China's Semiconductor Strategy: Why It Skips the 2nm Race 2026

China's semiconductor strategy is not focused on winning the 2nm race with TSMC, Intel, and Samsung. Instead, the country is betting on mature nodes to strengthen its supply chain and secure a dominant position in the global integrated circuit market. This insight comes from Richard Chang Rujing, founder of SMIC, China's largest chipmaker with about 5% global market share.

The 2nm misconception

Rujing recently stated that many people believe semiconductor competition is all about advanced nodes and that success only comes when reaching 2 or 3 nanometers. He calls this a misunderstanding. His words carry a clear intention: China should reinforce its supply chain and global position by developing its capacity to manufacture mature chips.

Currently, SMIC's most advanced production technology is 7nm lithography, achieved without access to ASML's extreme ultraviolet (EUV) lithography equipment. Like other Chinese chipmakers, SMIC would benefit from producing 5nm, 3nm, and 2nm semiconductors, which would allow it to compete on equal footing with TSMC, Intel, and Samsung.

Mature nodes dominate the market

However, advanced nodes represent less than 20% of the global integrated circuit market by volume. More than 80% of demand comes from mature nodes and other segments. This means China can build a strong position by focusing on the chips that power everyday devices, cars, and industrial equipment.

Mature nodes, typically defined as 28nm and above, are used in a wide range of applications, from consumer electronics to automotive and aerospace. By mastering these technologies, Chinese companies can serve the majority of the market and reduce reliance on foreign suppliers.

SMIC's current capabilities and challenges

SMIC's 7nm process is a significant achievement given the export restrictions on EUV machines. Without EUV, scaling to 5nm and below becomes increasingly difficult and costly. The company has relied on older deep ultraviolet (DUV) lithography, using techniques like multiple patterning to push the limits of what's possible.

But Rujing's point is that China doesn't need to be first to 2nm to be successful. The country can build a robust ecosystem around mature nodes, which are essential for many industries and have stable, growing demand.

China's broader semiconductor plan

China's strategy involves investing heavily in domestic semiconductor manufacturing, research, and development. The goal is to create a self-sufficient supply chain that can withstand external pressures and support the country's tech ambitions.

This includes funding for mature node fabs, developing domestic equipment and materials, and fostering talent. By focusing on mature nodes, China can achieve quick wins and build the foundation for future advances. The background to this story is set out in SMIC Matches TSMC Chip Density Without EUV Machines, Redefining Foundry Race. A related thread runs through US Semiconductor Companies Thrive in China's Chip Market. Earlier coverage in TSMC's Nvidia Focus Lets China's SMIC Gain Ground in Chips shows how the argument developed.

What this means for the global chip industry

China's focus on mature nodes could reshape the global semiconductor landscape. As Chinese companies increase their share in this segment, they may put pressure on established players like TSMC, Samsung, and GlobalFoundries, which also produce mature node chips. A closer look at the same subject appears in ASML Shares Fall as US Eyes Tighter China Semiconductor Export Rules. Anyone following the wider picture can start with Business: latest articles. The same theme surfaces in Strait of Hormuz Blockade Threatens Samsung and TSMC Chip Supply, which takes a different angle.

Moreover, China's growing capacity in mature nodes could lead to overcapacity and price competition, benefiting consumers but challenging incumbents. It could also accelerate the adoption of chips in emerging technologies like IoT and electric vehicles. Context on how this played out before sits in Samsung Delays 1.4nm Node to 2029 as High-NA EUV Lithography Not Ready. A companion piece, Nvidia Skips New Gaming GPUs in 2026 as AI Chip Demand Soars, approaches the same subject from another angle.

Key takeaways

• Advanced nodes (below 7nm) account for less than 20% of the global chip market by volume.
• Mature nodes (28nm and above) represent over 80% of demand and are critical for many industries.
• SMIC's 7nm process is its most advanced, but without EUV, scaling further is difficult.
• China's strategy focuses on mature nodes to build a resilient supply chain and gain market share.
• This approach could disrupt the global chip industry by increasing competition in mature segments.

Comparing node technologies

Note: Market share percentages are approximate and based on industry estimates.

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