This paper analyzes the internal mechanisms for facilitating the domestic and international circulation of industrial chains under the new development pattern through the innovation of intermediate goods, from the perspective of intermediate goods and by constructing a game theory model. Two scenarios are examined: one in which intermediate goods are monopolized by a foreign manufacturer, and the other in which intermediate goods are produced simultaneously domestically and abroad. Building on this, the paper discusses how to incentivize innovation in intermediate goods to elevate the value chain. Our findings indicate that achieving breakthroughs in the innovation of intermediate goods domestically can structurally alter the profit distribution pattern within the industrial chain, potentially changing the impact of intermediate goods trade costs on various economic variables and helping to mitigate risks associated with the domestic and international circulation of the industrial chain. Furthermore, the paper finds that altering certain external economic conditions can effectively enhance firms’ willingness to engage in the innovation of intermediate goods.