Chinese foundries to grow share in 12-inch wafer production capacity

Chinese foundries are expected to increase their market share in terms of 12-inch wafer production capacity despite facing export controls from the US, Japan, and the Netherlands.
Wafer foundry capacity by regionCurrently at 24 percent in 2022, the market share of Chinese foundries is projected to reach approximately 26 percent by 2026. There is even potential for further expansion if the exports of 40/28nm equipment gain approval, possibly pushing the market share to 28 percent by 2026. This growth potential should not be overlooked, TrendForce, a market research firm, predicts.

According to TrendForce, Chinese foundries have primarily focused on developing mature processes like 55nm, 40nm, and 28nm. The demand for deposition equipment can be met by local Chinese vendors, reducing concerns regarding expansion and development. However, the main obstacle lies in the equipment used for photolithography.

TrendForce’s research suggests that the impact of export controls will first be felt by SMIC’s Beijing and Shanghai fabs, as well as Nexchip’s A3/A4 fabs in Hefei. Nexchip’s Hefei fabs may experience relatively less disruption as they currently prioritize production of more mature processes. In contrast, SMIC’s Beijing and Shanghai fabs may face delays in their expansion plans until permission is granted for their equipment vendors to proceed with shipments.

The US Export Administration Regulations (EAR) primarily aims to restrict China’s growth in advanced processes rather than mature ones. Although export regulations from the US, Japan, and the Netherlands cover equipment used in both mature and advanced process generations, equipment used in processes ranging from 45nm to more advanced ones will require inspection.

However, there is a possibility that mainstream equipment for mature processes, from 45nm to 28nm, may still require export authorization. Despite the lengthy equipment review process that Chinese foundries are likely to face, which may cause delays in their expansion plans for 40nm and 28nm processes, their strong positioning in the 28nm market ensures a robust pace of development.

It is important to note that while Chinese foundries currently focus less on advanced processes such as 1Xnm, the enforcement of more comprehensive export regulations is expected to present increased obstacles to China’s potential for further development in this area.