Often described as the "industrial staple" of the digital economy, the tiny chip has become deeply embedded in numerous facets of modern life—powering the smart speaker that wakes you in the morning, precisely managing systems in new energy vehicles during commutes, and driving the communication devices essential for remote work. In 2025, the combined sales revenue of leading global semiconductor companies exceeded $400 billion, marking a historically high level for the same period. As we step into 2026, propelled by the concurrent drivers of burgeoning AI computing power, a reshaping of memory supply-demand dynamics, and continued domestic substitution efforts in key regions, the semiconductor industry is entering a development stage characterized by technological iteration and structural transformation. The industry-wide contest centering on cost, technology, and supply chain resilience is already unfolding.
Amid global fluctuations within the memory segment, domestic Chinese players are accelerating their pace. The Shanghai Stock Exchange has accepted the application for a Sci-Tech Innovation Board (STAR Market) IPO from ChangXin Memory Technologies (CXMT), a major domestic DRAM manufacturer (publicly recognized as part of the global fourth echelon). The company aims to raise approximately 29.5 billion yuan. Notably, its Q4 2025 profits surpassed expectations, indicating strong momentum. Of particular interest is CXMT's focused development of its CBA (Cube Bonding Array) technology architecture. This innovative path toward 3D integration is seen as narrowing the technological generation gap with leaders like Samsung and SK Hynix, laying a foundation for subsequent capacity expansion. GF Securities has highlighted this technological direction, noting that in the DRAM field, future chips could leverage CBA architecture for upgrades. By separately manufacturing memory array wafers and logic control unit wafers before bonding them, overall system performance can be optimized. In the 3D NAND space, China's Xtacking technology has already achieved good performance by independently processing and integrating storage arrays and logic circuits. Soochow Securities points out that CXMT's capacity expansion is expected to benefit upstream and downstream players across the equipment, foundry, and packaging/testing segments, fostering synergistic development within the domestic memory industry chain. Simultaneously, the 4F2+CBA architecture actively explored by domestic manufacturers could introduce new incremental changes to the supply chain, enabling a stronger competitive position in the global memory market. GF Securities further predicts that as memory technology evolves toward stacking storage and logic wafers, the manufacturing of logic wafers may shift from primarily an IDM model to incorporate foundry models. This could leverage the technological strengths of the logic foundry industry to optimize performance, and China, with its rich logic foundry resources, could achieve synergistic industrial development.
The relentless advance of the AI wave is fundamentally reshaping the growth logic of the chip industry, making the computing power arena a critical competitive battlefield. Despite earlier bubble concerns, the 2026 growth trajectory of the global computing power industry chain has gained recognition from multiple institutions. According to TrendForce, driven by expanding computing power demand from CSPs, sovereign clouds, and the steady development of AI inference applications, the combined capital expenditure of the world's eight major cloud providers is projected to grow 40% year-on-year to $600 billion in 2026, with AI server shipments expected to increase by 20.9%. The industry's focus is gradually shifting from AI training to inference. The continuous advancement of large models in multi-modal understanding and application is driving increased attention toward Application-Specific Integrated Circuits (ASICs). Guohai Securities estimates that global data center ASIC chip shipments could exceed 8 million units in 2026 and surpass 10 million in 2027, potentially reaching a scale comparable to GPUs in the same period. GF Securities also notes that AI remains a pivotal industrial theme for 2026. Internationally, supply-demand gap areas like optical chips and copper foil warrant attention, while domestically, the focus lies on opportunities arising from rebounding computing power demand and innovation at the edge. This trend is already materializing in corporate orders. VeriSilicon (芯原股份), for instance, reported Q4 2025 new order bookings of 2.494 billion yuan, a 129.94% year-on-year increase, with the vast majority attributed to its one-stop chip customization business (Data Source: Company Announcement).
The innovative vigor of the AI industry chain is also extending downstream into end-device fields. 2026 is viewed within the industry as a "significant year for AI terminal innovation." Tech giants including Meta, Apple, and Google plan to launch next-generation terminal products, encompassing diverse form factors like AI glasses, AI pins, and camera-integrated headphones. Liu Chenming, Chief Strategy Analyst at GF Securities, concurs with this assessment, stating that 2026 could see a concentrated launch period for major vendors' edge-side hardware products. As AI technology evolves toward intelligent agents and general intelligence, its integration with myriad industries will spawn new demands and business models. Accelerated model iteration and application scenario development may lead to market-recognized terminal products emerging within this major vendor innovation cycle. Hybrid edge-cloud technical architectures will empower AI scenarios, and edge-side SoC chips are poised to benefit from this wave of innovation. For domestic computing power chips, 2026 is considered a potential year for tangible financial results. Soochow Securities analysis suggests domestic GPUs could benefit from capacity releases associated with advanced node expansion. In the competitive landscape, AI ASIC service providers, given their critical role in the supply chain, stand to gain significant development opportunities.
