The global demand for AI chips is causing a shortage in mature-node semiconductors, pushing orders to Chinese foundries. This shift benefits China's chip manufacturing sector as global rivals focus on higher-margin products.

The global AI boom is driving orders back to Chinese foundries as overseas rivals shift production towards high-margin AI chips and high-bandwidth memory, creating a shortage in mature-node semiconductors, according to the head of China’s top contract chipmaker. “AI demand has directly pushed power-management and other mature capacity into shortage,” said Zhao Haijun, co-CEO of Semiconductor Manufacturing International Corporation (SMIC), during the company’s first-quarter earnings call on...