China is reportedly aiming for domestic suppliers to provide more than 70% of the silicon wafers used by its chipmakers in 2026, extending its semiconductor localization efforts to a basic material used in chip production.
Multiple anonymous sources described the goal as an unspoken directive among Chinese chipmakers to use domestically made 12-inch wafers.
Silicon wafers provide the substrate on which semiconductor devices are manufactured. Twelve-inch wafers, designated as 300 mm wafers, are used in logic and memory production. Eight-inch wafers remain common in older manufacturing processes and some power electronics.
Bernstein Research analyst David Dai estimated that domestic suppliers met about half of China’s demand for 12-inch wafers in 2025. Bernstein separately estimated that Chinese producers’ share of global silicon wafer capacity rose from 3% in 2020 to about 28% in 2025, and forecast a rise to 32% in 2026. The firm cautioned that utilization rates and production quality would affect actual output.
Eswin’s expansion plans
Xi’an Eswin Material Technology is among the companies expanding domestic wafer capacity. An earlier company projection put combined capacity at 1.2 million 12-inch wafers a month after its second factory reached full capacity and technical improvements were made. That projection described planned capacity rather than an achieved production level.
Two sources with direct knowledge of the matter said Eswin planned to add hundreds of thousands of wafers in monthly capacity during 2026 through facilities in Xi’an and Wuhan.
Other domestic wafer producers include National Silicon Industry Group, Zhonghuan Advanced and Hangzhou Lion Microelectronics.
Eswin is reported to supply major Chinese chipmakers, including Semiconductor Manufacturing International Corporation, or SMIC. Eswin says its domestically made wafers have become the default choice for new domestic chip plant expansions.
The company also says it supplies international customers and that other chipmakers are validating its products. Product validation does not establish that a customer has begun broad commercial use.
Different requirements across chipmaking processes
China is reported to be largely self-reliant in 8-inch wafers. Domestic substitution in the 12-inch market remains less uniform across manufacturing processes.
A chip industry executive with knowledge of the situation said Chinese wafer suppliers could meet domestic demand and requirements for mature and legacy chips, while some Chinese chipmakers pursuing more advanced production still needed support from established foreign suppliers.
Japan’s Shin-Etsu Chemical and SUMCO are established international wafer suppliers. Wafer quality, defect levels and consistency are important manufacturing requirements; additional capacity alone does not demonstrate that a supplier’s products meet the specifications of every production process.
AI demand and export restrictions
Chinese foundries and Huawei-linked companies are also reported to be increasing capacity for chips roughly in the 7 nm to 5 nm class to meet demand for AI computing. Some advanced production is reported to continue requiring foreign wafers.
The wafer expansion comes against a backdrop of U.S. restrictions on advanced semiconductor technology. On December 2, 2024, the U.S. Bureau of Industry and Security announced additional controls covering semiconductor manufacturing equipment, software tools and high-bandwidth memory. The agency said the measures were intended to restrict China’s ability to produce advanced semiconductors for military applications.
