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China Aims to Triple Its Domestic AI Chip Production by 2026 as Part of the Chip War. Huawei Leads New Factory Projects with State Support and Focus on Self-Sufficiency.
The Chinese government has announced an ambitious plan to triple the domestic production of artificial intelligence (AI) chips by 2026 in the so-called chip war, responding to technological restrictions from the United States.
The strategy includes the construction of up to three new factories dedicated to AI chip production, with strong involvement from Huawei and SMIC (China’s largest manufacturer).
The goal is to reduce American dependence, accelerate local innovation, and strengthen technological sovereignty.
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“Chip War”: China’s Ambition for Independence
The so-called chip war intensified after the U.S. imposed restrictions on China’s access to advanced semiconductors.
In response, Beijing is working to consolidate a self-sufficient industry.
As part of the announced plan, AI chip production is expected to grow significantly, allowing China to advance in cutting-edge technology despite sanctions.
Additionally, Huawei’s factory is set to be operational by 2025, with other units planned for 2026.
The Role of Huawei and SMIC in This New Cycle
Huawei stands out as a key player in China’s new technological phase.
The company will start operations at a factory exclusively for AI chips in 2025, and two more units are planned for inauguration in 2026.
If successful, the production from these factories could surpass the capacity of the giant SMIC (Semiconductor Manufacturing International Corporation).
At the same time, SMIC plans to double its manufacturing of 7nm chips, with Huawei as its main customer.
Investments in Chips and Legal Boosts
China has backed the plan with strong political support and public investments, with state funds and private initiatives financing the projects.
Additionally, there is an explicit directive for Chinese companies to reduce dependence on foreign technology, especially from Nvidia.
Although Nvidia has received authorization to sell the H20 chip, Beijing has recommended that local companies prioritize domestic solutions.
Building Technological Competitiveness
Initiatives like “Made in China 2025” are the foundation of this self-sufficiency strategy.
The program sets ambitious goals to increase the production of homegrown technology in strategic sectors, with a focus on semiconductors and AI.
Currently, China is advancing with its own chips — like Huawei’s Ascend 910C, which competes with the H20 chip in energy efficiency — even though it is produced using SMIC’s 7nm process, which is less advanced than Taiwan’s cutting-edge technology.
Challenges on the Path to Technological Independence
Despite the momentum, the global environment still presents obstacles.
The Chinese industry faces limitations in the sophistication of the most advanced chips, as well as resistance in the effort to consolidate companies in a fragmented sector, where recent mergers have disintegrated due to financial and internal political disputes.
Every step taken by China resonates in the global market.
The escalation of domestic chip production and local content regulations — such as the requirement to use at least 50% domestic chips in public data centers — pressures companies like Nvidia and AMD and alters the sector’s dynamics.
Meanwhile, investments in quantum computing and AI point to a future where the country will be less dependent on Western technology.
