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A Snapshot of China’s Semiconductor Journey in 2023

In 2023, China's semiconductor journey takes center stage, showcasing remarkable strides in technology and industry dynamics.
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The global semiconductor industry found itself at a crossroads in 2023 as geopolitical tensions and trade restrictions reshaped the landscape. The escalating US tech sanctions, particularly on China, tightened restrictions on access to advanced chip-making tools and AI processors. This led to a pivotal moment for China’s semiconductor sector, prompting a concerted effort towards self-sufficiency.

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1. Challenges faced by China and its response

China faced formidable challenges due to extended sanctions on semiconductor equipment, limiting access to advanced technologies. In response, the country intensified efforts, supported by state funding, to domestically produce less-advanced tools and parts.

China’s State Funding for Semiconductor Development

Direct Investment: The government established dedicated funds like the National Integrated Circuit Industry Investment Fund, pouring billions into research, development, and fabrication facilities.

Subsidies and Tax Breaks: Generous financial incentives encouraged domestic chipmakers, offering production subsidies, tax breaks on materials and equipment, and preferential loan rates.

Strategic Procurement: A directive instructed public sector entities to prioritize the purchase of domestically produced chips, actively boosting demand and offering market feedback to local manufacturers.

2. Investment in Mature Process Nodes

What are mature process nodes?

Different types of semiconductor devices are classified by the technology node, basically a measure of the feature size of a chip. Smaller nodes are called advanced nodes (e.g.,14nm, 7nm), the ‘older’ larger sizes are called trailing edge or mature nodes.

In the context of China’s semiconductor strategy, a focus on mature process nodes like 28 nm indicates a strategic emphasis on reliable and cost-effective semiconductor production.
With Western restrictions limiting the purchase of advanced tools, China is strategically investing in 28 nm and older technologies.

By the end of 2024, the capacity for mature chip production is set to expand significantly across 32 Chinese fabs, potentially raising China’s global share of mature capacity to 39% by 2027, causing concerns from the EU and US.

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Explore China’s ambitious economic transformation in our latest blog post, “China’s Economic Evolution: Navigating from Property to Progress in High-Tech Manufacturing and the Fourth Industrial Revolution.”

Read more: China in a Rush to Stockpile Semiconductor Manufacturing Equipements

Global Market Challenges

Despite these strides, the semiconductor market globally faced challenges in 2023, impacting Chinese chip makers.

Companies such as SMIC and Hua Hong Semiconductor reported revenue declines due to softening chip demand and elevated inventories of consumer and mobile devices.

Resilience: List of Chinese semiconductor breakthroughs

As China continues to navigate these challenges, it is evident that it is reevaluating their semiconductor strategies to secure their positions in this critical sector. Its push towards self-sufficiency had led to number of novel semiconductor breakthroughs. Let’s explore this one by one:

1.China First Homegrown 28 nm Lithography Tool

In 2020, China set ambitious goals to manufacture 28nm and 20nm chips independently, without US technology and equipment. Shanghai Micro Electronic Equipment (SMEE) played a vital role in this effort, advancing ultraviolet-based lithographic technology.

The aim was to lessen dependence on foreign semiconductor equipment, including firms like ASML Holding NV and Tokyo Electron Ltd.

Read more: China First Homegrown 28 nm Lithography Tool to Be Delivered This Year

2.YMTC 3D Nand breakthrough

China’s Yangtze Memory Technologies Corp. (YMTC) recently sent shockwaves through the semiconductor industry with its 232-layer 3D NAND memory chip, a breakthrough quietly hidden within a consumer SSD.

The chip packs a whopping 232 layers of memory cells, the highest ever seen in a consumer device. Think of it as stacking 232 floors of tiny storage units on a single chip. This significantly increases the storage density, allowing for more data to be crammed into a smaller space

3.SEIDA: China’s indigenous EDA tool for OPC

SEIDA, short for “Semiconductor Intelligent Design Automation” is a Chinese startup is reported to have developed an OPC (Optical Proximity Correction) tool, which is a crucial component used in the design of advanced chips. The founders of the company have been former Siemens EDA employees in US.

Read More: SEIDA: China’s answer to American EDA tool monopoly

4. China Deploys First Big RISC-V Server Cluster

China has deployed its first major RISC-V server cluster, defying U.S. restrictions. The cluster, announced by Alibaba at the RISC-V Summit, consists of 48 nodes with a total of 3,072 cores. China’s move to embrace RISC-V aligns with its efforts for technology independence and reducing reliance on foreign intellectual property.

Read More: China Deploys First Big RISC-V Server Cluster, Defying US Restrictions

5. China’s 7nm 5G chip manufactured by SMIC

SMIC reaching the 7-nm chip fabrication process has been a jaw dropper. Huawei’s mate 60 pro came with Kirin 9000s processor manufactured at SMIC’s 7nm process technology. The chip is being praised as a victory for China amid semiconductor technology restrictions imposed by the US and its allies. Although the exact fabrication details have been a mystery but the feat is indeed remarkable.

Read More: Huawei Kirin is A Nightmare for Apple and Qualcomm


The year 2023 stood a pivotal moment in the semiconductor industry, with China facing and responding to challenges that have reshaped the global landscape. The push towards self-sufficiency, particularly in mature chip technology, showcases China’s determination to navigate restrictions and assert its presence in the semiconductor market. These many breakthroughs by Chinese counterparts is a testament to the proverb “Necessity is the mother of invention”.

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One comment

  1. Wow, this paragraph is pleasant, my younger sister is analyzing these kinds of things,
    so I am going to inform her.

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