Full Breakdown
China’s Advanced Chip Supply Set to Surge by 2035, Lithography Remains a Bottleneck
8/24/2026, 10:44:21 PM
Projected Supply Surge
U.S. investment bank Goldman Sachs projects that China’s output of advanced-node wafers (7-nanometre and below) will expand at a compound annual growth rate of 46 % from 2025 through 2035. By 2035, monthly supply is expected to reach roughly 410,000 wafers, narrowing the gap between domestic supply and demand to 34 % (down from 92 % in 2025). Domestic demand is forecast to grow 17 % annually over the same period, reaching about 619,000 wafers per month.
Drivers of Growth
The model attributes most of the increase to aggressive capacity expansion by Semiconductor Manufacturing International Corp (SMIC), China’s largest contract chipmaker. Goldman Sachs assumes SMIC will add 30,000–50,000 advanced-node wafers per month each year from 2026 to 2031, then an additional 20,000 wafers per month annually through 2035. Yield improvements are also factored in, rising from 23 % in 2026 to 50 % by 2030 and 75 % by 2035.
Lithography Bottleneck
Despite the projected supply boost, the analysis highlights lithography—the process used to etch circuit patterns—as a persistent weakness. The lack of domestic extreme-ultraviolet (EUV) lithography equipment limits the ability to achieve full semiconductor independence, keeping China reliant on foreign technology for the most advanced layers.
Comparative Yield Context
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading foundry, already achieves yields exceeding 90 % for 7 nm chips, depending on design and die size. China’s projected yields, even at 75 % by 2035, remain below TSMC’s current performance, underscoring the technology gap.
Implications for Independence
If the forecasts hold, China will substantially reduce its advanced-chip deficit, but the lithography constraint suggests that complete self-sufficiency will remain out of reach through 2035. The gap in high-precision equipment could continue to shape global supply-chain dynamics and influence policy discussions on technology transfer and export controls.
