Recent data shows that China’s dominance in the legacy chip market is growing as U.S. export controls fail to restrict its production.

While the U.S. and its allies have been focusing on controlling China’s access to advanced chips for cutting-edge applications, Chinese chip production in the first quarter of this year increased by 40%.

According to TrendForce, mainland Chinese firms could account for 33% of the legacy chip market by 2027.

Analysts suggest that China’s potential success in this market is a result of its support for strategic sectors, aiming to secure its industrial supply chain.

Despite export restrictions imposed by the U.S., Chinese chip manufacturers are turning to the production of less advanced chips in order to start their operations and gradually scale up.

However, concerns have been raised about oversupply and potential price wars in the chip market.

Additionally, some U.S. allies continue to sell chipmaking tools to China, making it challenging for non-Chinese companies to compete.

The Biden administration has allocated funds to expand local chip manufacturing in an effort to address this issue, but whether these efforts will be sustainable remains uncertain.