As the US continues to apply pressure on China, new reports show that the Chinese semiconductor industry shows positive growth. What exactly has been reported, and does this finally show that such sanction are ineffective?
China Semiconductor Companies Show Strong Growth
Amid ongoing US export restrictions on advanced semiconductor technologies, reports from China suggest that the domestic chip industry is continuing to expand. Two companies in particular, Moore Threads and Hygon Information Technology, have recently announced strong revenue forecasts for the first half of 2026, highlighting the increasing demand for Chinese-developed semiconductor solutions.
Moore Threads, a semiconductor company focused on GPU development, has forecasted revenue of between 1.65 and 1.75 billion yuan for the first half of 2026. Compared with the 710 million yuan earned during the same period in 2025, this represents expected growth of approximately 135% to 149%.
The expected increase comes from several factors. Firstly, Moore Threads’ GPUs have seen growing adoption across a range of applications, including data centres, AI development, and general-purpose computing. Secondly, the company has expanded its Kua’e computing cluster offerings, allowing more customers to access its hardware solutions. Finally, the mass production of the MTT S5000 GPU has helped increase availability and improve access to Moore Threads’ products.
Hygon Information Technology, another Chinese semiconductor company, has also announced strong revenue expectations for the same period. The company expects revenue between 8.5 and 9.3 billion yuan, representing growth of approximately 55.6% to 70.2%.
This growth has been driven by increasing demand for AI processors, AI agents, and other computing solutions developed entirely within China. As Chinese cloud providers and data centres look for alternatives to foreign hardware, locally developed processors are becoming increasingly important.
Other companies, including Biren Technology, MetaX, Iluvatar CoreX, and Enflame Technology, are also expanding their semiconductor businesses. As more organisations adopt domestically produced GPUs, accelerators, and server processors, China’s semiconductor ecosystem continues to grow.
However, despite the optimistic forecasts, investor confidence has remained mixed, with share prices for some of these companies falling due to broader uncertainty across the semiconductor market. Nevertheless, analysts remain optimistic that continued investment in AI and data centre infrastructure will support long-term growth for Chinese semiconductor companies.
Does this Show the Ineffectiveness of Sanctions?
The sanctions introduced by the US against China have clearly been designed to limit access to advanced semiconductor technologies while preventing the development of cutting-edge computing capabilities.
For several years, these restrictions appeared to slow Chinese progress. However, recent developments suggest that they may now be having the opposite effect.
Instead of relying on foreign technologies, China is increasingly investing in its own semiconductor designs, manufacturing techniques, and supply chains. Domestic foundries are being expanded to meet internal demand, while companies are developing processors that can replace technologies previously sourced from Western manufacturers.
Furthermore, China is now showing signs of becoming increasingly self-reliant in semiconductor development. While Chinese companies may still face disadvantages compared with leading-edge manufacturers, the ability to produce and deploy home-grown solutions means that dependence on foreign suppliers is gradually decreasing.
But this creates a potential problem for the West. If current trends continue, China could eventually develop a completely independent semiconductor ecosystem, meaning future sanctions would have far less impact. A country capable of designing, manufacturing, and deploying its own advanced technologies becomes significantly harder to influence through export restrictions.
As such, the very sanctions introduced to slow Chinese technological development may have instead accelerated it. By forcing China to remove its dependence on Western technologies, the restrictions have created a strong incentive to develop alternative solutions.
So, are these sanctions having the intended effect, or have they simply forced China to become more independent? Only time will tell, but the next few years will likely reveal whether China can transform its semiconductor industry into a genuine competitor on the global stage.
