Chinese progress towards chip self-sufficiency will remain slow
However, at least half of this production will be from the likes of SK Hynix, Samsung and TSMC; inward investors in Chinese wafer fabs. This will leave Chinese indigenous production far behind the 70 percent target set by Made-in-China 2025 project.
IC Insights sees little change since a year before (see Chinese chip progress is limited and slow, says analyst). This is partly because the market researcher has reined in its estimates for market growth both in China and globally due to the Covid-19 pandemic and subsequent recession.
IC Insights now thinks Chinese companies will manufacture $43 billion out of $208 billion domestically produced chips in 2024. A year ago it was forecasting China would make $45 billion out of $229 billion a year earlier in 2023.
China IC market versus China IC production over time. Source: IC Insights.
In 2019 Chinese IC production of $19.5 billion in China represented 15.7 percent of its $125 billion IC market and up only slightly from a 15.1 percent share five years earlier in 2014.
And importantly Chinese headquartered companies only made $7.6 billion – about 39 percent – of that $19.5 billion. The majority of “Chinese” silicon is made by SK Hynix, Samsung, Intel, and TSMC who have fabs there. That means Chinese companies only accounted for 6.1 percent of the market. Of the $7.6 billion about $1.8 billion was from IDMs and $5.8 billion was from foundries such as SMIC.
SMIC is being joined by indigenous memory specialists such as YMTC and CXMT. Nonetheless IC Insights reckons that at least 50 percent of IC production in China in 2024 will be performed by inward investors in Chinese wafer fabs.
IC production in China is forecast to exhibit a compound annual growth rate of 17 percent over the period 2019 to 2024 but even so the possibility of China getting even close to being self-sufficient in ICs within the next decade is remote, IC Insights said.
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