A report by Nikkei Asia claims that China wants 70 percent of the silicon wafers used by its chipmakers this year to be sourced from domestic suppliers. The move marks another step in the country’s increasingly urgent push to localize its semiconductor supply chain, as chips become ever more critical in the age of AI.
According to the report, reliable sources say the Chinese government's target has become an unspoken mandate among chipmakers to use locally made 12-inch wafers. "Only 30% of the market will still be open to foreign players. Some Chinese chipmakers are still aiming to produce more advanced chips, and that part of the market still requires foreign market leaders' support," a chip industry executive reportedly told Nikkei Asia. "But for the local market in mature and legacy chips, basically local Chinese silicon wafers can already meet the demand and requirements.”
Earlier this month, we reported that Huawei was on track to challenge NVIDIA in the Chinese market, buoyed by rising demand and growing pressure from Beijing for tech firms to prioritize domestic suppliers. These developments are part of a broader, coordinated push to reduce reliance on foreign players across the semiconductor stack.
Today, many of the most critical segments remain dominated by overseas companies. Samsung Electronics and SK Hynix lead the global memory market, while Intel and NVIDIA remain dominant in high-performance computing chips. Even at the materials level, the supply chain is still largely controlled abroad, with the two largest silicon wafer manufacturers — Shin-Etsu Chemical and SUMCO — both based in Japan.
Together, these companies command a significant share of the global semiconductor supply chain, underscoring the scale of China’s challenge as it seeks to build a fully localized ecosystem.
China is already largely self-reliant in producing 8-inch silicon wafers, which are typically used for older-generation chips and certain power electronics. However, competing at the cutting edge requires access to more advanced 12-inch (300 mm) wafers, which are essential for manufacturing high-performance logic and memory chips. China still depends heavily on foreign suppliers for these larger wafers. We reported late last month that the US government is preparing to further block the export of advanced AI chips to China, further intensifying the country’s push to localize its semiconductor supply chain.
According to the report, China’s push into advanced wafer manufacturing is being led by Xi'an Eswin Material Technology, which is targeting 1.2 million 12-inch wafers per month by 2026 — enough to meet about 40 percent of domestic demand and push its global share past 10 percent. The report highlights a wider expansion across players such as National Silicon Industry Group, Zhonghuan Advanced, and Hangzhou Lion Microelectronics, with Eswin described as the most aggressive, adding roughly 700,000 wafers per month through new facilities in Xi’an and Wuhan.
The report said Eswin already supplies several major domestic chipmakers, including Semiconductor Manufacturing International Corporation (SMIC), and is increasingly becoming the default supplier for new fabs. It also claims links to global customers such as Micron Technology and United Microelectronics Corporation, while Samsung Electronics and SK Hynix are validating its wafers.
The report also added that Chinese foundries, alongside Huawei-linked firms, are ramping production of advanced chips — roughly in the 7 nm to 5 nm class — to meet AI demand. However, some production still depends on foreign wafers. It cites estimates from Bernstein Research suggesting that China met about 50 percent of its 12-inch wafer demand by 2025, with domestic players’ global capacity share rising from 3 percent in 2020 to 28 percent in 2025, and potentially to 32 percent by 2026.
