Chip wars could lead to oversupply as China increases domestic capacity

China’s chip manufacturing capacity is expected to more than double within the next 5 to 7 years, according to TrendForce, and this could lead to a market oversupply that would spell trouble for semiconductor companies elsewhere. While imports of semiconductors into China were down 10.8 percent in volume over the last year, as …

[David Roberts]

Graphics cards?

Will there be a price war on graphics cards?

Thought not.

[Lurko]

Re: Graphics cards?

Unlikely, because good GPU's are reliant on much closer to cutting edge technology. Even something like a three and half year old RX6600 was built using 7nm. And producing a few demo chips for a phone with a vast bin rate is not the same as producing advanced GPU and AI processors.

China of course wants to build such capability but even if they can that's some way away, and is unlikely to result in new GPUs. All Chinese capacity will be hoovered up the country's demand for AI processing power, to help the party find new ways of monitoring and oppressing their own population.

[DoctorNine]

A comparison

Nominally adequate is absolutely fine for some things, but not others. I would expect that PRC chips will compete for space in industrial applications, but not be able to hold market share for consumer products. Sort of like Chinese motorcycles are right now.

Besides, Russia is going to need as much of that stock as they can get hold of for tanks and drones. You can only go so far cannibalizing washing machines and microwave ovens.

[DS999]

The west would protect western DRAM/NAND vendors

By putting tariffs on Chinese DRAM/NAND if they threatened to cause Micron, Samsung, Hynix, etc. to go bankrupt, so the risk and downside of an oversupply would be on China.

[IGotOut]

Western centric view again...

"This assumes, of course, that buyers would be happy to source semiconductors from China"

I'd say at LEAST 50% of the world would be happy.

Think South America, Africa, large sections of Asia.

There are plenty of places willing to buy because they are NOT made by western powers, plus no doubt they will be much lower in cost.

[3arn0wl]

Do I hear the sound of backfiring?

China is said to be 20% of the electronics marketplace. It's also the biggest producer of electronics. Of course this policy was going to have a detrimental affect on the West's electronics industry and economy. Factor in trade agreements between BRICS economies, and the picture worsens still.

China is now focusing on RISC-V too. That is also going to have a major impact on western processor-design companies down the line.

[Alan Brown]

"this could lead to a market oversupply that would spell trouble for semiconductor companies elsewhere"

Or it could lead to "pork belly" futures traders exiting the market

In the last 30 years we've seen the Dramurai, the Rambus patent saga and before that, price manipulation of memory following the Sumitomo plastics factory fire (they made encapulation plastics. Ram prices doubled overnight).

Following the 2011 Thai floods we saw rampant scalping, followed by a massive drop in HDD quality and the makers treating customer with contempt

There are many areas of supply/demand where "futures traders" are parasitic. Whilst there's _some_ benefit in hedging and/or stripping down zombie companies, the vast majority are motivated to make as much money as possible in as short a time as possible with no care given to the longer-term effects of their actions