China's semiconductor industry is intensifying its drive toward self-sufficiency through expanded state funding and domestic innovation, particularly as Donald Trump's return to the White House approaches. At the 2024 China International Semiconductor Expo (IC China), industry leaders and government officials highlighted the nation's progress in strengthening its semiconductor capabilities.
Progress in self-sufficiency
According to Nikkei Asia, China has made substantial progress in semiconductor independence over the past decade. Data from TechInsights and SEMI shows that China's domestic chip self-sufficiency rate increased from 14% in 2014 to 23% in 2023, with projections indicating it could reach 27% by 2027.
Strategic investment expansion
The "National Integrated Circuit Industry Investment Fund" (Big Fund) has been crucial in advancing China's semiconductor ambitions. The fund's initial phase launched in 2014 with CNY138.7 billion (US$19.2 billion), followed by a second phase in 2019 of CNY204 billion. The third phase, initiated in May 2024, further expanded to CNY344 billion.
The Big Fund has extended its investment focus across the entire supply chain, particularly targeting manufacturing equipment and materials. This comprehensive approach has fostered the growth of domestic companies like Naura Technology Group, while supporting established players such as YMTC, a 3D NAND flash manufacturer, and SMIC, which produces 7nm chips for Huawei smartphones.
Import strategy and technological advancement
Despite accelerating domestic production of advanced process chips, China continues to increase its chip imports. According to AscenPower Semiconductors, China's semiconductor imports grew 15% year over year from January through October 2024, marking the first annual increase in two years. South Korea remains the primary source of advanced AI memory chips.
Industry response to geopolitical challenges
With Trump's anticipated return to office in January 2025, China's semiconductor sector is preparing for potentially stricter US sanctions. At IC China, YMTC chairman Nanxiang Chen emphasized the importance of industry collaboration in addressing these challenges.
A senior official from the Ministry of Industry and Information Technology (MIIT) detailed improvements in China's semiconductor supply chain and competitiveness. Industry leaders, including Guowei Xiao of AscenPower Semiconductors and Daniel Yuan of Sino IC Leasing, expressed confidence in the progress of process technology and supply chain development.
Alternative technology development
Following US restrictions on extreme ultraviolet (EUV) lithography machines for advanced chipmaking, China has increased investment in alternative technologies such as multi-layer processing to achieve technological breakthroughs.
Power semiconductor focus
China is strategically emphasizing development in the electric vehicle power semiconductor sector, which currently remains unrestricted by US sanctions. In the silicon carbide (SiC) power semiconductor market, Chinese companies are leading substantial investments. Recent improvements in wafer and ingot quality have attracted international attention, exemplified by Infineon's partnerships with two Chinese suppliers in 2023.
To establish a sanctions-resistant semiconductor supply chain, MIIT is developing technical standards for automotive semiconductors, with plans to implement over 30 key standards by 2025 and more than 70 by 2030.
