Xiaomi and Huawei are making bold strides in semiconductor innovation with breakthroughs that signal more than just progress. China is no longer catching up. It is charting the course.
China has leapfrogged South Korea in foundational chip capabilities—marking a significant shift that’s intensifying the global semiconductor race.
According to research by a South Korean think tank, Korea Institute of S&T Evaluation and Planning (KISTEP), China has outpaced South Korea in key semiconductor technologies, including the memory segment, an area traditionally dominated by South Korean companies.
The country is making significant strides in high-density resistive memory while also demonstrating strong capabilities in AI semiconductors, power chips, and next-generation sensing technologies.
Despite facing strict U.S. export controls that block access to advanced tools like EUV lithography and cutting-edge semiconductor equipment, Chinese tech giants have made unexpected strides into the sub-7nm chip category—a level many experts had deemed unattainable under such constraints.
Last month Xiaomi’s founder chairman, and chief executive Lei Jun announced the tech firm’s launch of its 3nm XRing O1 chip based on the 3-nanometre lithography process in semiconductor manufacturing. This marks a major step in China’s semiconductor race, following Huawei’s unexpected progress despite U.S. sanctions.
Xiaomi is now the fourth company worldwide—after Apple, Qualcomm, and MediaTek—to mass-produce 3nm chips.
Huawei’s HiSilicon doubled its 2024 revenue and expanded into automotive chips, proving it can innovate and grow despite heavy export restrictions.
What’s remarkable is that historically, semiconductor leadership has taken decades to reach where they are today. The U.S. built dominance over more than 50 years; Japan rose in 30–40 years; South Korea became a memory chip leader after 20–30 years; and Taiwan’s TSMC achieved advanced logic manufacturing leadership over three decades.
In contrast, China’s leap—from launching its national strategy in 2014 to surpassing South Korea in foundational chips by 2025—has taken just 10–11 years.
This rapid progress reflects massive state investment, national mobilisation, and geopolitical urgency.
China’s semiconductor ecosystem is expanding rapidly, driven by aggressive state support and a strategic push for self-reliance.
Despite U.S. export controls blocking access to advanced tools like EUV lithography, firms like SMIC are producing 7nm chips using older tech, while memory players YMTC and CXMT challenge South Korean dominance. Equipment makers NAURA, AMEC, and SMEE are strengthening local tooling capabilities, and fabless firms such as UNISOC, Cambricon, Loongson, and BYD Semiconductor are reinforcing China’s chip stack.
Beijing’s “Made in China 2025” strategy—backed by the National Integrated Circuits Industry Development Investment Fund (Big Fund), which launched its third phase in 2024 with 344 billion yuan (~$47.5 billion)—is focused on R&D, fab construction, talent, and supply chain localization.
Generous tax breaks, land subsidies, and growing domestic demand in EVs, AI, and industrial tech are fuelling rapid progress.
Rather than competing across the board, China is targeting strategic niches like memory, AI accelerators, and power semiconductors. Its value-added share in semiconductors jumped from 8% in 2001 to 31% by 2016, while the U.S. and Japan saw declines.
Although China’s overall market share in global semiconductor industry was just 7.2% in 2023—trailing the U.S. (50.2%), South Korea (18.8%), and the EU (12.7%)—it is gaining ground fast.
Globally, semiconductor markets remain fragmented: TSMC (Taiwan) leads advanced nodes; South Korea dominates memory; the U.S. excels in chip design and EDA; ASML (Netherlands) holds an EUV monopoly; and Japan provides key materials.
Still, China’s momentum—especially in memory and mature-node logic chips—positions it as an increasingly formidable player, despite ongoing geopolitical headwinds.
