AI boosts semiconductor silicon wafer track, domestic substitution process accelerates.

Securities Times reporter Wang Yiming

Since June, the semiconductor silicon wafer track has not only been favored by the capital market, but has also seen frequent moves at the industrial level.

Recently, NSIG announced plans to jointly invest 11.45B yuan with Guosheng Group in its subsidiary Shanghai Xinsheng for 300mm silicon wafer capacity upgrades; on June 14, Shanghai Hejing set up a SOI (Silicon-on-Insulator) joint venture, entering a high-value-added track...

In terms of pricing, global silicon wafer giants have initiated two rounds of price adjustments since the beginning of the year; combined with recent survey notes disclosed by domestic silicon wafer companies, although the domestic market has not yet entered a full price hike cycle, management generally believes that silicon wafer prices have shown signs of stabilization, and with subsequent demand improvement, prices are expected to recover.

Industry insiders in semiconductors believe that the current global 12-inch silicon wafer industry presents an oligopolistic landscape, with the top five global players all being long-established overseas companies, and there is a significant gap in domestic silicon wafer self-sufficiency. Driven by both the rising industry prosperity and accelerated domestic substitution, domestic silicon wafer companies are seeing development opportunities.

Structural Imbalance

Silicon wafers are the core substrate in the intermediate stream of the semiconductor industry chain and the fundamental "foundation" for chip manufacturing, widely used in the production of semiconductors such as integrated circuits, discrete devices, and sensors.

From the industry cycle perspective, the semiconductor silicon wafer market entered a mild recovery channel in 2025. Due to the time needed for market recovery to transmit downstream to upstream, combined with the impact of high inventory during the downturn, the market shows a differentiation of "volume growth but price decline." According to data from the Semiconductor Equipment and Materials International (SEMI), global semiconductor silicon wafer shipment area reached 12,973 million square inches (MSI) in 2025, a year-on-year increase of about 5.8%, reversing the continuous decline since 2023. However, total sales revenue fell by about 1.2% year-on-year, marking a third consecutive year of decline.

But the market situation has further improved this year. In Q1, SEMI estimates that global silicon wafer shipments increased by 13.1% year-on-year to 850k square inches (MSI). On the pricing front, on May 10, the three major silicon wafer manufacturers—Shin-Etsu Chemical, SUMCO, and GlobalWafers—simultaneously issued price hike announcements: Among them, 12-inch conventional silicon wafers rose by about 5%–8%, while high-end specialized wafers for AI/HPC scenarios saw increases of 18%–22%. GlobalWafers Chairman Hsu Hsiu-lan stated at a earnings conference in late May that the market situation this year is much better than last year. With 12-inch capacity already fully loaded, coupled with rising costs and increased depreciation, the company is actively communicating with customers about raising prices in the second half of the year.

Analyzing the reasons for this round of industry warming, "AI" is an undeniable driver. "The rapid development of the AI industry has driven continued prosperity in the semiconductor chip market. The main benefiting segments include AI computing chips, memory chips, silicon photonics products, power management chips, and future 6G applications. However, some semiconductor devices have also been negatively affected; for example, mobile phone chips this year face pressure from tight memory supply and rising costs," Li Wei, Director and Executive Vice President of NSIG, recently analyzed in an interview with a Securities Times reporter.

He pointed out that in this context, from the perspective of silicon wafer applications, products from companies related to the AI industry are developing rapidly and are expected to remain in an upward phase for one to two years; if the association with AI is low, the corresponding silicon wafers may remain tepid. In terms of product specifications, 12-inch silicon wafers driven by AI demand are performing better than 8-inch wafers; SOI and other products also stand out.

Gao Chengyuan, an industry development consultant at Guangzhou Doctor Information Technology Research Institute, cited a set of data to the Securities Times reporter: Currently, the demand for 12-inch silicon wafers per AI server is about 3.8 times that of a general-purpose server, and the consumption of wafers for HBM (High Bandwidth Memory) storage is three times that of mainstream DRAM (Dynamic Random Access Memory). This "multiplication leverage" has tightened the supply-demand relationship for corresponding 12-inch lightly doped polished wafers, heavily doped wafers, and epitaxial wafers. "But the demand for non-AI 8-inch and below mature-process wafers is relatively stable. So this is a structural imbalance, and the expansion cycle for silicon wafer supply typically takes 18–24 months," he said.

What is the current proportion of high-end silicon wafers? According to SUMCO's forecast, AI demand for 12-inch advanced silicon wafers will reach 1 million wafers per month by 2026, accounting for more than 10% of total global demand. At the same time, demand from new energy vehicles, industrial control, 3D NAND storage, and other fields is also recovering simultaneously, boosting the prosperity of corresponding 8-inch and 12-inch silicon wafers.

Domestic Prices to Recover

According to information obtained by the Securities Times from the industry chain, after price hikes by global leading manufacturers, a few domestic silicon wafer manufacturers have already issued price adjustment notices for all categories of epitaxial wafers, with an increase of 15%. However, the domestic semiconductor silicon wafer market has not yet entered a full price hike cycle.

When discussing silicon wafer prices, Xi'an Yicai stated in a survey note disclosed in late May that current product prices are basically flat compared to last year, at a relatively low level. With sustained strong market demand, full production at the company's second factory, and continuous improvement in product and customer structure, the average unit price is expected to rise.

