🧠 Food for thought

Implications, context, and why it matters.

The deal fits China’s state-backed effort to meet rising local demand

• SMIC is running close to full capacity, with utilization at 95.8% in Q3 2025 1.
• Much of that demand comes from China’s effort to make more of its own tech supply chain, and mainland China accounted for 86% of SMIC’s Q3 2025 revenue 2.
• The purchase also fits a broader national plan, with government incentives adding an estimated 2.8 percentage points to semiconductor market growth 3.
• Full control of the Beijing foundry unit comes as China plans to add 240,000 wafers a month of new 300mm (12-inch) chipmaking capacity after 2026 3.

China’s chip buildup could spark a price war in older semiconductors

• That wider push bolsters China in mature-node manufacturing, older but widely used chip production processes, and could raise its share of global 28 nm to 65 nm capacity to 39% by 2027 3.
• State-backed expansion also brings a higher risk of oversupply and lower prices for chips used in electric vehicles and Internet of Things (IoT) devices, connected products such as sensors and smart appliances 3.
• SMIC already cut 28 nm wafer quotes to about US$1,500 from roughly US$2,500 during the 2024 downturn 3.
• That path could split the global market, with China leading in mature nodes while US export controls still restrict access to the most advanced sub-7 nm chipmaking technologies 3.