As leading corporations in the global foundry (semiconductor contract manufacturing) market such as TSMC and Samsung Electronics scale back legacy (older) businesses like the 8-inch (200 mm) process to focus on advanced nodes, China's SMIC and Hua Hong Semiconductor are said to be tightening the reins to expand market share. With demand rising for power semiconductors and other chips made on older processes amid the growth of the artificial intelligence (AI) industry, analysts say Chinese foundry corporations are poised to benefit.
According to the industry on the 19th, TSMC has notified customers that it will shut down 6-inch (150 mm) and 8-inch process production lines next year. Samsung Electronics is also expected to scale down some production lines running on 8-inch. Market research firm TrendForce forecast that due to reductions in 8-inch wafer capacity at TSMC and Samsung Electronics, global 8-inch wafer output this year will fall about 2.4% from a year earlier.
Although the 8-inch process yields fewer chips per wafer than the current mainstream 12-inch (300 mm), it favors high-mix, low-volume production, making it a focus for midsize and small foundry companies. Power semiconductors used in home appliances, automobiles, and data centers are mainly produced on 8-inch lines. As the AI industry grows, the number of chips per device increases, and demand for power control rises, driving demand for the process. TrendForce expects prices for older nodes to increase by about 5% to 20% this year.
TSMC, Samsung Electronics, and others are concentrating resources on more profitable advanced nodes. In an earnings conference call on the 15th (local time), TSMC said it will invest $52 billion to $56 billion (about 76 trillion to 82 trillion won) in capital expenditures (CAPEX) this year to meet AI demand. That is more than 20% above market expectations for CAPEX. The company also raised its revenue growth rate target through 2029 to 25% from the previous 20% annual average. Samsung Electronics, speeding up orders from global big tech clients at 3-nanometer (nm; 1 nm is one-billionth of a meter) and below, is also focusing on those nodes.
Against this backdrop, Chinese foundry corporations are emerging as alternatives that can meet 8-inch demand. In China, SMIC, Hua Hong Semiconductor, and CR Micro currently offer the process. SMIC is understood to have raised 8-inch process prices by around 10% amid surging demand, while Hua Hong Semiconductor's 8-inch line utilization reportedly approached 100% in some lines as manufacturing orders concentrated from leading automotive chip companies Infineon Technologies AG and onsemi.
Kang Sung-cheol, research fellow at the Korea Semiconductor Display Technology Society, said, "As the United States imposes restrictions on advanced semiconductors against China, China is strengthening its capabilities around older nodes and has established a foothold in the 8-inch foundry market," adding, "TSMC and Samsung Electronics' business reductions will benefit them."
Meanwhile, some analysts say the ongoing conflict between the United States and China over the semiconductor industry could pose risks. A semiconductor industry official said, "Global finished-vehicle corporations mindful of U.S. restrictions are reluctant to manufacture semiconductors through Chinese foundries to reduce dependence on Chinese parts," adding, "If the U.S.-China power struggle persists, we should not overlook the possibility that manufacturing demand for older nodes could shift to UMC (Taiwan), DB HiTek (Korea), and others."