Key Takeaways
- China is significantly lowering prices in the semiconductor industry, with silicon carbide wafers dropping from USD 1,500 to USD 500.
- The expansion of China’s chip production is driven by state-backed support and equipment that can evade U.S. export controls.
- Overcapacity concerns are rising as Chinese foundries increase their share of the mature process chip market, projected to exceed 25% by the end of 2025.
China’s Semiconductor Market Expansion
A report from ijiwei, sourced from Nikkei, indicates that China is rapidly enhancing its production capabilities in the mature semiconductor and niche substrate markets, leading to unprecedented price reductions that impact the global chip industry. A sales director from a German semiconductor equipment manufacturer noted that two years ago, Wolfspeed’s 6-inch silicon carbide (SiC) wafers sold for USD 1,500 each. Currently, Chinese suppliers are offering similar wafers for as low as USD 500 or even less, putting considerable price pressure on competitors.
China’s growth in the semiconductor sector is largely fueled by government-backed initiatives to strengthen its domestic supply chain. The focus is particularly strong on SiC and compound semiconductors, as well as mature-node chips, which are widely used in various electronic applications. The country’s expansion in SiC wafer production is bolstered by the availability of manufacturing equipment outside the jurisdiction of U.S. export controls, enhancing accessibility and production capabilities.
In light of increasing competition from low-cost Chinese chips, Wolfspeed’s CEO, Gregg Lowe, resigned at the end of 2024, attributing the decision to declining financial performance amid intensified market pressures. Similarly, Japanese SiC wafer manufacturers like ROHM have reported consecutive quarterly losses since mid-2024, highlighting the challenges posed by China’s aggressive pricing strategies.
Mature Node Production Concerns
As Chinese companies ramp up their mature-process chip production, concerns over overcapacity are mounting. The influx of Chinese electronics and automotive firms entering the semiconductor manufacturing space further exacerbates this issue. TrendForce predicts that by the end of 2025, Chinese foundries will account for over 25% of the mature process capacity among the top ten manufacturers, driven by significant advancements in 28/22 nm production. Additionally, Chinese foundries are making strides in specialty process technologies, particularly through the high-voltage (HV) platform, with 28 nm chips already in mass production as of 2024.
The growing presence of Chinese suppliers in the global semiconductor market illustrates a shift that may challenge established companies while reshaping the competitive landscape in the chip industry.
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