The advancement of domestic substitution (国产化) serves as a crucial pillar for the Chinese chip industry to navigate external uncertainties and achieve high-quality development. Data shows that from 2017 to 2025, the number of Chinese chip design companies grew from 1,380 to 3,901, a compound annual growth rate (CAGR) of 14%. Companies with annual sales exceeding 100 million yuan increased from 191 to 831, a CAGR of 20%, with their sales revenue growing at a 19% CAGR—significantly higher than the global semiconductor industry's 6% during the same period (Data Source: Industry Statistics). The growth of local chip design firms has contributed to domestic foundries like SMIC and Huahong Semiconductor experiencing earlier rebounds in capacity utilization, indicating a trend toward manufacturing localization.
In 2026, multiple segments of the domestic chip industry chain are poised for development opportunities. In the foundry sector, a supply gap exists domestically for advanced nodes. Coupled with overseas supply risks and strong demand for domestic advanced logic chips, companies like SMIC and HuaLi Group will continue advancing advanced node capacity expansion. The number of entities expanding 14nm capacity is also expected to increase. Soochow Securities anticipates the scale of advanced logic capacity expansion could see significant growth (Data Source: Soochow Securities Research Report). The semiconductor equipment sector continues to make breakthroughs driven by localization. China Securities (CSC) notes that despite an overall slowdown in industry-wide capacity expansion, the core growth driver remains the increase in domestic equipment adoption rates. Leading integrated equipment manufacturers saw order growth of 20%-30% in 2025 (Data Source: CSC Research Report), and the localization process for critical components is accelerating. Currently, major customers have strong demands for domestic substitution, while non-listed entities are also accelerating the adoption of domestic equipment. The trend toward higher domestic adoption rates is expected to become more pronounced, fostering a synergistic攻关 (tackling key problems) pattern involving "equipment – materials – manufacturing."
Notably, the pace of Chinese chip industry expansion abroad is also accelerating, with export structures continuously optimizing. In the first eleven months of 2025, China's integrated circuit exports reached 1.29 trillion yuan, a year-on-year increase of 25.6% (Data Source: Customs Statistics). Chips based on 28nm and more mature nodes constituted the mainstay of these exports. Against the backdrop of growing global demand for mature node chips in areas like IoT and industrial control, China, leveraging its complete manufacturing chain and cost advantages, has become a key global supplier of mature chips. It is also gradually establishing substitution advantages in emerging markets like Southeast Asia and Latin America. In globally fast-growing categories like logic chips and memory chips, China's export growth rate has surpassed the global average, demonstrating the competitiveness of domestic chips in the international market.
Nevertheless, the development path of China's chip industry still faces multiple challenges. Gaps persist in advanced node technology compared to global leaders; localization rates for critical materials like photoresist gases remain insufficient (currently around 18%, still distant from the 2026 target of 40%); costs for third-generation semiconductor chips are relatively high; and shortcomings exist in industry chain coordination and software-hardware ecosystem adaptation—all requiring long-term攻坚 (dedicated efforts). However, positive signals are emerging. On the policy front, financial support policies for new industrialization are being intensively introduced, specifically targeting the integrated circuit sector. Industrially, SMIC continues to expand 12-inch wafer capacity, and material suppliers like Guoguang (Guangdong Huate Gas) have achieved breakthroughs supporting 5nm process nodes. Market-wise, global semiconductor revenue grew 22.5% in 2025 (Data Source: Industry Statistical Report), with the Asia-Pacific region as the core growth area, providing a vast market space for "China-made chips."
From a broader perspective, the semiconductor industry in 2026 stands at a critical juncture of technological innovation and structural reshaping. Three intertwined main themes outline the industry's development landscape: the cyclical dynamics of memory, the driving force of AI, and the steady progress of domestic substitution. This miniature "industrial marvel" carries the crucial momentum for digital economic development and is integral to enhancing national technological competitiveness. Amid the waves of global industrial transformation, China's chip industry must persistently break through in core technologies, strengthen industry chain synergy, and cultivate both domestic and international markets. Only through these efforts can it secure a firm footing in this future-defining industry competition, progress from "catching up" to "running alongside," and steadily advance towards the goal of higher-quality development.
