exports for this particular type of goods is the widest.

China has been the world’s largest importer of chips since 2005. As a result, global chipmakers and the governments in their home countries have grown obsessed with its plan to pursue independence on semiconductors for the past few years. They fear that China is looking to build a domestic chip supply chain and decrease its reliance on imports that have proved profitable for certain economies, most notably South Korea, Taiwan, and the United States. 

It is true that China is determined to increase its domestic chip production. But the goal is not to make China a silicon locavore, entirely independent from global supply chains. Making a chip is a hugely complicated process involving hundreds of companies that specialize in different steps, and no country does it all. China is trying to bring the highest value-added steps in the process, like chip design and manufacturing, on shore, but no matter how well this goes the country will remain dependent on the industrys’ global supply chains.

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Wei Sheng

Wei Sheng is a Beijing-based reporter covering hardware, smartphone, and telecommunications, along with regulations and policies related to the China tech scene. He writes a monthly newsletter tracking...