While Silicon Valley’s attention is focused almost exclusively on the most advanced lithographic processes, a picture of new pragmatic dominance is emerging in Shanghai. This year’s Semicon China 2026 confirmed what analysts have long suspected: the global hunger for AI infrastructure is not only accelerating the development of state-of-the-art computing units, but is triggering a surge in demand for components that China can produce best and cheapest.
Jerry Zhang of VAT notes that the industry’s momentum this year is ‘coming faster than expected’. This is not just a matter of commercial optimism, but the hard maths of capacity. According to SEMI China’s forecasts, China’s share of global chip production based on mature nodes (22nm to 40nm) will increase to 42% in the next two years. This is a strategic shift as these ‘working’ processors are the backbone of the power, automotive and connectivity systems without which AI data centres cannot function.
Artificial intelligence is changing the architecture of the entire sector. As Terry Feng of Teradyne points out, the demand for computing power is forcing more complex testing and packaging of chips. China is becoming a key link here, particularly in the area of optical interconnects. Companies such as MRSI (part of Mycronic) are already reporting order books filled a year ahead, suggesting that bottlenecks in the supply of data centre components could become the new market norm.
Despite a strong drive towards self-sufficiency, represented by investments from giants such as SMIC and Yangtze Memory, the landscape remains inextricably intertwined with Western technology. Experts at Tidal Wave Solutions point to an important gap: foreign suppliers still maintain an advantage in material expertise and after-sales support. China’s chip industry, although powerful in terms of scale and speed of response to demand, still needs Western know-how to keep the most complex processes running. Chinese expansion in the 22-40nm segment will make the region the absolute centre of gravity for consumer and industrial electronics.
