ChinAI #251: A surprise in the data on China's chip imports

Greetings from a world where…

I’m enjoying Wong Kar-wai’s foray into C-drama land with Blossoms

…As always, the searchable archive of all past issues is here. Please please subscribe here to support ChinAI under a Guardian/Wikipedia-style tipping model (everyone gets the same content but those who can pay support access for all AND compensation for awesome ChinAI contributors).

Feature Translation: How Many Chips Does China Import?

Context: Earlier this month, China’s General Administration of Customs (GAC) released 2023 figures on imports and exports of integrated circuits. One anomaly from the data: For the first time since GAC started tracking these figures in 2005, China’s chip imports dropped in two consecutive years. What gives? This week’s analysis (link to original Chinese) by Semiinsights[半导体行业观察] examines changing trends in China’s chip industry.

Key Takeaways: We start by looking back at the past ten years. From 2014 to 2021, China’s chip industry grew wildly.

• As the figure below shows, during that eight-year span, China’s chip imports and exports doubled in quantity and value, undergoing rapid development. Downstream demand for smartphones and other consumer electronics fueled this growth.

• Based on China Semiconductor Industry Association data, by 2021, China’s chip industry sales had more than tripled that of 2014. One interesting note: during this time, the chip design segment became the core of China’s chip industry, accounting for 43% of the industry’s total revenue in 2022.

In the last two years, however, China’s chip imports and exports have declined from those record 2021 numbers. The article offers several reasons:

• Geopolitical factors: “Since 2018, tense geopolitical relations and complex international trade situations have caused many manufacturers to start stocking up in large quantities to avoid supply shortages caused by trade barriers, directly increasing the import and export amounts of integrated circuits.”

• A mismatch between supply shortages and hugely increased demand from new energy vehicles and other emerging industries like 5G, AI, and Internet of Things.

In addition to the above reasons, another factor is China’s efforts to localize production of chips.

• China still faces a significant trade deficit in chips (see second column from the right in the image below), but this has declined by 6.1% and 18% over the past two years.

• It is very difficult to measure the self-sufficiency rate in chips. By one metric, it has increased from 16.6% in 2020 to 23.3% in 2023, but that number includes chips made by foreign-funded companies in China (e.g., Samsung’s production base in Xi’an).

• If you’re interested in delving deeper on this point, see my piece in China Leadership Monitor, which argues that China’s benchmark for independence in semiconductors is flawed.

China’s trade deficit in chips, 2014-2023. Source: 半导体行业观察

FULL TRANSLATION: How Many Chips Does China Import?

ChinAI Links (Four to Forward)

Should-read: AI Is Taking Off in China - So Have Worries About Its Future

For Sixth Tone, Vincent Chow covers the changing conversation about AI safety in Chinese industry and academic circles. The articles distills some key findings from Concordia’s State of AI Safety in China report. Also includes some comments from me.

Should-read: Language Agents as Hackers: Evaluating Cybersecurity Skills with Capture the Flag

Very cool paper in a NeurIPS 2023 workshop that assesses the risk that malicious actors misuse language models to conduct cyberattacks. Yang et al. find that “while language agents possess rudimentary cybersecurity knowledge, they are not able to perform multi-step cybersecurity tasks out-of-the-box.” H/t to Peter Henderson for sharing.

Should-read: I was wrongly charged under the DOJ’s failed China Initiative. A House bill would reinstate it.

Gang Chen, an MIT Professor, shares how his life has changed since he was charged under the China Initiative (all charges were ultimately dismissed). The details about FBI agents staking their case on Google Translate are equal parts infuriating and sad.

Should-apply: Postdoctoral Fellowship in Global Asias (University of Maryland, Baltimore County)

A two-year postdoctoral fellowship for an Asian American studies scholar at UMBC. For questions, please contact Dr. Tamara Bhalla, an associate professor and chair of American Studies.

Thank you for reading and engaging.

These are Jeff Ding's (sometimes) weekly translations of Chinese-language musings on AI and related topics. Jeff is an Assistant Professor of Political Science at George Washington University.

Check out the archive of all past issues here & please subscribe here to support ChinAI under a Guardian/Wikipedia-style tipping model (everyone gets the same content but those who can pay for a subscription will support access for all).

Also! Listen to narrations of the ChinAI Newsletter in podcast format here.

Any suggestions or feedback? Let me know at chinainewsletter@gmail.com or on Twitter at @jjding99