China faces an urgent need to innovate in semiconductor design to stay competitive in the global market, according to Wei Shaojun, a leading expert on semiconductors. Speaking at the China Integrated Circuit Design Industry Exhibition in Shanghai, Wei emphasized the importance of building a self-sufficient technological ecosystem amidst tightening US technology restrictions.
Wei, a professor at Tsinghua University and vice-president of the China Semiconductor Industry Association, pointed out that the domestic chip industry is losing access to advanced resources. “External advanced resources are now closed to China,” he said, highlighting the limited manufacturing technologies currently available. He called for breakthroughs in design architecture and microsystem integration as critical steps toward reducing reliance on restricted technologies.
The United States recently expanded export restrictions, targeting 24 types of chipmaking equipment and three categories of software vital for integrated circuit development. Additionally, 140 Chinese semiconductor firms were added to the US Entity List, effectively barring them from partnerships with American companies. These sanctions have created significant hurdles for China’s chip industry, including limited access to electronic design automation (EDA) software and advanced chip lithography tools.
Wei’s concerns were echoed by other industry insiders. Chen Zenghui, chief technology officer at Shanghai-based EDA firm PhySim Electricity Technology, described the challenges posed by restricted access to advanced processing technologies. Chen proposed using strategies like 3D stacking and heterogeneous integration to overcome sanctions, noting that these techniques could achieve performance comparable to advanced nodes without relying on cutting-edge tools.
China’s semiconductor market continues to experience mixed growth. While chip-design sales are projected to reach 646 billion yuan (approximately $89.1 billion USD) this year, the growth rate lags behind the global semiconductor industry’s expected 19% increase in 2024, according to data from the World Semiconductor Trade Statistics. The domestic market remains dominated by chips for communications and consumer electronics, which account for nearly 68.5% of China’s IC design sales, while computer processors represent less than 11%.
Emerging industries like artificial intelligence and electric vehicles, which could drive transformative demand for semiconductors, have yet to reach mainstream adoption. In the meantime, concerns over US sanctions have spurred Chinese companies to stockpile chips. From January to November, China imported 501.47 billion ICs, marking a 14.8% year-over-year increase in volume. Semiconductor exports also saw double-digit growth, with 271.6 billion ICs shipped abroad during the same period.
Wei stressed that innovation is the only path forward for China’s semiconductor industry, particularly in the face of escalating geopolitical challenges. Without a push for domestic technological breakthroughs, the country risks falling further behind in the global semiconductor value chain.
China’s semiconductor challenges present an opportunity to focus on design innovation like 3D stacking and integration, reducing reliance on manufacturing-heavy approaches. By investing in R&D and fostering local collaboration, China could redefine its role in the global market. Without action, it risks falling further behind leading nations.
