It all started with a report from Nikkei Asia. On February 26, 2025, they released a major article that directly pointed out the rapid expansion of China in the mature chip sector, which caught many off guard. The price has dropped dramatically, from sky-high to ground-level. Two years ago, the 6-inch silicon carbide wafers sold by global giant Wolfspeed were priced at $1,500 per piece, but now Chinese suppliers can push it down to $500 or even lower.
This is a real flood of production capacity, and the global chip community was thrown into chaos. According to IDC, a global data company, by the end of 2025, China's share of mature process chip capacity could reach 28%, a number that sounds alarming. Mature chips are used in automotive sensors, display drivers, and microcontrollers, where demand is huge. Once China starts to exert pressure, a price war breaks out.
Western companies had originally thought that by strictly controlling advanced chips, they could choke China. However, they did not expect that the mature node became the breakthrough point. The American Semiconductor Industry Association (SEMI) also came out to say that by 2027, China's share might rise to 39%, and excess supply has already begun to show signs. Wolfspeed directly laid off 20% of its staff, and Onsemi cut 9% of its positions. This pressure is no joke.
This operation essentially reflects the clever response of Chinese companies to U.S. export restrictions. While the United States regulates advanced technology, China focuses on old nodes, which have lower costs and relatively lower barriers. Once capacity expands, the market gets reorganized. Large clients such as global automakers and data centers, who previously had stable supply chains, now need to reevaluate their purchase orders.
The Chain Reaction of Low-Cost Wafers, the Automotive Industry First Can't Bear It
Silicon carbide (SiC) has become the vanguard of China's low-price offensive in the mature chip sector. The Nikkei report clearly states that this material is used in electric vehicle power semiconductors, aerospace, and data center heat dissipation, and demand is booming. Two years ago, Wolfspeed was the only one in the market, with high prices. Now, Chinese suppliers not only surpassed them in capacity but also matched their quality, with prices halved.
An anonymous sales director of a German chip equipment vendor revealed that Chinese enterprises showed an astonishing level of enthusiasm, buying machines to cut 8-inch wafers into 6-inch ones for sale, with tight cost control. As a result, the global SiC market quickly became saturated. Although electric vehicle demand is recovering, the price war has made profits as thin as paper.
IDC analyst Garan Zeng bluntly stated that several types of mature chips are already oversupplied. With China's economy not yet fully recovered, this wave of capacity deployment seems more like a bet on the future. Speaking of it, the automotive chip sector sees Chinese automakers investing heavily to promote localization. By 2025, domestic chips should account for 25% of the total market, with the goal of full localization by 2026.
SMIC has been focusing on mature nodes in recent years, and for sensors and microcontrollers, its prices and services are more competitive than TSMC. An executive of a chip developer privately admitted that SMIC's low prices and stable delivery have naturally attracted customers. Global automakers, especially those in Europe and Japan, have large demands but sensitive supply chains. Now, Chinese capacity is just filling the gap, and orders are quietly shifting.
TrendForce's report also points out that this low-priced SiC and mature chips are igniting a global semiconductor price war, squeezing the survival space of Western companies. To be honest, this is not just a price competition, but a deep adjustment of the industrial chain. China uses scale effects to lower the threshold, forcing small and large factories to keep up with the pace.
Capacity Shift Under U.S. Restrictions, the Mature Node Becomes a New Battlefield
Over the past few years, the U.S. export controls on advanced chips aimed to curb China's high-tech development, but unintentionally pushed China toward the mature node. The Chip Act under Biden poured money to subsidize domestic manufacturing, and after Trump took office, tariffs increased, with the core aim still being to bring back manufacturing. However, according to the analysis by Nikkei, these policies inadvertently allowed Chinese companies to avoid the danger zone and focus on expanding the mature node.
Since 2013, China's chip capacity has steadily risen. In 2024, it exceeded 20% of the global total, and 28% in 2025 is not something that fell from the sky. Charles He, a chip analyst at Needham, stated that since the U.S. restricted advanced processes, China entered the mature field, and with the huge demand in the automotive industry, it was precisely the target for China's low-cost products to erode.
