Why China, other chip giants still spend billions on semiconductor imports

From China to South Korea and the US, leading semiconductor powers continue importing billions of dollars worth of chips, offering key lessons for India's self-reliance push

India is investing billions of dollars to build its semiconductor industry and aims to become one of the world's top five chip makers by 2032. However, if the goal is to completely stop importing chips, the experience of the world's biggest semiconductor and electronics producers shows that this is neither practical nor necessary.

 

China, despite spending decades building the world's largest electronics manufacturing ecosystem and investing heavily in domestic chip production, imported $386.5 billion worth of electronic integrated circuits in 2024, according to World Integrated Trade Solution (WITS) data based on UN Comtrade. That was more than 16 times India's semiconductor imports during the year, according to the same data.

   

The scale is even more striking because China's chip imports exceeded the value of its crude oil imports in 2024, according to China's General Administration of Customs, as reported by the South China Morning Post. Yet Beijing continues to pour billions of dollars into semiconductor manufacturing, equipment and materials, even as US export controls restrict its access to advanced processors and chipmaking technology.

 

This shows that in the semiconductor industry, self-reliance does not mean stopping imports completely. It means becoming stronger in key parts of the global chip supply chain while reducing the risk of disruptions caused by geopolitical tensions.

 

Why semiconductor giants still import chips

 

Unlike many manufacturing industries, semiconductor production is spread across multiple countries, with each specialising in different technologies, equipment and production stages.

 

"Presently, no country owns the entire chip stack: lithography sits in the Netherlands, design software in the US, leading-edge logic in Taiwan, memory in Korea, and specialty chemicals in Japan," Rajeev Sharan, head of research at Brickwork Ratings, told Business Standard. "The economic logic is clear: semiconductors are so capital intensive and fast moving that no country can efficiently produce everything at home."

 

Tushar Bhaskar, president of Rubix Data Sciences, told Business Standard that the semiconductor supply chain is arguably one of the most complex and highly specialised manufacturing ecosystems in the world, spanning hundreds of discrete processing steps distributed across different geographies.

 

As a result, even countries with advanced semiconductor industries continue importing large volumes of chips and related components.

 

Besides China, South Korea imported $60.7 billion worth of integrated circuits in 2024, according to WITS. Although the country dominates the global memory chip market through Samsung Electronics and SK hynix, it continues importing advanced logic, analog and automotive chips.

 

The trend extends beyond the largest chip producers. Malaysia imported $54.2 billion worth of integrated circuits in 2024, according to WITS, even though it is one of the world's largest semiconductor packaging and testing hubs. The United States imported $41.3 billion worth of integrated circuits, according to WITS, despite being home to global design leaders such as Nvidia, AMD, Qualcomm and Intel.

 

Similarly, Japan imported $24.3 billion worth of chips, while India imported $23.5 billion, according to WITS data.

 

"South Korea leads in memory but imports logic and analog chips. Japan dominates materials and equipment but imports advanced logic. China has enormous assembly capacity but imports the high-value silicon that goes into it," said Eswara Rao Nandam, managing director and chief executive officer of Polymatech Electronics Limited. "Imports are not a sign of failure; they are a sign of specialisation." 

 

China's lesson: Build resilience, not isolation

 

China's experience also shows that import dependence can coexist with aggressive domestic capacity building.

 

According to Bhaskar, China has expanded domestic production in mature semiconductor technologies while continuing to import advanced chips needed by its consumer electronics, automotive and industrial sectors. It has also invested heavily in semiconductor manufacturing equipment and long-term ecosystem development.

 

Sharan said Beijing's strategy has focused on reducing vulnerabilities. Even under US export controls, China has continued importing critical equipment and advanced chips while gradually building domestic alternatives, he noted.

 

Nandam agreed with this view: "Money alone does not buy self-reliance. China has invested well over a hundred billion dollars and still imports more semiconductors by value than crude oil."

 

He argued that ecosystem depth -- including equipment, materials, process knowledge and trusted partnerships -- is more important than headline investment figures alone.

 

India's semiconductor bet

 

India is making its own ambitious push. The Union government has committed more than $21 billion (around ₹2.03 trillion) in incentives for the semiconductor sector, including the recently announced ₹1.27 trillion incentive scheme, with the aim of making India one of the world's top five semiconductor players by 2032.

 

According to the Ministry of Electronics and Information Technology's roadmap, the government plans to establish four to six semiconductor fabrication plants, 10 outsourced semiconductor assembly and test (OSAT) facilities, and six to 10 compound semiconductor plants over the next five years.

 

The country's first commercial semiconductor fabrication plant, being set up by Tata Electronics, is expected to begin production by mid-2028. In assembly and packaging, projects by Micron, Kaynes and CG Power are already operational under the government's semiconductor programme.

 

Even so, India's subsidy push remains smaller than that of several global competitors. China's semiconductor incentives are estimated at about $95 billion, while the US CHIPS and Science Act provides $52 billion in direct support, alongside hundreds of billions of dollars in planned private investment. South Korea has announced around $23 billion in support, backed by massive investments from Samsung and SK hynix, while Japan's subsidy programme is estimated at $38 billion.

 

Where India should focus

 

Experts say India's success will depend less on competing immediately in cutting-edge chip manufacturing and more on strengthening areas where it has a realistic competitive advantage.

 

Bhaskar said India should prioritise assembly, testing, marking and packaging (ATMP/OSAT), mature-node manufacturing, compound semiconductors, fabless chip design, semiconductor intellectual property and materials, while linking semiconductor investments with fast-growing sectors such as electric vehicles, telecom, renewable energy, defence and industrial automation.

 

Sharan agreed: "These are areas where India's talent, domestic demand and policy support can create meaningful scale without chasing the most expensive, export-controlled cutting-edge nodes."

 

Nandam said India's biggest opportunity lies in becoming a trusted partner in global supply chains rather than trying to replicate every part of the semiconductor ecosystem.

 

The experience of China, South Korea, Japan and the US suggests that success is not measured by how few chips a country imports, but by how resilient, competitive and globally integrated its semiconductor ecosystem becomes.