IC Insights, SEMI far apart on significance of Chinese IC production
Last year SEMI said it sees China achieving 20 percent of global chip manufacturing in 2020 (see China set to make a fifth of world’s chips in 2020). In a recent statement from IC Insights the market researcher said it thinks China-based fabs will only make 8.2 percent of the global IC manufacturing by value in 2023.
Both firms would probably agree that the production of ICs in China is growing faster than the Chinese market. This partly a result of Chinese investment and in-line with the Chinese government’s policy of reducing Chinese dependency on overseas chip makers, but is likely to fall short of government goals, according to IC Insights.
IC Insights’ forecasts that China’s IC production will grow at a compound annual growth rate of 15 percent over the six years 2018 to 2023 while the Chinese chip market will grow with a CAGR of 8 percent over the same period. As a result China’s IC production value of $23.8 billion in 2018 represented 15.3 percent of its $155 billion IC market and IC Insights forecasts that this share will increase to 20.5 percent in 2023.
China IC market versus China IC production over time. Source: IC Insights.
China is ploughing billions of dollars into supporting home-grown companies as well as encouraging semiconductor leaders to build fabs and train Chinese chip workers for local production so it is likely the strategy will have some success. However, IC Insights believes that China’s current strategy will fall short of the levels China’s government has targeted with its “Made in China 2025” plan, which were 40 percent self-sufficiency by 2020 and 70 percent by 2025.
Next: Indigenous versus inward investors
In 2018, SK Hynix, Samsung, Intel, and TSMC were the major foreign IC manufacturers that had significant IC production in China. SK Hynix’s 300mm China fab had an installed capacity of 200,000 wafer starts per month.
Intel’s 300mm fab in Dalian, China (Fab 68) switched to 3D NAND flash manufacturing in 2015 and 2016 and had an installed capacity of 70,000 300mm wafer starts per month in December 2018.
Samsung’s NAND flash fab in Xian, China has had about $2.3 billion spent on it so far and has an installed capacity of 100,000 wafers per month as of December 2018. The total budget at the site is $7 billion and Samsung has plans to double manufacturing capacity there.
Overseas investments largely balance the investments in existing and new indigenous Chinese companies including pure-play foundries SMIC and Huahong Group and memory startups YMTC and ChangXin Memory Technologies (CXMT, formerly Innotron). DRAM startup JHICC is currently on hold pending the sanctions imposed on the company by the US. Taiwan-based Foxconn announced in December of 2018 that it intended to build a $9.0 billion fab in China to offer foundry services as well as produce TV chipsets and image sensors.
If China-based IC production rises to $47.0 billion in 2023 – as IC Insights forecasts – it will represent 8.2 percent of the total forecasted 2023 worldwide IC market of $571.4 billion. SEMI did not provide much background to its estimate over Chinese chip production although SEMI monitors fab construction in China and counts seventeen 300mm wafer fabs projects being brought up aimed at foundry, DRAM and 3D-NAND production.
IC Insights forecasts that at least 50 percent of IC production in China in 2023 will come from foreign companies with fabs in China such as SK Hynix, Samsung, Intel, TSMC, UMC, GlobalFoundries, and Foxconn.
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