China Poised To Challenge Us Dominance: Chip Production Set To Surge Fivefold By 2025

China’s Chip Industry on the Cusp of a Major Breakthrough: A Five-Fold Increase in Leading-Edge Production by 2025

China is planning to increase its production of leading-edge chips by an astonishing five times within the next two years, according to reports from Nikkei. The country’s leading chipmakers, including Semiconductor Manufacturing International Corp. (SMIC) and Hua Hong Semiconductor, are aiming to lift their production of chips using 7nm- and 5nm-class fabrication technologies from below 20,000 wafer starts per month today to roughly 100,000 within one to two years.

This ambitious target is a significant departure from China’s current chip production capabilities, which are largely focused on mature nodes. SMIC and Hua Hong Semiconductor have been working tirelessly to expand their capacity for producing chips using cutting-edge process technologies. However, the Chinese government has set its sights on significantly increasing this output in a bid to satisfy the growing demand of China’s domestic AI sector.

The push to increase leading-edge chip production is part of a broader effort by China to become a major player in the global semiconductor industry. The country has invested heavily in expanding its chip manufacturing capabilities, with significant investments made in recent years to upgrade its existing facilities and build new ones.

One of the key challenges facing China’s chipmakers is access to leading-edge tools from foreign companies. Due to sanctions imposed by the US and other countries, Chinese chipmakers have been unable to procure many of these high-tech tools, which has significantly limited their ability to produce chips using advanced process technologies. SMIC has managed to circumvent this limitation by procuring some key equipment in advance.

The company’s co-CEO, Zhao Haijun, has stated that the timing difference in procuring equipment has brought an even situation where the procured equipment may not be able to form production lines this year. This highlights the challenges faced by SMIC in meeting its own production targets due to the lack of supporting equipment.

On the other hand, Hua Hong Semiconductor has reportedly made significant progress in ramping up its 28nm- and 22nm-capable capacities. The company’s efforts have been supported by technical assistance from Huawei, which has played a key role in helping China’s chipmakers transition to more advanced process technologies.

Beyond these two major foundries, other Chinese companies such as PengXinWei and Dongguan Guangmao Technologies are also building out pilot lines and development capacity, including efforts targeting nodes more advanced than 10nm. These efforts demonstrate the growing importance of China’s domestic AI sector in driving demand for leading-edge chips.

UBS estimates that China’s existing capabilities on 22nm/28nm nodes and below are around 30,000 – 50,000 wafer starts per month, which suggests that SMIC’s 7nm-capable production lines produce considerably fewer wafers per month than this. However, the financial services firm is optimistic about China’s ability to boost its 22nm/28nm and below capacities in the coming years.

The potential breakthroughs that China’s chipmakers are working towards have significant implications for the global semiconductor industry. As China becomes increasingly important to the demand for leading-edge chips, it is likely to drive innovation and competition in this sector.

China’s ambitious plans to increase its production of leading-edge chips by five times within the next two years demonstrate the growing importance of the country’s domestic AI sector. With significant investments made in expanding chip manufacturing capabilities, China’s chipmakers are well-positioned to meet this target and become a major player in the global semiconductor industry.

The Chinese government has set an ambitious goal for its chipmakers, which could significantly impact the global semiconductor industry. The country’s efforts to increase leading-edge chip production will likely drive innovation and competition in this sector.

Key Statistics:

• 7nm- and 5nm-class fabrication technologies: production capacity increase by five times within two years
• 100,000 wafer starts per month: SMIC’s target for 7nm-capable production lines
• 150K -160K wpm advanced node capacity: UBS’ estimate of China’s target for 22nm/28nm and below capacities by end-2027