Using an analytical framework of the global production network (GPN), the present paper examines the external environment and the internal dynamics of China s integrated circuit (IC) industry. We analyze the transition of China s IC industry from a state-led integrated device manufacturers' model to deeper integration into the GPN. We also explore the technological sources, the upgrading dynamics as well as the positioning of different nodes of China s IC industry in the GPN. We conclude that the “East Asia model” of gradual industrial upgrading might not apply anymore in the new era of GPN. High-technology industries can now be upgraded based on a parallel evolution model. Policy implications for China's high-technology industrial upgrading strategies are drawn from our analysis.