Amid the artificial intelligence (AI) wave, advanced process chips are hard to find and their value is soaring. Concurrently, 8-inch wafer production lines, once acceleratedly divested by foundries, are undergoing a structural reversal from overcapacity to full-capacity price hikes, driven by international giants' collective shift to 12-inch wafers and growing demand for AI peripheral chips. In this changing landscape, mainland Chinese wafer foundries are filling this global capacity vacuum, and their evolving role is drawing significant market attention.
A recent report from market research firm TrendForce, released on January 13, indicates that the global supply and demand for 8-inch wafers is entering a period of imbalance. Influenced by the strategic capacity reductions from TSMC and Samsung Electronics, the total global 8-inch foundry capacity is projected to shrink by 2.4% by 2026. Meanwhile, robust demand for AI-driven products like Power Management ICs is pulling the industry's average capacity utilization rate back up to a high level of 90%.
Against this backdrop, mainland Chinese wafer foundries are emerging as alternative solutions to meet the demand for 8-inch chips. Simultaneously, these foundries are increasing their quotes, with expected price adjustments ranging between 5% and 20%.
The 8-inch wafer market is primarily used for manufacturing Power Management ICs (PMICs), display driver ICs, microcontrollers (MCUs), and power devices. Long regarded as a "cash cow" in the portfolios of advanced process giants due to mature technology and fully depreciated equipment, this market has been highly profitable.
However, as process nodes advance towards 3nm, 2nm, and beyond, older 8-inch production lines face increasing pressure. On one hand, mature processes are rapidly migrating to 12-inch lines to achieve higher wafer output efficiency. On the other hand, the escalating maintenance costs of aging equipment challenge their marginal benefits. Currently, leading foundries are directing almost all capital expenditure towards 12-inch lines to support costly advanced process R&D and capacity expansion.
According to the TrendForce report disclosed on January 13, supply-side capacity contraction has become the trigger for the current 8-inch wafer supply-demand imbalance. TSMC officially began gradually reducing its 8-inch wafer capacity in 2025, targeting complete shutdowns in some fabs by 2027. Samsung is following suit, adopting a more aggressive stance towards reducing its 8-inch foundry operations. TrendForce believes that under this dual pressure, global 8-inch wafer capacity is expected to experience negative growth of 2.4% in 2026.
Concurrently, demand growth for power devices, driven by AI servers and edge computing, is causing a structural shortage in 8-inch wafer capacity. TrendForce states that global foundry prices stopped falling and began rising in the second half of 2025, with an expected across-the-board increase of 5% to 20% in 2026.
"Influenced by TSMC and Samsung accelerating 8-inch capacity reductions, coupled with growing demand for AI power devices and panic buying in the supply chain, the global 8-inch wafer supply-demand structure has become tighter. Significantly rebounding capacity utilization rates are prompting major foundries to initiate price hike strategies," TrendForce noted in its report.
A report from market research firm Sigmaintell, also released on January 13, shows that in the fourth quarter of 2025, the average capacity utilization rate of major global wafer fabs rebounded to 90%, an increase of approximately 7 percentage points year-on-year. The agency attributed this to growth in orders for power/analog applications driven by AI, alongside recovery in automotive and industrial control applications, leading to a faster-than-expected recovery in foundry capacity utilization. Specifically, 8-inch processes are consistently operating at full capacity, entering a price recovery cycle.
Currently, specialized processes in mainland China, including analog chips, automotive power devices, and low-power MCUs, still primarily rely on 8-inch platforms. Some small and medium-sized IC design houses unable to secure capacity may even face supply disruptions or be forced to pay high premiums to compete for limited local foundry slots.
Notably, as wafer giants like TSMC and Samsung accelerate generational transitions in their production lines amidst surging demand for AI data centers, exacerbating structural tightness in 8-inch capacity demand, mainland Chinese wafer foundries are poised to fill the global market's capacity vacuum to a certain extent.
