China facing 'unprecedented' chip shortage

China faces an “unprecedented" chip shortage and needs more international cooperation to solve the problem, industry executives told an industry conference in Shanghai on Wednesday.

Domestic chip production can only meet less than 20 percent of demand in China fueled by smartphone, consumer electronics, electric vehicle and artificial intelligence applications, they said during the opening ceremony of Semicon China 2021.

Last year, China’s chip industry revenue reached 891.1 billion yuan (US$141 billion), a 17.8 percent growth year on year, according to Zhou Zixue, chairman of the China Semiconductor Industry Association. 

China’s integrated circuit production could meet only 15.7 percent of demand in the country in 2019 and capacity will meet about 20.7 percent of demand in 2024, said Wu Hanming, dean of Zhejiang University’s School of Micro-Nano Electronics. 

“There’s an unprecedented chip shortage in China. International cooperation is the only the way to solve the shortage,” Zhou said in his opening remarks. 

The strict US tech ban can also make the shortage more serious as it blocks advanced chip-making equipment coming into China, analysts said. 

The senior executives of global semiconductor equipment giants, including Applied Materials, Tokyo Electron and ASML, gave speeches online due to the pandemic. They called China a “forefront” market of chips, with diversified and rapidly growing demands.

Car companies and chip firms should enhance cooperation to solve the shortage, according to industry officials.

The event, which attracts 1,100 exhibitors with exhibition space of 84,500 square meters, ends on Friday.