China’s Chipmakers Ride AI Wave to Record Highs Amid Tech Tensions

• China’s chipmakers posted record revenues, driven by AI demand, EV growth, and global memory shortages.

• U.S. export restrictions accelerated Beijing’s push for semiconductor self-reliance.

• SMIC, Hua Hong, and Moore Threads reported strong growth, with further expansion expected.

• Memory leader CXMT surged amid HBM demand and supply gaps.

• Despite momentum, China still trails global leaders in advanced chip manufacturing and EUV access.

China’s semiconductor industry has delivered its strongest financial performance to date, propelled by surging demand for artificial intelligence infrastructure, tight global memory supplies, and ongoing U.S. export restrictions that have intensified Beijing’s push for technological self-reliance.

Leading chipmakers across the country reported unprecedented revenue figures last year, with many forecasting even stronger results ahead. The growth reflects a powerful combination of domestic demand and strategic policy shifts, as Chinese technology firms increasingly turn inward to build out AI capabilities and reduce dependence on foreign suppliers.

Paul Triolo, a partner at advisory firm Albright Stonebridge Group, described U.S. export controls as having acted like “rocket fuel” for China’s semiconductor demand. While sectors such as electric vehicles and data centers were already contributing to growth, restrictions on access to American technology have accelerated investment in domestic alternatives.

Semiconductor Manufacturing International Corp. (SMIC), China’s largest contract chipmaker, reported that its 2025 revenue climbed 16% year-over-year to reach a record $9.3 billion. Analysts project that figure could surpass $11 billion in 2026, signaling continued expansion. Meanwhile, Hua Hong Semiconductor posted record fourth-quarter revenue of $659.9 million and expects sales to remain in a similar range in the coming quarter.

Emerging players are also riding the momentum. Moore Threads, a company positioning itself as a domestic challenger to Nvidia, forecast 2025 revenue between 1.45 billion and 1.52 billion yuan—representing a dramatic year-on-year increase of more than 200%.

Forces Powering the Surge

Several factors are converging to support the industry’s rapid ascent. The proliferation of electric vehicles and related charging infrastructure has bolstered demand for so-called “mature node” chips, which are less advanced but essential for automotive systems. At the same time, appetite for cutting-edge processors has soared as Chinese tech giants race to build AI data centers and computing platforms.

U.S. export restrictions introduced over the past several years have cut off Chinese companies from key technologies, including high-performance graphics processing units (GPUs). In response, Beijing has encouraged domestic procurement, prompting firms such as Huawei and others to develop and supply alternatives. Although these homegrown solutions may not yet match the performance of leading U.S. products, they are helping narrow what analysts describe as a domestic computing shortfall.

According to Counterpoint Research analyst Parv Sharma, locally produced chips are increasingly filling this gap and contributing to record revenues across the sector.

The memory segment has been particularly buoyant. Global shortages of memory components—critical for AI servers and consumer electronics—have driven prices higher. ChangXin Memory Technologies (CXMT), one of China’s leading memory manufacturers, reportedly saw revenue jump 130% year-over-year to exceed 55 billion yuan (approximately $8 billion).

High-Bandwidth Memory (HBM), a premium type of memory essential for advanced AI systems, has traditionally been dominated by Samsung, SK Hynix, and Micron. However, export controls limiting China’s access to certain HBM products have opened opportunities for domestic suppliers. Although CXMT’s current offerings, such as HBM2 and HBM2e, trail global leaders technologically, demand remains strong due to limited alternatives. The company is expected to begin producing HBM3 this year.

Triolo noted that China’s expanding memory fabrication capabilities are serving as training grounds for more sophisticated manufacturing processes, potentially laying the groundwork for future advances in logic chips and GPUs.

Persistent Gaps and Long-Term Risks

Despite the impressive revenue growth, Chinese semiconductor firms continue to trail competitors in the United States, South Korea, Taiwan, and Europe in terms of cutting-edge manufacturing capabilities.

SMIC and Hua Hong, for example, are still unable to mass-produce the most advanced chips at the scale achieved by Taiwan Semiconductor Manufacturing Co. (TSMC). A key obstacle is restricted access to extreme ultraviolet (EUV) lithography equipment produced by ASML in the Netherlands—tools that are essential for fabricating the most advanced semiconductors.

Efforts to develop domestic substitutes are underway, but replicating the sophisticated global semiconductor supply chain is a formidable challenge. As Triolo observed, China is attempting to rebuild large portions of the chip ecosystem internally—an undertaking that requires significant time and resources.

There are also concerns about potential overcapacity in mature-node chips as companies ramp up production to replace imports. While replacing foreign suppliers is currently fueling growth, sustaining momentum will depend on whether Chinese firms can successfully climb the technological ladder into advanced memory and next-generation logic processes.

For now, however, a mix of policy support, market demand, and geopolitical pressures has created a powerful growth cycle for China’s semiconductor sector—one that shows little sign of slowing in the near term.