Integrated circuit (IC) production fell 24.7 percent year-on-year to 24.7 billion units, marking the biggest one-month drop since 1997, according to the South China Morning Post.
It is also the second consecutive month of decline for chip manufacturing. In July, production fell 16.6% to 27.2 billion units.
Local production of microcomputers fell 18.6% to 317.5 billion units in August.
In August, domestic manufacturing activity contracted for the first time in three months, the report said.
A record 3,470 chipmaking companies “went out of business in the first eight months of the year”, according to statistics from the Qichacha business database platform.
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The slump in chip production in China comes as India and the United States step up efforts to bolster local chip manufacturing.
The Government of Gujarat has partnered Vedanta and Foxconn, aiming for an investment of Rs 1.54 lakh crore to achieve self-sufficiency in semiconductor manufacturing.
According to report by India Electronics & Semiconductor Association (IESA) and Counterpoint Research.
The Indian government has announced an expenditure of Rs 76,000 crore (approximately $10 billion), under its PLI program, separately for the development of an ecosystem of semiconductor and display manufacturing electronics .
Meanwhile, US President Joe Biden signed into law the Chips and Science Act, which provides nearly $52 billion in incentives for semiconductor production.
Intel has started work on the new $20 billion semiconductor factory in the state of Ohio in the United States.
Samsung has floated the idea of investing nearly $200 billion to build 11 more chip factories in the United States over the next two decades.