China’s semiconductor ecosystem: opportunities and challenges

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The Chinese government laid out its Made in China 2025 strategy in 2015, setting a target of achieving 70% self-sufficiency in semiconductor production within a decade. In 2020, trade tensions and restrictions on access to key US technology redoubled that desire to be self-sufficient. More than that, China aspires to technology leadership in the chips that power platforms, such as those for 5G and artificial intelligence (AI), that are central to the country’s economic and hi-tech goals.

These two goals, for greater self-reliance and for technology leadership or global parity, are driving an increase in investment and innovation, which will transform China’s hi-tech sector and affect the global ecosystem. A significant number of start-ups and large companies are contributing to the effort, and in the second quarter of 2020, investment in the semiconductor industry was 10 times the figure in the same quarter in 2019.

Progress is not only driven by the current geopolitical situation, but by China’s broader ambitions to be at the cutting edge of technologies that will transform society and the economy, such as 5G, AI, robotics and green energy. This report is based on Analysys Mason's assessment – based on extensive stakeholder interviews – of China’s progress in these strategic technology areas.