A wave of price increases is rippling through the semiconductor industry from the bottom up; silicon wafers—the "foundational building blocks" of chip manufacturing—have seen price hikes across all sizes for the first time in three years.

Recent media reports indicate that the semiconductor silicon wafer market is experiencing a broad-based price hike covering the full range of 6-inch, 8-inch, and 12-inch wafers. In fact, leading overseas manufacturers had already implemented their second round of price increases this year back in May, focusing primarily on 12-inch and high-end specialized wafers. While prices for advanced process wafers remain firm, products made using mature processes are also seeing catch-up price increases.

In response to the shifting supply-demand landscape, some domestic silicon wafer manufacturers began adjusting their prices in June. In their latest interim reports, several industry leaders confirmed that the sector has entered a new cycle of rising prices and expressed optimism that this trend will continue.

However, due to constraints from pre-existing long-term contracts with fixed pricing, a divergence has emerged between spot market rates and contract prices. Consequently, there is a time lag before these price hikes translate into financial performance, with some manufacturers expecting the benefits to materialize gradually in the second half of the year.

Widespread Price Hikes Across Silicon Wafer Sizes

The wave of price increases in the semiconductor silicon wafer market is spreading across the board, characterized by a distinct pattern: advanced process wafers lead the rise, followed by mature process products.

Recent reports indicate that the market is seeing its first wave of price hikes in three years, with simultaneous increases across the entire product lineup—6-inch, 8-inch, and 12-inch wafers—starting at a minimum of 10%. Notably, this marks the industry's first large-scale, across-the-board price adjustment in over three years.

GlobalWafers, one of the world's top three silicon wafer manufacturers, confirmed that demand in certain end markets has recently improved and that inventory levels across the supply chain are healthier than in the past. Formosa SUMCO Technology (FST) also stated that, driven by cost pressures and demand support, it has begun discussing price adjustment mechanisms with customers and anticipates stronger operational performance in the second half of the year compared to the first. Wafer Works has likewise confirmed active negotiations with customers regarding price adjustments.

In reality, signals of these price increases had already emerged as early as May of this year. On May 10, the world's three leading silicon wafer manufacturers—Shin-Etsu Chemical, SUMCO, and GlobalWafers—simultaneously issued price hike notices, marking the second round of price increases this year. Standard 12-inch wafers saw price hikes of 5%–8%, while high-end specialized wafers designed for AI and HPC applications saw increases of 18%–22%. The adjustments remain focused on 12-inch and high-end specialized wafers.

"12-inch wafers directly address the demand for advanced process nodes used in computing power, smartphones, and PCs, leading the way in price hikes. Meanwhile, 8-inch and 6-inch wafers primarily serve the automotive and industrial power chip sectors; as downstream inventory clearing gradually concludes, these segments have now entered a catch-up phase for price increases," explained Yu Yiran, Managing Director at CIC, to reporters. However, with overseas manufacturers focusing capacity expansion on 12-inch wafers and new supply for 8-inch wafers remaining limited—coupled with a rebound in demand for power devices—the momentum for these catch-up price increases is strengthening.

This aligns with the views of Ginji Yada, Chairman of SEMI SMG and General Manager of Sales and Marketing at SUMCO.

He noted that silicon wafer shipments maintained steady growth in the second quarter of this year, with robust and expanding AI-related demand spreading from advanced logic and memory sectors to power devices, optoelectronics, and other markets. Additionally, demand from the industrial and automotive sectors is recovering.

Regarding the data, the quarterly analysis report on the silicon wafer industry released by SMG shows that global silicon wafer shipments in the second quarter reached 3,573 million square inches (MSI), marking a 7.4% year-on-year increase and a 9.1% quarter-on-quarter rise.

Beyond the surge in demand, supply and cost factors have also served as key catalysts for this round of price hikes. Having endured the pain of the previous overcapacity cycle, major overseas silicon wafer manufacturers have generally adopted a cautious approach to expanding production. Hua Xiaowei, an analyst at Guosheng Securities, noted that the long lead times for capacity expansion, combined with an oligopolistic market structure dominated by international giants, make it difficult for the supply side to respond quickly to rising demand. Furthermore, across-the-board increases in costs—such as energy and labor—alongside disruptions in the supply of petrochemical raw materials from the Middle East, have further driven up silicon wafer prices. It is evident that the current round of price hikes for semiconductor silicon wafers is not merely a short-term speculative trend; rather, it is driven by a convergence of factors—including demand, supply, and costs—that have solidified the fundamental basis for this upward cycle.

