China’s semiconductor industry is regrouping and launching an offensive after being affected by U.S. technology sanctions. Despite these restrictions, Huawei maintained its lead in the global telecommunications equipment market last year with a 31.3% market share and earned $560 million from patent royalty income in 2022. This resurgence is marked by a series of strategic moves and legal battles aimed at reclaiming technological ground.

On July 19, Japan’s Nihon Keizai Shimbun (Nikkei) analyzed, “Huawei appears to have actively engaged in patent lawsuits to increase revenue after being hit by U.S. sanctions.” This statement comes in the wake of Huawei filing a lawsuit against Taiwanese firm MediaTek for patent infringement. MediaTek, which surpassed U.S. company Qualcomm in the first quarter of this year to become the global leader in mobile AP chip shipments, now faces significant legal challenges from Huawei.

Huawei holds the most wireless communication-related patents in the world, with about 20% of global patents in the 5G sector. The company has entered into cross-licensing agreements with major companies like Samsung Electronics and Ericsson, and developed its AI accelerator “Ascend” series using its own technology. These moves underscore Huawei’s strategy to leverage its extensive patent portfolio to generate revenue and maintain its market position.

In a related development, Nvidia has been selling the H20, an AI semiconductor specifically designed for the Chinese market with reduced performance, in China since the first quarter of this year. The Global Times quoted a semiconductor expert saying, “The Chinese market is gradually evolving into one that does not need Nvidia,” and reported, “Lower-performance (Nvidia) products will eventually face competition.” This sentiment reflects the growing confidence within China’s semiconductor industry, which is increasingly focusing on self-reliance and innovation.

China’s largest memory semiconductor company, YMTC (Yangtze Memory Technologies), has also taken legal action by filing a lawsuit against U.S. company Micron for patent infringement in the Northern District Court of California. YMTC claims that Micron infringed on 11 of its patents in advanced 3D NAND and DRAM products. The U.S. Department of Commerce added YMTC to its export control list in 2022, further complicating the competitive landscape.

In a recent interview with Chinese state media CGTN, YMTC Chairman Chen Nanxiang stated, “The Chinese semiconductor industry has not yet reached explosive growth,” but expressed optimism about the future, adding, “In the next 3 to 5 years, China will find a way to overcome U.S. technology restrictions.” Analysts suggest that China’s semiconductor industry is gradually regaining confidence through advancements in new semiconductor technologies such as AI and advanced packaging.

The backdrop to these developments is the ongoing U.S.-China trade war and technology sanctions, which have significantly impacted China’s semiconductor industry. The U.S. has imposed a series of technology sanctions on China, particularly targeting its semiconductor sector, as part of a broader geopolitical struggle aimed at curbing China’s technological advancements.