China's Mature-Node Chipmakers Shake the Global Market: Western Companies Face a Severe Challenge

China's Mature-Node Chipmakers Shake the Global Market: Western Companies Face a Severe ChallengeFebruary 27 news: Chinese manufacturers and wafer producers of mature-node chips are flooding the global market with highly competitive prices, putting immense pressure on Western companies. Faced with a double whammy of oversupply and price wars, many Western firms are struggling to compete

China's Mature-Node Chipmakers Shake the Global Market: Western Companies Face a Severe Challenge

February 27 news: Chinese manufacturers and wafer producers of mature-node chips are flooding the global market with highly competitive prices, putting immense pressure on Western companies. Faced with a double whammy of oversupply and price wars, many Western firms are struggling to compete. Industry insiders even predict a "China shock" in the chip manufacturing industry, with some companies already experiencing an unprecedented existential crisis. The profound impact of this industry upheaval, driven by China, is gradually becoming apparent.

Mature-node chips, generally referring to chips with process nodes of 20 nanometers and above, are the lifeblood of non-cutting-edge semiconductor companies. These chips are widely used in consumer electronics, automobiles, and other sectors. Their production and the associated wafer manufacturing provide crucial financial support for R&D across the entire chip industry. However, this landscape is undergoing a dramatic transformation with the rise of Chinese manufacturers.

Price War: Chinese Manufacturers Grab Market Share with Low Prices

A low-price strategy is key to Chinese manufacturers' success. Take silicon carbide wafers as an example. Two years ago, a 6-inch mainstream wafer from Wolfspeed, a global leader, cost as much as $1500. Now, a comparable product from Guangzhou Nanshan Semiconductor Technology Co., Ltd., costs only $500, with many other Chinese manufacturers offering even lower prices. A sales director at a German chip manufacturer described the competition as a "brutal elimination game," predicting that many domestic and foreign manufacturers would suffer heavy losses and even face bankruptcy. Wolfspeed has already cut its workforce by 20%, and its stock price has plummeted 96% in three years; Onsemi, an American semiconductor company, also announced a 9% workforce reduction. While these problems aren't solely attributable to Chinese competition, China's rapid rise in mature-node chip manufacturing is undoubtedly a significant factor, a point acknowledged publicly by the United States.

Strong Government Support: Industrial Policies Fueling Growth

The explosive growth of China's mature-node chip industry is inseparable from strong government support. The National Integrated Circuit Industry Investment Fund has raised a staggering 688 billion RMB (approximately $95 billion USD) through three rounds of fundraising. Local governments are also actively supporting leading domestic companies. This massive government investment provides a powerful backing for the expansion of China's chip industry, enabling Chinese manufacturers to engage in even fiercer global competition.

Rapid Market Share Expansion: The Rise of Chinese Manufacturers is Unstoppable

The massive expansion of China's chip industry is leading to a surge in competitors for Western companies. By the end of 2025, Chinese foundries are projected to account for 28% of global mature-node chip production capacity, rising further to 39% by 2027. Galen Zeng from market research firm IDC stated that driven by localization strategies, Chinese manufacturers' capacity expansion will far outpace that of international counterparts in the coming years. This rapid growth indicates that China's influence in the global mature-node chip market will continue to strengthen.

Technological Blockade and Strategic Shift: China Focuses on Mature Nodes

US sanctions against China have blocked Chinese companies from accessing advanced process technologies and equipment. Faced with this challenge, China has chosen to concentrate its efforts on developing mature-node technologies to meet the demands of its domestic technology sector. This strategic adjustment has not only effectively mitigated the risks posed by technological blockades but also created favorable conditions for the rapid development of China's chip industry.

Full-Scale Impact and Future Outlook: China's Strength Cannot Be Underestimated

In 2023, China publicly announced for the first time an acceleration of mature-node production capacity construction. Mature-node chips from China are causing a full-scale impact on the global chip industry. While the overall impact remains to be seen, there's no denying that China's rise in this area has profoundly affected the global industrial landscape. Chinese manufacturers, using low-price strategies to quickly grab market share and leveraging strong government support to continuously expand capacity, have caught Western companies off guard with their speed and momentum.

The rise of China's mature-node chip industry is the result of a confluence of factors: strong government support, growth in domestic market demand, and the combined advantage of low costs have all propelled Chinese manufacturers' competitiveness in the global market. Western companies, however, need to face increasingly intense competition from Chinese manufacturers and reassess their strategies to survive and thrive in future competition. This chip industry upheaval, initiated by China, is profoundly reshaping the global semiconductor industry landscape, and its long-term impact warrants continued attention.

The rapid development of China's mature-node chip industry has not been without its challenges. Technological bottlenecks, competition for talent, and uncertainties in the international market remain hurdles for Chinese manufacturers. However, the Chinese government's continued investment in the semiconductor industry and the ongoing efforts of Chinese manufacturers have laid a solid foundation for the future development of China's chip industry.

In the future, China's position in the global mature-node chip market will further improve. This means Western companies will face even fiercer competition and need to adopt more effective strategies to meet the challenge. The global chip industry landscape will also undergo profound changes, forming a new competitive landscape. The rise of China's mature-node chip industry is undoubtedly a significant milestone in the history of global semiconductor development, and its impact will be long-lasting.

This competition is not just about market share; it's about reshaping the global technology industry chain. The rise of China's mature-node chip industry is declaring to the world: a powerful Chinese chip industry has arrived and will play an increasingly important role on the global stage. In the future, competition in the global chip industry will become even more intense, and China will undoubtedly be the most significant force to contend with. The ultimate outcome of this competition will profoundly influence the future direction of the global technology industry.

Whether Western companies can adapt and respond to this challenge will determine their survival and development in future competition. The continued development of China's mature-node chip industry also requires addressing various challenges and continuously improving its technological level and competitiveness. This is an era full of opportunities and challenges. The global semiconductor industry is undergoing profound changes, and China has become an undeniable force in this transformation. In the future, we will continue to witness the exciting unfolding of this global chip competition and the booming development of China's chip industry.