Chinese IC production grows as proportion of global market

Chinese IC production grows as proportion of global market

Market news |
By Peter Clarke

China-based IC production will be equivalent to 21.2 percent of the Chinese IC market in 2026 but the majority of that production will still by foreign companies, according to IC Insights.

Overseas chip manufacturers with fabs in China, such as Samsung, SK Hynix and TSMC, are expected to be responsible for more than 50 percent of Chinese production through to 2026.

In January 2021, the market analysis firm, estimated that China would make 19.4 percent of the value of the domestic market in 2025. This figures reflect the view that China’s progress in approaching self-sufficiency in chip manufacturing is glacial at best.

IC Insights predicts that Chinese IC production will grow with a compound annual growth rate of 13.3 percent over the period 2021 to 2026. Over the same period the Chinese market for ICs is expected to have a CAGR of 8.0 percent.

China’s IC market versus IC production 2010 to 2026F Source: IC Insights.

IC production in China represented 16.7 percent of its $186.5 billion IC market in 2021, up from 12.7 percent 10 years earlier in 2011. IC Insights forecasts that this share will increase by 4.5 percentage points from 2021 to 21.2 percent in 2026 (a 0.9 percentage point per-year gain on average).

Of the $31.2 billion worth of ICs manufactured in China last year, China-headquartered companies produced $12.3 billion (39.4 percent), accounting for only 6.6% of the country’s $186.5 billion IC market. TSMC, SK Hynix, Samsung, Intel, UMC, and other foreign companies that have IC wafer fabs located in China produced the rest. IC Insights estimates that of the $12.3 billion in ICs manufactured by China-based companies, about $2.7 billion was from IDMs and $9.6 billion was from pure-play foundries like SMIC.

If China-based IC manufacturing rises to $58.2 billion in 2026 as IC Insights forecasts, China-based IC production would still represent only 8.1% of the total forecasted 2026 worldwide IC market of $717.7 billion.

Even after adding a significant markup to some of the Chinese producers’ IC sales (many Chinese IC producers are foundries that sell their ICs to companies that re-sell these products to the electronic system producers), China-based IC production would still likely represent only about 10% of the global IC market in 2026.

Related links and articles:

News articles:

China will miss 2025 IC self-sufficiency goals

China is gaining chip production market share rapidly, says SIA

Chinese progress towards chip self-sufficiency will remain slow

China’s chip output falls due to Covid lockdowns

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