A survey by the Bureau of Industry Security at the Department of Commerce found that one-quarter of the chips sold in the U.S. come from Chinese factories, and the manufacturing cost accounts for only 6% of the total price. This cost advantage would make anyone jealous. Once the local supply chain is used, the price surges, and consumers naturally turn to cheaper alternatives. The U.S. wants to restore its hegemony, but China has proven through actual actions that the globalized supply chain cannot be broken by anyone's words.
China's big fund has invested 688 billion yuan in three rounds, and local governments have also followed suit, building factories like mushrooms. SMIC's revenue reached 8 billion USD in 2024, all driven by mature chips. Doris Hsu, chairman of Global Wafers, complained that the internal competition in China is too fierce, and once capacity expands, SiC becomes widely available, making the market chaotic.
But this also exposed the pain points of the West: relying on China's low-cost manufacturing while fearing being "surrounded." The Nikkei report emphasized that China's move is not just about subsidies, but the result of its localization strategy. In the coming years, its growth rate will exceed the global average, and the center of the supply chain is subtly shifting eastward.
Hidden Worries of Global Oversupply and Long-Term Rivalry, Who Will Win in the End
Currently, the signs of overcapacity in mature chips have already emerged. According to multiple industry insiders quoted by Nikkei, China's economic recovery is slow, and the rapid release of capacity has led to inventory buildup in several types of chips. SEMI predicts that by 2027, China's share could reach 39%, meaning that Western companies must face survival crises. Wolfspeed's stock price has dropped 96% over three years, and Onsemi has cut jobs to cope. This is not an isolated case, but a warning bell for the industry.
European carmakers' orders have shifted to China, and there has been heated debate at supply chain meetings. The Tokyo Stock Exchange's chip stocks have fluctuated greatly, and traders are shaking their heads while watching the screen. This low-price encirclement sounds intimidating, but essentially it's the result of market laws. China has used its massive domestic demand and investment to drive global shares. Chris Miller said in "Chip War" that semiconductors are inherently global, and no country can dominate alone.
Any attempt at monopoly will only hinder technological progress. China's exports have grown from 400 billion USD in 2014 to 1.14 trillion USD in 2024, and in the first half of 2025, it has already reached 650 billion USD, growing by 20.3%. This momentum has caused Japanese media to exclaim that "China's chips are encircling the world." Looking ahead, the U.S., Europe, and Japan will need to adjust their strategies, perhaps strengthening cooperation or easing some restrictions.
But China will not stop. Once the goal of 100% localized automotive chips is announced, the global landscape will change further. TrendForce points out that this price war has ignited the semiconductor powder keg, and the West needs to think about how to respond to the flood of capacity. In the future, whoever adapts faster will gain the upper hand. China has played its hand steadily, and the global stage must follow suit.
In summary, this wave of low-cost mature chips from China is not a temporary trend, but a signal of deep changes in the industrial chain. The Nikkei Asia report is correct; the global community feels pressure, but this pressure also forces everyone to innovate and change. The chip industry has always relied on strength, and China has proven itself through actual capacity. Western companies need to wake up and stop thinking that regulation alone can stabilize their position.
Looking ahead to 2026, if China achieves 100% localized automotive chips, will the global supply chain be completely reshuffled? The numbers from IDC and SEMI are there, with a jump from 28% to 39%, which is not empty talk. At the corporate level, SMIC's competitiveness is becoming increasingly evident, with customer feedback stating good service and low prices, which is a strong card in the mature node.
As for the West, high costs and reliance on Chinese factories without wanting to let go create a dilemma that they must resolve themselves. Miller's view is straightforward: globalization is the essence, and cooperation is the way out. So far, China has not been hasty or anxious, but has steadily built its capacity and gradually taken the market. The global pressure is great, but it also has to admit that China's move is reasonable and well-founded.
In the coming years, the mature chip market will be more lively, low prices will continue, but quality and service must also keep up. Chinese enterprises are making efforts here, and global competitors need to work harder. In short, this encirclement is not a zero-sum game, but the beginning of a new balance. Everyone must adapt to this rhythm.
Original text: https://www.toutiao.com/article/7564677592473715243/
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