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[News] Acceleration of Localization in China’s Semiconductor Industry
The localization of the semiconductor industry in China is a long-term strategic goal. In recent years, the localization rate across the semiconductor supply chain has gradually increased. However, the current volatile domestic and international environment has further spurred the rapid advancement of China’s semiconductor industry.
Semiconductor Equipment Remains in a Golden Era of Development
At present, semiconductor equipment in China can generally meet the needs of all stages of the semiconductor manufacturing process (excluding lithography machines). The localization rate and major manufacturers for various types of equipment are shown in the chart above.
According to reports, China is the world’s largest semiconductor equipment market. In the first half of this year, China spent a record $25 billion on chip manufacturing tools, surpassing the combined spending of Taiwan, South Korea, and the United States.
Responding to AI Demand: Storage Industry Seeks Innovation and Transformation
Chinese memory manufacturers are actively expanding DRAM production capacity to increase their market share. In terms of specific products, domestic memory manufacturers are accelerating competition in areas like DDR4 and LPDDR4.
Meanwhile, the booming AI market continues to drive rising demand for memory. International giants are focusing more on advanced technologies such as DDR5 and HBM, which creates opportunities for Chinese DRAM manufacturers. Domestic memory producers are also striving to move toward high-end storage, accelerating R&D in HBM and DDR5 technologies.
Silicon Carbide Accelerates Toward the 8-Inch Era
In the silicon carbide (SiC) sector, manufacturers across the entire supply chain in China — from materials (substrates/epitaxy) to chips/modules and equipment — are entering the 8-inch SiC market.
According to incomplete statistics by DRAMeXchange, more than 100 Chinese companies have ventured into the SiC field in the past two years, with over 50 SiC projects expected to make significant progress in 2024.
Currently, China has established two major 8-inch SiC wafer production lines. UNT built the first 8-inch SiC MOSFET wafer production line in Shaoxing Yuecheng, while Silan Microelectronics officially launched the country’s first 8-inch SiC power device chip manufacturing project on June 18, with a total investment of RMB 12 billion.
China Becomes a Growth Driver for Mature Nodes
According to the latest survey by TrendForce, driven by the localization trend, domestic foundries in China will become the primary growth driver for mature nodes by 2025. It is estimated that the global capacity of the top 10 mature-node foundries will increase by 6% by 2025, although pricing trends may face downward pressure.
TrendForce predicts that by the end of 2025, Chinese foundries’ capacity for mature nodes will account for more than 25% of the top 10 global players, with 28/22nm nodes contributing the most additional capacity. Furthermore, Chinese foundries are advancing specialty process technologies, particularly on the HV platform, with 28nm mass production expected by 2024.
Advanced Packaging Accelerates Adoption of 2.5D and Chiplet Technologies
As the industry approaches the physical limits of transistor density and chip size, advanced packaging technologies such as SiP, WL-CSP, 2.5D, 3D, CoWoS, InFO, Foveros, and X-Cub have created new possibilities for the semiconductor industry. Among these, advancements in China’s advanced packaging sector are particularly noteworthy.
This year, Chinese companies like JCET, Tongfu Microelectronics, and HT-Tech have made significant investments in advanced packaging projects, achieving notable progress.
Additionally, in the emerging FOPLP advanced packaging technology sector, Chinese companies such as HT-Tech, ECHINT, MIIC, and SiPTORY have been actively expanding their presence.
To meet the demands of high-performance chip packaging, the domestic packaging supply chain is also exploring the development of 2.5D packaging technologies and accelerating the implementation of Chiplet technologies.
Innovation in China’s Domestic AI Technology
China’s AI industry is developing rapidly, with unicorn companies emerging at an accelerating pace and the market scale continuing to expand. Representative companies include Infinigence AI, Alibaba Cloud, Baidu, AIsphere, Vastai Technologies, BIRENTECH, and MThreads, among others.
China’s AI industry enjoys significant advantages, including a vast industrial scale and broad application demands. Moreover, China leads globally in AI research output, with the highest number of patents and papers. According to data, in 2022, China accounted for 61.1% of all authorized AI patents worldwide.
However, the Chinese AI industry faces challenges in breaking through core foundational technologies. It lags behind the top global standards, particularly in areas such as model innovation and computational resources. The most critical bottleneck lies in AI chips, especially GPUs.
(Photo credit: JCET)
