China to become the largest source of IC wafer capacity by 2026

There has been a surge in new fab construction worldwide since the COVID-19 pandemic – partly driven by government investments such as the Chip Acts – to build up local semiconductor resources in hopes of avoiding the supply chain issues exposed by the pandemic. Substantial amounts of money have been and continue to be made available to chip manufacturers through these programs in every country where fabs exist.

Following relatively slow growth in 2024, big increases are expected in 2025 and 2026 as record numbers of new fabs are brought online. 

While the U.S.-led sanctions on China’s semiconductor industry are hampering efforts by Chinese companies to develop and install capacity for leading-edge process technologies, the country is still expected to show the highest growth in wafer capacity in the next few years. In fact, based on fab construction and expansion plans, the country is projected to surpass both South Korea and Taiwan to become the world’s biggest source of IC wafer capacity by 2026. Most foreign companies with fabs in China, such as Samsung, SK Hynix, TSMC, and UMC, have been granted some reprieves from the sanctions.

At the end of 2023, China's share of global monthly wafer capacity was 19.1%, a few percentage points behind Korea and Taiwan. By 2025, the capacity share of China is projected be roughly on par with that of the leaders. Then, in 2026, China is expected take the top spot.

A substantial portion of the IC wafer capacity in China is owned by foreign companies, including those listed above as well as Powerchip (through its Nexchip subsidiary), Texas Instruments, Alpha & Omega Semiconductor, and Diodes. While China was home to about 19% of the world's wafer capacity at the end of 2023, the share held by Chinese companies was only 11%.