Goldman Sachs: China's Advanced Chip Supply to Surge by 2035 Despite Equipment Bottlenecks

A report from Goldman Sachs, published on Monday, forecasts that China will significantly decrease its advanced chip deficit over the next ten years, primarily due to SMIC's aggressive capacity growth and enhanced yields. The production of wafers utilizing processes of 7-nanometres and below is anticipated to increase at an annual rate of 46% from 2025 to 2035, surpassing the 17% rise in domestic demand. By 2035, the disparity between supply and demand is expected to shrink to 34%, down from 92% in 2025, with China's advanced-node wafer output reaching 410,000 monthly, compared to a demand of 619,000. Goldman predicts that SMIC will expand its monthly capacity by 30,000 to 50,000 wafers annually from 2026 to 2031, and an additional 20,000 per month through 2035, while yields are expected to improve from 23% in 2026 to 75% by 2035. In contrast, TSMC, the leading foundry, which started mass production of 7nm chips in 2018, achieves yields above 90%. Nonetheless, lithography challenges may hinder China’s quest for complete semiconductor independence.