Illustration: Liu Xidan/GT

The explosive growth of artificial intelligence (AI) applications is propelling China's semiconductor industry into a pivotal stage of development. Surging demand for AI-enabled technologies is accelerating innovation in chip design, while investment and market orders are helping shorten the transition from laboratory breakthroughs to commercial mass production. Despite intensifying US restrictions on advanced technology, Chinese chipmakers are showing resilience and adaptability in navigating this challenging landscape.

Among 102 A-share companies in SWS Research's categories of digital chip design, analog chip design, integrated circuit manufacturing and packaging and testing, 66 posted profits in the first half of 2025. Of these, 38 reported year-on-year growth in net profit. Notable players such as Cambricon Technologies, Halo Microelectronics and 3peak Inc ranked among the sector leaders in revenue growth, the Shanghai Securities News reported on Monday.

These financial results highlight more than a cyclical recovery. They signal a structural shift in the semiconductor value chain, driven by AI's broad adoption across industries. The current range of tech applications is broad, including cloud computing, autonomous driving, generative AI and industrial automation. These applications require increasingly powerful, energy-efficient chips with customized architectures and faster upgrade cycles, creating a feedback loop: AI adoption drives innovation, while technological advances further expand AI's reach.

Chinese chipmakers are encouraged to accelerate iterations in response to the evolution of the market. Strong inflows of capital and robust end-market orders are reinforcing this process, helping firms cut the time between research and full-scale production. In the stock market, investor sentiment is clearly favoring Chinese chipmakers in response to AI trends and trade dynamics. This development is allowing Chinese companies to seize opportunities despite external headwinds.

This resilience is particularly significant given the escalating US restrictions. The US has curbed exports of advanced chips and barred access to critical manufacturing equipment. In the latest example, according to a notice published on Friday, the US Commerce Department said that it was revoking waivers for Samsung and SK Hynix to use US technologies in their Chinese operations, Bloomberg reported, further escalating Washington's strategy of blocking China's access to advanced semiconductor manufacturing technology.

Yet Chinese firms have managed to adapt by strengthening their foothold in specialized segments. Their progress in related areas demonstrates the sector's ability to advance. Meanwhile, supportive policies have underpinned their momentum. China has consistently prioritized semiconductor development as a strategic goal, encouraging innovation.

AI adoption is a worldwide phenomenon, fueling semiconductor demand not only in China but across other regions. High-performance computing chips are the core hardware underpinning the implementation of AI technology, and they are most closely tied to its development. Companies in this segment have significant opportunities arising from the surging demand.

For Chinese firms, this creates opportunities to expand internationally and diversify revenue streams. However, ongoing US containment and blockades may continue to pose challenges, including limiting access to some overseas markets and technologies. Successfully navigating this environment will be essential for long-term growth.

At the moment, growing earnings and rising investment present valuable resources, but their impact will depend on how effectively they are reinvested into long-term research and development (R&D). Sustained progress for the chip sector in China requires technology breakthroughs. Only by channeling today's momentum into R&D progress can the industry extend its "window of opportunity" and build resilience.

If Chinese chipmakers succeed in developing a robust innovation ecosystem - one that withstands external shocks and delivers steady technological upgrades - they will not only achieve sustained growth but also strengthen China's role in the global semiconductor landscape. 

The AI wave has created unprecedented possibilities. The current trajectory suggests that, even under external pressure, Chinese firms are carving out paths of resilience and innovation. As demand for high-performance computing chips continues to grow, China's semiconductor sector is well-positioned to capitalize on the AI-driven wave and translate it into long-term technological strength.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn