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Would China Buying More Semiconductors from US Reduce Trade Deficit?

Paige Tanner
Would China Buying More Semiconductors from US Reduce Trade Deficit?

Given that global semiconductor revenues reached $400 billion in 2017, China’s (FXI) proposal to increase semiconductor imports from the US appears positive. If China buys more chips from the US, it would shift its chip purchases from South Korea (EWY) and Taiwan to the US. More than 95% of the semiconductor revenue in South Korea comes from Samsung (SSNLF) and SK Hynix, both of which manufacture memory chips. Of the five companies, two manufacture application-specific standard products, the volume of which is relatively modest compared to the trade volume between the US and China.