China’s advanced chip supply to surge by 2035 despite equipment bottlenecks, Goldman says
China is projected to significantly reduce its reliance on foreign advanced chips by 2035, according to a new report from Goldman Sachs. The investment bank forecasts that domestic foundries will rapidly expand production, narrowing the gap between local supply and demand for 7-nanometre and below wafers from 92 percent in 2025 to 34 percent by 2035. This growth is expected to be driven by aggressive capacity expansion at SMIC, China’s largest contract chipmaker, and improving manufacturing yields. However, challenges in lithography equipment are identified as a key bottleneck preventing full semiconductor independence.
China's push for advanced chip self-sufficiency, as detailed by Goldman Sachs, points to a substantial increase in domestic wafer supply. The forecast of 46 percent compound annual growth in 7nm and below wafer supply between 2025 and 2035 reflects significant investment and strategic focus within the Chinese semiconductor industry. This trajectory, largely driven by SMIC's capacity expansion, suggests a tangible shift in the global chip supply chain over the next decade. The critical factor to watch is the assumption of rising yields, from 23 percent in 2026 to 75 percent by 2035. While ambitious, achieving these levels is essential for China to meet its projected supply targets and narrow the demand gap to 34 percent. The persistent challenge of lithography equipment, however, remains a hard constraint, indicating that full independence in advanced chip manufacturing will likely remain out of reach even with aggressive domestic scaling.
