China Thrives After US Blacklist Entry, Trump Out!

Jakarta, CNBC Indonesia - Chinese semiconductor producers are celebrating. Their business is growing significantly amid US chip export controls and the global memory chip shortage crisis.

Analysts and Chinese chip companies also predict annual revenue increases throughout this year. Local chip producers are seizing opportunities from high demand by domestic tech giants to build artificial intelligence (AI) infrastructure.

This once again proves that US efforts to restrict access to the most advanced chips to China are backfiring. CNBC International reports that US chip export controls have become ammunition for local players to develop domestic chips.

Chips made in China are not only being developed for AI data centres but also for other areas like the electric vehicle (EV) industry, according to a partner at Albright Stonebridge Group.

SMIC, China’s largest chip manufacturer, stated that revenue for 2025 increased 16% year-on-year and set a record at US$9.3 billion. LSEG analysts predict the company’s revenue could reach US$11 billion in 2026.

SMIC is one of the companies on the US blacklist. Its name came into the spotlight due to its ties to Huawei, when it first launched a 5G-networked smartphone after being hit with US sanctions.

Hua Hong, another Chinese chip producer, reported that Q4 2025 revenue also set a record, reaching US$659.9 million. Meanwhile, Moore Threads, aiming to rival Nvidia, is projected to post 2025 revenue between 1.45-1.52 billion yuan, up 231-247% year-on-year.

Reasons Behind China’s Booming Chip Industry

The record sales from Chinese chip producers are driven by several factors. Growth in EVs and related infrastructure has supported less advanced semiconductors, while demand for more sophisticated chips is very high due to AI, Triolo told CNBC.

US restrictions over the past few years, which cut off China’s access to key technologies, have accelerated Beijing’s drive for self-sufficiency to break free from US technology.

US export restrictions on Nvidia chips to China have prompted Beijing to encourage local companies to buy domestic alternatives, with firms like Huawei stepping in to fill the void, even though their semiconductor performance lags behind the US.

“Although China does not yet lead in peak GPU performance, these domestic solutions fill the ‘computing gap’ at home and drive record revenues,” said Parv Sharma, senior analyst at Counterpoint Research, to CNBC, quoted on Monday (6/4/2026).

Chinese memory chip players are also seeing increases. Memory, a key component for AI data centres and consumer electronics, is facing a global supply shortage while demand remains high. This has caused an unprecedented surge in memory chip prices.

ChangXin Memory Technologies (CXMT), one of China’s leading memory players, recorded a 130% year-on-year revenue surge to over 55 billion yuan, according to a Bloomberg report last week, citing sources familiar with the matter.

High-bandwidth memory (HBM) is a top-tier memory type needed for AI. This market is dominated by the world’s three largest players: Samsung and SK Hynix from South Korea, and Micron from the US.

Export restrictions on HBM to China have created opportunities for CXMT, although its technology still lags far behind leading players, said Phelix Lee, senior equity analyst at Morningstar, to CNBC.

“After HBM was restricted from entering China, CXMT became the only local alternative, so even lower-tech HBM2 or HBM2e are being welcomed enthusiastically,” said Lee.

HBM2 and HBM2e are technologies that Samsung and SK Hynix began producing around 2016. CXMT is expected to produce HBM3 this year.

Expertise gained from making memory chips could lead to advances in other chips, like GPUs, said Triolo from Albright Stonebridge Group.

“All memory fabs in China are now incubators for advanced process technology in ways unimaginable before the US export controls in October 2022,” Triolo told CNBC.

China’s Technology Still Lags

Although Chinese semiconductor companies are posting record revenues, they still trail companies in the US, South Korea, Europe, and Taiwan in technological capabilities.

SMIC and Hua Hong are still unable to produce the world’s most advanced chips at scale like market leader Taiwan Semiconductor Manufacturing Co. (TSMC). This is because they cannot access the most advanced equipment produced by ASML in the Netherlands due to export restrictions.

Although efforts are underway to create domestic alternatives, the technological complexity means this is a monumental task.

“Because demand remains high, Chinese semiconductor companies are still under significant pressure from US export controls, and domestic alternatives are increasingly available in many subsectors, but not comprehensively,” said Triolo.

“China is unique because the country is essentially trying to recreate much of the semiconductor supply chain, and this is certainly challenging and will take more time to overcome US controls in key areas,” he added.

Although current growth is driven by replacing import dependencies, there is a risk of overcapacity for less advanced chips, said Sharma from Counterpoint.

“Sustaining this growth will depend on whether China can successfully add value to advanced HBM and next-generation logic nodes,” Sharma added.