China aims to become a global leader in science and technology by 2035, and has identified the next five years as a critical, decisive period for breakthroughs towards that goal. This push comes as international competition intensifies in strategic fields such as semiconductors and artificial intelligence. The Minister of Science and Technology, Yin Hejun, reported that national R&D investment has surged by 48% compared to 2020, the number of researchers remains the world’s largest, and China has climbed to 10th place in the Global Innovation Index. It has led the world in the volume of high-impact international journal publications and patent applications for five consecutive years. While China has achieved front-runner status in areas like space exploration, 5G and new energy, the semiconductor and AI sectors remain key battlegrounds, especially as U.S.-led export curbs hobble Beijing’s access to advanced chip manufacturing technology.
“The core challenge for China’s chip industry is transitioning from a strategy of ‘catching up’ and ‘import substitution’ to one of pioneering new technological pathways,” according to Professor Ye Tianchun, a leading academic in integrated circuits at the Chinese Academy of Sciences (CAS). “The semiconductor industry is facing the dual challenges of a technology blockade and supply chain decoupling,” Ye noted. “The paramount development needs remain in the independent R&D of advanced process nodes, exploring new technical routes and cultivating a collaborative ecosystem.”
China has achieved a degree of self-sufficiency in mature process nodes, specifically those of 28 nanometers and above. However, the high-end market is still dominated by American, Japanese and European companies. Systematic breakthroughs are still needed in the development of advanced process equipment, such as lithography machines and their core components. At the same time, as transistor sizes approach their physical limits, the global semiconductor industry is actively exploring new frontiers, with emerging technologies such as photonic chips and quantum computing offering potential for performance leaps. “Domestically, fully depleted silicon-on-insulator (FDSOI) technology presents an opportunity,” Ye said. The technology has less demanding requirements for advanced lithography tools.
“Another pressing issue is the problem of low-level, redundant internal competition. In almost every segment where localization has been achieved, there are more than five domestic companies competing,” Ye said. “This is partly a result of U.S. restrictions pushing firms into horizontal expansion, and partly due to policy incentives attracting capital and new entrants who replicate mature products, thereby wasting innovative resources.” The strategy of catch-up and substitution, while building capabilities within the global ecosystem, has also created a dependency on foreign technological road maps, leaving China strategically passive. In the face of decoupling efforts led by the United States, China must now establish its own development model, Ye said, describing it as “building our own house with our own blueprints”.
According to Professor Li Xianjun of the Beijing Academy of Social Sciences, “China must not only overcome existing bottlenecks, such as developing extreme ultraviolet (EUV) lithography, but also make forward-looking investments in emerging and disruptive technologies.” Li said this included advancing chiplet packaging to achieve near-advanced performance using mature nodes, actively building the RISC-V open-source chip ecosystem to break traditional architecture monopolies, and exploring entirely new manufacturing techniques, such as nano-imprint lithography. “Growth in areas like computing infrastructure, intelligent driving and smart manufacturing is expected to be a key market driver during the 15th Five Year Plan (2026-2030),” he added.
The rapid development of AI is a dual catalyst for the chip industry. It creates explosive demand for specialized AI chips while simultaneously transforming chip design and manufacturing processes through automation, advanced materials screening, and improved equipment efficiency. The 15th Five Year Plan period will be crucial for the accelerated innovation and widespread application of AI, Chen Xiaohong, Academician of the Chinese Academy of Engineering said.
China's AI strategy involves three key pillars. First, concentrating efforts to make breakthroughs in foundational algorithms, development frameworks and high-end chips. Second, promoting the development of brain-inspired computing to reduce the energy consumption of training and running large models; advancing explainable AI to tackle issues of model “hallucination” and opaque decision-making; and enhancing cross-modal representation and generation technologies to improve the understanding and creation of multi-modal information spanning text, images, sound and video. Third, fostering the integration of data, algorithms, computing power and computing networks. This involves improving data markets, promoting authorized use of public data, building open-source algorithm ecosystems and establishing national computing power scheduling platforms, the South China Morning Post reports.
