Chinese chip manufacturers have started offering discounts of up to 40% on their services

The existing sanctions of the United States and allies do not greatly limit the access of Chinese companies to equipment for the production of chips using mature technical processes, so the local semiconductor industry is not only rapidly increasing its capacity, but is also beginning to put pressure on foreign competitors with its aggressive pricing policy.

Image Source: Hua Hong Semiconductor

According to Economic Daily News, Chinese contract chip makers SMIC, HuaHong and Nexchip are now offering discounts on 300mm silicon wafers with their products of up to 40% compared to their Taiwanese competitors. In the segment of 200 mm silicon wafers, discounts reach 20 or 30%. The discounts are most noticeable in the segment of services for the production of 40-nm and 45-nm chips.

On the one hand, this caused an influx of orders from Taiwanese chip developers to China. On the other hand, this is forcing Taiwanese chip makers to reduce prices for their services in order to retain customers. The utilization rate of production lines in Taiwan for a certain range of mature technologies has fallen to 70%. According to analysts, the price situation will not stabilize before the second half of 2025.

It is noteworthy that the leaders of the Chinese market will continue to commission new contract production facilities next year. The ten largest mature technology chip makers will collectively increase their production volumes by 6% next year. At least the plans of SMIC, HuaHong and Nexchip include the construction of new enterprises in China in 2025. The listed companies occupy third, sixth and tenth places in the ranking of the world’s largest contract chip manufacturers, respectively. Apart from TSMC, which dominates the market, only these three companies were able to increase their revenue sequentially in the third quarter by more than 10%.