According to the report released by Dongxing Securities, based on SEMI data, the increasing demand for chips is driving the continuous growth of global semiconductor wafer fabrication capacity, which is expected to rise from 31.5 million wafers per month in 2024 to 33.7 million wafers per month in 2025 (calculated in terms of 8-inch wafer equivalents), with growth rates of 6% and 7% for 2024 and 2025, respectively. The current rise of the AI industry has brought about high-end consumer electronics and computing power demand, and the wafer foundry industry is driven by the demand from AI, automotive electronics, and other sectors. Advanced processes and specialty technologies are expected to maintain growth in the coming years, benefiting targets such as SMIC (688981.SH, 00981), Hua Hong (688347.SH), and UNT (688469.SH).
<h2>The main points of Dongxing Securities are as follows:</h2>
What is wafer foundry?
Wafer foundry refers to the specialized manufacturing of semiconductor wafers, accepting commissions from other integrated circuit (IC) design companies for manufacturing without engaging in design. Wafer foundry is one of the important links in the semiconductor industry. The upstream of the wafer foundry industry chain includes semiconductor materials, equipment, and related design service supply links; the midstream includes wafer foundry processing service links; and the downstream includes wafer packaging and testing links, as well as end application fields such as consumer electronics, semiconductors, photovoltaic cells, and industrial electronics.
Wafer manufacturing processes can be roughly divided into advanced logic processes and specialty processes; by process node, they can be divided into advanced processes and mature processes, with nodes below 14nm classified as advanced processes and those at 28nm and above classified as mature processes. With the evolution of process nodes, the investment required for equipment has significantly increased, with specialty processes (generally at 40nm and above) requiring an investment of two to three billion dollars for every 50,000 wafers of capacity, while advanced processes (28nm and below) require an investment of at least 4 billion dollars or more.
What are the advantages and challenges of wafer foundry?
Currently, wafer foundry shows clear trends towards localization and sustained market demand. However, it also faces challenges such as geopolitical instability, significant first-mover advantages of leading companies, reliance on key materials, and yield issues.
What is the current state of the industry market?
According to semiconductor sales and the Philadelphia Semiconductor Index, the industry is currently in a prosperous cycle. Based on SEMI data, the increasing demand for chips is driving the continuous growth of global semiconductor wafer fabrication capacity, which is expected to rise from 31.5 million wafers per month in 2024 to 33.7 million wafers per month in 2025 (calculated in terms of 8-inch wafer equivalents), with growth rates of 6% and 7% for 2024 and 2025, respectively.
Global semiconductor sales are expected to grow at a compound annual growth rate (CAGR) of 9% from 2025 to 2030, with total sales exceeding 1 trillion dollars by 2030. The global wafer foundry industry presents a competitive landscape characterized by &#34;one leader and many strong players.&#34; TSMC, as the industry leader, occupies 60% of the market share, ranking first. From a geographical distribution perspective, by 2027, mainland China will dominate mature processes, while Taiwan will still hold a leading position in advanced processes
What major companies in mainland China are involved?
Currently, domestic companies such as SMIC, Hua Hong Semiconductor, Jinghe Integrated, and UNT are involved. SMIC is one of the world's leading integrated circuit wafer foundry companies and a leader in the integrated circuit manufacturing industry in mainland China. Hua Hong Semiconductor is a global leader in specialty process wafer foundry and has the most comprehensive specialty process platform coverage in the industry. Jinghe Integrated's foundry products are widely used in liquid crystal panels, mobile phones, consumer electronics, and other fields. In 2022, Jinghe Integrated achieved the largest global market share in the liquid crystal panel driver chip foundry sector. UNT focuses on four technology platforms: power devices, MEMS, BCD, and MCU, with AI becoming a new growth area.
Taking TSMC as an example, what are the trends in wafer foundry technology development?
Currently, global capacity continues to expand, with market share concentrating among leading companies. The 3/2nm process dominates the high-end market, advanced processes are accelerating, and competition in mature processes is fierce. Packaging and process technologies are developing in synergy, with the 2nm process adopting GAAFET architecture. With the development of AI, the demand for HPC is continuously expanding, leading to a rising demand for wafer foundry services.
Risk Warning
Downstream demand slowdown, technology introduction not meeting expectations, customer introduction not meeting expectations, geopolitical risks

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Dongxing Securities Co., Ltd. released a research report indicating that global semiconductor wafer foundry capacity is expected to reach 31.5 million pieces per month in 2024 and increase to 33.7 million pieces per month in 2025 due to the continuous growth in demand for AI and automotive electronics. The wafer foundry industry will benefit from the demand for advanced processes and specialty technologies, with related companies including SMIC, Hua Hong, and UNT. Despite strong market demand, the industry still faces challenges such as geopolitical issues and material dependencies

- Dongxing Securities reports that global semiconductor wafer fabrication capacity is projected to grow from 31.5 million wafers per month in 2024 to 33.7 million in 2025, driven by rising chip demand.  
- The growth rates for 2024 and 2025 are estimated at 6% and 7%, respectively, with the AI industry significantly influencing high-end consumer electronics and computing power needs.  
- The report highlights the competitive landscape, with TSMC holding a 60% market share, while domestic players like SMIC and Hua Hong Semiconductor are positioned to benefit from this expanding market.

Dongxing Securities: Global wafer foundry capacity continues to expand, market share concentrates towards leading enterprises