As 2024 comes to a close, China's chip industry is grappling with a wave of closures, sparking concerns about its future amid an intensifying global chip war. According to reports from Commercial Times and anue, citing local media outlets Ijiwei and QQ News, over 14,000 chip-related companies in China have shut down this year, continuing a trend of closures that began in 2022.

In 2023, nearly 10,900 chip companies in China went bankrupt or deregistered, and by December 5, 2024, the number had surged to 14,648. This mass closure of companies has left the industry in disarray, with weakened growth in key sectors such as automotive and industrial, alongside the impact of export restrictions on Chinese semiconductors.

Despite the challenges, new entrants into the chip market appear to remain optimistic. As of December 13, 2024, approximately 52,401 new chip-related companies were registered in China. Although this marks a decline from the roughly 66,000 registrations in 2023, it highlights the resilience and continued interest in the sector.

Many of these new companies are focused on consumer electronics, automotive, and AI technologies, driven by the ongoing success of domestic leaders such as Huawei's HiSilicon, Will Semiconductor, Wingtech, and GigaDevice. However, Commercial Times cautions that the wave of closures signals the start of a broader industry restructuring and optimization process, with the reshuffling expected to take about two years to complete.

The report also notes that rising competition and diminishing support from investors and local governments are making it increasingly difficult for startups to secure funding, attract top talent, and improve their R&D and operational capabilities. As a result, many companies may struggle to survive in the highly competitive and ever-evolving chip market.