Efforts by the Beijing-backed Semiconductor Manufacturing International Corporation, or SMIC, to break through innovation barriers have landed it in a geopolitical tech battle.

While the 65-nanometer machine still lags behind international competitors like Dutch firm ASML, which produces chips with resolutions as small as 8 nanometers, the government’s support for domestic technology marks an important development in China’s semiconductor ambitions.

Shares in several Chinese companies linked to the semiconductor industry surged on Wednesday, driven by investor excitement over a government list that some interpret as signaling progress in China's efforts to develop domestic chipmaking technology.