Key Takeaways
1. By 2030, Mainland China’s semiconductor foundry capacity is projected to reach 30%, surpassing Taiwan’s stable 23%.
2. China’s growth is driven by state-supported funding, particularly from the “Big Fund,” which supports domestic companies like SMIC and Hua Hong Semiconductor.
3. Three new fab projects in China are set to begin in 2025, focusing on crucial mature nodes (8 nm to 45 nm) for various industries.
4. China faces challenges in producing leading-edge products, with SMIC struggling to achieve consistent 5 nm processes while competitors advance to 2 nm.
5. The shift in global semiconductor capacity reduces reliance on Taiwan and shows that market share does not guarantee technological leadership.
According to new estimates from Yole Group, it appears that Mainland China is on track to surpass Taiwan in the global semiconductor foundry capacity by the time this decade concludes. The research company anticipates that by 2030, China will hold 30 percent of the worldwide capacity, an increase from 21 percent this year. Meanwhile, Taiwan’s share is expected to remain stable at about 23 percent. South Korea, Japan, and the United States follow behind with shares of 19 percent, 13 percent, and 10 percent, respectively.
The Driving Force Behind Change
The reason behind this transformation is largely due to Beijing’s “whole-nation” approach. The state-supported funding from the China Integrated Circuit Industry Investment Fund—commonly referred to as the “Big Fund”—has played a significant role in establishing national players like Semiconductor Manufacturing International Corp (SMIC) and Hua Hong Semiconductor. Currently, domestic companies are responsible for around 15 percent of China’s foundry output, and Yole forecasts that this percentage will increase significantly as new fabs become operational.
Construction Trends Align with Projections
Data regarding construction backs up these predictions. SEMI, a U.S. industry group, has reported that three new fab projects in China are expected to commence in 2025, which accounts for one-sixth of the total worldwide. Many of these projects are aimed at mature nodes ranging from 8 nm to 45 nm, a capacity that remains crucial for automotive, industrial control systems, and the growing Internet-of-Things market.
Challenges Ahead for China
However, China faces challenges when it comes to leading-edge products. SMIC has not yet proven a consistent 5 nm process, two years after it launched its first 7 nm chips in Huawei devices. On the other hand, Taiwan Semiconductor Manufacturing Co. and Samsung Electronics are pushing rapidly towards mass production at 2 nm. Lacking similar lithography tools—due to U.S. export restrictions—Chinese fabs are likely to concentrate on volume production instead of cutting-edge density.
In conclusion, the shift in capacity is significant. It diminishes the global reliance on a few Taiwanese locations and indicates that merely having market share does not assure technological dominance anymore.
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