When Will Domestic Manufacturers Reap the Benefits?

Following price increases by leading global manufacturers, some domestic silicon wafer producers began adjusting their prices in June, and the upward trend has continued through August.

In June, media reports indicated that Jinruihong, a subsidiary of Lion Micro (Li'an Wei), announced a 10% to 15% price increase for its silicon wafer business, effective July 1. During a recent earnings briefing, Lion Micro Chairman Wang Minwen explicitly stated: "Market demand for semiconductor silicon wafers is robust, and the industry has entered a cycle of rising prices."

Additionally, Minde Electronics stated during an institutional investor briefing in early July that Jingrui Electronics—an associate company specializing in wafer raw materials—had issued a price adjustment notice in June, raising prices by 15% starting July 1. Jingrui Electronics' key products include 4- to 8-inch silicon epitaxial wafers, double-side polished wafers for MEMS sensors, SiC epitaxial wafers, and SOI wafers.

Beyond the companies that have already implemented price adjustments, numerous silicon wafer manufacturers have confirmed in their interim reports and earnings briefings that domestic market prices have stabilized and begun to rise. They anticipate the upward trend will persist, with the associated benefits likely to materialize gradually over the second half of this year and the first half of next year.

Xi'an Yicai, a company specializing in 12-inch lightly doped silicon wafers, noted in its interim report that the trend of market demand growth became increasingly clear in the second quarter of this year. This drove a rise in spot prices for 12-inch silicon wafers, a trend expected to continue. However, because orders delivered in the first half of the year were largely finalized by the end of 2025—locking in both production capacity and shipment prices—the company's financial performance during the reporting period was only marginally affected by the aforementioned increases in demand and prices.

Most orders for domestically produced silicon wafers are based on long-term agreements signed previously—with terms ranging from six months to three years—resulting in a time lag before the benefits of price increases are fully realized. A representative from a leading domestic silicon wafer manufacturer told reporters: "We are currently seeing relatively tight supplies of silicon wafers on the spot market. During business discussions in the first half of the year, there was a strong industry-wide consensus regarding the rise in spot prices. For silicon wafer companies, negotiating prices under these conditions is certainly more advantageous than it was last year."

"Even if the price increases are fully reflected in the company's financial statements, that likely won't happen until the fourth quarter of this year or the first half of next year," the representative added.

Another industry leader, NSIG (Shanghai Simgui Technology), also confirmed the rebound in market prices in its interim report: after a period of sustained price declines across the industry from 2023 to 2025, the price of 300mm (12-inch) silicon wafers gradually stabilized and recovered in the first half of this year. The company is conducting price optimization and business negotiations tailored to specific products and customers, with the expectation that the resulting benefits will gradually materialize in the second half of 2026.

In contrast, Lion Micro—which focuses primarily on 12-inch heavily doped silicon wafers—has already benefited from the rebound in downstream demand during the first half of the year. "Unlike lightly doped silicon wafers—which are mainly used in advanced process applications like CPUs, GPUs, and memory—heavily doped wafers are primarily used in power semiconductors and discrete devices, where domestic production capabilities are relatively mature. Currently, demand for 12-inch heavily doped wafers is growing rapidly in sectors such as AI server power supplies and new energy vehicles," noted Yu Yiran.

In explaining its return to profitability for the first half of the year, Lion Micro stated that a significant improvement in the profitability of its semiconductor silicon wafer segment was the key factor. Driven by the AI ​​computing industry, market demand for heavily doped wafers surged. This, combined with the continued ramp-up of the company's 12-inch wafer production capacity and a shift toward a higher-end product mix, led to steady growth in overall production and sales volume. The substantial increase in 12-inch wafer shipments effectively diluted unit production costs, resulting in a marked year-over-year rise in the silicon wafer business's overall gross margin.

Prices for heavily doped wafers—currently in short supply—are expected to continue rising in the second half of the year; relevant companies may adjust prices for long-term contracts for the coming year as early as September or October.

