China’s push to build a self-reliant semiconductor industry could gain major momentum in 2026, with domestic chip shipments projected to reach around 5 million units, according to industry expert commentary shared during a Deutsche Bank-hosted discussion.
The forecast comes at a critical time for China’s technology sector. With U.S. export restrictions limiting access to advanced AI GPUs, especially high-performance chips from NVIDIA, Chinese companies are increasingly turning to locally designed and manufactured alternatives. This shift is not only being driven by necessity, but also by government efforts to reduce dependence on foreign semiconductor suppliers.
China’s domestic chip market is now under intense pressure to scale quickly. The country’s leading chip manufacturers, including Semiconductor Manufacturing International Corporation and Shanghai Huahong Grace Semiconductor Manufacturing Corporation, are expected to play a central role in meeting local demand. These companies are becoming increasingly important as China works to strengthen its AI chip supply chain despite restrictions on access to the most advanced semiconductor manufacturing equipment.
NVIDIA has attempted to continue serving the Chinese market by developing chips specifically designed to comply with U.S. export rules. However, Chinese authorities have reportedly discouraged local firms from purchasing these modified products, aiming instead to accelerate the adoption of homegrown AI chips. This policy direction could give domestic semiconductor companies a stronger foothold in one of the world’s largest AI markets.
The spotlight on China’s local chip ecosystem has grown even brighter after Moonshot AI claimed that its Kimi K3 artificial intelligence model was trained entirely using domestic chips. If accurate, the claim would represent a significant symbolic milestone for China’s AI and semiconductor ambitions, suggesting that local hardware is becoming capable enough to support advanced AI model development.
According to the expert call details, Chinese domestic chip shipments may have reached around 4 million units in 2025 and could climb to 5 million units in 2026. The broader domestic chip sector is also expected to grow at a compound annual growth rate of roughly 30% over the next two to three years. Within that growth, the domestic market share led by companies such as SMIC and Shanghai Hua Hong could rise from about 40% to more than 50%.
Other financial institutions have offered similarly optimistic long-term projections. JPMorgan has estimated that domestic AI chip shipments in China could grow from around 1 million units in 2025 to 5 million units by 2028. The bank expects Huawei and government-backed Cambricon Technologies to be among the biggest beneficiaries of this expansion.
Cambricon has already attracted significant attention from investors and industry analysts. Previous estimates suggested that the company could ship millions of AI chips by the end of the decade, helped by rising demand from Chinese AI developers that can no longer rely as easily on foreign suppliers. Reports have also indicated that a large portion of Cambricon’s revenue has come from major technology customers such as ByteDance, underscoring the company’s growing role in China’s AI infrastructure.
The rapid growth of China’s domestic AI chip market highlights a major shift in the global semiconductor landscape. Export controls have created serious challenges for Chinese companies, but they have also accelerated investment in local alternatives. As AI adoption expands across cloud computing, consumer applications, enterprise software, and government-backed technology projects, demand for AI accelerators is expected to keep rising.
China still faces major obstacles. Advanced chip manufacturing remains extremely complex, and restrictions on high-end lithography tools continue to limit the ability of domestic fabs to compete at the cutting edge. However, the projected shipment growth suggests that Chinese firms are making progress in building chips that are good enough for many AI workloads, even if they do not yet match the most advanced global GPUs.
If domestic chip shipments do reach 5 million units in 2026, it would mark an important step in China’s long-term semiconductor strategy. The country’s AI industry may still face performance gaps and supply chain challenges, but the momentum behind local chip production appears to be strengthening. For Chinese chipmakers, the coming years could define whether the country can build a more independent AI hardware ecosystem capable of supporting its fast-growing technology ambitions.
