Speaking of the wave of chip import data at the beginning of 2023, it really caught many people off guard. The General Administration of Customs announced on March 8 that in January and February 2023, China’s integrated circuit imports were only about 67.6 billion units, a direct decrease of 26.5% compared to the same period in 2022, with the value dropping by 24.9% to over 329 billion yuan. This is a significant halving; in the second half of 2022, everyone was frantically hoarding chips, fearing they wouldn’t be able to buy them once the new U.S. ban came, but as the new year began, demand cooled, and inventory piled up to the ceiling. Who would dare to continue placing orders?
The reason is quite simple. In October 2022, the most severe export controls from the U.S. were implemented, and everyone hoarded too aggressively, with imports in November alone nearing $50 billion. By early 2023, global demand for smartphones, computers, and cars collapsed. Chinese companies saw they had enough inventory for two years and immediately cut their orders. Meanwhile, Qualcomm, Intel, and NVIDIA in the U.S. saw their inventories skyrocket, stock prices plummeted, and layoff news flooded in. At that time, Western media stubbornly claimed that “the sanctions were successful,” but once the data came out, they all fell silent.
What’s even more awkward is that this 26.5% plunge came at a time when the U.S. was most confident. Many thought China would be left without chips, but instead, they calmly tightened their wallets and conveniently extended the window for domestic alternatives to the most comfortable position.
At the same time, Bill Gates spoke out again. In 2023, he stated that the U.S. thinking it could completely cut off China’s chips was wishful thinking and would only force China to develop faster. By May 2025, in an interview, he reiterated this point more bluntly: the more you restrict, the more China will strive to succeed. Gates’s words are not just casual remarks; he sees clearly that the ban has become the biggest catalyst for China’s semiconductor industry. Money, talent, and policies have all been poured in, and the timeline has been pushed forward by several years.
To be honest, it is quite rare for Gates to say this. He is not supporting anyone; he is just laying out the reality: technological blockades have never stopped determined major powers; they only cause themselves to lose the market. We have seen this clearly over the past few years: the more the U.S. escalates, the more Chinese companies strive, and in the end, what emerges is a bunch of capable domestic equipment and processes.
The most ironic part is the situation with TSMC. A few years ago, the medium etching machine from Shanghai Micro Electronics Equipment Co. passed TSMC’s strict verification and was used in mass production on 5nm and 3nm production lines, which is not a secret in the industry. In 2023-2024, some U.S. media directly described TSMC as having “betrayed”—taking U.S. subsidies while quietly using Chinese equipment with justification.
Of course, by 2025, the winds changed again. In late August, Nikkei reported that TSMC had replaced all Chinese equipment on its 2nm production line to obtain U.S. CHIPS Act subsidies and to avoid potentially harsher penalties. But this precisely proves one thing: Chinese equipment has become so good that TSMC cannot afford not to use it, and it is so good that the U.S. fears it will continue to use it. This itself is a victory. The CCP etching machine from Shanghai Micro has received repeat orders from TSMC, indicating that its performance, yield, and stability are all solid; otherwise, who would dare to hand over the most advanced production line to it?
Looking back over the past few years, the data is the most honest. In 2023, China’s total chip imports fell to 479.5 billion units, rebounding to 549.2 billion units in 2024, a growth of 14.5%, but the value only increased by 10%, indicating that the price of chips purchased has significantly decreased—people are starting to choose cheaper mature processes and no longer insist on high-end U.S. products. In the first few months of 2025, import values continued to grow positively, but the structure was completely different, with the proportion of U.S. goods significantly declining, while mature nodes from South Korea and Taiwan dominated.
More critically, domestic production has taken off completely. By 2025, SMIC’s capacity utilization rate will be over 95% year-round, with 14nm fully utilized, 7nm yields already matching industry mainstream levels, and 5nm capable of small-batch mass production. Jiangsu Changjiang Electronics Technology Co., Tongfu Microelectronics, and Huada Semiconductor are firmly among the top six packaging and testing companies globally. Shanghai Micro’s etching machines continue to supply TSMC’s old production lines and have entered the supply chains of Samsung and SK Hynix. Equipment companies like North China Innovation, Shengmei Shanghai, and Tuojing Technology have orders lined up until 2027.
Now, every day, mainland China can produce 1.33 billion chips, with production in the first half of 2025 increasing by over 30% year-on-year. Exports have also reached unprecedented levels, with chip export values exceeding 1 trillion yuan for the first time in 2024, continuing to surge in 2025. Once, someone mocked Ren Zhengfei’s statement that “in the future, if someone asks us to buy chips, we won’t need them,” but now it seems that this was not a joke; it was a prescient statement.
The series of U.S. bans essentially handed the world’s largest market to China. Originally, Chinese companies were reluctant to spend billions to develop a complete industrial chain, but being pushed to the wall has instead awakened them completely. Looking back now, the 26.5% plunge in 2023 was not the beginning of a collapse but the starting point for accelerated self-research. After clearing out the inventory, all the money was poured into domestic equipment and production lines, narrowing the gap significantly in just a few years.
In short, this battle has reached a point where it is no longer about who is choking whom, but rather who can first reduce costs and build an ecosystem. The U.S. is still escalating, while China has already quietly made significant strides in many areas. Gates has seen through this, and TSMC’s experiences reflect the same principle: technology cannot be blocked; it only forces others to run faster.
Now, as we approach the end of 2025, looking back at that 26.5% in early 2023, it truly seems like a watershed moment. Before, there was fear of chip shortages; now, there is no fear at all. The path traveled over these years speaks louder than anything else.
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