Specifically, TSMC currently operates four 8-inch wafer fabs and one 6-inch wafer fab in Taiwan, China. To achieve a complete exit by 2027, it will need to continue cutting capacity through 2026. TSMC's current monthly 8-inch foundry capacity is approximately 528,000 wafers.
Samsung Electronics also began reducing 8-inch wafer fab output in the second half of 2025, adopting a more proactive approach to reallocate resources towards competing in the 12-inch wafer market. Previously, to address persistent losses in its foundry business and low utilization of 8-inch fabs, Samsung had already planned to scale back its 8-inch operations, with rumors suggesting layoffs of over 30% in its 8-inch manufacturing and technology teams. Samsung's current monthly 8-inch foundry capacity is also approximately 528,000 wafers.
United Microelectronics Corporation (UMC) once had a monthly 8-inch wafer capacity exceeding 360,000 wafers, with current utilization rates around 70%. Looking ahead, UMC holds a positive outlook for 2026, expecting operations to continue on a growth trajectory. Facing industry changes, the company avoids direct confrontation with advanced process leaders, instead choosing to solidify its market share by deepening its expertise in specialized process technologies.
SMIC currently operates three 8-inch wafer fabs and four 12-inch wafer fabs in Shanghai, Beijing, Tianjin, and Shenzhen. SMIC's latest financial report shows that, as of the end of Q3 2025, its monthly logic chip capacity (converted to 8-inch equivalent) historically surpassed the one-million-wafer mark, reaching 1.023 million wafers. The report indicated SMIC's overall capacity utilization rate in Q3 was 95.8%, the highest since Q2 2022.
The performance of another giant, Hua Hong Semiconductor, better reflects competitiveness in specialized processes. On some of Hua Hong's 8-inch production lines, capacity utilization is nearing 100%. This is largely thanks to order transfers from international power semiconductor giants like Infineon and ON Semiconductor. Before 12-inch specialized processes fully mature, 8-inch remains the most economical platform for IGBTs, MOSFETs, and analog chips.
Although the market previously held some concerns about the pace of capacity expansion by mainland Chinese foundries, the current high capacity utilization rates demonstrate the strategic value of this expansion. SMIC's Co-CEO Zhao Haijun explicitly stated that the speed of domestic capacity expansion will only increase, not decrease. This stance stems not only from the explosion in demand for AI peripheral chips but also from the return of local orders following supply chain reshaping. Zhao also mentioned that mainland Chinese products are entering overseas customer supply chains, with favorable demand trends, making capacity expansion an inevitable trend for the mainland's foundry industry.
Due to the surge in demand, mainland Chinese fabs have already raised prices for 8-inch chip processes by approximately 10%, with some order increases even reaching 20%. TrendForce stated that in response to tight supply and demand, foundries including SMIC, Vanguard International Semiconductor Corporation (VIS), and Samsung are planning price hikes, covering various processes and customers, with this wave of increases expected to continue into 2026.
Reportedly, on December 24, 2025, SMIC formally issued a price increase notice to downstream customers, explicitly raising prices for 8-inch BCD process代工 by about 10%. The BCD (Bipolar-CMOS-DMOS) process is currently a major product for 8-inch wafer fabs.
However, although 8-inch wafer capacity is currently experiencing a boom period, the long-term trend of migrating Power Management ICs and display driver ICs to mature 12-inch nodes remains unchanged. While expanding 8-inch capacity, mainland Chinese manufacturers must accelerate their布局 in 12-inch specialized processes. SEMI pointed out in a report that global semiconductor manufacturers are expected to increase 12-inch fab capacity in 2026, reaching a historic high of 9.6 million wafers per month.
SEMI President Ajit Manocha stated, "Strong long-term demand for semiconductors will continue to drive capacity growth thereafter. Foundry, memory, and power semiconductors are expected to be the main drivers of new capacity additions in 2026." During the forecast period from 2022 to 2026, chip manufacturers are projected to add 12-inch fab capacity to meet growing demand.
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