Beijing is reportedly trying to triple production to offset Washington’s restrictions on advanced semiconductors
China has accelerated efforts to expand its AI chip production, aiming to triple domestic output next year in the face of US export controls, Financial Times reported on Wednesday.
The US began curbing sales of cutting-edge chips to China in 2022 over claimed national security concerns. Beijing has called the practice a “malicious blockade” and accused Washington of “politicization and weaponization of tech and trade issues.”
Fabrication plants linked to telecom giant Huawei are expected to play a major role in the ramp-up. One facility is set to begin operations by the end of 2025, with two more launching next year, sources familiar with the plans told FT.
The new facilities could together reportedly exceed the current AI chip output of China’s top foundry, Semiconductor Manufacturing International Corporation (SMIC). SMIC, which already supplies Huawei, is also planning to double its capacity for 7-nanometer chips – the most advanced type produced in the country.
The expansion could benefit other domestic chip designers, who are now gaining more access to SMIC production lines as US restrictions block their access to US chipmaker Nvidia’s high-end processors.
”Domestic output won’t be an issue for long,” an executive at a Chinese semiconductor manufacturer told the outlet, noting the surge in production capacity.
A growing number of companies are aligning with DeepSeek, China’s leading AI start-up, which has adopted a new data format called FP8. This format improves efficiency at the cost of precision, but could help Chinese chips catch up with Nvidia’s technology. DeepSeek founder Liang Wenfeng has said China must build a complete AI ecosystem to rival Nvidia’s global dominance.
The government has reportedly thrown its support behind the sector, with the State Council having called for integrated development across AI research, engineering, and commercialization.
“Necessity begets innovation,” one investor told FT, highlighting how US restrictions are pushing Chinese companies to develop homegrown alternatives.
Following a trade deal with Beijing earlier this month, US President Donald Trump approved export licenses for Nvidia and AMD, enabling the companies to resume exports of certain semiconductors to China.
