Semiconductor companies are optimistic about local AI chips

Chinese companies have made significant progress in designing and manufacturing high-performance, energy-saving integrated circuits, part of China’s ongoing efforts to strengthen its semiconductor sector, industry experts recently told the Global Times.

While there has been a noticeable increase in the use of domestic chips by Chinese companies, domestically produced artificial intelligence (AI) chips still need to be improved in terms of technological advancement, market share and brand recognition.

“The AI ​​chip market is in the midst of intense competition, with domestic manufacturers trying to find ways to keep up with the industry’s top players. It is not easy for latecomers to integrate into the supply chain, but we are moving toward technological self-sufficiency,” an industry official surnamed Yang told the Global Times on Friday at the Global AI Chip Summit 2024 in Beijing.

Recently, China has increased investment in domestic AI chips. Leading companies such as Huawei, Baidu, Alibaba, and Tencent have accelerated AI chip R&D activities, while more and more AI chip startups are emerging.

Some of these companies are now able to design and produce high-performance and more energy-efficient integrated circuits — developments needed to boost the competitiveness of China’s semiconductor industry, the Global Times learned at the summit.

Integrated circuits play a key role in processing large numbers of computational tasks in various AI applications and are commonly called AI accelerators.

The advances by Chinese technology companies are key to the development of the country’s computing technology and reflect the growing domestic market for AI-processing chips.

Data from the World Semiconductor Trade Statistics indicate that the global semiconductor market is expected to grow year-on-year by 16 percent in 2024, with the market size estimated at $611 billion.

As Yang noted, while leading AI chip companies like Nvidia, ADM, and Intel will continue to benefit from this trend, Chinese AI chipmakers have an opportunity to narrow the gap.

Industry experts say China, with its vast data resources and diverse application scenarios for AI chips, has become a new leader and innovation center.

Leading Chinese startups such as Cambricon Technologies Co., Enflame Technology and Moore Threads Technology Co. have shown impressive results, approaching the level of their foreign counterparts and gradually catching up, according to Chinese media.

Chinese experts have noted that domestic innovation by Chinese companies is starting to overcome the difficulties caused by the United States’ unilateral technological blockade in the past few years. Chinese companies are ready to continue to increase their resilience and strengthen their R&D capabilities, analysts said.

Chinese companies spent $25 billion on semiconductor-related equipment in the first half of 2024, more than the combined spending of U.S. and South Korean companies, Nikkei Asia reported last week, citing a report published by industry association SEMI.