‘Panic’ over capacity crunch in mature node chips drives orders to Chinese foundries
AI demand shifts chip production to China, boosting SMIC’s capacity and revenue as global foundries focus on high-margin AI chips
The global AI boom is driving orders back to Chinese foundries as overseas rivals shift production towards high-margin AI chips and high-bandwidth memory, creating a shortage in mature-node semiconductors, according to the head of China’s top contract chipmaker.
Zhao noted that the squeeze was prompting consumer electronics and IoT customers to seek capacity in mainland China – a trend reinforced by electric vehicle demand, a robotics boom, domestic supply-chain localisation, and companies stockpiling.
His comments align with broader market data. The average utilisation rate for older generation 8-inch wafers at the world’s top 10 foundries was expected to hit nearly 90 per cent in 2026, up from 80 per cent in 2025, according to TrendForce. The rebound is driven by surging demand for power management integrated circuits (PMICs) used in AI servers.
With global leader Taiwan Semiconductor Manufacturing Company (TSMC) planning to reduce some 12-inch mature-node capacity, Chinese suppliers and second-tier foundries are absorbing the overflow, the research firm said.
SMIC’s own metrics reflect this migration. The company’s overall wafer utilisation rate rose to 93.1 per cent in the March quarter, up from 89.6 per cent a year earlier even as monthly capacity expanded. Revenue from China climbed to nearly 89 per cent of its total.