In the escalating US-China tensions, China's aggressive drive to boost domestic semiconductor production—coupled with a sweeping "trade-in" subsidy program—has led to a surge of orders flowing to South Korean 8-inch wafer foundries, creating an unexpected boon for the nation's mature chip manufacturing sector.
According to South Korean media outlet Newdaily, China's local demand for 8-inch wafer fabrication has increasingly shifted toward South Korean firms specializing in established process technologies. Industry leaders such as DB HiTek and SK Key Foundry have seen sustained growth fueled by Chinese clients.
Korean foundries reach capacity limits
Since early 2025, DB HiTek's 8-inch production lines have operated at over 85% capacity, up significantly from about 74% utilization in late 2024. This ramp-up reflects efforts to meet mounting Chinese orders. To capitalize on this trend, DB HiTek officially transformed its Shanghai office into a full-fledged company in March 2025, signaling a commitment to expanding its Chinese market presence.
In the first quarter of 2025, DB HiTek reported total revenues of approximately KRW2.76 trillion, with an estimated KRW1.7 trillion directly attributed to Chinese customers.
Similarly, SK Hynix subsidiary SK Key Foundry, also focused on 8-inch wafer manufacturing, has benefited from China's "trade-in" incentives. The foundry's utilization rates reportedly climbed above 80% in the first half of 2025. Unlike DB HiTek, SK Key Foundry's revenue has traditionally stemmed mainly from SK Hynix's AI memory chip demands. However, the recent surge in Chinese orders could see China accounting for up to 30% of its total sales.
This development marks a sharp shift since the formalization of US restrictions on China's access to advanced semiconductor technologies. The US government has prohibited exports of semiconductor equipment incorporating American technology, intensifying China's push to boost self-sufficiency in chip manufacturing.
China's domestic foundries, including industry giants SMIC and Hua Hong Semiconductor, have absorbed much of the demand from local IT companies, rapidly increasing their share of the global wafer foundry market.
CNY300 billion stimulus drives demand surge
China's sweeping "trade-in" policy—offering subsidies for consumers to scrap old durable goods and purchase new ones—is driving a surge in demand for upgraded electronics and fueling semiconductor consumption. The government allocated approximately CNY162 billion for the program in the first half of 2025, with plans to inject another CNY138 billion in the second half, bringing the total to roughly CNY300 billion for the year.
In response, Chinese manufacturers have ramped up production and rolled out new products, triggering a sharp increase in demand for key semiconductors such as PMICs, display driver ICs, and MCUs used in appliances and vehicles. However, with China's domestic foundry capacity nearing saturation, many Chinese clients have turned to South Korea to meet their chip needs.
DB HiTek, a South Korean 8-inch foundry specializing in legacy semiconductors for electronics and automobiles, has been a major beneficiary. Highly sensitive to IT demand cycles, the company has seen orders from China surge since early 2025. Utilization rates at its Bucheon facility have climbed above 100%, with overall company utilization nearing 85%, up from 74% in the second half of 2024. As a result, DB HiTek recently established a new corporate entity in Shanghai to expand its local business operations.
Similarly, SK Key Foundry—another South Korean foundry focused on 8-inch production—has seen its utilization rebound to over 80%, buoyed by orders from firms supplying components to China from the US and Europe.
Warning signs of overcapacity
Still, analysts warn that this momentum may prove short-lived. While South Korean foundries are enjoying a temporary boom due to China's stimulus-driven demand, there is growing concern that the current "order overflow" could eventually give way to global overcapacity, setting the stage for intensified price competition and pressure across the mature-node foundry sector.
Article edited by Jerry Chen
