How Innovative Is China in Semiconductors? - Information Technology and Innovation Foundation

Abstract

The Information Technology and Innovation Foundation (ITIF) assesses the current status of Chinese semiconductor innovation, highlighting that while China has poured massive resources into the sector, it still lags significantly in cutting-edge manufacturing technology. The report identifies China's strategic shift toward indigenous IP development, particularly through utilizing open architectures like RISC-V, as a key component of its long-term strategy to achieve technological self-sufficiency. This geopolitical drive for independence is rapidly increasing competition and reshaping the global technology supply chain landscape.

Report

Key Highlights

• Innovation Gap: China maintains a substantial gap behind leading international competitors (US, South Korea, Taiwan) in key areas, especially advanced process nodes (sub-14nm) and critical manufacturing equipment (EUV lithography).
• Massive Investment: Despite technological gaps, China continues its aggressive investment policy, backed by centralized state funding, aiming to meet high domestic self-sufficiency targets for semiconductor consumption.
• Strategic IP Diversification: China is strategically promoting and adopting architectures like RISC-V to circumvent reliance on foreign proprietary IP (like Arm and x86), viewing it as a path to architectural independence.
• Domestic Success Focus: China's primary successes are concentrated in mature process nodes, specialized chips (AI accelerators, IoT devices), and specific domestic market applications.
• Policy Challenge: The report emphasizes that China's push requires significant and coordinated policy responses from Western nations to maintain global technological leadership.

Technical Details

• Process Node Focus: The report analyzes China's progress, likely pointing to challenges in high-volume production beyond 28nm and serious limitations below 14nm due to restricted access to advanced fabrication tools.
• EDA Self-Sufficiency: A major technical bottleneck identified is the lack of sophisticated, domestically produced Electronic Design Automation (EDA) tools necessary for designing complex modern chips.
• RISC-V Deployment: China is heavily investing in developing mature RISC-V ecosystems, including competitive CPU cores, compiler toolchains, and verification methods, aiming for widespread deployment across edge computing and server markets.
• Specialized Architectures: Focus is placed on developing custom silicon solutions—including specialized DSPs (Digital Signal Processors) and NPUs (Neural Processing Units)—optimized for the unique demands of the Chinese domestic market, often utilizing the modularity of RISC-V.

Implications

• RISC-V Commercialization: China’s massive domestic market commitment and government backing significantly accelerate the maturity, standardization, and commercial viability of the RISC-V architecture globally.
• Geopolitical Decoupling Tool: RISC-V serves as a critical mechanism for China to mitigate the impact of U.S. export controls and supply chain restrictions, enabling the creation of entirely indigenous semiconductor supply chains that are immune to foreign IP revocation.
• Ecosystem Fragmentation: Increased indigenous innovation in China, driven by RISC-V adoption, may lead to a partially bifurcated global tech ecosystem, where Western technologies maintain dominance in ultra-advanced nodes while China drives high-volume adoption of open standards in mature nodes and specialized application domains.
• Innovation Competition: The robust Chinese development of RISC-V cores and related software stacks forces existing proprietary architecture providers (like Arm) to increase their competitiveness and licensing flexibility to maintain relevance in rapidly growing markets.