On October 16, according to a report by the Economic Daily, TrendForce released a report indicating that due to the non-implementation of U.S. semiconductor tariffs, low IC factory inventory levels, the smartphone peak season, and strong AI demand, the capacity utilization rates of wafer foundries in the second half of the year did not decline as expected. Some manufacturers performed better in this quarter than in the third quarter, and some are even considering price increases. The semiconductor supply chain has temporarily exited the inventory correction cycle.
However, TrendForce also noted that the uncertainty of tariff policies and macroeconomic factors still exist. Additionally, the lack of innovative applications in consumer products and extended replacement cycles may pose hidden concerns for the market in 2026. It remains to be seen whether the semiconductor supply chain can maintain a stable trend.
In the second half of 2025, the MCU market experienced a modest recovery in consumer, home appliance, industrial, and automotive fields, but the effect of customers pulling goods in advance weakened. In September, Taiwanese manufacturers saw a year-on-year decline in revenue. Holtek, for example, stated that customers are more inclined to place short-term orders. In the second quarter, GigaDevice’s MCU revenue increased by nearly 20% quarter-on-quarter, with a slight decline in gross margin. Future product prices are expected to remain stable, with growth potential in high-barrier domestic substitution areas.
InnoTek expects pressure in the home appliance market, but growth is anticipated in variable-frequency large home appliances. The electric bicycle MCU market is also showing signs of improvement, and AI PCs are driving the recovery of the PC market. Zhongwei Semiconductor’s product prices have bottomed out, and there is a possibility of increased upstream costs, which will be passed on. The increase in the proportion of high-value-added products is expected to drive a recovery in gross margin, with deepened cooperation in the fields of small home appliances, automobiles, and robots. Fudan Microelectronics shipped over ten million automotive-grade MCUs in 2024, with a significant year-on-year increase in shipments in the first half of 2025, mainly applied in body control and comfort systems.
On October 15, according to SemiMedia, AMD made significant progress in the AI processor market. Oracle announced on October 14 that it will deploy approximately 50,000 AMD chips in its global data centers starting from the third quarter of 2026 to support large-scale AI training and inference workloads. AMD currently offers GPU accelerators, general-purpose CPUs, and network chips to meet the comprehensive solution needs of data center operators.
On October 16, according to the Financial Weekly, the memory industry is experiencing a rare shortage. Adata’s four major product lines (DDR4, DDR5, NAND Flash, and HDD) are short of supply for the first time. Adata Chairman Chen Li-bai said that the development of AI has prompted the three major original manufacturers to adjust their production capacity. CSP manufacturers with strong financial resources (such as OpenAI) have become the main “grabbing goods” parties, making it difficult for downstream module manufacturers to compete.
From the supply side, the three major original manufacturers have decided to stop producing DDR4, retaining only a small amount of capacity for customers with long-tail demand who have signed long-term contracts, resulting in a decreasing DDR4 capacity. NAND Flash is also in short supply due to the increased demand for SSDs driven by AI applications, and this shortage is expected to last until the first half of next year.
Entering the fourth quarter, the three major DRAM manufacturers’ inventories are running low, with only 2 to 3 weeks of inventory remaining. On the demand side, AI demand is key. The three major original manufacturers are actively expanding production to HBM and DDR5. CSP manufacturers have placed large, long-term orders directly with the three major original manufacturers, and OpenAI has also signed contracts with the two major South Korean memory manufacturers.
On October 15, Omdia data showed that the global smartphone market grew by 3% year-on-year in the third quarter of 2025. Samsung, Apple, Xiaomi, Transsion, and vivo ranked as the top five manufacturers.
New product launches drove market growth, but rising component costs have squeezed manufacturers’ profit margins, putting profitability under pressure. With the rapid growth of data centers and AI investments, semiconductors such as storage and memory face significant cost pressures.
On October 15, according to media reports, Baotou Steel and Northern Rare Earth announced that the transaction price of rare earth concentrate for the fourth quarter of 2025 has been raised to 26,205 yuan per ton, a 37.13% increase from the third quarter. The price hike is due to the continuous growth in demand for rare earths in the fields of new energy vehicles and wind power, as well as the upgrading of domestic policy controls, especially the stricter export controls on rare earths implemented by the Ministry of Commerce and the General Administration of Customs on October 9. Rare earths are key raw materials for semiconductor manufacturing and other high-end manufacturing processes. The price increase is expected to be passed on to the downstream manufacturing sector, squeezing profit margins and prompting downstream companies to accelerate the diversification of raw material sources and international alternative procurement.
