China’s semiconductor industry investment totaled CNY455 billion in the first half of 2025, a decline of 9.8% from a year earlier, according to a report from chip market research firm Cinno. In contrast, investment in semiconductor equipment surged more than 53% from the same period last year, highlighting the country’s efforts to establish a self-sufficient supply chain. Wafer manufacturing accounted for the largest share of semiconductor investment at 51%. Of the remaining investment, nearly 19% was directed towards chip design, while 9% was allocated for packaging and testing. These categories experienced declines of about 24% and 28%, respectively, owing to weak consumer demand for electronics and disruptions in the international supply chain. Other investments included encapsulation testing and materials.
Geographically, about 80% of the investments were concentrated in five regions. Jiangsu province led with nearly 21%, followed by Shanghai and Zhejiang province at nearly 19% and 14%, respectively. Beijing and Hubei province, which is making strides in the memory chip industry, each drew 12.5% of the funding. The Yangtze River Delta – comprising Shanghai, Jiangsu, Zhejiang and Anhui – is home to a robust industrial chain for wafer manufacturing and packaging testing.
Investment in semiconductor materials reached CNY16.2 billion in the first six months of the year, making up more than 27% of the total funding – indicating a shift from traditional silicon-based materials to high-performance alternatives, which are essential for electric vehicles, 5G technology and smart grids, according to Cinno. China’s semiconductor industry is entering a new phase focused on “fine cultivation”, according to the report.
Amid rising geopolitical tensions and more restrictive trade policies in some markets, the growth of the chip sector would depend on three main factors: innovation breakthroughs, effective industrial policies and international cooperation, analysts said, as reported by the South China Morning Post.
