With the results of the 2024 U.S. presidential election, Trump's re-election will undoubtedly have a profound impact on China's semiconductor industry. China Exportsemi will make a prediction from five dimensions: policy impact, supply chain changes, market size and growth, domestic substitution trends, technology development and international cooperation.
1. Policy implications
The Trump administration has been known for its hardline China policy, and its re-election is likely to continue its technology blockade policy against China. Since Trump first took office in 2017, China's semiconductor industry has gradually divided into four stages, from chip design to AI chips, and the localization process has accelerated. Trump's victory may further increase the technology blockade against China, thereby stimulating the independent and controllable development of China's semiconductors. China's semiconductor industry may entering the most difficult stage, and we can focus on links with low localization rates and the AI chip industry chain.
2. Supply chain changes
In the context of the restructuring of the global semiconductor supply chain, the United States has comprehensively suppressed China's global semiconductor supply chain, on the one hand, it has "stuck its neck" on China in terms of high-end chips and their manufacturing processes, technologies, materials and equipment; On the other hand, it promotes the return of high-end chip manufacturing from China and tries to "decouple" from China. This will force Chinese semiconductor companies to find new positioning and partners in the global supply chain, while accelerating the construction and improvement of the domestic supply chain.
Figure: Trump won the U.S. election, what is the impact of China's semiconductor industry?
3. Market size and growth
According to the forecast of the "Panorama of China's Semiconductor Industry in 2024", the market size of China's semiconductor industry will grow at a growth rate of about 5% from 2024 to 2029, and the market size is expected to reach 246.4 billion US dollars by 2029. Trump's victory is likely to affect the global macroeconomic situation, which in turn will affect the market growth of China's semiconductor industry. However, considering the endogenous growth momentum of China's semiconductor industry and the support of national policies, it is expected that the market size will still maintain stable growth.
Fourth, the trend of domestic substitution
In the context of continuous pressure from the United States, domestic substitution of key semiconductor equipment has become an inevitable trend. The market size of China's semiconductor industry has grown from US$131.5 billion in 2017 to US$182 billion in 2022, with a CAGR of 5.6%, accounting for about one-third of the global semiconductor industry market size. With the improvement of the technical level and R&D capabilities of domestic semiconductor material manufacturers, the scale of China's semiconductor materials market has increased faster than that of the world, and the domestic semiconductor materials market size has increased from US$6.8 billion to US$12.98 billion from 2016 to 2022, with a CAGR of 9.7%. This shows that domestic substitution has not only been promoted at the policy level, but also shown a strong growth momentum under the dual role of market demand and technological progress.
5. Technological development and international cooperation
The Trump administration's technology blockade policy may have an impact on the technological development and international cooperation of China's semiconductor industry. However, the cooperation of China's semiconductor industry on a global scale has not completely stopped. The 21st China International Semiconductor Expo is an example, which brings together global industry resources and provides reference information and cooperation channels for domestic enterprises to go global and international enterprises to explore the Chinese market. Despite the challenges, China's semiconductor industry is still seeking new ways and models for international cooperation.
In summary, Trump's re-election will have a multifaceted impact on China's semiconductor industry. China Exportsemi believes that we need to be prepared at multiple levels such as policy, supply chain, market size, domestic substitution and technology development to deal with possible challenges and opportunities. By strengthening independent research and development, optimizing the supply chain structure, and expanding international cooperation, China's semiconductor industry is expected to occupy a more important position in the global semiconductor industry.
