The New Mature‑Node Chip Crunch: How the AI Boom Is Pushing Orders to Chinese Foundries

The semiconductor industry is facing a new bottleneck — not in the most advanced chips, but in the mature‑node processes that power everyday electronics. A combination of the global AI boom, recovering demand for conventional chips, and geopolitical supply‑chain shifts is tightening capacity for older manufacturing nodes such as 28 nm, 40 nm, and other legacy processes.

As leading foundries focus more resources on high‑margin AI processors and high‑bandwidth memory (HBM), some mature‑node orders are being redirected to Chinese manufacturers like Semiconductor Manufacturing International Corp. (SMIC). The result is rising utilisation rates at these fabs and growing revenue for companies positioned in this part of the market.

Why mature‑node semiconductor capacity is tightening

The crunch is less about a global shortage of fabrication capacity and more about how capacity is being allocated.

First, the rapid expansion of AI infrastructure has made advanced chips significantly more profitable. Foundries are prioritising production of AI GPUs, AI accelerators, and advanced packaging tied to these chips, along with the HBM memory used in AI systems. As capacity shifts toward these products, less manufacturing space remains for mature‑node devices.

Second, demand for mature‑node chips has been recovering across multiple industries. Power‑management ICs and other legacy components are widely used in:

• consumer electronics
• electric vehicles and automotive electronics
• industrial equipment and robotics
• IoT devices

When these sectors rebound simultaneously, they place heavy pressure on the mature‑node supply base.

Market research firm TrendForce projects that the average utilisation rate for 8‑inch fabs among the world’s top foundries could approach about 90% in 2026 and remain above 80% into 2027, reflecting sustained tightness in mature‑node capacity.

How the AI boom is shifting orders to Chinese foundries

As overseas foundries concentrate on advanced AI chips, many customers are looking for alternative suppliers for mature‑node production.

Chinese fabs have become a major destination for these orders. According to industry commentary from SMIC leadership, the surge in AI demand has directly tightened supply for mature‑process chips such as power‑management ICs, contributing to increased orders for Chinese foundries.

Several factors make this shift possible:

• Chinese foundries maintain large mature‑node manufacturing footprints.
• Some Western and Asian foundries are scaling down older fabs or reallocating them to higher‑margin processes.
• Supply‑chain localisation policies encourage domestic sourcing of chips within China.

This combination allows Chinese manufacturers to capture order spillover when global leaders focus on advanced nodes.

Rising utilisation and industry reshaping

The redistribution of orders is visible in utilisation and market dynamics.

SMIC’s utilisation rates have climbed sharply alongside stronger wafer shipments and mature‑node demand. By the end of 2025, utilisation was reported above 93%, reflecting strong demand for its fabrication capacity.

Across the wider foundry market, AI demand has also strengthened the dominance of advanced‑node leaders. For example, TSMC reached roughly 70% global foundry market share in Q2 2025, largely driven by advanced‑node chips and packaging used in AI systems.

This divergence highlights a growing structural split in the industry: advanced‑node leaders capture the AI boom, while mature‑node suppliers absorb the spillover demand.

Impact on SMIC revenue growth

Chinese foundries — especially SMIC — are benefiting from the mature‑node shift.

SMIC reported strong financial results as demand improved:

• $2.49 billion revenue in Q4 2025, up from $2.38 billion in Q3 2025 and $2.21 billion a year earlier.
• $9.33 billion total revenue in 2025, up from $8.03 billion in 2024.
• Net profit of $685.1 million in 2025, a 39% year‑over‑year increase.

Much of this growth reflects higher wafer shipments and stronger utilisation tied to mature‑node demand.

The broader industry takeaway

The emerging mature‑node shortage is largely the result of structural demand shifts rather than a universal chip shortage. AI infrastructure is pulling capacity toward advanced processes and HBM, while demand for mature‑node chips remains strong across everyday electronics.

As global foundries concentrate on the most profitable AI technologies, Chinese manufacturers with large mature‑node capacity are increasingly positioned to capture overflow demand. The result is a reshaping of the semiconductor supply chain — where AI accelerates both advanced‑node leadership and the strategic importance of mature‑node fabs.