Integrated Electronic Circuits
Although microprocessors and memory have been a part of personal computers
since their introduction in the late 1970s, the rapid turnover of the technology in these
products, with new manufacturing processes required for each successive generation,
makes them similar to “new” products every few years. For example, between 2000 and
2008, there were 4 different production processes, characterized by ever smaller etching
technology, utilized by the main semiconductor manufacturers. Because of the everchanging
technology and highly specialized processes, the capital requirements can be
enormous. For example, a new semiconductor fabrication plant can cost as much as
$5 billion dollars, with the equipment and necessary inventory holdings costing billions
more.16 To be profitable, the plants need to run at high volumes. According to the NBS,
Chinese production of semiconductor integrated circuits increased from less than
6 billion pieces in 2000 to 42 billion pieces in 2007.
Unlike for the other categories of exports discussed, the United States is not one
of the primary markets for Chinese exports of integrated circuits. U.S. imports of
integrated circuits have remained relatively flat since 2002 at around $22 billion, with
China accounting for only $1.4 billion in 2007. This is likely because integrated circuits
are an intermediate good, with China primarily exporting them to other countries as a
step in the production process; the United States, however, may well be the primary
market for the final product.