War on Semiconductors – the way of the People's Republic of China to technological sovereignty

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Zdjęcie: ChiÅska polityka energetyczna (11)

Semiconductors, or tiny units that drive all modern electrical equipment, have become a subject of much discussion and interest, including at state levels. This is not surprising, especially since the semi-conductors play a key function in the economical improvement of countries and their safety. The semiconductor production sector is besides at the heart of Beijing's interest, which seeks independency in this area. Without them there could be no electrical cars, solar panels or modern weapons. China puts a large deal of emphasis on self-sufficiency and innovation while noting crucial advancement in production[1]. However, these efforts are not without challenges, especially in the face of geopolitical tensions.

The global semiconductor marketplace is valued at over half a trillion US dollars[2]. Advanced chip plan is dominated by American companies. The chips themselves are mainly produced in Taiwan, China and Malaysia, but this is only possible thanks to equipment and chemicals originating in Europe, Japan and North America. An example of the complexity of this process: the production of semiconductor wafers — a thin part of semiconductor material on which the integrated circuit is printed to produce the chip — requires over a 1000 different stages, about 400 different chemicals and even 50 different types of equipment[3].

China began to work towards the production of semiconductors as early as the Cold War, initially with the support of the russian Union. In the first period this production was based on little advanced products, and crucial improvement took place only in the 1980s, erstwhile the mediate State opened the door to abroad capital and technology. The manufacture continued to grow in the 1990s, after the government introduced industrial policies to support development, specified as task 908. As a result, state resources went to factories, as well as recruiting talent from abroad, with peculiar emphasis on TSMC. Initially Shanghai grew into a production hub. By 2000, however, China was able to meet only a tiny part of the request through home production.[4].

After 2000, the Chinese semiconductor production marketplace changed significantly, including through the activities of companies specified as HiSilicon (owned by Huawei) and SMIC (Semiconductor Manufacturing interior Corporation). With large state support, specified as taxation credits and R & D funds, as well as funds from the National IC manufacture Investment Fund (the ‘Big Fund’), these companies have importantly strengthened their activities. There are tens of thousands of semiconductor companies operating in China alone. The country is besides the largest semiconductor consumer in the world. In 2020, China purchased 53.7% of the world's supply of chips worth about $240 billion[5]. According to a Semiconductor manufacture Association report, published in November 2022, China's share of the global chip plan marketplace is expected to emergence from 9% in 2020 to 23% in 2030 (compared to the US's decline in share from 46% to 36%), a crucial increase, but inactive dividing Beijing from the planet top. Although China is not yet competitive in the plan and production of state-of-the-art chips, it has an advantage over the United States in the field of assembly outsourcing and semiconductor testing[6].

The already mentioned SMIC was established in 2000. This company is partially state-owned, the largest Chinese maker of semiconductors, as well as the 5th largest in the world[7].

Another crucial player is besides mentioned earlier HiSilicon. This company was established in 1991 and deals only with chip design, not production. The company owes its success to the company-mother Huawei[8].

YMTC was established in Wuhan in 2016 with a clear nonsubjective of reducing dependence on abroad companies. Thanks to generous state funding, she became the leading Chinese chip manufacturer. She was besides helped by the acquisition of many South Korean engineers. YMTC has already filed over 8,000 patent applications, and thanks to innovative Xtacking technology, it has produced more dense NAND flash memory systems than any another company in the world. In 2021, the company held 4.5% of the global marketplace share of these agreements[9]. However, in 2022 the United States legislature banned the national government from buying or utilizing YMTC chips. The company intends to compete with manufacture leaders from South Korea, SK Hynix and Samsung, but the U.S. consequence poses an crucial challenge to it.[10].

UNISOC is the largest Chinese chip designer for mobile phones. In 2021, it was the world's 4th largest company after Mediatek, Qualcomm and Apple, with a 9% share in the global market.

Naura, partially state owned, is the largest Chinese maker of chip production equipment and is simply a key support company for the semiconductor industry. Will Semiconductor is another semiconductor plan company without its own factory. Founded in 2007, it is 1 of the fewer key players in the manufacture who do not receive any financial support from the Chinese large Fund.

GigaDevice is simply a company that designs chips without its own mill and presently ranks 3rd worldwide in terms of sales volume in this section of the market.

Another crucial player is Wingtech, founded in 2006. Wingtech's core business is to plan semiconductor integrated circuits, manufacture semiconductor wafers, optical imaging and integration of communication products[11].

The oldest company on the list of Chinese semiconductor manufacturers is JCET, founded in 1972. It deals with a wide scope of semiconductor activities, including packaging, assembly, production and investigating of products. It is the largest Chinese company in this section and the 3rd largest in the world[12].

