Authored by: Ma Junhao and Huang Tianan

The global chip consumer market has a massive capacity and maintained high-speed growth despite the impact of international trade disputes and the COVID-19 pandemic in recent years. The global sales in 2022 reached $573.5 billion, with the largest share in China at $180.3 billion, accounting for 31.4%. Being the largest consumer market, China has yet to establish an integrated and advanced chip industry supply chain.

The chip industry supply chain can be briefly divided into three parts: upstream integrated circuit design, midstream wafer manufacturing, and downstream packaging and testing. Among them, wafer manufacturing is the weakest part of China’s chip industry, AKA “strangle technology”, while one of the typical sanctions implemented by the U.S. government is to put Chinese high-tech companies on the “Entity List” barring them from buying components and services from U.S. companies without government approval in order to cut off the supply chain of these Chinese companies.

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