🚨🇨🇳 Goldman: China Could Erase Most of Its Advanced-Chip Deficit by 2035 China could supply two-thirds of its own advanced chips by 2035, according to a new Goldman Sachs forecast. The bank expects domestic output of wafers made at 7 nanometers and below to grow 46% annually from 2025 to 2035, versus 17% growth in Chinese demand. Monthly supply is projected to reach 410,000 wafers against demand for 619,000. That would cut China’s advanced-chip shortfall from 92% in 2025 to 34% by 2035. The main engine is Semiconductor Manufacturing International Corporation (SMIC), China’s largest contract chipmaker. Goldman assumes it adds capacity for 30,000–50,000 advanced wafers per month each year through 2031, followed by annual additions of 20,000 through 2035. The model also assumes production yields, the share of usable chips obtained from each wafer, rise from 23% in 2026 to 50% in 2030 and 75% in 2035. That would turn costly, inefficient capacity into commercially meaningful output. The buildout follows the US attempt to cut Huawei off from advanced manufacturing. After the US blocked its access to Taiwan’s TSMC, SMIC still produced a 7-nanometer processor for Huawei in 2023. Goldman now expects China’s semiconductor investment to grow by double digits annually and reach $82B in 2030, 79% above its forecast one year ago. That spending is also building a domestic equipment industry. China’s wafer-fabrication equipment market could reach $53B in 2027, while local suppliers’ share is projected to climb to 38% by value in 2028. Chinese firms are moving beyond etching and deposition into ion implantation, inspection and precision measurement. Lithography remains the hardest bottleneck. China still lacks a production-ready extreme-ultraviolet system and relies heavily on imported deep-ultraviolet machines. Reports in July said domestic immersion DUV equipment had entered limited production, but it still requires testing and has not proven reliable at high volumes. US restrictions can still slow China at the frontier, but they have not frozen its capacity. If Goldman’s forecast proves accurate, dependence will narrow to fewer foreign tools while Chinese foundries cover most domestic advanced-chip demand. Export controls would lose much of their power to choke China’s AI and electronics supply chain. @NewRulesGeo❗Follow us on X