NSIG responded at an earnings conference on May 22 that semiconductor silicon wafer prices are gradually stabilizing. With subsequent demand improvement, prices are also expected to recover.

Regarding the future trend of domestic silicon wafer prices, a sales manager at a domestic silicon wafer company told the Securities Times reporter: "The silicon wafer market heat this year has exceeded our expectations. By the end of 2025, we had already negotiated this year’s silicon wafer prices with our main large customers, so those product prices will not change within the year. For customers with short-term incremental orders, appropriate price increases may be unavoidable. In fact, some of our AI-related silicon wafer varieties are already in clear short supply, and we are speeding up capacity expansion. Under these circumstances, these varieties have room for price adjustments."

The sales manager also pointed out that, in terms of specific operations, taking international leading silicon wafer companies as an example, although they have announced certain price increases, in actual practice, since silicon wafers are non-standardized products with diverse varieties and uneven batches, structural adjustments must be made according to different situations.

"Generally speaking, from an industry trend perspective, if market heat continues into the second half of the year, our company’s year-end pricing agreements will overall have appropriate room for adjustment," he said.

From an industry structure perspective, the global market has long been controlled by the top five silicon wafer manufacturers, accounting for over 80% of the global market share, creating multiple barriers in technology, capacity, and customer resources, especially in the 300mm (12-inch) high-end silicon wafer segment, where core supply is monopolized.

Against this backdrop, with rising industry prosperity, domestic manufacturers are also accelerating their expansion pace. For example, recently NSIG announced plans to jointly invest with shareholder Guosheng Group in its subsidiary Shanghai Xinsheng, with a total capital increase of up to 720k yuan. The latter is the main entity for implementing the company's 300mm semiconductor silicon wafer development strategy. By the end of 2025, NSIG's total 300mm semiconductor silicon wafer capacity had reached 850k wafers per month, with capacity utilization remaining at a high level.

Another example: In addition to the recent strategic investment to establish an SOI joint venture, Shanghai Hejing’s Zhengzhou Hejing Phase II 12-inch semiconductor silicon wafer expansion project is steadily advancing, with plans to add an additional 720k wafers per year of epitaxial wafer capacity.

Balancing Innovation Investment and Profitability

According to a forecast by Jiwei Consulting, the size of China's semiconductor silicon wafer market is expected to reach $5.87B by 2030, with its global share further increasing to 23.21%. The localization rate of 12-inch silicon wafers in mainland China in 2025 is about 15%–20%. It is estimated that the localization rate will increase to 25%–30% in 2026, and as leading companies gradually reach full capacity, the domestic substitution process will further accelerate.

In Gao Chengyuan's view, the opportunities for the domestic silicon wafer industry are clear: first, the explosion in AI computing power has triggered a surge in demand for high-end silicon wafers; second, the wave of domestic wafer fab expansion has opened up space for domestic substitution.

According to SEMI forecasts, by 2028, the world is expected to build 108 new wafer fabs, of which 84 will be in Asia, with China alone accounting for 47, more than half of Asia's new capacity; at mainstream process nodes of 22 to 40 nanometers, China's capacity share will increase from 25% in 2024 to 42% in 2028.

Beyond the domestic market, domestic silicon wafer manufacturers also have opportunities overseas, but they also face considerable challenges.

"Except for a few very high-end silicon wafers, the domestic industry still has room for improvement on the technical level. Currently, we have the capability to meet the technical requirements for over 80% of global silicon wafers. I now travel abroad almost every month to explore overseas markets, and our products are already sold to North America, Europe, Asia, and other regions. However, the global market share of domestic manufacturers is still low. The reasons are: on one hand, we have not yet reached the technical threshold for the highest-end silicon wafers; on the other hand, geopolitical factors have also hindered the pace of domestic manufacturers expanding into overseas markets," Li Wei told the Securities Times reporter.

He pointed out that in this context, one of the main gaps between domestic silicon wafer companies and international silicon wafer giants is the lack of a broad customer base—that is, the lack of long-term, stable supply opportunities with many world-class wafer foundries, making it harder to rapidly improve their own business levels. Second, from a supply chain perspective, although the domestic semiconductor industry has achieved widespread domestic substitution and self-sufficiency in many areas such as equipment and materials in recent years, some areas have yet to be conquered, inevitably making it dependent on others.

Gao Chengyuan said that from a financial perspective, despite impressive revenue growth, the domestic silicon wafer industry as a whole is still in a "high-investment" stage of tackling tough challenges. A single 12-inch production line investment often amounts to tens of billions of yuan; at the same time, to break through overseas technology monopolies, continuous high-intensity R&D investment is required. Currently, most relevant companies have not yet escaped loss.

According to statistics, in the first quarter of 2026, the seven A-share silicon wafer listed companies posted a combined net loss of approximately 2.41B yuan, with an average net profit of about -344 million yuan.

"In the long term, the core challenge facing domestic silicon wafer companies today is to find a balance between innovation investment and profitability while expanding capacity and maintaining technological innovation capability. In the short term, with the transmission of global silicon wafer price increases to the domestic market, as well as improvements in capacity utilization rates and product structure optimization, the industry's profitability is expected to gradually improve," Gao Chengyuan said.