China’s semiconductor industry is expanding rapidly as demand for domestically produced chips accelerates across artificial intelligence, electric vehicles, consumer electronics and industrial applications. Revenue in China’s integrated-circuit industry jumped 22% year over year in 2025 to a record $245 billion, according to figures cited in recent industry data, highlighting the growing scale of the country’s semiconductor ecosystem.
The growth extends a longer-term expansion. Chinese chip-industry sales have nearly doubled since 2020, as Beijing has increased support for domestic semiconductor production and companies have invested heavily across chip design, fabrication, packaging and testing. Recent results from major Chinese chipmakers also show strong demand: SMIC, China’s largest contract chipmaker, reported second-quarter 2026 revenue of more than $3 billion, up 36% year over year, with AI-related demand helping drive the increase.
China’s Semiconductor Industry Reaches Record Revenue
The $245 billion revenue figure represents a significant increase from the level recorded just a few years ago. A 22% year-over-year increase means China’s integrated-circuit industry added roughly $44 billion in annual revenue compared with the previous year.
The expansion is occurring across a semiconductor ecosystem that includes chip designers, foundries, memory manufacturers, equipment companies and packaging and testing providers.
China’s Chip Industry At A Glance
| Indicator | Figure |
|---|---|
| 2025 industry revenue | $245 billion |
| 2025 year-over-year growth | 22% |
| Revenue added in one year | ~$44 billion |
| Growth since 2020 | Nearly 2x |
| Reported global semiconductor market share | ~6% |
| Global semiconductor sales in 2025 | $791.7 billion |
| Major domestic foundry | SMIC |
Global semiconductor sales reached $791.7 billion in 2025, up 25.6% from $630.5 billion in 2024, according to the Semiconductor Industry Association. That means the global market itself expanded at a very strong pace as AI and memory demand accelerated.
China’s Chip Industry Has Nearly Doubled Since 2020
The latest growth is part of a much larger expansion rather than a one-year surge.
Chinese semiconductor sales have nearly doubled since 2020 as the country has sought to reduce dependence on overseas chip suppliers. Domestic demand from smartphones, electric vehicles, industrial equipment, artificial intelligence and data centers has provided an increasingly large market for local semiconductor companies.
China’s Semiconductor Growth
2020
≈ 100% of 2020 sales
████████████████████
2025
≈ Nearly 200% of 2020 sales
██████████████████████████████████████
The exact revenue series depends on how the Chinese semiconductor industry is defined. For example, a Frost & Sullivan estimate cited in a Hong Kong Exchange filing puts China’s semiconductor market at $211.8 billion in 2024 and forecasts $241.9 billion for 2025, rising to $374 billion by 2029.
That distinction is important because “industry revenue,” “semiconductor market size” and “global semiconductor sales” can refer to different measurements and should not be treated as interchangeable.
AI Is Creating A New Wave Of Chip Demand
Artificial intelligence is becoming one of the strongest growth drivers for the semiconductor industry.
AI servers require processors, memory, networking chips, power-management semiconductors and other components. As Chinese companies build their own AI systems and data centers, demand for domestic semiconductor products is increasing.
The trend is already visible at SMIC.
SMIC reported second-quarter 2026 revenue of more than $3 billion, up 36% from a year earlier, while net profit reached $479.2 million. Reuters reported that strong AI-related demand contributed to the company’s performance, while SMIC also raised prices for some products because of supply constraints.
AI Demand → Chinese Chip Growth
AI Model Development
│
▼
More AI Data Centers
│
▼
Higher Demand For Compute
│
├──► Processors
├──► Memory
├──► Networking Chips
└──► Power Semiconductors
│
▼
Higher Chinese Chip Demand
The AI boom is therefore supporting both advanced semiconductor development and demand for mature-node and specialty chips.
China’s Position In The Global Semiconductor Market
The data cited for China’s roughly 6% share places the country in a similar range to several established semiconductor regions and economies, including Japan, the European Union and Taiwan.
