Recently, the American semiconductor market seems to have reached new heights. In the third quarter of 2024, the sales of chips in the U.S. achieved a remarkable two-time championship, successfully surpassing China's market and taking the crown as the largest single market globally.

The reasons for this surge are crystal clear: the U.S. is pouring massive amounts of investment into artificial intelligence (AI) and high-end chips, flooding the market with terms like "generative AI" and "high-end storage," leading to a scene of prosperity. In stark contrast, China's semiconductor sales during the first three quarters of 2024 reached a mere $135.8 billion, representing about 30% of the global market, placing it in second position. However, a closer look at the data reveals that Chinese chip manufacturers are bustling with activity: Semiconductor Manufacturing International Corporation (SMIC) set a record with quarterly revenue, Northern Huachuang saw a profit surge, and Shanghai Simgui Technology posted rapid growth. It’s safe to say these results don’t resemble those of a "loser" in the race.

Nonetheless, questions arise about whether the U.S. chip boom signals a new leadership in the market or is merely a "false fire." What defenses can China's semiconductor industry employ to remain steady amid these changes?

Can America’s chip frenzy truly secure a lasting victory? At first glance, America's chip "comeback" appears to have reinstated its dominance in the market. However, upon deeper reflection, one might ponder the sustainability of this "hasty growth."

Despite the glamorous facade of the American chip market, there are several lurking pitfalls:

The skyrocketing investment in AI raises doubts about market absorption. The reason for America overtaking the market is largely attributed to the “computing power frenzy” brought on by generative AI. However, while production capacity for high-end chips expands at an incredible rate, traditional markets like smartphones and personal computers are not keeping pace. Ultimately, this suggests that the current boom is "top-heavy." Should the AI bubble burst, the problem of oversupply within the chip industry could trigger an immediate crisis.

Additionally, how long can capital fever sustain companies like NVIDIA? As the primary beneficiary of the current AI chip wave, NVIDIA reports an astonishing market capitalization of $3.39 trillion, nearly four times that of Taiwan Semiconductor Manufacturing Company (TSMC). However, the question remains: where are its profits? For 2024, NVIDIA's profit sits at just $4.37 billion, a stark contrast to its overall market value growth. This type of "bubble-like escalation" is hardly indicative of long-term stability.

The substantial subsidies from the U.S. government have indeed activated the market in the short term, but they also risk creating excessive dependence on policy benefits among firms. Should these subsidies diminish, the industry may face threats of financial collapse. In essence, the "prosperity" of America's chip sector appears precariously constructed on "giant sandcastles" built upon short-lived policy gains.

Chinese firms being edged back to second place globally does not necessarily equate to falling behind. While the U.S. has celebrated two consecutive victories, Chinese semiconductor sales still capture nearly 30% of the worldwide market. The burgeoning demand from emerging sectors like automotive electronics, IoT, and AI servers in China further underscores the resilience of its industry. Coupled with China’s massive domestic market, even amid international competitive setbacks, the semiconductor industry in China shows signs of steady growth.

SMIC has reported revenues exceeding $2 billion, making it the third largest chip foundry globally; Northern Huachuang’s profits soared by 54.72%, maintaining the highest shipment volumes for advanced process equipment in China. Furthermore, companies like Shanghai Simgui Technology and Zhongwei have been narrowing the gap with international giants in the semiconductor equipment sector. These figures illustrate that the technological strength and market competitiveness of Chinese chip manufacturers have not diminished; rather, they are thriving under pressure.

The competition in the chip industry is far from a straightforward battle of “who is stronger, who is weaker.” Instead, it resembles a multi-participant game of strategy among various players.

Market fragmentation is evident, exacerbated by the East-West conflict within the industry. As the U.S. increases its technological restrictions against China, the global chip supply chain clearly exhibits signs of division. China is accelerating its push for domestic alternatives, while the U.S. reinforces local manufacturing through subsidy policies. This "everyone-for-themselves" scenario is likely to persist for quite some time.

Nevertheless, new market opportunities are emerging for China, even in the face of heightened tensions between China and the U.S. Chinese chip companies are increasingly making significant inroads in other regions, notably Southeast Asia and the Middle East. In 2024, China's exports of chips to countries along the "Belt and Road" initiative grew by over 35%. This indicates that global market demands are offering more avenues for Chinese chip production, simultaneously diminishing America's market “monopoly.”

So how can China mount a successful comeback in this competitive landscape? The "short-lived frenzy" in the U.S. chip sector may not result in a lasting secure dominance, urging China to maintain an advantage by focusing on several critical points:

First, addressing shortcomings and transitioning from a "reactive chase" to "autonomous control." China's semiconductor industry continues to grapple with deficiencies in high-end areas such as lithography and advanced manufacturing processes.

In 2024, breakthroughs in EUV lithography technology marked significant strides, yet the journey towards full self-sufficiency remains ongoing. Continuous investment in core technologies and essential materials is essential for China's full-scale "breakthrough" in the semiconductor landscape.

Talent acquisition is vital as well; the technology race fundamentally hinges on talent. Current data points to a shortage of 500,000 professionals in China’s semiconductor field in 2024. Attracting high-caliber research talents and nurturing domestic technical teams will dictate the future competitiveness of China's chip industry.

Additionally, international collaboration through “openness” can shatter existing barriers. In the broader context of globalization, "openness" is a powerful tool for overcoming technological blockades. From Southeast Asia to Europe, Chinese chip companies can leverage their technological cost-effectiveness to partner with numerous countries, boosting market share. Through trans-regional innovation and collaboration, Chinese semiconductors could gain a proactive stance in global competition.

Ultimately, the chip war will rely heavily on long-term strategies. Though the current peak of the U.S. chip market may usher it back into the limelight, the underlying uncertainties lurking behind this rapid growth must be acknowledged. On the other hand, even while facing external pressures, China’s semiconductor industry continues to advance steadily, driven by domestic market demand and inherent technological resilience, showcasing strong potential for "latecomer advantages."

The ultimate rule of competition in the global tech landscape is straightforward: the true winner is who can endure until the end. In this pivotal semiconductor race that holds the future in the balance, China may have started later, yet is laying a strong foundation for increased momentum, solidifying its place in the global arena.