China's semiconductor self-reliance push has notched new gains, with Chinese AI giants expanding purchases of domestic AI chips and facing direct pressure from Beijing to use more local silicon, market sources say. Industry players say the trend toward chip substitution has been building for years, but whether it truly accelerates will depend on how strong the "chilling effect" becomes.
Semiconductor executives say cloud AI chips have become a core point of US-China competition, and Beijing has already made clear that domestic development is essential. They point to DeepSeek's earlier shift to Huawei, which reportedly required heavy engineering resources and even caused bottlenecks in the progress of their AI models, as evidence of strong official pressure.
In that segment, the chilling effect is especially intense. Even if some buyers still obtain Nvidia chips through various channels behind the scenes, companies are at least expected to publicly treat domestic substitution as the top priority.
In other applications, however, IC design firms say there is still room to maneuver, and the chilling effect is not as obvious.
Chinese EV brands, from industry leaders to startups, have recently been developing their own in-house automotive computing chips, and some have indeed produced results. But in actual deployments, products from Qualcomm, MediaTek, Nvidia, and NXP still dominate Chinese EVs. Collaboration remains frequent with no sign of easing.
That means pressure for domestic substitution is relatively lighter in the automotive sector. This includes peripheral chips, where Chinese customers have not moved toward full substitution, instead choosing suppliers based on policy direction, export destination, cost, and specifications.
Many Taiwanese firms say Chinese IC design peers are locked in fierce competition for a certain share of domestic substitution orders. But that battle does not necessarily hit overseas chipmakers directly, and Taiwanese suppliers still hold an edge in technical specifications, supply stability, and overall value for money.
Some companies also note that certain Chinese semiconductor vendors try to create their own chilling effect by exploiting legal and patent battles at home, and using inflammatory tactics to pressure Chinese brands and push foreign competitors out of the market.
So far, however, there has been no particularly successful case. The main force capable of creating a real chilling effect remains geopolitical pressure.
Taiwanese IC design firms say that over the past year or so, most chipmakers have already learned to adjust supply chains and shipping destinations for different end markets, making supply-chain segmentation the new normal. Only in a small number of chip products and applications that Beijing regards as absolutely non-negotiable have moves to displace overseas vendors become especially pronounced.
The chilling effect may spread gradually to more applications in the future, but for now sources say the pressure outside cloud AI remains within a manageable range.
Article translated by Lily Hess and edited by Ysi Chen
