China's Chip Sector Poised For 'Explosive Growth' In Next 3-5 Years Amid Tech War With US, Says Industry Leader

Chen Nanxiang, chairman of the China Semiconductor Industry Association (CSIA) and head of Yangtze Memory Technologies Corporation (YMTC), has predicted a significant surge in China’s chip industry within the next three to five years.

What Happened: Chen, in an interview with CGTN, the English channel of China Central Television (CCTV), highlighted the industry’s shift towards a market-driven model, moving away from the traditional reliance on universities and research academies. He emphasized the importance of innovation in industry, products, services, and business models, South China Morning Post reported on Tuesday.

"The chip industry in China has not yet reached explosive growth, but that day will come over the next three to five years,” Chen was quoted.

Chen also pointed out the role of the ongoing U.S.-China tech war in accelerating the growth of China’s domestic semiconductor industry. He suggested that advanced packaging technologies could play a crucial role in the future, potentially surpassing the importance of foundry technology.

See Also: Goldman Sachs Turns Bearish On Chipmakers, Advises Hedge Through Put Options: China Remains ‘A Major Risk

Despite US sanctions on China’s top technology companies and semiconductor foundries, including YMTC, Chen called for industry unity and state support to navigate the challenges. He refrained from providing a clear answer on whether China could completely catch up with the U.S. in chip-making.

Why It Matters: The U.S.-China relations have been marked by efforts from both sides to undermine each other’s access to the most advanced chips and other key technologies. The Chinese government has announced a new $47.5 billion public fund aimed at fueling the country’s self-reliance in manufacturing advanced chips.

China's leading chip manufacturer, Semiconductor Manufacturing International Corp., has reportedly been ramping up its chip production with domestic tools, a move that could potentially counteract U.S. export restrictions.

Chinese President Xi Jinping has called on his nation to boost its innovation capabilities, in light of the continuing semiconductor conflict with the U.S. He pinpointed "bottlenecks and constraints" in sectors like integrated circuits, industrial machine tools, basic software, and advanced materials.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari