China's Chip Expansion Intensifies Pressure on Global Rivals

Lead

Four years after the United States imposed sweeping export controls on advanced semiconductors to China, Beijing's response has reshaped the global chip industry. According to reporting by Deutsche Welle, the restrictions, introduced under the Biden administration, were designed to limit China's ability to develop technologies for artificial intelligence, data centers, and national defense—areas with direct implications for military and economic power. Instead, they accelerated China's push for self-reliance, a goal first articulated in its Made in China 2025 plan. Today, China controls roughly 30% of the global market for legacy chips—the older, less advanced semiconductors used in everything from cars to consumer electronics—and its domestic foundries are operating at record capacity.

Coverage Comparison

All available reports on this story come from Deutsche Welle, the German public broadcaster. The outlet's coverage is consistent across multiple articles, focusing on the strategic implications of China's chip ambitions. The tone is neutral and data-driven, leaning on expert opinions and financial figures. No other sources—such as Reuters, AP, or Chinese state media—are included in the material provided, meaning the article relies solely on DW's perspective. While DW is known for its balanced European viewpoint, its reporting on this topic does not include direct quotes from Chinese officials or industry leaders, instead relying on analysts like Ryu Yongwook from the National University of Singapore.

Key Claims

US Export Curbs and China's Self-Reliance Drive

According to Deutsche Welle, the United States tightened export curbs on advanced chips to China four years ago, aiming to curb Beijing's technological rise. The outlet reports that this move pushed China to accelerate its chip self-reliance strategy, formalized in the Made in China 2025 plan. The Chinese government has since poured hundreds of billions of dollars into domestic semiconductor production, offering subsidies, tax breaks, and other incentives to nurture local champions that could rival NVIDIA and TSMC, the global leaders in advanced chip design and manufacturing.

China's Dominance in Legacy Chips

DW reports that China has captured 30% of the global market for legacy chips—the less sophisticated semiconductors that remain essential across industries. Chinese firms can produce these chips on a massive scale, leveraging economies of scale and state support. This dominance is not just a matter of market share; it has strategic implications, as legacy chips are critical components in automobiles, medical devices, and industrial machinery.

Progress in Advanced Chips

While China's legacy chip production thrives, its progress in advanced chips is more modest. DW notes that China has made significant strides in producing 7-nanometer-class processors, a technology that was once considered out of reach due to US sanctions. However, experts quoted by DW caution against overstating these achievements. Ryu Yongwook, an assistant professor at the National University of Singapore's Lee Kuan Yew School of Public Policy, told DW that "Beijing wants to achieve chip self-sufficiency, but the current level is nowhere near it." He added that China still lags the US in research, design, and innovation, and trails Taiwan and South Korea in manufacturing prowess.

SMIC and HuaHong's Record Performance

DW highlights the financial success of China's leading foundries. SMIC, the backbone of China's self-reliance plan, recorded revenues of $9.3 billion (€7.8 billion) last year—a historic high. HuaHong, the mainland's second-largest chip foundry, has been running at 106% operational capacity due to demand, according to its 2025 fourth-quarter earnings report, as cited by DW. These figures indicate robust domestic demand for Chinese-made chips, even as international restrictions limit access to cutting-edge technology.

Perspectives

The Optimistic View: China's Resilience

From Beijing's perspective, the US export curbs have proven counterproductive, spurring a homegrown semiconductor industry that is now a major global force in legacy chips. The success of SMIC and HuaHong, coupled with advances in 7-nanometer technology, suggests that China can achieve a degree of self-reliance even under sanctions. The Chinese government's substantial investments in the sector are paying off, and the country's fast-expanding power sector gives it an advantage in rolling out data centers at scale—a factor that analysts say is crucial for AI development. As one unnamed analyst noted, cheap energy is very important for AI and other advanced technologies, and China is well-positioned in this regard.

The Skeptical View: Technological Limits

Experts like Ryu Yongwook argue that China's progress is often exaggerated. Despite the capacity and revenue numbers, China remains far behind in cutting-edge chip design and manufacturing. The 7-nanometer achievement, while notable, still falls short of the 3-nanometer and 2-nanometer technologies being developed by TSMC and Samsung. Moreover, China's reliance on imported equipment and software, despite US restrictions, remains a vulnerability. The gap in research and innovation is not closing quickly, and China's self-sufficiency is still a distant goal.

The Global Market Impact

Looking ahead, DW reports that China's expansion in legacy chips could drive down prices globally, putting pressure on non-Chinese vendors who cannot match China's scale and cost advantages. This could squeeze profit margins for established players like Samsung and Intel, particularly in mature nodes. Additionally, if trade and geopolitical tensions escalate, two separate AI ecosystems could prevail—one centered on the US and its allies, another on China and the Global South. The US may maintain its lead in AI research with advanced chips, while China's AI systems spread in developing countries, creating a fragmented technological landscape.

The Power Grid Factor

The article also touches on a less-discussed factor: the US power grid. According to a claim carried by a single outlet and not yet independently verified, the US may maintain its lead in the chip industry by fixing its power grid. This suggests that energy infrastructure is becoming a strategic bottleneck for AI and semiconductor production, and that China's investments in power generation could give it a long-term advantage.

Conclusion

China's chip expansion is a double-edged sword. On one hand, it has achieved remarkable success in legacy chips, becoming a dominant supplier and putting pressure on global rivals. On the other hand, its advanced chip capabilities remain limited, and the country still depends on foreign technology for cutting-edge production. The coming years will likely see increased competition, potential price wars, and possibly the emergence of distinct technological blocs. As the situation evolves, the balance between self-reliance and interdependence will remain a central tension in the global semiconductor industry.