Accelerating the Localization of Chinese Silicon Wafers: Aiming for 70% Domestication Rate of 12-inch Wafers by 2026

According to an exclusive report by Nikkei Asia, the Chinese government has set a new goal for the domestic replacement of semiconductor silicon wafers - by 2026, the domestic proportion of 12-inch silicon wafers used by domestic fabs must exceed 70%. This means that the market space left for overseas leaders such as Shin-Etsu Chemical, SUMCO, and Taiwan's GlobalWafers will be further compressed to only about 30%.

Several informed sources have revealed that although this goal has not been formally issued, it has become an "unspoken order" in the industry. Unlike previous self-sufficiency targets that were often missed, the industry generally believes that a 70% domestic replacement rate for silicon wafers is highly feasible and is expected to become a symbolic achievement in the localization process of China's semiconductor supply chain.

Xi'an YSW: A company carrying nearly half of the production capacity

Xi'an YSW, which went public on the Science and Technology Innovation Board last October, is aggressively capturing the market. The company disclosed that its total production capacity will reach 1.2 million pieces per month by 2026, which can meet 40% of the domestic demand for 12-inch silicon wafers, and the global market share is expected to break through 10%. Currently, YSW is building new production lines in Xi'an and Wuhan, planning to add 700,000 pieces per month of production capacity within the year.

A supply chain insider said bluntly: "Our Chinese customers are all expanding production, and YSW is the most aggressive, the expansion may account for nearly half of the entire industry."

On the client side, domestic leading fabs such as SMIC, Hua Hong Semiconductor, Changxin Memory, and Yangtze Memory have all become YSW's main clients. The company also revealed that its products have entered the supply chains of major international manufacturers such as Micron, TSMC, GlobalFoundries, and United Microelectronics, and Samsung and SK Hynix are also in the verification phase. However, YSW's revenue in 2025 has reached 2.64 billion yuan, but it has not yet achieved profitability.

From 3% to 32%: China's silicon wafer leap in five years

Data from Bernstein Research outlines a steep growth curve: The global capacity share of China's silicon wafer manufacturers has jumped from only 3% in 2020 to about 28% in 2025, and is expected to rise further to 32% in 2026. The domestic self-sufficiency rate for 12-inch silicon wafers also continues to increase rapidly from about 50% in 2025.

It is worth noting that domestic replacement is not a "one-size-fits-all" approach. In mature processes and traditional chip fields, domestic silicon wafers can basically meet the needs; but in advanced processes - such as 7nm and even 5nm production lines that SMIC, Hua Hong, and some Huawei-affiliated companies are expanding in multiple cities - they still depend on the supply of high-end overseas silicon wafers.

Industry chain linkage accelerates "de-externalization"

As previously reported by Nikkei, SMIC has asked its chip design customers to agree to use domestic silicon wafers in the manufacturing process to promote the verification of domestic silicon wafers in more application scenarios. BOE Technology has also made similar requests to its driver IC suppliers. This kind of cascading from the terminal to the upstream is accelerating the pace of domestic replacement throughout the entire supply chain.

Supply and demand game: Oversupply concerns coexist with AI dividends

The large-scale entry of Chinese manufacturers has raised concerns about overcapacity, but the consumption of silicon wafers for AI infrastructure construction and advanced packaging technology is releasing additional demand - advanced packaging requires the bonding of multiple wafers, significantly increasing the amount of silicon wafer used. According to the International Semiconductor Industry Association (SEMI), driven by AI, the global silicon wafer shipment volume in 2026 is expected to grow by 13% year-on-year.

Overall, China's silicon wafer industry is staging a "quantity-for-market" offensive. In the short term, the market pattern for mature processes is set, and the share of overseas manufacturers is almost irreversible; but in the advanced process, this "last stronghold," domestic replacement still requires time.