Chinese chip firms post record high revenue on AI boom, U.S. curbs
China is focusing on large language models in artificial intelligence.
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Chinese semiconductor firms posted record revenue last year amid demand for artificial intelligence, memory chip shortages and U.S. export restrictions that have pushed Beijing to bolster its own domestic tech industry.
Analysts and the companies themselves are also expecting further revenue growth this year, underscoring how Chinese chip players are benefiting from strong demand from domestic tech giants looking to build out their AI infrastructure.
U.S. export restrictions on the Chinese tech sector over the past few years have added “rocket fuel” to chip demand, boosting growth in other areas such as electric vehicles and artificial intelligence data centers, according to Paul Triolo, partner at Albright Stonebridge Group.
Semiconductor Manufacturing International Co. China’s largest chipmaker (SMIC) said its 2025 revenue rose 16% from the previous year to a record $9.3 billion. Revenue could reach $11 billion in 2026, according to LSEG analyst estimates.
Another Chinese chipmaker, Hua Hong, said fourth-quarter revenue was a record $659.9 million and forecast sales to be between $650 million and $660 million.
Moore Threads aims to be a competitor NvidiaIt predicted 2025 revenue would be between 1.45 billion yuan ($209.8 million) and 1.52 billion yuan, up 231% to 247% annually.
What drives sales records?
There are multiple factors at play. Triolo told CNBC that while the growth of electric vehicles and related infrastructure is providing a boost to less advanced or “mature node” semiconductors, demand for more advanced chips is “going through the roof because of AI.”
U.S. restrictions that have isolated China from key technologies over the past few years have accelerated Beijing’s push for self-sufficiency away from American technology.
“While China is not yet the leader in peak GPU performance, these homegrown solutions are filling the local ‘compute gap’ and driving record revenues,” Parv Sharma, senior analyst at Counterpoint Research, told CNBC.
There has also been an increase in memory chip players in China. While memory, a key component for AI data centers and consumer electronics, is in short supply worldwide, demand remains high. This led to an unprecedented increase in the prices of memory chips.
ChangXin Memory Technologies (CXMT), one of China’s leading memory players, saw a 130% year-on-year increase in revenue to over 55 billion yuan ($8 billion). Bloomberg It was reported last week, citing people familiar with the matter.
High bandwidth memory (HBM) is a type of high-end memory required for artificial intelligence. The market is dominated by the world’s three largest players producing this type of memory: Samsung, SK Hynix and Micron. Phelix Lee, senior equity analyst at Morningstar, told CNBC that HBM’s export restrictions on China provide an opening for CXMT, even though its technology has somewhat outpaced leading players.
“Following the restriction of HBM to China, CXMT domestic production is being adopted as the only alternative, so even the technologically inferior HBM2 or HBM2e is welcomed with enthusiasm,” Lee said.
HBM2 and HBM2e are technologies that Samsung and SK Hynix started producing around 2016. CXMT is expected to produce HBM3 this year.
Albright Stonebridge Group’s Triolo said expertise gained from manufacturing memory chips could lead to advances in other chips, such as GPUs.
“Entire memory factories in China are now advanced technology incubators in ways that were unimaginable before US export controls in October 2022,” Triolo told CNBC.
China’s ongoing challenges
Even as China’s semiconductor players generated record revenues, they continued to lag behind companies in the United States, South Korea, Europe and Taiwan when it came to technological capacity.
SMIC and Hua Hong still fail to produce the world’s most advanced chips at market-leading scale Taiwan Semiconductor Manufacturing Company. (TSMC). Because they cannot access the most advanced vehicles produced. ASML Due to export restrictions in the Netherlands.
While efforts to create domestic alternatives are ongoing, the complexity of the technology means this is a huge task.
“As demand remains high, Chinese semiconductor firms remain under great pressure from US export controls and domestic alternatives are becoming increasingly available in many subsectors, but not across the board,” Triolo said.
“China is unique in attempting to recreate a large portion of what is essentially the entire semiconductor supply chain, which is inherently quite challenging and will require more time to overcome US controls in key areas.”
Counterpoint’s Sharma said that although current growth was driven by “changing import dependency”, there was a risk of overcapacity for less advanced chips.
“Sustaining this growth will depend on whether China can successfully move its value chain towards advanced HBM and next-generation logic nodes,” said Sharma. he added.
