Shanghai Semiconductor Device Research Institute is on the verge of having its legal status cancelled as the court completes the liquidation process. Established during the planned economy era of the last century, this research unit is ultimately coming to an end due to depleted funds and stagnant operations. Industry insiders point out that the closure of the institute is not an isolated case, but a continuation of the comprehensive contraction of China’s semiconductor research system.
According to the announcement by the Third Intermediate People’s Court of Shanghai, Shanghai Semiconductor Device Research Institute has been approved to enter bankruptcy liquidation due to insolvency. Established in the 1970s, it was once an important base for early semiconductor process research in China. The liquidation notice states that the unit has not conducted substantial business for many years, lacks stable sources of income, and during the performance of its duties, the liquidation team did not take over any cash assets, with only one creditor reporting a debt of 14.13 million yuan. The court confirmed the liquidation report on October 30, deeming it to meet the conditions for bankruptcy.
The bankruptcy of the institute is seen as a turning point in the marketization of China’s research system. Several technology industry experts have pointed out that these state-owned research units have generally stalled after the reduction of administrative funding, reflecting a structural contradiction between corporate research and market mechanisms. Mr. Ge, an observer of technology in Beijing, told reporters that the closure of this institute is not an isolated case, stating, “China’s research system has long relied on administrative budgets without an independent economic cycle. After the decrease in funding, research activities naturally shrink.”
The institute, formerly under the Ministry of Electronics Industry, was involved in satellite communication and aerospace electronic component development and was one of the earliest units in China to conduct research on integrated circuits and MOS technology. After the 1980s, with research tasks shifting and personnel flowing out, the institute’s production line gradually shut down, ceasing research activities by 2010. The remaining personnel mainly engaged in equipment maintenance and asset inventory. After the completion of the liquidation process, its legal status will be cancelled, and the factory area and equipment assets will be transferred under court supervision.
Shenzhen semiconductor industry analyst Lin Heng (pseudonym) told reporters that this bankruptcy signifies the contraction of the state-owned research system, stating, “China’s policy focus is shifting from research institutes to enterprise-led initiatives. Units like research institutes lack competitiveness under market economic conditions and are unable to attract capital.”
In the global semiconductor competitive landscape, China has long lagged behind major countries such as the United States, Japan, and South Korea. According to industry association data, although China’s chip self-sufficiency rate has risen to 30% under policy stimulus, it still relies on external supply chains for high-end processes. More than 80% of domestic wafer manufacturing equipment needs to be imported, and core lithography technology is completely dependent on foreign sources. Analysts in the industry have pointed out that China’s chip research focus has long been on “catch-up programs,” lacking independent technological paths and long-term basic research. A senior engineer in Beijing told reporters, “Our research is more project-driven rather than technology-driven, resulting in disbandment of teams and projects not being sustainable once the cycle ends.”
Since 2024, several semiconductor projects have been halted due to broken funding chains or policy changes, with some companies withdrawing IPO applications. In June 2025, AMS announced the failed restructuring of a 12-inch wafer plant, becoming a typical case of the burst of investment in local chip making in China. It is widely believed in the industry that the semiconductor industry is entering a “defoaming” stage, with research institutes being the first to be liquidated after the retreat of policy guidance and capital fervor.
Lin Heng stated that the problem in China’s semiconductor industry lies in the misalignment of policies and the market, saying, “The research system has not established a sustainable innovation chain, and once the national mission is completed, the institutions within the system lose their basis for existence.”
Some netizens commented, “It’s not that research has failed, but rather the old system can’t sustain itself.” Others wrote, “An era is finally being liquidated, even research institutes have become historical relics.”
The bankruptcy of Shanghai Semiconductor Device Research Institute marks the official exit of the research system from the planned economy era.