The global semiconductor wafer industry has formally entered an upcycle characterized by simultaneous increases in both volume and price. Driven by the accelerated commercialization of large-scale artificial intelligence (AI) models and aggressive capacity expansions by leading global foundries, the semiconductor wafer market is emerging from a two-year inventory adjustment period, with a clear inflection point for price increases now confirmed.
Since 2026, the three global wafer giants—Shin-Etsu Chemical, SUMCO, and GlobalWafers—have simultaneously raised quotes for 12-inch wafers, with particularly significant price hikes for wafers dedicated to AI and high-performance computing. Analyst Hua Xiaowei from Guosheng Securities noted in a recent report that this round of price increases is driven by a combination of three factors: demand growth, supply constraints, and rising costs, indicating it is not a short-term fluctuation. SUMCO forecasts that monthly demand for advanced process wafers from AI applications will reach one million wafers in 2026, accounting for over 10% of the total global demand for 12-inch wafers.
From an industry-wide perspective, global wafer shipment area grew 5.8% year-over-year in 2025 to 12.973 billion square inches, while sales revenue saw a slight 1.2% decline, showing a structural recovery pattern of "increased volume but decreased price." The opening of the price uptrend in 2026 marks the industry's transition from a simple volume recovery to a phase of simultaneous volume and price growth. According to SEMI projections, the global semiconductor wafer market size is expected to surpass $20 billion by 2030.
Concurrently, as international oligopolies face capacity constraints and overall prices rise, domestic Chinese wafer companies are entering a window for accelerated market share expansion. SEMI predicts that of the 108 new fabs expected to be built globally by 2028, 47 will be in China. China's share of capacity in the mainstream 22 to 40-nanometer process nodes is projected to increase from 25% in 2024 to 42% in 2028. This wave of expansion will continuously generate rigid demand for domestically produced wafers, opening up vast market space for Chinese wafer manufacturers.
Multiple Supply-Demand Factors Converge, Wafer Prices Enter an Uptrend
The current wafer price increase is not driven by a single factor but is the result of simultaneous pressures from demand, supply, and cost.
On the demand side, the accelerated commercialization of large AI models is driving robust growth in demand for high-end chips, the continuous rise in new energy vehicle penetration is expanding demand for automotive-grade chips, and record-high capital expenditure for capacity expansion by leading global foundries is directly boosting upstream wafer procurement volumes.
On the supply side, wafer capacity expansion cycles are lengthy, requiring 18 to 24 months from equipment procurement to full production ramp-up, coupled with extremely high technical barriers. Adding to this is the high market concentration among international oligopolies like Shin-Etsu Chemical, SUMCO, and GlobalWafers, making it difficult for the supply side to respond quickly to demand growth in the short term, thus creating a supply-demand gap.
On the cost side, comprehensive increases in energy and labor costs, along with supply disruptions for petrochemical raw materials from the Middle East, are further pushing up production costs, providing additional support for price increases. The convergence of these three factors gives wafer manufacturers ample motivation and room for price hikes.
Artificial intelligence is the core driver behind this wafer industry recovery. SUMCO estimates that monthly demand for advanced process wafers from AI-related applications will exceed one million wafers in 2026, accounting for over 10% of total global 12-inch wafer demand. This figure signifies that AI computing power demand has evolved from a marginal increment to a core variable affecting the overall supply-demand landscape.
Massive Foundry Expansion Unleashes Rigid Demand
With growing emphasis on semiconductor supply chain security by various nations and ongoing tightening of technology export controls, this backdrop is accelerating the process for domestic chip manufacturers to advance certification of local suppliers. A Guosheng Securities report points out that localization is evolving from "isolated breakthroughs" to "widespread adoption."
According to SEMI forecasts, of the 108 new fabs expected globally by 2028, 47 will be in China. China's share of capacity in the mainstream 22 to 40-nanometer process nodes is projected to surge from 25% in 2024 to 42% in 2028. Once a foundry's stringent certification system is passed, strong customer loyalty is established. Domestic wafer companies, leveraging geographical advantages and rapid response capabilities, are poised to continuously expand their market share.
Leading Companies Achieve Technological Breakthroughs, Unlocking Significant Earnings Potential
As the global semiconductor industry enters the "post-Moore's Law era," the acceleration of 2nm process mass production and the widespread adoption of GAA architecture are imposing higher requirements on wafer metrics such as monocrystalline quality and defect density. Some leading domestic companies, relying on profound technical expertise and forward-looking capacity planning, have broken through core technological barriers and established deep ties with leading global foundries, with their earnings potential accelerating.
Hangzhou Lion Microelectronics Co.,Ltd. (ASX: 605358), a leader in the domestic heavy doping field, accounted for approximately 3.68% of global full-size wafer shipments in 2025. In the first quarter of 2026, the company's revenue from 12-inch wafers surged 88.12% year-over-year, with gross margins recovering significantly. Currently, its wafer business is operating at full capacity, with heavy-doped silicon epitaxial wafers in full production and sales, and lead times for its 8 to 12-inch low-resistivity silicon epitaxial wafers have extended.
Xi'an Yicai focuses on the 12-inch wafer segment and has achieved full-process technological independence and control. As of the end of 2025, its monthly 12-inch wafer capacity exceeded 850,000 wafers, with a global market share of about 6.8%, ranking first in China and sixth globally. It has been supplying stable, bulk quantities to globally renowned companies like TSMC and Micron Technology. Its capacity is expected to further expand to approximately 1.2 million wafers per month by the end of 2026.
Furthermore, the domestic wafer leader National Silicon Industry Group Co.,Ltd. (ASX: 688126) has comprehensively broken through key technologies such as 300mm near-perfect single crystal growth. In 2025, the company developed 168 new 300mm products, with customers covering leading global manufacturers like SMIC, TSMC, and UMC. Simultaneously, through its subsidiary Okmetic, the company is deepening its presence in high-end niche markets, accelerating its strategic transformation from a "domestic leader" to a "global participant."
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