The comparison shows that China is no longer a marginal participant in global semiconductor activity.
Reported Global Semiconductor Market Shares
| Region / Economy | Approx. Share |
|---|---|
| North America | 53% |
| South Korea | 21% |
| Japan | 7% |
| European Union | 7% |
| China | ~6% |
| Taiwan | ~6% |
Figures reflect the market-share comparison supplied for this analysis; semiconductor market-share estimates vary significantly depending on whether they measure sales, production, value added, design or manufacturing capacity.
That final distinction is particularly important. The National Science Foundation’s latest data, for example, measures value-added semiconductor production rather than industry sales and shows a very different geographic picture: China accounted for 30% of global value-added semiconductor production in 2024, followed by Taiwan at 22%, the United States at 19% and South Korea at 11%.
The different figures do not necessarily contradict each other because they measure different parts of the semiconductor value chain.
China Is Expanding Manufacturing Capacity
China’s semiconductor push is particularly visible in mature-node manufacturing.
The U.S.-China Economic and Security Review Commission says China-based companies accounted for 33% of global wafer production capacity for foundational-node logic chips in 2023, up from 19% in 2015. It also says Chinese mature-node semiconductor capacity grew more than four times faster than global demand between 2015 and 2023.
That capacity is important because mature-node chips remain essential for automobiles, industrial equipment, power systems, consumer electronics and many other products.
China’s Semiconductor Capacity Expansion
2015
China-based foundational-node capacity
19%
███████████████████
2023
China-based foundational-node capacity
33%
█████████████████████████████████
China’s growing manufacturing footprint therefore extends beyond the race to produce the most advanced processors.
SMIC Emerges As A Major Domestic Player
SMIC is at the center of China’s semiconductor manufacturing strategy.
The company has expanded production capacity while increasing output to meet rising domestic demand. In the second quarter of 2026, SMIC shipped the equivalent of 2.9 million eight-inch wafers, a 14% increase, while utilization reached 93.7%.
SMIC also increased monthly 12-inch wafer capacity by 8,000 wafers during the quarter. Its capital spending reached $3.4 billion during the first half of 2026 as it continued expanding manufacturing capabilities.
SMIC’s Latest Numbers
| Metric | Q2 2026 |
|---|---|
| Revenue | >$3 billion |
| Revenue growth | 36% YoY |
| Net profit | $479.2 million |
| Wafer shipments | 2.9 million 8-inch-equivalent wafers |
| Wafer shipment growth | 14% |
| Utilization rate | 93.7% |
| H1 2026 capital spending | $3.4 billion |
The company’s performance suggests that China’s semiconductor expansion is translating into greater commercial activity for domestic manufacturers.
Government Support Remains A Major Factor
China’s semiconductor expansion has been supported by substantial government investment and industrial policy.
The U.S.-China Economic and Security Review Commission estimates that China’s state-led semiconductor investment exceeded $150 billion by 2024. The country’s industrial strategy has focused on developing capabilities across the semiconductor value chain, from design and manufacturing to equipment and materials.
China’s latest industrial planning continues to identify integrated circuits as a strategically important sector. The Shanghai Stock Exchange reported that 128 semiconductor companies listed on its STAR Market generated combined revenue of more than RMB360 billion in 2025, representing 25% year-over-year growth.
China’s Semiconductor Strategy
Government Investment
│
▼
Domestic Chip Companies
│
├──► Chip Design
├──► Wafer Manufacturing
├──► Memory
├──► Packaging & Testing
└──► Equipment & Materials
│
▼
Greater Domestic Capacity
│
▼
Lower Import Dependence
The objective is not simply to increase sales. China is attempting to build a more complete semiconductor ecosystem that can reduce vulnerabilities created by dependence on foreign technology and suppliers.
