China’s semiconductor industry reported its highest-ever annual revenue last year, driven by surging demand for artificial intelligence (AI), shortages in memory chips, and pressure from U.S. export restrictions.

These policies from Washington have instead pushed Beijing to aggressively strengthen its domestic technology sector.

Analysts and industry players expect this revenue growth to continue this year, highlighting how Chinese chipmakers have capitalized on strong demand from domestic tech giants racing to build AI infrastructure.

Citing CNBC International and Bloomberg on Sunday (April 5, 2026), Paul Triolo of Albright Stonebridge Group explained that U.S. export restrictions on China’s technology sector in recent years have actually acted as a catalyst for chip demand. He added that this has also supported growth in sectors such as electric vehicles and AI data centers.

Triolo noted that these export controls have significantly boosted chip demand while reinforcing expansion in electric vehicle and AI-related infrastructure sectors.

China’s largest chipmaker, Semiconductor Manufacturing International Co. (SMIC), reported that its 2025 revenue rose 16% year-on-year to a record US$9.3 billion (Rp158.1 trillion). According to LSEG analyst estimates, the company’s revenue is projected to exceed US$11 billion (Rp187 trillion) in 2026.

Another Chinese chipmaker, Hua Hong, also delivered strong performance, recording a fourth-quarter revenue of US$659.9 million (Rp11.21 billion), marking a new record. The company expects future sales to remain stable in the range of US$650 million to US$660 million.

Meanwhile, Moore Threads, which aims to compete with Nvidia, projected its 2025 revenue to reach between 1.45 billion and 1.52 billion yuan (Rp3.5 trillion to Rp3.6 trillion), reflecting a remarkable annual growth of 231% to 247%.

Triolo further explained that the growth of electric vehicles and related infrastructure has supported demand for “mature node” chips, which use older technology. However, demand for advanced chips has surged sharply due to the rapid expansion of AI.

He emphasized that while EV growth supports demand for conventional chips, the AI boom is driving a sharp increase in demand for more advanced semiconductors.

U.S. restrictions that have cut China off from key technologies have accelerated Beijing’s push for technological self-reliance and reduced dependence on American technology. Recent U.S. measures restricting Nvidia chip exports to China have encouraged local companies to adopt domestic alternatives, with firms like Huawei stepping in to fill the gap, even though their performance still lags behind U.S. products.

Parv Sharma of Counterpoint Research noted that although China has yet to lead in top-tier GPU performance, domestically developed solutions have helped fill the local computing gap and contributed to record revenues for companies.

He stated that despite not leading in GPU performance, local products are effectively addressing domestic computing needs and supporting revenue growth.

China’s memory chip sector has also benefited significantly. A global shortage of memory chips—essential components for AI data centers and consumer electronics—combined with strong demand has led to unprecedented price increases.

According to Bloomberg, ChangXin Memory Technologies (CXMT) recorded a 130% year-on-year revenue increase to over 55 billion yuan, or about US$8 billion (Rp136 trillion). While high-bandwidth memory (HBM) remains dominated by Samsung, SK Hynix, and Micron, export restrictions on HBM to China have created opportunities for CXMT.

Phelix Lee of Morningstar stated that following restrictions on HBM exports to China, CXMT has emerged as the only domestic alternative. Although its technology still lags behind, products such as HBM2 and HBM2e have been warmly received in the domestic market.

Triolo added that expertise gained from memory chip manufacturing could drive advancements in other chip types, such as GPUs. He observed that China’s memory fabs are now acting as incubators for advanced process technologies, something that was unimaginable before U.S. export controls introduced in October 2022.

He noted that all memory manufacturing facilities in China are now serving as breeding grounds for advanced process innovations.

Despite achieving record performance, China still faces significant challenges, as companies like SMIC and Hua Hong are not yet able to mass-produce the most advanced chips like Taiwan’s TSMC. This limitation is due to restricted access to cutting-edge equipment produced by Dutch company ASML under export controls.

Triolo emphasized that China’s effort to rebuild much of the semiconductor supply chain is highly challenging and will require considerable time to overcome U.S. restrictions in key areas.

He stressed that China’s position is unique, as it is attempting to reconstruct nearly the entire semiconductor supply chain, which is a complex and time-consuming task.

In conclusion, Sharma warned of potential overcapacity risks in lower-end chips. He noted that sustaining China’s growth will depend heavily on its ability to move up the value chain, particularly in developing advanced HBM and next-generation logic chips.