The Right Time to Expand 12-Inch Wafer Capacity

Driven by the transmission of price increases and a recovery in downstream demand, ramping up 12-inch silicon wafer capacity has become a common strategy among domestic manufacturers. Since the beginning of 2026—and particularly in the second half of the year—major manufacturers have significantly accelerated the pace of announcements regarding their 12-inch silicon wafer projects.

On the evening of August 26, Lion Micro announced plans to invest 3 billion yuan to ramp up its semiconductor silicon wafer operations. The company intends to build facilities capable of producing 200,000 lightly doped 12-inch substrates and 120,000 12-inch epitaxial wafers per month. With a total investment of approximately 3 billion yuan and a five-year construction period, the project is expected to generate an annual output value exceeding 1.3 billion yuan once fully operational.

To address the supply gap for high-end domestic silicon wafers and meet the rapidly growing demand driven by AI computing power, high-end memory, and advanced logic chips, Xi'an Yicai announced on August 5 that it—alongside several strategic investors—would inject 6.5 billion yuan in additional capital into its wholly-owned subsidiary, Wuhan ESWIN Materials. These funds are earmarked entirely for the construction of the Wuhan 12-inch silicon wafer production base. Currently, the company’s monthly production and sales volume of 12-inch silicon wafers has surpassed 1 million units.

The semiconductor industry is inherently cyclical; the current AI-driven "super-cycle" has caused memory chip prices to skyrocket. While price increases have rippled through the supply chain—affecting products such as power semiconductors and electronic components—semiconductor silicon wafers (which serve as the fundamental "bedrock" for upstream chip manufacturing) have experienced a lag in realizing the benefits of these price hikes.

Amidst this wave of industry-wide capacity expansion, questions have arisen: will this surge in production lead to a future oversupply of silicon wafers?

Lion Micro noted that the silicon wafer industry is characterized by heavy asset requirements and long capacity ramp-up periods, resulting in relatively low supply elasticity. Establishing a 12-inch silicon wafer production line—from equipment procurement to a stable capacity ramp-up—typically takes 18 to 24 months; consequently, the pace at which capacity comes online lags significantly behind the rapid surge in downstream demand. Furthermore, leading overseas manufacturers have not engaged in large-scale expansion in recent years, and existing supplies are largely locked in by long-term contracts. Additionally, production lines have shifted toward lightly doped 12-inch wafers, squeezing the supply of heavily doped wafers and further exacerbating the market supply-demand gap.

A company representative interviewed regarding these developments explained that capacity expansion has been an ongoing process since construction began in 2018, involving counter-cyclical investment during the industry downturn of 2023–2025 and continued investment during the upturn. The company’s strategy aims to establish several modern factories over the next three to five years. Consequently, capacity expansion is "linked to the industry's up- and down-cycles, though not in a strictly linear fashion."

However, Yu Yiran noted that while barriers to entry for advanced-node wafers remain extremely high and supply remains scarce, a blind expansion of capacity for entry-level products—such as mid-to-low-end test wafers and dummy wafers—could trigger localized price wars.

This is precisely why NSIG (Shanghai Silicon Industry Group) has chosen to focus on expanding advanced production capacity and upgrading its product mix toward high-end offerings. The company stated that, in the short term, it will continue to advance the expansion of 300mm high-end silicon wafer capacity and ramp up production at its Taiyuan facility. By the end of the first half of the year, NSIG’s combined 300mm semiconductor silicon wafer capacity across its Shanghai and Taiyuan sites had reached 1 million wafers per month.

Continued investment by leading domestic players will further drive up the localization rate of 12-inch silicon wafers. According to forecasts by JW Insights, the localization rate for 12-inch silicon wafers in mainland China is expected to reach approximately 15%–20% in 2025 and rise to 25%–30% in 2026; as leading companies bring their capacity fully online, the localization process is set to accelerate further.

Opportunities abound, yet challenges remain. Industry analysts point out that domestic silicon wafer manufacturers still lag behind global giants in areas such as technology, customer base, and supply chain capabilities. Striking a balance between production capacity, technology, and profitability is a critical issue that domestic manufacturers must address. (Source: 21st Century Business Herald)

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