China silicon wafers enter AI-led upcycle: prices rise, 12-inch capacity expands

The 3-billion-yuan investment by Hangzhou Lion Microelectronics signals China's push to expand 12-inch wafer capacity amid rising AI-driven demand. This move will reduce reliance on imported wafers, particularly in AI chips and high-performance computing, spurring upstream supply chain upgrades in silicon materials, photoresists, and equipment. Technologically, it strengthens domestic capabilities in advanced nodes, fostering vertical integration. From a compliance standpoint, companies face heightened risks from export controls and supply chain disruptions, especially in critical materials and tools. Competitors may respond by accelerating investments in China or seeking alternative supply routes, intensifying market competition. Over the next 12-24 months, sustained AI demand will likely trigger a cycle of capacity expansion and pricing recovery, reshaping the industry landscape.