With the rapid advancement of China's semiconductor industry, companies such as Huafu and Cambrian are accelerating the production of artificial intelligence accelerators. According to the latest report, it is expected that by 2026, China's annual production capacity of AI chips will increase to three times that of the current one, and the annual production capacity may reach millions or even tens of thousands, which is very important in improving China's self-sufficiency in the AI field. However, bottlenecks with production capacity still exist, especially on the supply of advanced semiconductor manufacturing capabilities and high frequency wide memory (HBM).
Although China has an important position in semiconductor manufacturing in China, it actually has not built its own crystal factory, but instead commissioned SMIC to produce advanced AI chips such as 7nm. Due to the sanctions of the US government, the supply chain for China is restricted, which makes only a few Chinese companies able to use Taiwan Power (TSMC) services, which mainly supply to other markets.
In terms of production, SMIC has recently begun to increase the production of Ascend 910B, planning to double its 7nm production capacity by 2025. The Ascend series will occupy about half of the capacity, and China may receive more than 5 million Ascend 910B chips throughout the year.
However, the challenges of production are not limited to the chip itself, but the supply of HBM has also become a big bottleneck. Hua is expected to consume all of its current HBM inventory by the end of 2025, which will affect its Ascend 910C production. China's major DRAM supplier Changxin CXMT is working hard to develop its own HBM production capacity, but its expected output still cannot meet the demands of China.
In this context, China's AI hardware industry faces huge challenges. Although the Chinese government hopes to promote self-sufficiency of domestic AI hardware, the reality of this goal is still full of uncertainty under the limitations of advanced process technology and HBM supply. From 2025 to 2026, China plans to add three new crystalline factories dedicated to China for local AI chip services, and its capacity scale will exceed SMIC's existing similar production lines. This strategy aims to reduce the dependence on foreign high-level chips and promote the domesticization process.
China’s chip champions ramp up production of AI accelerators at domestic fabs, but HBM and fab production capacity are towering bottlenecks