Export Controls Are Increasing The Pressure
China’s semiconductor expansion is taking place alongside increasingly strict U.S. controls on advanced chip and semiconductor-manufacturing technologies.
Since 2018, Washington has progressively expanded restrictions intended to limit China’s access to advanced semiconductor technologies and manufacturing capabilities. The restrictions have focused particularly on advanced chips, semiconductor equipment and technologies relevant to artificial intelligence.
Those restrictions create a difficult environment for Chinese chipmakers seeking to close the technological gap with leading global manufacturers.
At the same time, the restrictions are encouraging investment in domestic alternatives. Chinese companies have greater incentives to develop local equipment, materials, design software and manufacturing processes.
China Is Stronger In Mature Chips Than Leading-Edge Chips
China’s rise should not be interpreted as meaning that it has caught up with the world’s most advanced semiconductor manufacturers.
The country has made significant progress in mature-node manufacturing and domestic semiconductor production, but it remains behind the cutting edge in several critical areas.
The U.S.-China Economic and Security Review Commission says China remains behind leading-edge semiconductor manufacturing and that Chinese equipment manufacturers met only 9.6% of domestic demand for certain 20nm-14nm manufacturing equipment in 2023.
This creates an important divide:
| Semiconductor Area | China’s Position |
|---|---|
| Mature-node chips | Rapidly expanding |
| Foundational chips | Major global capacity |
| Chip packaging/testing | Strong ecosystem |
| Domestic AI chips | Growing rapidly |
| Advanced logic | Still behind leaders |
| Advanced manufacturing equipment | Major gap remains |
| Leading-edge foundry | Still behind TSMC |
China’s semiconductor story is therefore best understood as a rapid expansion of overall capability rather than complete technological parity with the industry’s leaders.
What China’s Chip Growth Means For The Global Industry
China’s growing semiconductor industry could reshape global supply chains in several ways.
First, Chinese companies may capture a larger share of domestic demand that is currently served by foreign suppliers. Second, increasing manufacturing capacity could lead to greater Chinese exports of mature-node chips. Third, excess capacity in some segments could increase competitive pressure on manufacturers in Taiwan, South Korea, Japan, Europe and elsewhere.
The U.S.-China Economic and Security Review Commission has warned that China’s expanding mature-node capacity could eventually create significant competitive pressure in global markets.
For companies that rely on semiconductors, China’s expanding capacity could provide another source of supply. For competing chipmakers, however, it could create pricing and market-share challenges.
The Bigger Picture
China’s semiconductor industry is becoming a much larger force in the global chip economy, driven by domestic demand, government support, AI investment and an aggressive expansion of manufacturing capacity. The reported $245 billion in 2025 industry revenue and 22% annual growth underline the scale of the opportunity, while recent results from companies such as SMIC show that demand is translating into higher production and revenue.
The bigger strategic question is how far China can move up the value chain. The country has made particularly strong gains in mature-node manufacturing and is building capabilities across design, fabrication, packaging and equipment. But advanced semiconductor manufacturing remains a significant challenge, especially under continuing U.S. technology restrictions. The next phase of China’s chip strategy will therefore be about turning scale and investment into technological competitiveness.
Looking Ahead
China’s semiconductor industry is likely to remain one of the most important areas of global technology competition. AI, electric vehicles, industrial automation and domestic electronics demand should continue supporting chip consumption, while government policy and corporate investment are expected to keep expanding local manufacturing capacity. SMIC’s recent growth demonstrates that Chinese chipmakers are already benefiting from strong domestic demand and supply constraints in selected markets.
For the global semiconductor industry, China’s rise presents both an opportunity and a competitive challenge. Greater Chinese production could diversify supply and reduce shortages in some mature-chip categories, but rapid capacity expansion could also intensify price competition and deepen geopolitical tensions. Whether China can translate its growing scale into leadership in advanced chips will be one of the defining semiconductor questions of the coming decade.
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