This Company is China's Main Bet Against TSMC and Samsung.

In the high-stakes arena of global semiconductors, China has placed its chips on one key player: Semiconductor Manufacturing International Corporation (SMIC). As of mid-2025, SMIC stands as China's primary contender against industry titans like Taiwan's TSMC and South Korea's Samsung. Despite facing significant technological and geopolitical challenges, SMIC's recent advancements underscore China's unwavering commitment to achieving semiconductor self-sufficiency.

SMIC's Strategic Role in China's Semiconductor Ambitions

Founded in 2000 by Richard Chang, a seasoned veteran of Texas Instruments and TSMC, SMIC has evolved into China's foremost semiconductor foundry. The company's mission aligns closely with Beijing's "Made in China 2025" initiative, aiming to reduce reliance on foreign technology and bolster domestic innovation.

However, SMIC's journey has been fraught with obstacles. U.S. export restrictions imposed in 2020 curtailed SMIC's access to advanced chip-making equipment, particularly extreme ultraviolet (EUV) lithography machines essential for producing cutting-edge chips. This limitation has compelled SMIC to innovate within constraints, utilizing deep ultraviolet (DUV) lithography and complex multi-patterning techniques to advance its manufacturing capabilities.

Technological Milestones and Challenges

Despite these hurdles, SMIC has made notable progress. In 2023, the company successfully produced 7nm chips, a significant achievement given the technological restrictions. Building on this momentum, SMIC is reportedly on track to finalize its 5nm chip development by 2025. However, these advancements come at a cost. Due to the absence of EUV technology, SMIC's 5nm chip production is estimated to be 50% more expensive than TSMC's, with yield rates only about one-third of TSMC's on the same process technology.

These cost and efficiency challenges highlight the broader difficulties China faces in closing the technological gap with global leaders. Nonetheless, SMIC's achievements demonstrate a capacity for innovation under pressure and a commitment to advancing China's semiconductor capabilities.

Government Support and Investment

Recognizing the strategic importance of semiconductors, the Chinese government has significantly increased its support for the industry. The National Integrated Circuit Industry Investment Fund, commonly known as the "Big Fund," launched its third phase in 2024, injecting approximately $47.5 billion into the sector . This funding aims to enhance domestic chip production, support research and development, and foster a self-reliant semiconductor ecosystem.

Additionally, local governments are contributing to this national effort. For instance, Shenzhen established a 5 billion yuan (approximately $694 million) investment fund in 2025 to bolster its semiconductor and integrated circuit industry . These investments reflect a coordinated strategy to overcome current limitations and position China as a formidable player in the global semiconductor market.

While SMIC's advancements are commendable, the company still lags behind TSMC and Samsung, which are progressing towards 3nm and even 2nm chip production. Moreover, SMIC's reliance on older manufacturing equipment and the associated higher production costs pose ongoing challenges. However, China's concerted efforts, both at the national and local levels, indicate a long-term commitment to overcoming these obstacles.

In conclusion, SMIC represents China's main bet against established semiconductor giants. Its journey reflects the broader narrative of China's push for technological self-sufficiency amidst global competition and geopolitical tensions. While the path forward is complex, SMIC's role as a catalyst in China's semiconductor ambitions is undeniably significant.