Hua Hong was founded in 1996 to aid make the Chinese integrated circuit industry. On a global scale, Hua Hong ranks sixth among the largest semiconductor manufacturers, with a 2% marketplace share. The company late announced that it intends to make advanced 14 nm chips that will compete with chips already marketed by SMIC. At this point, the company produces middle-class semiconductors, with the smallest presently of 28 nm, and focuses on improving older technologies[13].

An crucial milestone for the Chinese semiconductor manufacture was the presentation of the Made in China 2025 initiative in 2015. With the initiative ambitious targets were adopted – Beijing intended to accomplish self-sufficiency in semiconductor production of 70% of demand[14]. In view of the difficulties, however, this nonsubjective seems impossible to achieve, as the consumption and production ratio is expanding to the disadvantage of China. The subject of semiconductors besides included China's 14th five-year plan for the period 2021-2025 for economical and social development. In addition to the improvement of semiconductors, China has besides set itself the goal of conducting investigation and improvement on integrated circuit plan tools, Bipolar transistors and another peculiar processing technologies, and data storage.[15].

China has for many years been focusing on gaining independency in AI and technology, and the semiconductor sector, characterised by capital-intensiveness, plays a key function in the Central State. Related industries specified as artificial intelligence models can besides number on state support, albeit to a limited extent[16]. China is already successfully producing its own chips, although their level of advancement is not yet as advanced as those produced by Nvidia. The pursuit of rivals is presently a precedence for Beijing.

With the “Big Fund”, China has invested over 150 billion dollars in the manufacture since 2014, not counting support from local governments and private investment[17]. After being sanctioned, Huawei became Beijing's main force in terms of production plans for advanced chips. SIMC, the leading Chinese manufacturer, is equally important, who has already managed to produce the chip 7 nm. For comparison, the Taiwanese TSMC introduced this technology already in 2018 (now the company is working on 2nm chip technology to be produced in 2026.[18]), which suggests that SMIC is presently 5 years behind competition. China's deficiency of access to Ultraviolet Lithography Machines (EUV), essential for the production of advanced semiconductors and manufactured exclusively by the Dutch company ASML, however, may impede further progress[19].

By 2030, China had set itself the goal of becoming an innovator and pioneer in technologies specified as artificial intelligence and semiconductors.[20]. At the same time, at the gathering of the Central Steering Group of the KPCh in mid-2018, the leader Xi Jinping stressed that "innovations could supply strong support to accelerate China's construction as an innovative country, make them a planet technological and technological power, and realise Chinese dreams of a large revival of the Chinese people in the global dimension of humanity". Innovation, in peculiar technological ones, is so seen by China's central leadership as an essential pillar in building a ‘great revival of the Chinese people’, the superiority of the Chinese strategy and the fundamental legitimacy of the NAP[21].

Another crucial aspect is the escalation of the trade war between China and the US. With US export control, companies specified as ZTE and Huawei were sanctioned, which highlighted China's weakness in access to key technologies, especially those of the most technologically advanced chips. However, it is worth noting that these events for the Beijing government were a signal that the issue of economical safety and independency should be a key one, as well as a consequence of increased efforts towards independence. The 20th legislature of the KPC, at which president Xi Jinping called for groundbreaking solutions in the field of “basic technologies” item the function in the country's economy, and the word “technology” fell as many as 55 times during his speech[22].

According to manufacture data, China faces a chronic shortage of technological and engineering personnel, which may make it hard for them to accomplish superpower positions in semiconductors and reduce dependence on imported chips[23]. Many local projects have been abandoned or not full exploited due to mediocre coordination, misallocation of grants or deficiency of method knowledge, leaving behind many costly but unused “zombie factories” nationwide[24].

A investigation squad from Tsinghua University has developed fresh material for utmost ultraviolet (EUV) to produce chips. If this technology is introduced, it can possibly address the long-term challenges of EUV lithography[25]. Tencent stated that the company has adequate reserves of graphics processors to train models and does not plan to acquisition NVIDIA H20 chips. The company is besides considering another options outside the West[26].

China focuses on the architecture of fresh generation chips, specified as photonic chips, while trying to catch up with the West in the field of silicon chips. In June 2025, CHIPX, the photonic chip centre of Jiao Tong University in Shanghai, announced the completion of the world's first production line of photonic chips from a thin layer of lithium niobian[27]. This is inactive a investigation line, although its yearly productivity of 12,000 6-inch tiles outweighs the performance of akin lines in Europe. Beijing has invested in alternate chip materials and architecture since the end of 2010, aiming to break and circumvent Western export restrictions on key chip production equipment specified as Ultraviolet utmost device (EUV). Like silicon carbide power semiconductors, these photonic chips usage larger nodes sizes and can be produced utilizing older machines that are widely available in China[28]. In addition, photonic chips are frequently built utilizing techniques akin to those utilized in fibre optic cables and lasers, i.e. technologies that China has strengthened in fresh years.

