China Semiconductor Industry

For China semiconductor industry, 2022 was a year of ups and downs.

If 2021 was a year of shortages, price increases and extended delivery cycles, then 2022 is a year of de-stocking, price cuts and chip differentiation. After the industry boom in 2021, 2022 has entered a period of adjustment and is going through a cold wave.

In addition to the internal problems, there are also external difficulties.

Under the macro background of global economic recession and changes in trade situation, some developed countries, represented by the United States, continue to exert pressure on China’s semiconductor industry, which has brought many obstacles to the development of domestic semiconductors. In this situation, the pace of domestic substitution becomes more urgent. In particular, EDA tools and IP, semiconductor equipment and materials will be the top priority.

However, China’s semiconductor industry has become an integral part of China’s economy after decades of rapid development. Therefore, the nation is sparing no effort to give financial and policy support in the development of the industry. It is under the vigorous promotion of national funding policies that China’s semiconductor industry has been growing continuously and the domestic semiconductor companies are gradually covering the various link the upper, middle and lower reaches of the industry chain and have the opportunity to emerge in the global market.

In today’s article, we have sorted out the development status of all links in the upper, middle and lower reaches of China’s semiconductor industry chain and related targets (nearly 1000 enterprises), which are divided into 14 chapters for a brief overview.

Memory Chip

According to WSTS statistics, the overall size of China’s semiconductor memory chip market has been on the rise in recent years, with China’s semiconductor memory sales reaching 350.583 billion yuan in 2021.

In the global memory market revenue share, the proportion of Chinese memory manufacturers is relatively low. They generally feature a late start so the capacity scale is still small compared with international giants.

However, in recent years, Chinese manufacturers like CXMT and YANGTZE MEMORY have filled some technology gaps. Data shows that YANGTZE MEMORY has already accounted for more than 7% of the global NAND flash market share, and will continue to expand its NAND flash production capacity in the future. The continuous rise of such Chinese memory manufacturers is breaking the monopoly of international giants on the memory chip market.

China Semiconductor Manufacturers-Memory

NOR

DRAM

NAND

New Memory

Master chip

Memory Modules

Sensors

Sensors, as an important basic electronic component in the era of intelligence, are seeing rapid development. Data shows that the scale of China’s sensor market in 2020 is 251 billion yuan, up 14.7% year on year. The sensor industry is increasingly valued under the power of the Internet. China’s sensor market size is expected to further increase to 315 billion yuan in 2022.

Chinese Sensor Manufacturers

Analog Chip

China has become the largest analog chip market in the world now. Statistics show that China analog chip market will reach about half of the global market in 2022, accounting for 47.8%.

From the perspective of industry, the middle and low-end fields have almost realized domestic analog chip substitution while the high-end fields are still dominated by giants. According to the data of the China Semiconductor Association, the self-sufficiency rate of domestic analog chips in 2021 is only 12%, and the penetration rate of domestic high-performance analog chips is still very low.

Chinese Analog Chip Manufacturers

Power Management

Signal Chain

Power Semiconductor

The demand for power semiconductors in China has continued to increase in recent years, and the industry market scale has maintained growth. According to the data, the size of China’s power semiconductor market reached about 18.3 billion US dollars in 2021, up 6.3% year on year. According to Omdia’s prediction, China’s power semiconductors will keep stable growth in the future, with a compound annual growth rate of about 4.5% from 2022 to 2027, exceeding the growth rate of the global power semiconductor market. The market size of China’s power semiconductor industry is expected to reach 23.8 billion US dollars by 2027.

China’s power semiconductor market has clear hierarchical competition, with the first tier being international giants such as Texas Instruments, Infineon, and Toshiba, and the second tier being domestic leading power semiconductor companies such as CR MICRO (China Resources Microelectronics Limited), Silan Microelectronics, and Yangjie Technology. In recent years, with the support of national policies, they have gradually achieved import substitution in some advantageous areas.

Chinese Power Semiconductor Manufacturers

Si Chinese Manufacturers

GaN Chinese Manufacturers

SiC Chinese Manufacturers

Equipment

After 2020, China became the largest market for semiconductor equipment for the second time in 2021, with a 58% increase in sales to reach $29.6 billion and a 28.9% share of the global market.

The semiconductor equipment industry has a high degree of market concentration, with the major players being from the US, Japan, and Europe. In 2021, the top six companies globally accounted for nearly 70% of the market share. China’s semiconductor equipment sales are growing, but its domestic R&D and manufacturing of semiconductor equipment is still in its early stages and lags behind advanced foreign countries. Therefore, the future plan of developing domestic semiconductor equipment is imperative.

