Abstract: The current "neck-sticking" dilemma in China is not merely sanctions on specific enterprises or technological fields, but the comprehensive blockade of the industrial chain and innovation chain by the Western countries with the United States as the leader. Derivative technological innovation around key core technologies and building a complete technological ecosystem based on the industrial chain represent fundamental approaches to comprehensively breaking through the "neck-sticking" dilemma. However, current literature on how focal firms' key core technology affects derivative technological innovation in the industrial chain is relatively limited, making the industrialization of key core technology lack theoretical guidance. Based on the perspective of innovation diffusion, we propose an analytical framework for the diffusion path of key core technology and its derivative technology innovation, and discuss its process mechanism, influencing factors and implementation path. This article takes A-share listed companies as research objects and identifies key core technology through their patent information, so as to obtain a list of focal firms owning key core technology. Subsequently, we obtain the basic information and patents of suppliers and customers for these focal firms and identify whether these patents are derivative patents around the key core technology based on their technology areas. Based on the finally available 699 year-firm unbalanced panel observations of 142 firms over the period 2008-2020, the empirical research is conducted using a regression method. It is found that the key core technology acquired by the focus enterprise might significantly promote the derivative technology innovation of the industrial chain. Among them, the focal firms can push the derivative technology innovation of upstream suppliers after acquiring key core technologies, but their influence on downstream customers is limited. Further heterogeneity analysis shows that the innovation model of collaborative R&D and the bargaining power of focal firms may strengthen the promotion effect of key core technologies on derivative technology innovation. Stringent intellectual property rights protection also hinders the innovation of derivative technologies, while the moderating effect of geographic proximity is not significant. Contributions are reflected in the following aspects: (1) The findings of this study provide theoretical support for whether and how derivative technology innovation can be promoted after the breakthrough of key core technology. Existing literature mostly analyzes the motives and paths of derivative technology innovations spawned by key core technology in a qualitative manner, which lacks empirical evidence. We argue that not only the single-point breakthrough from "0 to 1" but also the subsequent derivative technology innovation from "1 to N" should be emphasized to break through the "neck-sticking " dilemma. We thus advance theoretical research on "neck-sticking" technology by testing that focal firms could construct a technological ecosystem from the perspective of innovation diffusion after acquiring key core technology. (2) We have broadened boundaries regarding the mechanism of innovation implications in industrial chains. Unlike previous studies that focused on how the innovation capability of suppliers or customers affects the innovation behavior of focal firms, the study shifts the lens to focal firms and focuses on how innovation breakthroughs of focal firms affect derivative technology innovations of upstream and downstream firms in the industry chain. (3) The study constructs information flow in the innovation diffusion process of key core technology and sheds light on how key core technology promotes derivative technology innovation through the flow of technology, information and personnel, thus enriching the study on spillover paths in innovation diffusion research. In summary, we have provided theoretical support for the diffusion of innovation of key core technology and the construction of the technological ecosystem of the industrial chain, as well as a reference basis for industrial innovation practice and policy formulation.