The Semiconductor Industry in China How China Is Integrating the Chip Industry More Closely with Manufacturing

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At the China International Industry Fair, the semiconductor industry made its debut with its own trade exhibition. Three trends defined the fair: new chip architectures, increased computing power directly at the machine level, and closer collaboration along the supply chain.

China aims to integrate its chip industry more closely with manufacturing in other sectors. At the China International Industry Fair in Shanghai (CIIF), which concluded last Friday (October 16, 2026), the chip industry was given its own dedicated section for the first time. The “IC Ecosystem Show” took place in Hall 5.2, where more than 300 companies exhibited. This mini semiconductor trade show in Hall 5.2 was part of China’s largest trade fair for the manufacturing industry, the CIIF, according to the business publication Diyi Caijing.

This trade show layout, featuring its own large pavilion, demonstrated how the semiconductor industry is being positioned as a key player within China’s manufacturing sector. It is interesting to note that the Chinese name for the chip exhibition (“guo xin zhan”) literally translates to “National Chip Exhibition.” Beijing is clearly focused on asserting itself more and more strongly amid ongoing pressure from Washington, which has imposed boycotts on advanced chips and equipment. However, likely out of consideration for international exhibitors, a more diplomatic English name was chosen for this exhibition-within-an-exhibition.

Government investors were stepping up their support for domestic companies such as the contract manufacturer Hua Hong and its expansion in Wuxi, the South China Morning Post in Hong Kong reported several days before the trade show began. “Even though they are less sophisticated than state-of-the-art AI processors, chips produced using mature manufacturing processes remain indispensable for electric cars, industrial automation, Internet of Things devices, and consumer electronics,” the newspaper writes.

The fact that, for customers in manufacturing plants, a chip’s performance within the overall system ultimately matters more than the performance metrics of a single semiconductor is arguably the most important narrative in the Chinese semiconductor industry—one that was also omnipresent at the trade show in panel discussions, in conversations at the booths, and in private discussions. At the trade show, China provided insights into how it intends to meet this industry demand despite restrictions from Washington, the Netherlands, and Japan on chips and lithography machines.

Three Trends for the Future of Chips

Three key trends were evident. New chip architectures are designed to reduce dependence on advanced manufacturing processes. AI computing power is shifting to the machine. And domestic manufacturers are joining forces in ecosystems to achieve more on their own.

One example of the first trend is the active search for alternatives to miniaturization in the connections between individual components of a semiconductor. “Supplementing Moore’s Law with non-Moore’s Law approaches,” is how Mao Junfa of the Chinese Academy of Sciences described it, as reported by Diyi Caijing. He spoke at the “Shanghai IC Summit,” which took place alongside the trade show.

Advances in interconnect technology are therefore expected to deliver higher performance when transistors can no longer be miniaturized—either for physical reasons or due to a lack of manufacturing equipment. Advanced packaging, optical interconnects, and chiplets are expected to shorten the paths between components and reduce energy consumption.

Dongfang Suanxin provided an example of this with its DF1000. The chip, which was unveiled in July 2026, combines three-dimensional stacking with in-memory computing. It was announced at the trade show that the chip is being developed and manufactured entirely in China using a mature 14-nanometer process. This architecture is designed to enable high-performance computing without requiring the most advanced manufacturing methods.

"Packaging instead of ever-smaller logic structures" is described by Diyi Caijing as an ongoing trend that, once again this year, is bringing an industry—previously viewed as rather marginal—increasingly into the spotlight. China is seeking technical solutions to overcome its politically driven restrictions on chip manufacturing.