China’s leading chipmakers are reportedly accelerating plans to scale up production of advanced semiconductors, aiming to meet surging demand from domestic AI developers despite ongoing U.S. export restrictions.
Companies such as Semiconductor Manufacturing International Co. (SMIC), Hua Hong Semiconductor, and many Huawei-linked chipmakers are either expanding or planning to start the production of chips using the most advanced technology available in China. This includes manufacturing at the 7-nanometer node, and even at the more advanced 5-nanometer level, according to a report by Nikkei Asia on Tuesday.
Huawei continues to receive the most support in terms of local production capacity, followed by Cambricon Technologies, T-head by Alibaba Group Holding Ltd. (NYSE:BABA), Sugon Information, and others such as Moore Threads and MetaX.
The national initiative aims to expand advanced chip manufacturing to support rising domestic AI computing demand. It aims to boost output of advanced chips to 100,000 wafers within one to two years, up from under 20,000 currently, with a longer-term goal of adding 500,000 additional wafers of capacity by 2030.
However, it remains uncertain whether this output can be achieved due to U.S. export restrictions limiting China’s access to state-of-the-art chipmaking equipment. Experts told the publication that despite advances in building its domestic chipmaking equipment industry, foreign machines continue to outperform homegrown alternatives.
Alibaba and Huawei did not immediately respond to Benzinga‘s request for comments.
US-China Chip Tensions Escalate
The report comes amid escalating U.S.-China tech war, with the Trump administration raising concerns over Chinese startup DeepSeek‘s use of Nvidia Corp.'s (NASDAQ:NVDA) most advanced Blackwell chips, potentially violating export controls.
At the same time, despite President Donald Trump‘s approval of Nvidia Corp.’s export of H200 chips to China, the sales are still pending final clearance from the State Department amid concerns over national security.
American Tech Exposed To Taiwan Risk
Meanwhile, China’s military activities near Taiwan have sparked concerns that any disruption to Taiwan's semiconductor exports could severely impact the U.S. tech industry, potentially choking off a vital supply chain that supports AI, cloud computing, consumer electronics, and defense systems.
The island, along with Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM), produces the vast majority of the world's advanced semiconductors, and any disruption could severely affect American companies that rely on the chipmaking giant's supply chain.
While former President Joe Biden used financial incentives and Trump leveraged tariffs to encourage domestic chip production, the U.S. tech sector remains deeply dependent on Taiwanese semiconductors. Taiwan's Vice Premier Cheng Li-chiun rejected calls to shift 40% of chip capacity to the U.S., even as TSMC moves ahead with a $165 billion investment to build fabrication plants in Arizona.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor
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