China’s quarterly production of semiconductors shrunk for the first time since early 2019 as consumer electronics demand softened and COVID-triggered lockdowns in regions including Shanghai disrupted output.
Output of integrated circuits dropped 4.2 percent in the first three months of the year as chipmakers reported a steeper decline in March, according to data from the National Bureau of Statistics. It was the worst quarterly performance since the first quarter of 2019 when the country’s chip output slumped 8.7 percent.
China has put Shanghai, a key chipmaking hub, into a month-long lockdown as Xi Jinping’s administration tries to stop the spread of Covid infections. The nation’s biggest chip manufacturers, from the Semiconductor Manufacturing International Corp. to Hua Hong Semiconductor, have struggled to source some components due to traffic controls imposed by local authorities. Chip production dropped 5.1 percent in the month of March.
A number of executives from Chinese auto and hardware companies expressed concerns over supply chain disruptions last week as more regions announced stricter prevention measures following reports of local COVID cases. Those include the tech manufacturing hub of Kunshan and Zhengzhou, home to the world’s largest iPhone factory.
Tech factories across the country could be forced into idle production after May if suppliers in Shanghai remain closed, Huawei Technologies Co. Executive Director Richard Yu wrote in a WeChat post last week.
“The economic loss will be immense,” said Yu, who oversees the Chinese company’s smartphone and smart car businesses.