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[News] China Makes Strides in Memory and Chipmaking, Reportedly Closing Gap with Korea and Taiwan
Though China might not be an industry leader in the semiconductor field in the short-term, the country is indeed disrupting the sector, which is traditionally dominated by South Korea, Taiwan, and the U.S, according to a report by South Korean media outlet Pulse, citing examples such as SMIC.
According to the report, Chinese chipmakers are making strides, even in advanced semiconductor areas, with key players like Semiconductor Manufacturing International Corp. (SMIC), NAND-focused Yangtze Memory Technologies Corp. (YMTC), fabless HiSilicon, and IoT chipmaker UNISOC leading the way.
SMIC Poised to Challenge TSMC by mid-2030s?
Due to robust growth in wafer production capacity and sales, SMIC’s revenue in the third quarter increased by 34% year-over-year to USD 2.17 billion, a record high, reaching the milestone of USD 2 billion in a single quarter for the first time. On the other hand, the overall utilization rate increased to 90.4% and gross margin increased to 20.5%, according to its press release.
Though the Chinese foundry company has been prevented from acquiring the most advanced lithography equipment from ASML, the report from Pulse suggests that TSMC now sees SMIC as its main competitor, as many of TSMC’s key R&D and process engineering staff have been recruited by SMIC, citing remarks by Professor Kwon Seok-joon of Sungkyunkwan University, a well-known college situated in Seoul.
SMIC’s CEO Mong-Song Liang is a semiconductor veteran from TSMC. Earlier this year, the company has reportedly achieved a new milestone by successfully developing the 5nm node with the older DUV machinery.
Before that, the report also notes SMIC has successfully developed a 7nm process similar to TSMC’s first-generation 7-nanometer process from 2018-2019, despite U.S. export restrictions on advanced equipment.
Although yield challenges remain and the company is still behind Korea and Taiwan in advanced processes, the technological gap has significantly narrowed for a company founded in 2000, the report points out.
It is worth noting that citing Professor Kwon’s prediction, the report indicates that China’s foundry industry, spearheaded by SMIC, could double or triple its market share in 10nm and above, as well as mid-tier technologies, over the next decade.
Kwon even made a bold prediction, adding that with ongoing government subsidies and strategic investments, SMIC could challenge TSMC by the mid-2030s.
Aggressive Expansion in the Memory Sector
On the other hand, China is also active in the memory sector. For instance, SMIC is expanding beyond foundries into memory production, aiming to become an integrated device manufacturer (IDM) similar to Samsung, the report notes.
The report further indicates that Chinese companies are leading the market in DDR4 production and are also progressing toward mass production of DDR5. For instance, large DRAM producers are reportedly concentrating on low-end memory, including 17-18nm-based DDR and LPDDR4X, a low-power DRAM.
In addition, Chinese companies such as Fujian Jinhua Integrated Circuit Co., are aggressively slashing DDR4 prices, offering chips that are significant cheaper than those from Samsung and SK hynix.
According to TrendForce, DRAM production will grow by 25% next year compared to this year, or 21% when excluding Chinese suppliers.
“China’s expansion of DRAM production poses the biggest risk to Korean semiconductor companies,” warned Kim Hyun-jae, a professor at Yonsei University cited by the report.
Overall, there are growing concerns about potential market disruptions caused by China’s heavily subsidized, low-cost chips, especially in legacy semiconductors used in consumer electronics, automobiles, and industrial equipment. The Pulse report notes that these products represent 75% of global semiconductor demand.
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(Photo credit: SMIC)
