Seoul [South Korea], May 12 (ANI): China is accelerating efforts to increase domestic production of silicon wafers as artificial intelligence-driven chip demand continues to surge globally, according to a news report by The Korea Herald.

The report stated that China aims to source more than 70 per cent of its advanced silicon wafers domestically by 2026 as part of a broader push to strengthen its semiconductor supply chain and reduce dependence on foreign suppliers.

While experts believe China's rise is unlikely to immediately disrupt the global semiconductor industry, they noted that the country is steadily reinforcing one of the most critical layers of chip manufacturing amid rising demand for AI-related infrastructure.

'The world's top five wafer suppliers are unlikely to face a serious threat from China's rise, but they will still need to keep Chinese rivals in check by maintaining their technological lead,' said Park Jae-geun, distinguished professor at Hanyang University's Department of Semiconductor Engineering.

The global silicon wafer market is currently dominated by a small group of major companies, including Shin-Etsu Chemical and Sumco from Japan, GlobalWafers from Taiwan, Siltronic from Germany and SK Siltron from South Korea.

According to the report, Beijing has encouraged local chipmakers to adopt domestically produced 12-inch wafers as AI infrastructure investments continue to boost semiconductor demand. Nikkei Asia reported that China has effectively made the use of locally produced wafers an 'unspoken mandate,' leaving only around 30 per cent of the domestic market available to overseas suppliers.

Chinese wafer manufacturer Eswin Material Technology said its combined production capacity will reach 1.2 million 12-inch wafers per month by 2026, enough to meet around 40 per cent of China's domestic demand. The company added that the expansion could help it secure a global market share exceeding 10 per cent.

Eswin also said it already supplies wafers to major global companies including Micron Technology, TSMC, GlobalFoundries and United Microelectronics Corporation.

The report noted that Samsung Electronics and SK hynix, both of which operate production facilities in China, are also evaluating Eswin's products.

However, experts said major chipmakers are still expected to rely on established suppliers for advanced commercial production due to the technology gap.

'Top companies such as TSMC are unlikely to use Chinese wafers for advanced mass production and will continue sourcing prime wafers from established suppliers. That shows the technology gap remains substantial,' Park said.

Industry officials cited in the report said Korean chipmakers may currently be using Chinese wafers mainly for testing and evaluation rather than large-scale production.

The report also highlighted growing concerns over possible wafer shortages as AI-driven semiconductor demand rises globally.

Samsung sources wafers from suppliers including Siltronic and SK Siltron, while SK hynix procures them from manufacturers with production facilities across South Korea, Japan, Germany and the US.

SK Group Chairman Chey Tae-won said shortages in high-bandwidth memory are largely linked to wafer supply constraints.

'It takes at least four to five years to secure additional wafer capacity,' he said, warning that industrywide HBM shortages could continue through 2030.

According to industry association SEMI, global silicon wafer shipments reached 3.28 billion square inches in the first quarter, up 13.1 per cent from a year earlier.

SEMI projects wafer shipments will rise further to a record 15.49 billion square inches by 2028, driven by increasing AI data center construction and growing edge computing demand.

The report added that China's localisation push is also aimed at preparing for potential future US trade restrictions by strengthening domestic supply chain resilience. (ANI)