Mainland China chipmaking capacity is accelerating, now poised to become the world’s leading semiconductor foundry hub by 2030, and overtaking Taiwan in total capacity, according to the latest projections from Yole Group. Chinese dominance in this field is fueled by the country’s push to manufacture its own tech as U.S. export restrictions continue to ramp up.

China’s rapid rise in semiconductor manufacturing

Yole Group forecasts that China’s share of global foundry capacity will rise to 30% by 2030, up from 21% in 2024. In contrast, Taiwan, the current leader, held a 23% share last year. China’s foundry expansion has already propelled it past South Korea (19%), Japan (13%), and the U.S. (10%) in capacity rankings.

According to the South China Morning Post, the acceleration is fueled by massive state investment in China chipmaking notably through the China Integrated Circuit Industry Investment Fund (“Big Fund”), which has nurtured national champions like SMIC and Hua Hong Semiconductor.

In 2024 alone, China’s monthly wafer production jumped 15% year-on-year, with local chipmakers accounting for 15% of global foundry capacity, a figure set to rise substantially by the decade’s end. The construction of new semiconductor fabrication plants, such as Huahong’s 12-inch facility in Wuxi, compounds the scale and speed of China’s manufacturing ramp-up.

Geopolitical tensions and Taiwan’s export crackdown

China’s doubling down in this area comes at a time of rising geopolitical pressures. Just three weeks ago, Taiwan imposed strict new export controls targeting Chinese firms like Huawei and SMIC, effectively blacklisting them from accessing advanced Taiwanese semiconductor technologies.

As CryptoSlate reported, this move aligns Taiwan more closely with U.S. policy and aims to close loopholes exploited by Chinese companies to circumvent existing sanctions. The updated rules require government approval for any high-tech exports to the blacklisted entities, further isolating China’s chip sector from cutting-edge global supply chains.

China chipmaking: implications for the AI and crypto sectors

The outcome of this capacity race impacts both the AI and crypto industries. Semiconductors are the backbone of AI model training and inference, as well as crypto mining operations. Despite export bans, Chinese firms like Huawei and SMIC are developing competitive AI chips, but the loss of access to leading-edge Taiwanese tech could slow their progress and increase reliance on domestic innovation.

For the crypto sector, chip supply constraints can directly impact mining efficiency and network security. U.S. and Taiwanese restrictions have already raised operational costs for Chinese mining firms. If China succeeds in scaling its foundry capacity and closing the technology gap, it could stabilize domestic supply for crypto miners and AI developers, potentially reshaping the competitive landscape for both sectors.

Big if true: The rumors about Arm’s ambitions to enter the chip manufacturing business appear to be true after all. Industry sources now claim the UK-based designer is in need of a highly skilled workforce and has begun poaching top talent from clients.

Arm Holdings is currently on a recruiting spree, with the ultimate goal of entering the chip production industry independently. Reuters has quoted several sources familiar with the matter, all of whom confirm Arm’s “sudden” interest in the manufacturing side of the microchip industry.

Arm’s core business revolves around licensing its namesake instruction set architecture to other silicon designers and chip foundries around the world. The company has been around since the 1980s, initially selling home computers with RISC processors under the Acorn Computers brand. Virtually all modern smartphones feature processors based on the Arm ISA, but Arm earns money through licensing deals, rather than from actual device sales.

The UK-based designer is clearly trying to change the status quo. Two Reuters sources revealed that Arm has been reaching out to its licensing partners, attempting to recruit executives and potential employees from other positions to help build its new chipmaking business. The news agency was able to examine a copy of a “note” sent by an Arm recruiter to an executive at one of its customers.

The note states that Arm wants to transform its licensing-only business model into a company that sells its own silicon products. The new chips would focus on “AI enablement in the data center” and other computing devices, according to the note. Arm has also reached out to other chip designers in Silicon Valley, seeking to hire new talent and experts in the area.

Over the past few years, Arm has adopted a much more proactive approach to the chipmaking business. In 2022, the company sued Qualcomm to terminate their licensing agreement, but was later forced to abandon the effort. During the legal dispute over Qualcomm’s licensing rates, Arm CEO Rene Haas stated that the company had never been involved in building chips.

Sources say Arm began attempting to hire new managers from its customers as early as November. Haas’ testimony occurred just a few weeks later. Regardless, Arm’s attempt to start designing and selling its own chips could send a shockwave through the entire mobile industry.

Historically, Arm Holdings has been considered a neutral player in the market, while silicon providers like Broadcom and Qualcomm have raked in billions by developing Arm-based custom CPUs. If Arm were to abandon its neutral stance, the chipmaking industry might react in unpredictable ways.