china's chip surge: poised to dominate mature market by 2027
Beijing, Thursday, 27 February 2025.
despite us efforts to curb china’s access to advanced semiconductors, china is set to control 39% of the global mature chip market by 2027. this rapid expansion is driven by significant investments and a focus on domestic supply chains. chinese suppliers are already offering silicon carbide wafers at prices three times lower than us competitors, causing major shifts in the global semiconductor landscape. this growth positions china as a major player, potentially impacting companies worldwide.
competitive pricing strategies
Chinese suppliers are aggressively undercutting global competitors [2]. For example, silicon carbide wafers, essential for aerospace and electric vehicles, are now offered by Chinese vendors for as low as $500, a staggering difference compared to the $1,500 charged by Wolfspeed, a leading U.S. manufacturer, just two years ago [2][4]. This price disparity, a 66.667 or 66.67% reduction, is placing immense pressure on global manufacturers and reshaping market dynamics [2].
smic’s revenue surge
Semiconductor Manufacturing International Corp (SMIC) reported revenue of $8 billion in 2024 [1]. This represents a doubling of its revenue since 2018 [1]. This growth is attributed to a strategic shift towards mature chip manufacturing, capitalizing on the demand for these components in various sectors [1]. SMIC’s success highlights the effectiveness of focusing on mature technologies amid restrictions on advanced semiconductors [1]. This revenue increase demonstrates a significant shift in the semiconductor market [1].
analyst perspectives on the ‘china shock’
Needham’s chip analyst, Charles Shi, warns of a potential ‘China Shock’ in the mature chip market [1][2]. This echoes concerns from China’s entry into the WTO [4]. Shi anticipates increased urgency among policymakers in the U.S., Europe, and Japan as China’s fabrication plants come online [1]. Galen Zeng, an IDC semiconductor analyst, notes that Chinese firms’ capacity expansion will outpace global counterparts due to domestic localization efforts [4]. These perspectives suggest a need for strategic adjustments by international players [1][4].
global market implications and responses
Taiwanese companies are feeling the pressure, with some executives describing the situation as a ‘bloodbath’ [2]. Some foreign chip manufacturers serving the Chinese market are now turning to mainland Chinese foundries for production [2]. This shift is driven by cost advantages [2]. The U.S. government is considering stricter semiconductor restrictions and pressuring allies to follow suit [4]. China’s Foreign Ministry has criticized these measures as hindering the global semiconductor industry [4].
domestic advancements and self-sufficiency
China is making strides in establishing a domestic semiconductor supply chain, particularly in less advanced but critical components [2]. TechInsights data indicates that the share of locally produced chips in China rose from approximately 15% before the COVID-19 pandemic to over 20% in 2024 [2]. This progress is supported by substantial government funding and the creation of a comprehensive semiconductor production ecosystem [6]. These efforts aim to achieve greater self-sufficiency in chip production [5].