China's aggressive expansion into mature chips, expected to account for 28% of the market in 2025, is driving prices down to previously unthinkable levels
Nikkei Asia :
Context & Ripple Effects
China’s mature-node buildout has been supported by a surge in demand for less-advanced production tools: Japanese trade data previously showed more than half of chipmaking-equipment exports going to China for three consecutive quarters through early 2024.
The story broadens a pattern visible across Chinese semiconductor segments. Reporting earlier in 2025 projected China’s nascent DRAM share reaching 10% as domestic suppliers added output, while mature chips now show the more immediate effect of capacity expansion: price pressure.
First-order effects
- Mature-chip buyers gain access to substantially cheaper supply, while incumbent producers in established manufacturing hubs face immediate pressure on pricing and utilization.
- China’s manufacturers can use scale in mature segments to win volume, even where lower selling prices compress returns across the market.
Second-order effects
- Rival mature-node fabs will have to choose between matching prices, narrowing their product focus, or accepting lost share; each response puts pressure on margins and future capacity plans.
- Demand for the older equipment used in these lines can remain resilient, reinforcing the equipment-import pattern already visible in China’s purchases of less-advanced chipmaking tools.
Third-order effects
- If persistent, the oversupply could deepen a split between strategically differentiated chips and commoditized mature-node capacity, with price competition increasingly set by China’s production scale.
- China’s reported push for domestic equipment in new capacity could make the mature-chip supply chain more localized over time, though its effect on global pricing will depend on how quickly capacity is absorbed.
The trend: China’s semiconductor strategy is moving from building domestic capacity to using scale in mature categories as a competitive lever in global component pricing.