In the first quarter of 2025, TSMC announced the official mass production of its 1.4nm process technology, achieving a transistor density of 320 million per square millimeter—equivalent to shrinking the entire map of New York City down to the size of a fingernail. Meanwhile, the latest data from the U.S. Department of Commerce shows that the global semiconductor market has surpassed $1.2 trillion, nearly tripling since 2020. On this battlefield without gunpowder, a chip war concerning national technological sovereignty is rewriting the global industrial landscape.
▍ Process Technology: A Race Approaching Physical Limits
In the field of semiconductor manufacturing, the competition for process technology has never ceased. TSMC leads the industry again with its 1.4nm process, boasting a yield rate of 92% that leaves competitors far behind. This groundbreaking technology will first be applied in Apple’s A19 and NVIDIA’s B100 chips, bringing a leap in performance for consumer electronics and AI computing. In South Korea, Samsung’s 2nm GAA process, despite a yield rate of only 78%, has successfully secured significant orders from Qualcomm and Tesla. Meanwhile, in mainland China, SMIC’s N+3 process, equivalent to 3nm, has steadily increased its monthly production capacity to 50,000 wafers, marking China’s continuous progress in advanced process technology.
However, as process nodes continue to shrink, traditional silicon-based materials are approaching their physical limits. Therefore, the industry is actively exploring new material solutions. IBM’s research on carbon nanotube chips has achieved significant breakthroughs, with performance improvements of up to 1000 times; two-dimensional semiconductor material MoS₂ has moved from the laboratory to trial production; Intel has taken a different approach, making progress in glass substrate technology, effectively addressing the bottleneck of chip interconnections. These innovations are providing new possibilities for sustaining Moore’s Law.
In terms of manufacturing equipment, photolithography machines remain a key bottleneck constraining industry development. ASML’s latest High-NA EUV lithography machine costs as much as $450 million, with a delivery cycle of up to 18 months. Although China’s independently developed SSA800 lithography machine can only achieve a 28nm process, this breakthrough is significant for ensuring the security of the supply chain. Globally, semiconductor equipment suppliers have orders booked until 2026, reflecting the urgent demand for industry expansion.
▍ Supply Chain Restructuring Under Geopolitical Tensions
The geopolitical implications of the semiconductor industry have never been as pronounced as they are today. The U.S. CHIPS Act 2.0 has added $280 billion in investments aimed at rebuilding domestic semiconductor manufacturing capabilities; the EU has passed the “Chips Act” plan to increase the region’s chip production share from 8% to 15%; India has also established its first wafer fab, producing 30,000 28nm chips per month. This regional manufacturing layout is reshaping the global semiconductor supply chain.
The game of technological blockade and counter-blockade is becoming increasingly intense. The U.S. continues to expand the ban on AI chip sales to China, attempting to curb China’s technological development. However, Chinese companies are also accelerating independent innovation, with Huawei’s Ascend 910B chip achieving 92% of NVIDIA’s A100 performance, and Yangtze Memory Technologies’ 232-layer 3D NAND flash memory achieving full autonomy, all of which are rewriting the global technological competition landscape.
In the raw materials sector, global silicon wafer prices have risen by 170% in two years, and export controls on rare earth elements gallium and germanium have triggered a chain reaction. Research institutions like Belgium’s IMEC are actively developing silicon-based alternative materials to reduce dependence on specific raw materials. This battle for raw materials highlights the fragility of the semiconductor supply chain and prompts countries to reassess their strategic reserves of critical materials.
▍ Customization Wave Driven by Application Scenarios
As digital transformation deepens, the demand for chips is showing a trend of diversification. In the automotive sector, the number of chips used in a single smart electric vehicle has exceeded 5,000, and the market size for silicon carbide power devices has reached $28 billion. Horizon Robotics has launched the Journey 6 chip with a computing power of 1000 TOPS, providing strong support for autonomous driving.
The AI chip market is also flourishing. The supply cycle for NVIDIA’s H100 has finally shortened to three months, alleviating some market pressure; Google’s TPU v5 has increased training speed by eight times, solidifying its advantage in AI infrastructure; and China’s Cambricon’s brain-like chip has successfully taped out, opening new paths for AI computing.
The rise of specialty chips is equally noteworthy. Quantum computing control chips need to operate in environments close to absolute zero, satellite internet is driving a surge in demand for space-grade chips, and the market size for biochips has surpassed $70 billion. The rapid development of these niche areas is giving rise to a new generation of industry leaders.
▍ China’s Semiconductor Industry Breakthrough Path
In the face of external pressures, China’s semiconductor industry is building full industry chain capabilities. The scale of Shanghai’s integrated circuit industry has surpassed 500 billion yuan, forming a complete industrial cluster; Huawei’s Hubble Investment has laid out over 200 semiconductor companies, creating a self-controllable supply chain system; and the yield rate of domestically produced 28nm production lines has reached international levels, laying a foundation for industrial security.
In terms of technology, Chinese companies are adopting a diversified innovation strategy. Chiplet technology is achieving performance breakthroughs through advanced packaging; Huawei’s Da Vinci architecture NPU maintains a lead in energy efficiency; and research in cutting-edge fields like photonic chips is also accelerating. These innovations are changing China’s role in the global semiconductor industry.
Talent is the core resource for industry development. Currently, there are 800,000 chip practitioners in China, and integrated circuit colleges at Tsinghua University and Peking University have expanded enrollment by 300%, with the return rate of high-level overseas talent increasing to 65%. This talent aggregation effect is transforming into technological innovation momentum.
▍ Future Challenges and Industrial Changes
Looking ahead, the semiconductor industry still faces many challenges. Processes below 1nm will encounter significant quantum effect issues, chip R&D costs will exceed $10 billion, and 3D packaging heat dissipation will become a new technical bottleneck. These challenges are driving the industry to explore new computing architectures, such as compute-in-memory chips, brain-like computing chips, and photonic quantum chips.
The pressure for sustainable development cannot be ignored either. A single wafer fab consumes 50,000 tons of water daily, and the carbon footprint of chip manufacturing accounts for 35% of the ICT industry. Leading companies like TSMC have committed to achieving 100% renewable energy use by 2030, making the industry’s green transformation imperative.
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The semiconductor industry in 2025 is witnessing a profound transformation. What do you think the future prospects of the semiconductor industry are? Feel free to share your views in the comments!
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