China’s domestic chip shipments are projected to hit 5 million units in 2026, according to an expert briefing hosted by Deutsche Bank.
Forecasts show rapid growth despite sanctions
The Deutsche Bank call indicated that shipments of locally produced chips rose to 2.5 million units this year and are expected to reach 5 million by the end of 2026. The same briefing noted a compounded annual growth rate of roughly 30 percent over the next two to three years.
Domestic manufacturers such as Semiconductor Manufacturing International Corporation (SMIC) and Shanghai Huahong Grace Semiconductor Manufacturing Corporation are expected to increase their share of the market from about 40 percent to just over half of total shipments. The shift follows a series of U.S. export controls that have limited China’s access to advanced artificial‑intelligence GPUs from companies like NVIDIA.
Investment bank JPMorgan echoed the outlook in a separate report, projecting that domestic AI chip shipments could climb from 1 million units in 2025 to five million by 2028. The analysis highlighted Huawei and the state‑backed Cambricon Technologies as the primary drivers of that expansion.
Companies adapt to a constrained supply chain
Moonshot’s Kimi K3 AI model, which the firm claims was trained exclusively on Chinese chips, has drawn attention to the country’s push for self‑reliance. The model’s development highlights the broader trend of local firms seeking alternatives after being cut off from the latest AI hardware.
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Cambricon, a major player in the domestic AI chip market, was previously estimated by Goldman Sachs to ship 2.3 million units by 2030. It reportedly derives about 80 percent of its revenue from ByteDance, reflecting the close ties between Chinese tech firms and content platforms.
Restrictions on acquiring cutting‑edge manufacturing equipment have limited the ability of China’s major fabs to produce leading‑edge GPUs. In response, the government has discouraged purchases of China‑specific NVIDIA chips, aiming to stimulate domestic production even though the special‑purpose designs were intended to comply with sanctions.
Analysts note that the current growth trajectory depends on continued investment in the local supply chain and on the ability of firms like SMIC to advance their process technologies despite export bans.
It seems likely that the momentum will sustain as long as policy incentives remain aligned with the goal of reducing reliance on foreign components. However, any acceleration in U.S. restrictions could force Chinese firms to re‑evaluate their production strategies, potentially slowing the projected increase in shipments.
The sector’s expansion will broaden AI chip options for Chinese developers.