Global chip sales continue to decline as U.S.-China trade war escalates
August 13, 2019 Category China News Round-up, Weekly
Global sales of semiconductors declined for the second consecutive quarter as trade tensions between the United States and China created industry uncertainty. Worldwide chip sales reached USD98.2 billion in the three months to June 30, down 16.8% from USD117.9 billion a year earlier, according to the Semiconductor Industry Association (SIA), the trade body that represents U.S. interests in chip manufacturing, design and research.
“At the midpoint of 2019, the global semiconductor market remains in a period of decreased sales, with revenues through June lagging the midyear totals from last year by nearly 15%,” said John Neuffer, SIA President and Chief Executive. “Year-to-year sales were down across all major regional markets and semiconductor product categories.” Chip sales in the first quarter dropped 13% to USD96.8 billion from USD111.1 billion a year ago, according to the SIA. A new round of tariffs on USD300 billion in trade with China will have potentially crippling consequences for the U.S. economy, according to the SIA when it testified before the International Trade Commission (ITC) in June on the Trump administration’s proposed fourth tranche of tariffs.
If implemented on September 1, the U.S. government’s proposed new round of tariffs will encompass virtually all information technology (IT) products, including laptops, smartphones, solid state drives, video game consoles, printers, televisions and displays. “IT firms make up a significant sector of the U.S. economy, and any slowdown in this sector will have a ripple effect through a broad range of other industries, greatly impacting U.S. economic growth,” the SIA said in June. “There is no scenario in which tariffs on IT products is positive for the U.S. economy.”
China makes more than 90% of the world’s smartphones, 65% of personal computers and 67% of smart televisions, according to estimates from Bernstein Research. But the country has had to buy much of the chips that go into these devices from abroad, especially the U.S. The value of China’s annual chip imports has surpassed oil in recent years, surging to USD312 billion in 2018, the South China Morning Post reports.
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