Crystal silicon growth Chinese companies

Etching machine Chinese companies

Thin film deposition Chinese companies

Cleaning machine Chinese companies

Photoresist coating machine Chinese companies

Lithography machine Chinese companies

Asher Chinese companies

Heat treatment machine Chinese companies

 Ion implanter machine Chinese companies

CMP machine Chinese companies

Process test equipment Chinese companies

Package testing equipment Chinese companies

PCB equipment Chinese companies

Semiconductor automation Chinese companies

Accessories

Material

As per the public data of SEMI International Semiconductor Association, the global semiconductor materials market size reached $64.3 billion in 2021. Among them, the size of semiconductor materials in Taiwan, China is 14.7 billion yuan, accounting for 23.7% of the total global market, and continues to hold the first place in the world; the size of semiconductor materials in mainland China is 11.9 billion yuan, accounting for 19.2% of the total global market, ranking second in the world.

From the semiconductor competitive landscape, the market concentration of various semiconductor materials is relatively low and fragmented. Japanese manufacturers dominate the packaging material field, while some mainland Chinese manufacturers have entered the top ranks, successfully capturing a certain market share. Overall, the self-sufficiency of semiconductor packaging materials is relatively high, and it is expected to achieve domestic self-sufficiency soon in the future.

EDA/IP

The EDA tools connect the whole process of integrated circuit design, manufacturing, and final testing. It is the foundation of the integrated circuit, electronic information, and digital economy industries and a strategic location for the integrated circuit industry.

According to data from the ESD Alliance, the global EDA tool market size was 13.4 billion dollars in 2021. However, according to data from the China Semiconductor Industry Association, the size of the Chinese EDA tool market was only 1.6 billion dollars, less than 12% of the global market. The first-tier EDA tool manufacturers provide full-process tool systems for their customers, accounting for nearly 80% of the total market. The second-tier manufacturers provide full-process tools in some areas or have advantages in specific fields. The third-tier manufacturers only provide single-process tool systems. Apart from Empyrean Technology entering the second-tier, most Chinese companies are in the third-tier. From the market size and business development, the Chinese EDA tools have made some breakthroughs, but still in the initial stages of development.

An IP core, also known as a knowledge property core, is a macro module that is verified, reusable, and has specific functions in integrated circuit design. It is a key link in supporting the design industry chain. According to data disclosed by IBS, the global IP core market size reached 5.8 billion dollars in 2021. Looking at the global market, only Verisilicon Microelectronices from mainland China was in the top ten, accounting for 2.0%. Currently, most chips in China are built on foreign IP architectures, and domestic manufacturers need to actively layout and grasp the opportunities for the development of semiconductor integrated circuits for their own development.

Wafer foundry

In 2021, the global wafer foundry market sales revenue broke $100 billion for the first time, with the main foundries concentrated in Taiwan and mainland China, accounting for 66% and 11% of the revenue respectively. Three mainland Chinese companies were among the top ten in terms of revenue of global wafer foundry companies: Semiconductor Manufacturing International Corporation (SMIC, $5.43 billion), Hua Hong Group ($2.91 billion), and GF Semiconductor ($840 million).

Currently, in mainland China’s integrated circuit wafer foundry companies, SMIC offers wafer foundry products at different technology nodes from 0.35 microns to 14 nanometers. The actual production is limited by factors such as yield, and the 14nm and 28nm processes account for about 15.1%. Although SMIC has 14nm mass production level, high-end materials and equipment are heavily dependent on imports, such as photolithography machines that rely heavily on ASML DUV, and full localization is still a long way off. Hua Hong Semiconductor has a relatively late development, and the most advanced 55/65nm process accounts for 9.7% of its products, with a large gap. In general, the technology of domestic leading foundry companies still has room for improvement.

Testing and Packaging

Compared to other stages, the packaging industry has a lower entry barrier, so in the early days of China’s integrated circuit development, many companies chose the testing and packaging stage as their entry point and continued to strengthen their acquisitions of domestic and foreign companies to continuously expand their scale.

China’s leading testing and packaging companies have now successfully entered the mature phase. According to ChipInsights data, in 2021, the global top 10 companies, represented by JCET, Nantong Fujitsu Microele, and Huatian Technology, China’s market share reached 20.1%. Based on data from CSIA, the China Semiconductor Association, the scale of sales in China’s IC testing and packaging industry reached CNY 27.63 billion in 2021, an increase of 10.1% YoY.

Chiplet

Omdia report shows that the market size of Chiplets will reach 5.8 billion US dollars by 2024 and exceed 57 billion US dollars by 2035, experiencing rapid growth in the global market.

For China’s semiconductor industry, Chiplets are considered as a relatively advanced packaging technology with a small gap compared to foreign counterparts, and are expected to lead the Chinese semiconductor industry to achieve a qualitative breakthrough in the post-Moore era. Chinese companies are also making contributions in Chiplets, such as VeriSilicon, which is expected to be one of the first companies to commercialize Chiplets in the industry.