China’s mature process production capacity is expected to account for approximately 29% in 2023

TrendForce has unveiled its latest market analysis, suggesting that from 2023 to 2027, the global semiconductor foundry sector will likely maintain a capacity ratio of approximately 7:3 between mature and advanced manufacturing processes. Particularly in China, owing to a fervent commitment to indigenous production policies and incentives, there’s a proactive capacity expansion underway. Forecasts posit that the proportion of mature process capacity will burgeon from 29% in 2023 to 33% by 2027.

Within the foundries of China, Semiconductor Manufacturing International Corporation (SMIC), HuaHong Group, and Nexchip are notably zealous in their endeavors. Their capacity expansion predominantly hones in on specialties such as Driver IC, CIS/ISP, and Power Discrete.

Concerning Driver ICs, the primary technology adopted is the High Voltage (HV) specialty process. The contemporary emphasis lies in the development of the 40/28nm HV process. United Microelectronics Corporation (UMC) takes a leading position in the market, closely trailed by GlobalFoundries. SMIC’s 28HV and Nexchip’s 40HV in Hefei are anticipated to transition into mass production between this year’s fourth quarter and the latter half of the ensuing year. With a gradually narrowing technological gap, firms like Powerchip Semiconductor Manufacturing (PSMC) and those without a 12-inch foundry, such as Vanguard and DBHitek, will be the foremost to face repercussions. In the long vista, this trend might also cast ripples across UMC and GlobalFoundries.

On the CIS/ISP front, the 3D CIS architecture incorporates an ISP logic layer and a CIS photosensitive layer. The prevailing process predominantly uses 40/45nm as a demarcation, with the ISP logic process persistently advancing towards more refined nodes. Meanwhile, the CIS photosensitive layer and FSI/BSI CIS predominantly rely on 65/55nm or higher. Currently, the technological vanguards in this realm are TSMC, UMC, and Samsung. However, hot on their heels are SMIC and Nexchip in Hefei. Besides striving technologically, they stand to gain from the backing of domestic smartphone brand orders and a keen alignment with government policies to redirect orders back to China. Power Discrete encompasses products like MOSFET and IGBT. Foundries in China have ample opportunities for inroads here, and with a swell of local smaller firms entering the fray, if capacity amplifies significantly, it will intensify the global competition for Power Discrete outsourcing.

The overarching objective for China at this juncture is to elevate the proportion of indigenous production. A marked boost in capacity might precipitate a global glut in mature process capacity, potentially ushering in a price war. As mature process capacity swells in the upcoming years, second and third-tier foundries could grapple with the risks of client attrition and pricing pressures, ultimately hinging on technological progression and yield rate.