When analysing the semiconductor production sector, Taiwan and its marketplace share cannot be disregarded. According to a 2021 Boston Consulting Group report, Taiwan has over 90% of the production capacity of the world's most advanced semiconductors[29]. The largest Taiwanese semiconductor maker is besides the largest and most crucial chip maker in the world. The company is presently liable for 8% of the island's full economical production and 12% of its exports[30]. By 2023, this 1 company produced over 90% of the world's most advanced semiconductors, key components supplying computers worldwide. According to TSMC data, only 10% of its gross comes from China. Over half of the gross comes from the United States. So erstwhile it comes to semiconductors, China needs Taiwan more than the another way around.[31]. Moreover, the presence of this technology in the territory recognised by China as its own makes Beijing even more curious in taking over the island[32]. Taiwan's economical success in semiconductors has been achieved through interdependence with China, but the same success now increases Taiwan's vulnerability. Continuing exports to China on a large scale, Taiwan can inadvertently strengthen its opponent's position. At the same time, restrictions on exports or isolation endanger to harm manufacture and to lose competitive advantage. Taiwan's decisions will so have long-term consequences for its economical and safety future in the close future[33]. China remains dependent on Taiwanese technology. This dependence creates serious strategical tensions – on the 1 hand, the function of Taiwan in semiconductor production acts stabilizingly, making any armed conflict an economical disaster for all parties, including China. On the another hand, it is this importance that can increase China's motivation to take over more control, possibly considering technological dominance as crucial to long-term national safety objectives. If Beijing had taken action, the remainder of the world, especially the United States, the European Union, Japan and South Korea, would gotta consider economical self-preservation in the context of geopolitical escalation. The acquisition of Taiwanese chip manufacture would give China an impact on a global economy that has not been in fresh history[34].

In conclusion, the Chinese semiconductor marketplace has seen crucial developments. Attempts to scope Western technology and to take a dominant position in this technology are crucial for Beijing, as the West is effectively trying to limit China's access to key, latest technologies. Furthermore, without semiconductors, the PRC will not be able to accomplish many crucial objectives specified as energy transformation, the construction of a strong army or the expansion of electrical cars. Therefore, independency in this area is so important. The narrow throats, specified as in the EUV lithography, or the optimization of productivity seem to be limited by Chinese efforts. For the West, knowing of the improvement of this manufacture in China is equally important, as it can let for hazard assessment and forecasting trends. As the complete isolation of China from this technology seems impossible, it is very likely that the script of independent improvement of semiconductor production technology in China and Western countries, i.e. the creation of parallel ecosystems, 1 centered around American and allied companies, and the another around Chinese companies supported by the state, is likely.

[1]https://www.economicsobservatory.com/whats-happening-in-chinas-semiconductor-industry (accessed 12.11.2025).

[2]https://www.precedenceresearch.com/semiconductor-market (accessed 12.11.2025).

[3]https://thechinaproject.com/2023/02/02/03/chinas-top-10-semiconductor-firms/ (accessed 12.11.2025).

[4]https://eastasiaforum.org/2022/09/28/washington-shoes-up-friends-in-the-semiconductor-industry/ (accessed 12.11.2025).

[5]https://thechinaproject.com/2023/02/02/03/chinas-top-10-semiconductor-firms/ (accessed 12.11.2025).

[6]https://www.semiconductors.org/wp-content/uploads/2022/11/SIA State-of-Industry-Report Nov-2022.pdf (accessed 12.11.2025).

[7]https://itif.org/publications/2024/08/19/how-innovative-is-china-in-semiconductors/ (accessed 12.11.2025).

[8]http://www.xtech.tw/en/hisilicon.html (accessed 12.11.2025).

[9]https://thechinaproject.com/2023/02/02/03/chinas-top-10-semiconductor-firms/ (accessed 12.11.2025).

[10]https://tspasemiconductor.substack.com/p/semicon-china-2025-boundless-collaboration (accessed 12.11.2025).

[11]https://asia.nikkei.com/business/tech/semiconductors/china-s-wingtech-to-buy-biggest-uk-chip-plant-amide-global-crunch (accessed 12.11.2025).

[12]https://www.jcetglobal.com/en/site/news-detail?id=1858 (accessed 12.11.2025).