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Chinese semiconductors: New businesses grew by 171.8%

Chinese semiconductor industries have grown rapidly since US sanctions were imposed. Due to intensive semiconductor development by the Chinese government, the number of companies investing in semiconductors is increasing.

china semiconductors
Some argue, however, that the overall size of the industry and the amount of development are not necessarily proportional. The number of companies going bankrupt due to ill-advised investments is also on the rise.

China’s Beijing Semiconductor Association released data on Sept. 22, citing “2021 Corporate Development Report” from a business data research institute. There were 18,770 new semiconductor companies in China in the first half of this year, up from 6905 in the same period last year. The increase is 171.8 percent year-over-year. Last year, there were 22,000 new semiconductor companies.

There are 72,000 semiconductor-related companies in China. In China’s Guangdong province, Shenzhen has the most with 13,000, followed by Guangzhou with 6,000 and Shanghai with 4,000.

China’s national fund has contributed heavily to China’s semiconductor industry, as reported by IG-Way, a Chinese media outlet.

Earlier this month, Huawei announced that it would invest 7.5 billion yuan ($1.16 billion) to build a new semiconductor production line by creating a project company with its wholly owned subsidiary Huawei Holdings.

Huawei also invested 727 million yuan ($112 million) in integrated circuits and computer security equipment. According to reports, Huawei has invested in more than 40 semiconductor companies since the second half of 2019 through its investment company Hubble Technology Invest.

Many large companies have also begun investing in semiconductors. A subsidiary of China’s largest delivery platform, Meiqun, Beijing Kuxun Technology has been added to Shanghai Ziaixin Semiconductor Technology Company’s shareholder list.

Nevertheless, some voices have expressed concerns over reckless company expansion and overlapping investments. There were many examples of companies that go bankrupt without producing any results. Tsinghua Uni Group (Ziguang), considered a symbol of China’s semiconductor boom, expanded its octopus business without government support, but eventually went bankrupt. In June last year, the company owed 202.9 billion yuan.

For MetaNews.


Jonathan Hobbs

Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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