china leapfrogs intel in optical chip tech amid us restrictions

2025-06-18 general

shanghai, Wednesday, 18 June 2025.
amid us chip act restrictions, china is making rapid advancements in optical chip technology. chinese firms are poised to dominate a significant portion of the $1.2 trillion global market by 2030. their silicon photonics chips have achieved 1000-channel photonic integration, surpassing intel’s 200 channels while also reducing power consumption. this progress presents a considerable challenge to western semiconductor companies and could revolutionize ai and high-performance computing. the chinese advancements may affect major industry players like nvidia, tsmc, and asml.

market dominance and technological advancements

China’s advancements in silicon photonics are not just incremental improvements. Chinese silicon photonics chips have achieved 1000-channel photonic integration [1]. This significantly surpasses Intel’s 200 channels [1]. These chips also offer a 70% reduction in power consumption [1]. This leap in technology positions Chinese firms to potentially dominate approximately 45% of the global optical chip market by 2030, which is projected to reach $1.2 trillion [1]. This market dominance could reshape the competitive landscape for semiconductor companies worldwide [1].

impact on key semiconductor companies

The rapid development of China’s optical chip technology poses considerable challenges for western semiconductor companies [1]. Companies like Nvidia, TSMC, and ASML could face increased competition and market pressure [1]. Nvidia’s stock performance is already under close observation amidst concerns about stagflation and market volatility [7]. ASML faces restrictions on exporting EUV lithography equipment to China, which could further accelerate China’s focus on alternative technologies [1][7]. TSMC will accelerate the construction and mass production of its TSMC Arizona plant, with the second and third fabs ahead of schedule by six months [3].

strategic implications and government support

The U.S. CHIPS Act restricts China’s access to EUV lithography, spurring innovation in areas like silicon photonics [1]. China’s ‘14th Five-Year Plan’ identifies optical chips as a strategic core of its ‘new type of national system’ [1]. The Ministry of Industry and Information Technology (MIIT) is implementing measures to boost domestic chip manufacturing [3]. The MIIT plans to invest $100 billion over the next five years in research and development [3]. Li Wei, a MIIT spokesperson, stated their commitment to achieving self-sufficiency in key semiconductor technologies by 2030 [3].

investment opportunities and strategic recommendations

The advancements in optical chip technology present notable investment opportunities [1]. The ‘China Optical Chip Industry In-Depth Research and Investment Prospect Forecast Report (2025-2029)’ suggests prioritizing investments in areas with high technological autonomy and strong policy support [1]. Specifically, the report recommends focusing on silicon photonics packaging materials and photonic computing EDA tools [1]. Companies like Debon Technology, experiencing a 200% order increase in silicon photonics packaging materials, and Huada Empyrean, with a 20% market share in EDA tools, are highlighted as potential beneficiaries [1]. Long-term investments in quantum dot modulators and photon LiDAR optical engines are also recommended [1].

risks and challenges

Despite the promising outlook, the Chinese optical chip sector faces certain risks [1]. One critical risk is the technology route gamble between silicon photonics integration and silicon-based GAA transistor routes [1]. Geopolitical pressures, particularly U.S. pressure on ASML to halt EUV lithography equipment supplies, pose another threat [1]. Supply chain vulnerabilities, such as a greater than 90% import reliance on indium phosphide substrates (dominated by Japan’s Sumitomo), also present a challenge [1]. Overcoming these hurdles will be crucial for sustaining growth and achieving self-sufficiency in the optical chip market [3].

Bronnen

silicon photonics optical chips