A look at Shanghai's status as China's chip hub: SMIC and SMEE making 14nm and 90nm chips, ~$36.95B market size in 2021 or ~25% of China's total, and more
Jiaxing Li / South China Morning Post : Tweets: @pstasiatech Tweets: Paul Triolo / @pstasiatech : Shanghai emerges as China's semiconductor highland City has emerged as a centre for China's most competitive chip players, including SMIC and SMEE https://www.scmp.com/... via @scmpnews
Context & Ripple Effects
This SCMP profile lands mid-arc: SMIC had just posted its record $5.4B 2021 revenue while adding capacity under US sanctions, and weeks later a teardown showed it quietly shipping 7nm chips. The piece answers the geographic question behind those results — Shanghai, where SMIC runs 14nm production and equipment maker SMEE builds 90nm lithography, in a market worth about $36.95B, roughly a quarter of China's total.
The hub framing also sets up what followed: China's stated focus on basic, high-demand chips like microcontrollers and power semiconductors, then the national output surge the statistics bureau recorded in Q1 2024. Shanghai is where the most competitive pieces of that buildout sit.
First-order effects
- US sanctions aimed at SMIC land squarely on Shanghai: the city hosts the foundry's most advanced lines and its domestic equipment champion SMEE, so export-control pain and any capacity response concentrate there instead of spreading across China's chip map.
- Shanghai's ~25% share of China's semiconductor market means SMIC's expansion decisions — made after 2022 revenue grew 34% before an expected Q1 dip ([[a:835468]]) — effectively set the pace of the national buildout.
Second-order effects
- Supply-security-minded Chinese buyers route orders to SMIC regardless of node, reinforcing the legacy-chip strategy Beijing laid out in mid-2022 and feeding the 40% YoY jump in integrated circuit output the country later recorded.
- Rival Chinese cities must either specialize around Shanghai's foundry-plus-equipment cluster or bid against it for the same fabs, talent, and subsidies, raising the cost of the self-reliance push.
Third-order effects
- Concentrating advanced nodes and the domestic lithography supplier in one city creates a single sanctions chokepoint: disruption in Shanghai would propagate through the entire self-reliance program — the concentration risk embedded in the 120% rally in SMIC's Shanghai-listed shares.
- If the pattern holds, China's chip industry consolidates into regional highlands pairing foundries with domestic equipment makers, rather than distributing capacity across provinces — a structural bet that proximity beats redundancy.
The trend: Under sanctions pressure, China's semiconductor industry is consolidating into geographically concentrated hubs where leading foundries and domestic equipment makers co-locate.