China has signaled a major acceleration in its push for semiconductor independence with a new strategic goal. The plan is to produce 100,000 'relatively advanced' wafers per month within the next two years, and expand that capacity by another 500,000 wafers by 2030.
This aggressive target is a direct consequence of the ongoing tech rivalry with the West. For years, the U.S. and its allies, like the Netherlands, have been tightening restrictions on China's access to advanced chipmaking technology. This includes blocking the sale of the most sophisticated EUV (Extreme Ultraviolet) lithography machines, which are essential for producing cutting-edge chips below 7-nanometers. Faced with these controls, Beijing is doubling down on its strategy to build a self-sufficient domestic supply chain.
So, how does China plan to achieve this without the best tools? The strategy unfolds in a few key steps. First, there's the money. China has established massive state-backed investment funds, like the 'Big Fund III' worth over RMB 344 billion (approx. $47.5 billion), specifically to finance this push. This capital is being channeled into building new fabrication plants (fabs) and supporting domestic equipment manufacturers.
Second, China is getting creative with existing technology. Since it can't buy EUV machines, it's focusing on maximizing the potential of older DUV (Deep Ultraviolet) lithography tools. Through techniques like multi-patterning, Chinese companies like SMIC are finding ways to produce 7nm-class chips—a feat previously thought to be inefficient without EUV. While this approach may have drawbacks like lower yields and higher costs, it provides a viable pathway to reduce reliance on foreign technology for many applications, including AI accelerators.
This national effort represents a significant shift. If China succeeds in producing 100,000 advanced wafers per month, it would capture a meaningful slice—around 7-8%—of the world's advanced chip manufacturing capacity. This would not only satisfy a large portion of its domestic demand but could also disrupt global markets, especially in slightly older 'mature node' chips where China is already creating oversupply. It's a high-stakes gambit to secure its technological future.
- Wafer: A thin slice of semiconductor material, such as silicon, upon which microcircuits are fabricated.
- DUV/EUV: Types of lithography technology used to print circuit patterns on wafers. EUV (Extreme Ultraviolet) is the most advanced, used for cutting-edge chips, while DUV (Deep Ultraviolet) is an older but still highly capable technology.
- Big Fund III: China's third major state-backed investment fund aimed at developing its domestic semiconductor industry.