China’s Chip Ambitions Shake Up Global Tech Industry

Beijing: Four years ago, the United States tightened the screws on China's technological ambitions, rolling out export curbs on advanced chips, commonly known as semiconductors, used in artificial intelligence (AI), data centers, and national defense. The Biden administration aimed to limit Beijing's ability to develop technologies that could boost its military and financial strength, further narrowing the gap between the world's two largest economies.According to Deutsche Welle, the restrictions pushed Beijing to accelerate its push for chip self-reliance, a goal laid out years earlier in its Made in China 2025 plan. The Chinese government has since poured hundreds of billions of dollars into building up domestic semiconductor production. Beijing granted huge subsidies, tax breaks, and other cost savings to nurture local counterparts to NVIDIA and Taiwan's TSMC, pivotal players in the advanced semiconductor industry.SMIC, the backbone of China's self-reliance plan, made record revenues of $9.3 billion la st year, while HuaHong, the mainland's second-largest chip foundry, has been running at 106% operational capacity due to demand, according to its 2025 fourth-quarter earnings report. However, Ryu Yongwook, an assistant professor at the National University of Singapore's Lee Kuan Yew School of Public Policy, noted that while China has been pushing to catch up with US Big Tech, progress is often exaggerated.China has achieved significant breakthroughs in recent years, capturing roughly 30% of the global market for legacy chips-essential components in vehicles, industrial equipment, and consumer electronics. John Lee, director of research consultancy East-West Futures, predicted that Chinese production expansion would drive down chip prices globally, putting pressure on non-Chinese vendors.Additionally, China has made strides in more advanced chips, producing 7-nanometer-class processors powering Huawei's latest smartphones. Despite these achievements, Tim Rhlig, senior analyst for Global China at the Europe an Union Institute for Security Studies, described China's chip ambitions as facing a "brick wall" of technological limits and US sanctions.Reflecting a shift in priorities, the Communist Party's new Five-Year Plan emphasizes AI over chip dominance. China focuses on practical AI for industry, which domestic chips can handle efficiently, leading to rapid adoption across the Global South. This poses a threat to the global dominance of US tech giants like Microsoft and Google, projected to invest heavily in AI infrastructure.ICIS, a global market intelligence provider, warned of potential limitations for US data centers due to the country's strained power grid. Cheap energy in China, according to Ryu Yongwook, compensates for its relative chip inefficiency. ICIS sees various possible outcomes in the chip race, including the US maintaining lead through infrastructure improvements or the emergence of two separate AI ecosystems.The chip industry faces a future where Chinese competitors are underpricing and ra pidly closing the gap in product sophistication and reliability, concluded Lee.