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China Strives to Break Through U.S. Restrictions in Mature Processes, Aiming for Over 30% Global Share by 2027
Despite the U.S. sanction on the semiconductor industry in China, China is still positively looking for further development.
Following our discussion on the shifts of Chinese wafer fabs in the previous article (China’s Wafer Fabs Hits 44 with Future Expansion 32, Mainly Targeting on The Mature Process), this article focuses on the application of 8-inch and 12-inch wafers, as well as provides detailed account of Chinese foundries’ strategic positioning in the landscape.
From a cost perspective, producing a 12-inch wafer incurs approximately 50% more cost than an 8-inch wafer. However, the chip output from a 12-inch wafer is nearly triple that of an 8-inch wafer, leading to a cost reduction of roughly 30% per chip. As manufacturing processes improve and yields increase, the cost of 12-inch wafers is expected to further decline in the future.
In terms of applications, a clear distinction emerges between 12-inch and 8-inch wafers. The versatility of 12-inch wafers is evident, covering a broad range of practical applications. As depicted in the table below, 8-inch wafers are primarily utilized for mature and specialized processes, focusing on the 0.13-90nm range.
8-inch wafers’ downstream applications are concentrated in industrial, mobile, and automotive sectors, encompassing power devices, power management chips, non-volatile memory, MEMS, display driver ICs, and fingerprint recognition chips, among others. The surging demand for power devices in automotive electronics and industrial applications has been a key driver for recent production expansions.
Currently, the market demand for 8-inch wafers remains robust. However, there is a trend of decreasing 8-inch production lines in the market. This shift is primarily due to the industry’s mainstream adoption of 12-inch wafers. Given the significant capital required to establish 12-inch wafer fabs (often exceeding billions of US dollars), many foundries are reevaluating their 8-inch wafer production lines. These lines face challenges such as outdated equipment (mostly sourced from the second-hand market), upgrades difficulties, and lower returns compared to 12-inch wafers. Consequently, an increasing number of major companies are transitioning their focus from 8-inch to 12-inch wafers.
While the quantity of 8-inch wafer fabs is far less than that of 12-inch wafer fabs, their presence is significant. According to data from SEMI, China has maintained rapid development in 8-inch wafers. It is projected that by 2026, China’s market share in 8-inch wafers will increase to 22%, with a monthly production capacity reaching 1.7 million wafers, ranking first globally. By the end of 2025, companies including Huahong, Sien, Silan, Yangdong Microelectronic, GTA Semiconductor, SMEIIC, Zkjx, Hwdz, and Eaerkey are expected to establish a total of nine new 8-inch wafer fabs.
China’s Semiconductor Focus: 33% Mature Process Capacity by 2027
Based on product requirements, we can categorize semiconductor processes into specialty processes and logic processes. Logic processes further divide into mature processes (28nm and above) and advanced processes (nodes below 28nm, primarily 16/14nm and below).
Considering the current scenario, challenges in advanced process technology and high expenditures have confined major players in advanced processes to Intel, TSMC, and Samsung. This year, Samsung and TSMC announced the mass production of 3nm processes, marking the most advanced nodes currently available. Examining China’s situation, the semiconductor industry, having started relatively late, is currently focusing on mature and specialty processes due to factors like equipment and material limitations and changes in the international landscape.
It’s worth noting that, apart from Chinese wafer fabs intensively researching mature processes, many major companies have started to reverse their focus on mature processes in the past two years. Companies such as TSMC, Samsung, Intel, UMC, and GlobalFoundries are actively expanding their mature process capacities.
Among them, UMC’s bet on mature capacities is unprecedented. It became the world’s first wafer foundry to announce leaving research and development of advanced processes. Since 2018, UMC has strategically focused on improving the company’s return on investment, particularly targeting processes of 28nm and above.
According to TrendForce, the compound annual growth rate of global semiconductor foundry capacities from 2021 to 2024 is expected to reach 11%. 28nm capacity is expected to be 1.3 times that of 2022 by 2024, making it the most actively expanded node in mature processes. It is anticipated that more applications of specialty processes will transition to 28nm. Moreover, from 2021 to 2024, the global capacity of mature processes (28nm and above) is expected to maintain a stable share of over 75%. This indicates the potential and significance of positioning in the mature process and specialty process markets.
TrendForce predicts that, with the expansion of mature process capacities below 28nm, mature process capacities are expected to account for 70% of the top ten foundries’ capacities by 2027. China is expected to hold 33% of mature process capacities in 2027, with the possibility of continuous upward adjustments.
(Image: SMIC)
