Europe sinks as China rises to lead in IC wafer capacity by 2026
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China will overtake Korea and Taiwan as it rises to become the leading region for IC wafer capacity by 2026. Meanwhile Europe’s share of wafer manufacturing capacity will continue to diminish, according to figures from Knometa Research.
Global wafer capacity for IC production is projected to grow 4.5 percent year-to-year by December 2024 followed by growth of 8.2 and 8.9 percent in 2025 and 2026, respectively.
China has been investing heavily in chip manufacturing capacity behind the leading edge and will take market share from all the other regions except the Americas. As a result, China will overtake South Korea and Taiwan in 2026, Knometa forecasts.
Forecast installed monthly wafer capacity shares by geography. Source: Knometa.
At the end of 2023, China’s share of global monthly wafer capacity was 19.1 percent, a few percentage points behind Korea and Taiwan. By 2025, the capacity share of China is projected be roughly on par with that of the leaders. Then, in 2026, China is expected take the top spot.
Europe which had 5 percent of global IC wafer capacity in December 2021 will see its share continue to decline from 4.8 percent in December 2023 to 4.5 percent in December 2026. This is despite plans for European wafer fabs announced by Intel, TSMC and partners and a joint enterprise by ST and Globalfoundries. Most of these will not come online in volume until after the period of this forecast.
The European Union and European Commission are eager for member states to support European chip manufacturing with the goal of doubling chip market share to 20 percent by 2030. Knometa’s forecast makes that hope look forlorn.
Everyone spending
The fact is that substantial IC manufacturing capacity is being installed in most of the world’s geographic regions and usually with substantial subsidies from governments.
US-led sanctions on China’s semiconductor industry are hampering efforts by Chinese companies to develop and install capacity for leading-edge process technologies but the country is still expected to show the highest growth in wafer capacity in the next few years. US and European politicians have now started to express concern that Chinese manufacturing of legacy chips could swamp and disrupt markets around the world.
China’s ability to claim the global leadership position is dependent on foreign companies with fabs in China – such as Samsung, SK Hynix, TSMC, and UMC – continuing to be granted some reprieves from the sanctions.
A substantial portion of the IC wafer capacity in China is owned by foreign companies, including those listed above as well as Powerchip, through its Nexchip subsidiary, Texas Instruments, Alpha & Omega Semiconductor, and Diodes. While China was home to about 19 percent of the world’s wafer capacity at the end of 2023, the share held by Chinese companies was only 11 percent.
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