Can China Become the World Leader in Semiconductors?

Key Points

  • China seeks to become a leader in the semiconductor industry, but faces hurdles

  • It would be a mistake to see China's efforts as permanently derailed

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China recognizes that a robust semiconductor industry isn't just a source of GDP growth itself, but that it is also a critical part of innovations in other big industrial sectors like automotive, telecommunications and computing. While China produced only 19% of the chips they needed for domestic use in 2019, they are willing to spend $150 billion to try and expand the sector, hoping to supply 70% of domestic needs by 2025, and to be at parity with international leading edge technology by 2030.

China faces challenges including foreign talent recruiting, restrictions on key manufacturing equipment, and access to leading edge contract manufacturing. While they are unlikely to catch-up in the short-term, it would be a mistake to believe that they can’t make inroads eventually.