China increases investment in traditional chips to counter U.S. export restrictions on cutting-edge chips

Faced with U.S. restrictions on the export of cutting-edge chips, China is increasing its investment and production of traditional chips. According to Morgan Stanley, China invested $41 billion in wafer manufacturing equipment in 2024, an increase of 29% from 2023, accounting for about 40% of the global market. Part of the investment came from Chinese companies such as SMIC and Huahong Semiconductor that manufacture traditional chips. SMIC is China's largest wafer foundry, with capital investment reaching $7.5 billion in 2023, compared with only $2 billion in the year before the epidemic.