A Banner First Half for Semiconductors
China's semiconductor sector delivered one of its strongest half-year performances on record in 2026. The integrated circuit (IC) output reached 279.8 billion pieces in the first six months, up 23.1% year-on-year, according to the Ministry of Industry and Information Technology. The surge reflects the accelerating domestic substitution wave, heavy investment in mature-process capacity, and robust demand from EV, AI hardware, and industrial automation sectors.
Capacity Additions Driving Growth
- New mature-process capacity (28nm–65nm): ~200,000 wafer starts per month added in H1
- SMIC, Hua Hong, and CXMT: collectively account for ~60% of new capacity additions
- Export of ME products (including chips): 9.36 trillion yuan in H1 2026, +20.1%
Export Contribution
Mechanical and electronic products — of which integrated circuits are a major component — accounted for 63.5% of total exports in H1 2026, totalling 9.36 trillion yuan. This cements China's position as the world's largest producer of consumer electronics and EV components, where chips are embedded upstream.
Policy and Investment Context
China's "Big Fund" (National Integrated Circuit Industry Investment Fund) committed its third tranche of approximately 300 billion yuan in early 2026, targeting advanced packaging, EDA tools, and silicon photonics. The government has set a target of reaching 40% domestic IC self-sufficiency by 2030, up from an estimated 25% in 2024.