Xi Declares Chip 'Breakthrough': Fortifying Power at Home, Signaling Long-Game on Taiwan

BEIJING — President Xi Jinping used his New Year’s Eve address to claim a decisive victory in China’s technological cold war with the West, announcing a "new breakthrough" in domestic semiconductor self-development. The announcement serves a dual strategic purpose: it aims to shore up Xi’s domestic political standing against economic headwinds and signals a future reduction in Beijing’s reliance on Taiwanese silicon—a shift that fundamentally alters the long-term risk calculus for a potential blockade of the island.

Speaking on state broadcaster CCTV, Xi framed the development as a validation of his controversial "whole-of-nation" approach to overcoming U.S. export controls. While specific technical details were omitted from the speech, industry analysts and state media reports confirm the breakthrough involves the successful operation of a domestic Extreme Ultraviolet (EUV) lithography prototype by state-backed institutes in Shenzhen.

Breaking the Monopoly Control over EUV technology—previously the exclusive domain of Dutch firm ASML—is the primary choke point Washington has used to stifle China’s military and economic modernization. Without EUV, manufacturing the sub-7nm chips required for advanced AI and weapons systems is virtually impossible.

By confirming that Chinese engineers have generated the necessary ultraviolet wavelengths to bypass Western supply chains, Xi is signaling that the U.S. containment strategy is porous. This "Manhattan Project" style effort, coordinating Huawei and state optics institutes, provides Xi with a critical political win. Amidst a slowing economy and trade tensions, the breakthrough offers tangible proof that his "new productive forces" strategy is yielding results, likely dampening internal criticism and fortifying his leadership position within the CCP—a key indicator for observers tracking leadership stability through 2026.

The 'Silicon Shield' Variable For geopolitical observers monitoring the Taiwan Strait, the announcement adds a complex variable to the timeline of potential conflict. Taiwan’s dominance in advanced chip manufacturing—the so-called "Silicon Shield"—has long been viewed as a deterrent against a Chinese invasion or blockade, as any disruption would devastate China’s own economy.

However, the timeline for commercializing this breakthrough suggests the "Shield" remains intact for the immediate future. While the prototype proves scientific viability, mass production is projected for the 2028-2030 window.

This creates a strategic paradox for the near term (through 2025). On one hand, China’s inability to mass-produce these chips today means it remains heavily dependent on imports, making a blockade of Taiwan economically suicidal in the short run. On the other hand, the confirmed trajectory toward self-sufficiency suggests that Beijing is systematically dismantling the economic barriers that currently deter military action.

Validation of Resilience Western analysts caution that scaling from a prototype to high-yield commercial manufacturing is a hurdle that has historically taken years to clear. Nevertheless, Xi’s high-profile embrace of this milestone is a clear message to Washington and domestic audiences alike: the technological siege is failing, and Beijing is playing a long game that points toward eventual autarky.