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Outlook still positive for China’s semiconductor sector with shift to mature processes
SMIC will likely have to delay expansion plans in its Beijing and Shanghai fabs.
China’s semiconductor expansion in mature processes remains strong despite the slew of export restrictions limiting the economic giant’s access to key chipmaking equipment and technology, TrendForce said in a note.
The global market intelligence provider forecasted the market share of Chinese foundries, in terms of 12-inch wafer production capacity, will grow from 24% last year to around 26% or even as much as 28% of global production in 2026.
It said Chinese foundries have been focusing on developing mature processes like 55nm, 40nm, and 28nm, a segment that is not the primary target of the export controls imposed by the US, Japan, and the Netherlands.
The latest restrictions came from the Netherlands that will soon require local firms to apply for a licence before exporting select advanced chip manufacturing equipment overseas beginning 1 September.
While this will affect processes like photolithography, deposition, and epitaxy, TrendForce said concerns on expansion and development should be minimal as local Chinese vendors can meet the demand for deposition equipment, while manufacturers may still feel the pinch on restrictions on photolithography equipment.
“Even though Chinese foundries will likely face a lengthy equipment review process, forcing them to delay their expansion plans for 40nm and 28nm processes, their ambitious positioning in the 28nm market ensures their development pace remains strong,” it said.
It also noted how the US Export Administration Regulations mainly target China’s progress in advanced processes rather than mature processes.
Although advanced processes like 1Xnm are not the main focus of Chinese foundries currently, TrendForce warned that the export controls could limit the sector's potential growth in this area.
China’s largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC) is expected to bear the brunt of the restrictions as its Beijing and Shanghai fabs will have to delay their expansion plans while their equipment vendors face lengthy approval processes.
Disruptions will likely be less severe for Nexchip Semiconductor and its fabs in Hefei given its short-term production focus on mature processes, said TrendForce.
