Summary of Key Points
In the first half of this year, Wuxi made its return to the top ten national list of foreign trade cities after an eight-year hiatus, with AI-related products (especially integrated circuits) being the main driving force behind this growth. Cities such as Suzhou, Xi'an, and Zhongshan have also utilized AI to achieve a significant leap in their foreign trade performance, reshaping the national landscape of foreign trade cities. However, AI-driven exports are vulnerable to uncertainties, including potential slowdowns in price increases and limitations in core technologies.
I. Wuxi’s Re-entry into the Top Ten: The Role of AI Hardware Exports
Wuxi’s resurgence in the top ten is largely due to the explosive sales of AI-related products. The city’s total foreign trade volume in the first half of the year reached nearly 500 billion yuan, an increase of 28.5%, with export growth at 35.5% (the highest among the top ten cities). AI-related product exports accounted for 179.6 billion yuan, representing 25.5% of Jiangsu Province’s total in this category, and their growth rate was as high as 75.3%, contributing directly to 81% of the overall export increase.
The key drivers are chips and computer components: chip exports amounted to 71.4 billion yuan, accounting for nearly 20% of Wuxi’s total exports; exports of computer parts increased by a factor of 4.6. Wuxi has a strong foundation in the chip industry, with seven of Jiangsu Province’s top ten wafer factories (which produce chip-making materials) located here, capable of manufacturing 8-inch and 12-inch wafers for various types of chips, including logic and memory chips. The South Korean company SK Hynix is a crucial player, with its Wuxi factory accounting for 30%-40% of the global production of DRAM memory chips. German company Infineon’s IGBT base in Wuxi is one of the largest in the world, used in electric vehicles and renewable energy applications, further bolstering Wuxi’s chip exports.
II. AI-Driven Foreign Trade Transformation: Multiple Cities Making Significant Progress
AI has enabled many cities to leapfrog in their foreign trade rankings:
- Suzhou: With a first-half foreign trade volume of 1.83 trillion yuan and a growth rate of 40.9%, it rose to third place nationally. The AI-related imports and exports in Suzhou’s industrial park exceeded 600 billion yuan, increasing by 2.1 times. Companies producing optical modules (essential components for computing power) have orders through 2028, and the market value of its listed companies is on track to rank fourth nationwide.
- Xi'an: Thanks to foreign companies like Micron and Samsung, Xi’an has developed a semiconductor cluster worth hundreds of billions of yuan, with chip imports and exports accounting for half of Shaanxi Province’s total. This has propelled Xi’an’s foreign trade ranking up by seven places.
- Zhongshan: With the opening of the Shenzhong Corridor, it has attracted companies like Jiangbolong, leading to a 14,619% increase (more than tenfold) in storage component exports. Its foreign trade grew by 13.1% in the first half of the year, and for the first time, it entered the top 30 national cities.
These cities have all seized the opportunity presented by the surge in demand for AI hardware; some have a established chip industry, while others have benefited from industrial relocation.
III. The Weaknesses of AI-Driven Exports: Rapid Price Increases, Potential Shortcomings
While AI-related exports appear robust, they rely heavily on price increases rather than increased sales volumes. A research report by Guojin Securities shows that in June, chip export values rose by 122.7%, but export quantities decreased by 0.4%; in May, computer equipment exports declined by 17% while prices rose by 32.4%. This indicates that the growth in exports is driven more by price hikes than by increased demand.
Chip spot prices continue to rise, but the rate of increase is slowing down, and year-on-year growth may peak and then decline in the second half of the year. If prices do not stabilize, it could affect the growth of AI-driven exports, posing a hidden risk.
IV. Dependence on Foreign Investment: Both a Boost and a Risk
The foreign trade of cities like Wuxi and Xi’an relies heavily on multinational companies such as SK Hynix (in Wuxi) and Samsung (in Xi’an) and Micron. These global chip giants control more than 90% of the DRAM memory market share in China. Their increased investment has boosted these cities’ foreign trade, but the core technologies and brands remain in their hands. If these companies adjust their production or technology transfer strategies, it could impact these cities’ foreign trade performance. However, domestic chip manufacturers in cities like Wuhan and Hefei (such as Yangtze Memory and ChangXin Memory) are emerging, potentially changing the landscape of AI-driven exports. Whether domestic chips can replace imported ones will determine the long-term stability of these cities’ foreign trade.
The map of foreign trade, being reshaped by AI, is still evolving. Those cities that can reduce their dependence on foreign investment and master core technologies will have a better chance of thriving in this transformation.