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Future of the China Semiconductor Industry and 2030 Market Predictions

Apr 17, 2025 4 minutes read
Apr 17, 2025 4 minutes read

The Chinese government is heavily investing in the production and export of semiconductor devices. Will it be able to become self-sufficient?

Semiconductors are a vital component of the modern world, since they power almost every aspect of technology, from consumer electronics such as smartphones and gaming consoles to national security servers and computers.

Moreover, artificial intelligence (AI), the Internet of Things, 5G connection, and cloud computing – all huge drivers of digital evolution – have semiconductors at their base.

It is therefore no surprise that the Chinese government is heavily investing in the production and export of semiconductor devices, which are the 8th most exported products out of 1,200 in China, with exports worth US$48 billion in 2024. China is home to one of the seven largest semiconductor market players.

Some of the world's largest players in the semiconductor market include:

  1. TSMC (Taiwan Semiconductor Manufacturing Company)
  2. SMIC (Semiconductor Manufacturing International Corporation - partially Chinese state-owned firm)
  3. Samsung Electronics (South Korea)
  4. Intel Corporation (USA)
  5. NVIDIA (USA)
  6. Broadcom (USA)
  7. ASML (Netherlands) – not a semiconductor producer but the world’s major supplier of photolithography machines, which are used in the production of semiconductors.

What is the value of the world semiconductor market?

According to data provided by Precedence Research, the size of the global semiconductor market in 2023 was estimated to be $545 billion, with experts expecting further growth to reach $1,137 billion in 2033.

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The world region considered to be the largest global semiconductor market is Asia Pacific, which in 2024 held a 50.94% share.

The semiconductor industry in China

China's semiconductor industry is evolving rapidly, and government assistance is playing a major role in this, together with growing local demand and technological advances.

In 2024, the value of the Chinese semiconductor market was estimated to be US$183 billion, with experts predicting this will reach US$295 billion by the end of this decade.

Semiconductor exports

China exported US$48.4 billion worth of semiconductor devices in 2024, with the key destinations being Hong Kong (US$9.1 billion), the Netherlands (US$4.8 billion), India (US$3.8 billion), Brazil (US$2.7 billion), and Pakistan (US$2 billion), according to the Observatory of Economic Complexity (OEC).

China’s growing role in semiconductor exports has even been confirmed by researchers in rival South Korea. In its recent report, the Korea Institute of Science and Technology Evaluation and Planning acknowledged China's dominance in semiconductors, stating this was “becoming more and more apparent in key technical fields.”

Guangdong as the largest regional semiconductor market

Guangdong province in China dominates the regional Southeast Asia semiconductor market due to its advantageous location, strong infrastructure, and highly qualified workforce.

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This province serves as the center for semiconductor research, design, and manufacture and is home to a flourishing environment of both local and international semiconductor companies.

Furthermore, its competitive advantage is strengthened by its closeness to important electronics manufacturers and export centers.

Growth drivers and key trends

Consumer electronics, along with constantly evolving tech, are the key drivers of market growth.

Advanced chips are becoming increasingly important as smartphone, tablet, and wearable technology manufacturers incorporate semiconductor-based technology such as AI processors, high-resolution screens, and 5G connections.

The data center market follows consumer electronics as a key driver, being the biggest end-user segment.

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The main players within the Chinese semiconductor market

According to TechNews, over the last few years, semiconductor equipment companies in the Middle Kingdom registered constant advances in technical innovations.

Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductor are the two major semiconductor producers in China today.

Semiconductor Manufacturing International Corporation (SMIC)

SMIC is the biggest semiconductor producer in China and one of the largest in the world, manufacturing memory and logic chips for a variety of process nodes.

Enjoying substantial government support, the company focuses on catering to local tech behemoths Xiaomi and Huawei while making significant investments in next-generation manufacturing technologies (5nm and 7nm fabrication).

Hua Hong Semiconductor

Hua Hong is China’s second-largest chip foundry and the seventh-largest in the world, with sales offices in Japan, Taiwan, and the U.S.

The company’s products are used in smartphones, PCs, Internet of Things devices, data centers, and vehicles.

However, for the most part, the producer focuses on more mature process technologies – older, proven chip manufacturing nodes that have been widely utilized and improved over time and are used for mass manufacturing due to their reliability, affordability, and efficiency.

Chinese government assistance for the semiconductor industry

Semiconductor devices are extremely important for the Chinese technological industry, which is why the authorities aim to substitute imported devices with locally produced ones to replace 70% of imported semiconductors within its borders by 2025 and achieve 100% import substitution by 2030, according to Maximize Market Research.

To achieve this objective, the government has launched extensive financial initiatives. In May 2024, amid growing U.S. export restrictions, China established a fund of 344 billion yuan (over $47 billion) in registered capital to support its semiconductor industry.

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Interesting facts about China’s semiconductor industry:

  1. Over 22,800 new semiconductor companies were registered within the country’s borders in 2020 alone, which is a roughly 200% increase compared to the year before.
  2. Between 2021 and 2022, China accounted for 55% of all semiconductor patent applications worldwide, according to the Information Technology & Innovation Foundation.
  3. China spent US$41 billion on wafer fabrication equipment in 2024, accounting for about 40% of all purchases in this field worldwide.

Market challenges

The U.S. efforts to restrict or delay China's capacity to obtain and manufacture cutting-edge semiconductor technologies have had a double-edged sword effect on the industry.

  1. The negative side for China lies in the fact that the nation's semiconductor ecosystem has been greatly impacted by recent chip limitations, which have restricted access to the machinery needed for next-generation production.
  2. The positive aspect is that China has begun to heavily invest in the domestic market of advanced chip manufacturing.

Since the world semiconductor industry is interconnected, any action taken by one player will almost certainly have an impact on another, thus impacting the global supply chain.

Final word

China continues to invest in its own R&D in the semiconductor industry, but geopolitical tensions still make the future uncertain.

The country's reaction to the restrictions lies in heavy investments in the semiconductor industry with the ultimate goal of making the country self-sufficient.

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