Key Takeaway: Fabs located in China have been purchasing equipment at a rapid pace during the past three years leading to expanding capacity.
TechInsights compiled information on semiconductor fab capacity in China (including Chinese-owned and multinational-owned fabs). The forecast calls for 40% growth in semiconductor production capacity by 2029 reaching 875msi. Spending on wafer fabrication equipment in China has grown from USD 11 billion in 2018 to close to USD 30 billion in 2023. The explosion in equipment purchasing over the past three years is translating into rapid capacity growth.
Critical implications: Capacity growth concentrated in 12-inch fabs
Wafer capacity data at Chinese fabs was compiled from external and internal sources including TechInsights' Semiconductor Manufacturing Economics fab databases (see Learn More). Fab production data was categorized by wafer size in inches (2, 3, 4, 5, 6, 8, and 12 inches). The fabs produce various types of semiconductors including Opto/LED, Discrete/Power, Memory, Logic, Analog/Linear, Foundries, etc. The rapid growth is mainly in fabs processing 12-inch wafers as shown below, though there is some growth in 8-inch and 6-inch wafer fabs.
Source: TechInsights
Next steps: Where will China's semiconductors be sold in the next five years?
15 years ago, the majority of semiconductors produced from Chinese fabs were sold to overseas customers. This has shifted to the current situation where most semiconductors produced in China are utilized within its borders. The question on everyone's minds is if the capacity growth over the next few years can be used internally or will Chinese fabs seek to sell their semiconductors in the global market once again. The worry is that Chinese excess semiconductor production may lead them to undercut pricing for their products—hence the recent semiconductor tariff increases from 25% to 50% implemented by the Biden administration in the USA to protect Western chipmakers (along with other tariff increases on EVs, batteries, photovoltaic cells). (Author: May Chang)
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