China Plans to Lower Mature Chip Prices to Force Competitors Out of Business

China Plans to Lower Mature Chip Prices to Force Competitors Out of Business

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China planea hundir el precio de los chips maduros para forzar el cierre de su competencia

We previously discussed the possibility that China was planning something really big behind the scenes, and today we have the answer through a fairly extensive report that continues from where we left off. China is preparing for the future with two clear moves. The first is to get ahead of the US by internationally filing patents for cutting-edge technologies, while the second, which we delve into today, comes from the past. China aims to sink the price of mature chips to eliminate its competition.

Of course, if, as we saw last week, it only has one company among the 25 largest in the world and it is about to fall out of that ranking, how will it undertake such a massive effort worldwide? The answer, in part, we saw: growing by 60% in 3 years and doubling production capacity in just 5. So, what’s new? The attack is moving up to 2026 and is deeper than what was previously said.

China wants to sink chip prices by eradicating its Western and Asian competition

The problem, which we have been observing in installments as the information came out, is that China, under Xi Jinping, has “loosened its purse strings.” And when a country like this puts money on the table, it means business.

It is now known that just before Biden managed to get Europe to cut off scanner supplies, Xi Jinping’s people were able to buy them at unprecedented levels. This does not mean that they were delivered – that will come later – but they are already paid for and ordered legally.

To give an idea of the madness that China has put on the table, just one figure: the volume of imports for lithography equipment from ASML increased by 1,050%. And now, we understand where such huge capacity increases will come from in such a short time.

The first blow will come in 2026, and the last one by the end of 2030

More numbers to understand China’s deployment here. It currently has 48 direct chip companies of different types and hundreds of companies related to these. Well, there are 44 active wafer FABs, 7 inactive, totaling 51 FABs that will all be operational soon.

Of the 44 active ones, 25 are said to be destined for 12-inch wafers, 4 focus on a 6-inch size, and 15 focus on 8-inch wafers. With this data, we learn about the new developments that are coming, as no fewer than 22 more are projected – 15 for 12-inch wafers and 8 for 8-inch wafers.

Do you think the Chinese have finished? Not at all… The report goes further because, when these 22 FABs are completed, there are another 10 projected – 9 will be 12-inch and only 1 will go to 8-inch wafers. The most impressive part? All will be completed this year, meaning that by the end of 2024, 32 more chip FABs will have been built in China to produce large-scale wafers.

A worrying global market share

Now, with this incredible data clear, China plans to grow from a 29% share in mature lithographic processes to a spectacular 33% in just 3 years, by 2027. Therefore, the world would be divided that year with 33% for China, 42% for Taiwan, 5% for the US, 4% for South Korea, and the rest of the world taking the remaining 16% of production.

In other words, in 3 years, 75% of mature lithographic processes (above 16 nm) will be controlled by Taiwan and China. In this way, Xi Jinping has only one rival left to beat. He can play with a cost price to attract customers from much of the world and sink the prices, as nobody can compete with China in terms of production volume and costs at that level.

The entry “China plans to sink the price of mature chips to force the closure of its competition” first appeared on El Chapuzas Informático.

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