In 2024, chips (primarily mature process memory, power management, MCUs, and other “low-end” products) achieved an export value of $159.5 billion, surpassing mobile phones and clothing for the first time, becoming the largest single export item from China. This may seem like a case of “thin profit margins with high sales volume,” but it has pushed China’s foreign trade, industry, and even global competition logic to a historic turning point, with implications far beyond the unit price of $0.5 per chip.
1. Export Structure Transition from Clothing to Chips — A Stamp of Industrial Upgrade After 40 Years
After the reform and opening up, China initially relied on textiles and clothing to earn foreign exchange, then expanded its surplus through home appliances, mobile phones, and PCs. Now, the largest foreign exchange earner has become the “industrial staple food” of chips, marking a shift in the export engine from labor-intensive end products to capital and technology-intensive upstream components, completing the leap from the bottom to the right end of the “smile curve,” and affirming the transition from a “manufacturing giant” to an “intelligent manufacturing powerhouse.”
2. Global Division of Labor Role Reversal — From “Largest Buyer” to “One of the Largest Sellers”
China had continuously accounted for over 60% of global chip imports for ten years, being the largest “cash cow” for manufacturers in the US, South Korea, and Taiwan. Now, with nearly 300 billion chips exported annually, this equates to 40 chips for every person on Earth, representing over 30% of the global mature process market’s incremental supply coming from mainland China. In just five years, we have transformed the “choke point” list into “export bestsellers,” gaining leverage to make counter-offers on the international supply-demand balance for the first time.
3. Trade Deficit “Relief Valve” — Reducing the Annual Chip Deficit of Over $200 Billion
In 2024, the chip deficit remains high at $226.1 billion, but the export growth rate (+17.4%) is outpacing imports (+10.4%), and the export unit price has increased by over 5% annually, while the import unit price remains stable. At this rate, the deficit could be reduced to the billion-dollar level by around 2030, equivalent to saving the annual import cost of crude oil, creating significant strategic space for the internationalization of the renminbi and foreign exchange security.
4. Industrial Security “Moat” — Low-End is Not Low-End, First Solve the Issue of “Availability”
Mature processes (28nm and above) account for over 70% of global chip usage, with 80% of applications in automotive, home appliances, industrial control, and military not requiring 7nm technology. China has achieved the lowest global costs and shortest delivery times for 28/40nm chips, effectively securing “food security” in the chip industry: even if external supplies are cut off, domestic manufacturers can still survive, allowing for continued strategic advancement towards 14nm and 7nm technologies.
5. Technological Iteration “Cash Cow” — Low-End Profits Fund High-End R&D
Products such as memory, MCUs, and analog chips, categorized as “low-end,” are expected to see export prices rise by 13-42% in 2024, with increased volume and price generating over $30 billion in industry profits, equivalent to the total capital of the first and second phases of the National Integrated Circuit Industry Investment Fund. These funds are reinvested by leading companies into 14nm, 7nm, EDA, equipment, and materials, creating a virtuous cycle of “funding the war with war” rather than relying on unlimited fiscal support.
6. International Discourse Power “Stepping Stone” — First Become the Largest Supplier, Then Set Industry Standards
When one in every three mature process chips globally is produced in China, pricing, delivery times, technical standards, and green manufacturing norms begin to reflect an “Eastern accent.” Chinese manufacturers have transitioned from “followers” to “proposers” in areas such as RISC-V, fast charging protocols, automotive MCU packaging sizes, and energy storage BMS interfaces, laying the groundwork for future breakthroughs in high-end segments.
7. Geopolitical “Counter-Blockade” Model — The More Sanctions Increase, the Higher Exports Soar
Since 2018, the US has continuously restricted the export of high-end equipment to China, yet in 2024, Chinese chip exports rebounded by 20%, achieving the top position in single-item exports for the first time, proving that “blockades act as catalysts.” The domestic 28nm DUV production line has been successfully established, with over 70% localization of chemicals and spare parts, forming alternative paths such as “if you cut EDA, I will use open source; if you cut equipment, I will use domestic products,” which serves as a model for other countries — the technological iron curtain is not impenetrable.
Conclusion
Low-end chips do not have “low-end significance.” They are like Japan’s DRAM in the 1970s and South Korea’s 64K memory in the 1980s, representing the first breakthrough for latecomer countries to tear down the monopolistic walls of early starters. China has become the world’s largest exporter of mature process chips, not only securing foreign exchange, employment, and industrial chain safety but also obtaining the “entry ticket” and “time window” to continue advancing towards high-end technologies. History will remember 2024 — the year chips first surpassed clothing and mobile phones to become China’s largest export item; it is also the year when China’s semiconductor industry officially stepped through the door from a “buyer’s market” into a “seller’s market.”