China’s Nexchip has global ambitions as legacy chips thrive in AI’s shadow
China’s Nexchip, a semiconductor foundry specializing in older-generation chips, recently debuted on the Hong Kong Stock Exchange, raising HKD 6.9 billion (USD 880.3 million) through its IPO. This dual listing, following its 2023 debut on Shanghai’s Star Market, aims to attract international investors and facilitate overseas equipment purchases. Nexchip, established in 2015 with significant state backing and technical assistance from Taiwan’s Powerchip, has grown to become the world’s eighth-largest semiconductor foundry. The company’s success is fueled by a global shortage of mature-node chips, as leading foundries prioritize advanced chips for AI, creating a favorable environment for latecoming Chinese players. Nexchip plans to increase R&D investment, expand production capacity, and accelerate global expansion.
Nexchip’s successful Hong Kong IPO highlights a significant trend in Asia’s semiconductor landscape: the strategic importance and resurgence of mature-node chip manufacturing. While global attention is heavily focused on cutting-edge AI chips, the underlying demand for legacy semiconductors, crucial for display panels, image sensors, and power management, remains robust. This creates a substantial opportunity for Chinese foundries like Nexchip, which are heavily supported by government policies and state-backed investment, allowing them to expand aggressively even in a capital-intensive sector where late entrants typically face steep challenges.
This dynamic is reshaping regional market dynamics. As industry giants like TSMC shift focus to advanced AI chips, a vacuum is created in mature-node production, leading to tightening supplies and potential price increases. This benefits not only Chinese players but also other regional foundries like Taiwan’s UMC, which also specialize in these technologies. The strategic investments by Chinese foundries, despite lower revenue-to-capex ratios compared to international peers, underscore a long-term national strategy to build self-sufficiency and global competitiveness in the semiconductor supply chain, leveraging government support to overcome traditional market constraints.
