Chinese chip firms hit record high revenue driven by the AI boom and U.S. curbs

Chinese semiconductor companies have achieved unprecedented revenue levels in the past year, largely fueled by a surge in AI demand, a global shortage of memory chips, and U.S. export restrictions that have prompted a significant boost in Beijing’s domestic technology initiatives. Analysts and industry insiders predict that revenue will continue to climb this year, demonstrating how Chinese chip manufacturers are leveraging strong interest from local tech giants eager to expand their AI capabilities. Paul Triolo, a partner at Albright Stonebridge Group, noted that U.S. restrictions on technology exports to China have acted as "rocket fuel" for chip demand, particularly as growth has also been seen in sectors like electric vehicles and AI data centers. Semiconductor Manufacturing International Co. (SMIC), China’s leading chip producer, reported a remarkable 16% increase in revenue for 2025, reaching $9.3 billion. Projections indicate that this figure could exceed $11 billion by 2026, according to estimates from LSEG analysts. Another key player, Hua Hong, announced fourth-quarter revenue of $659.9 million and anticipates sales between $650 million and $660 million for the upcoming quarter. Moore Threads, aiming to compete with Nvidia, forecasts a staggering revenue range of 1.45 billion yuan ($209.8 million) to 1.52 billion yuan for 2025, reflecting a year-on-year growth of 231% to 247%. Several factors contribute to this growth; the rising demand for electric vehicles and the corresponding infrastructure has bolstered the market for less-sophisticated or “mature node” semiconductors, while the need for advanced chips has skyrocketed due to AI advancements. U.S. restrictions over the past years, which have limited China's access to key technologies, have also accelerated Beijing’s push for self-sufficiency, reducing dependence on American tech. Recent U.S. export curbs on Nvidia's chips have further driven Chinese companies to seek domestic alternatives, with firms such as Huawei stepping in to fill the gap, even if their semiconductor performance currently trails behind U.S. offerings. "While China does not yet lead in peak GPU performance, these homegrown solutions are filling the domestic 'compute gap' and driving record revenues," stated Parv Sharma, a senior analyst at Counterpoint Research. In the realm of memory chips, which are crucial for AI data centers and various consumer electronics, Chinese manufacturers are also experiencing significant benefits. The global shortage of memory chips has led to soaring prices, with ChangXin Memory Technologies (CXMT) reporting a staggering 130% year-on-year revenue increase, surpassing 55 billion yuan ($8 billion). High-bandwidth memory (HBM), essential for AI applications, remains dominated by global leaders such as Samsung, SK Hynix, and Micron. However, U.S. export restrictions on HBM to China have created an opportunity for CXMT, even as their technology remains less advanced. Phelix Lee, a senior equity analyst at Morningstar, pointed out that with HBM access restricted, CXMT is stepping up as the primary homegrown alternative, generating interest even for its less advanced HBM2 and HBM2e technologies. The growth in memory chip production could translate into advancements in other chip categories, such as GPUs, according to Triolo. "All the memory fabs in China are now incubators for advanced process technology in ways inconceivable before the October 2022 U.S. export controls," he remarked. Despite these record revenues, China's semiconductor companies still fall short in technological capabilities compared to their counterparts in the U.S., South Korea, Europe, and Taiwan. SMIC and Hua Hong still struggle to manufacture the most advanced chips at scale, unlike the market leader, Taiwan Semiconductor Manufacturing Co. (TSMC), due to limitations in accessing essential tools from ASML in the Netherlands. While efforts are underway to develop domestic alternatives, the complexity of the technology presents significant challenges. Triolo concluded, "As demand remains high, Chinese semiconductor firms are under immense pressure from U.S. export controls, and while domestic alternatives are increasingly available in many areas, they are not yet comprehensive. China is uniquely attempting to reconstruct vast segments of the entire semiconductor supply chain, a task that will require considerable time and effort to overcome U.S. controls in critical sectors." As growth continues to be fueled by the replacement of imported components, there remains a risk of overcapacity in less advanced chip categories. Sharma added, "Sustaining this growth will hinge on China's ability to advance into more sophisticated HBM and next-generation logic nodes."