Data from the National Bureau of Statistics of China shows that in June, China's integrated circuit production reached 45.1Bn units, a year-on-year increase of 15.8%, reaching an all-time high since December 2024 (42.8Bn units).

Amid heightened geopolitical tensions, China is making efforts to improve self-sufficiency and reduce external dependence in chip manufacturing. China’s expansion of mature-process node (>28nm technology) production capacity and optimisation of costs are making it an indispensable and important supply force in the global mature-process chip field.

China has become the second-largest manufacturer of integrated circuits (chips), accounting for approximately 20% of all global chip production in 2025.

However, in the field of advanced processes, fierce technological competition and geopolitical factors will overhang the market. China faces difficulties in obtaining key equipment—such as extreme ultraviolet lithography machines—after the Netherlands and other key semiconducting countries announced export restrictions on high-end chip manufacturing equipment and technologies to Chinese consumers.

The USA’s recent revocation of its equipment import exemption for foreign-funded wafer fabs in China has further tightened the flow of advanced manufacturing equipment and technology to China. This has prompted China to accelerate independent R&D and domestic substitution.

Cut off from both high-end chips and chip-manufacturing equipment, China has rapidly increased its large-scale mature-process production capacity. This has contributed to the stabilisation of global mature-process chip prices, providing more diversified choices for downstream manufacturers; it may also pose competitive pressure on mature-process manufacturers in other regions. In the future, China’s chip industry may continue to adopt a dual-track approach.

Whilst it will continue to expand and optimise the production capacity and competitiveness of mature processes, it will also likely invest in advanced chip manufacturing technologies and develop cutting-edge technologies.