China is far from semiconductor self-sufficient, IC Insights reports. While China-based chip production will account for 21.2% of the domestic IP market in 2026, foreign companies such as Samsung, SK Hynix and TSMC are expected to account for more than 50% of China’s IP production during this period.
The Chinese government has made the development of the semiconductor industry a national priority in its 14th five-year plan, with as much as 70 percent of the chips to be made in China by 2025.
IC Insights distinguishes between the Chinese IC market and local IC production in China. Although China has been the world’s largest consumer of chips since 2005, this does not necessarily mean that there will be an immediate increase in China’s IC production – if ever. China’s IC production accounted for 16.7 percent of its $ 186.5 billion IC market in 2021, up from 12.7 percent 10 years earlier in 2011. IC Insights predicts that share will increased by 4.5 percentage points from 2021 to 21.2 percent in 2026 average annual increase).
Of the $ 31.2 billion of IP produced in China last year, local companies produced $ 12.3 billion (39.4 percent), representing just 6.6 percent of the IP market for $ 186.5 billion in the country. . TSMC, SK Hynix, Samsung, Intel, UMC and other foreign companies that have IC wafer fabs located in China produce the rest. IC Insights estimates that of the $ 12.3 billion in IP produced by Chinese-based companies, about $ 2.7 billion is from IDM and $ 9.6 billion is from foundries for pure gaming such as SMIC.
If China-based IC manufacturing grows to $ 58.2 billion in 2026, as IC Insights predicts, China-based IC manufacturing will still account for only 8.1% of the total projected 2026 global IC market of $ 717.7 billion. Even after adding a significant markup to some of the sales of IP to Chinese manufacturers (many Chinese IP manufacturers are foundries that sell their IP to companies that resell these products to electronic system manufacturers), China-based IP production is likely will represent only about 10 percent of the global IC market in 2026.
Following the global shortage of chips two years ago, the US and the EU have also given priority to the production of onshore semiconductors and more localized supply chains. US law will provide chipmakers with $ 52 billion in funding to expand production. The European Commission, the EU’s executive body, has announced a new European chips law that will allow € 15 billion ($ 17.11 billion) in additional public and private investment by 2030. This is in addition to the € 30 billion in public investment that previously intended.
The global chip industry is still heavily dependent on the Asia-Pacific region for semiconductor materials and services such as packaging. China is the largest producer of rare earth minerals widely used in electronics. The self-sufficiency of semiconductors in any region will require more than just factories.