While South Korean memory giants Samsung Electronics and SK hynix saw their sales in China double in the first half of this year, the country as a whole seems to heavily rely on China for essential semiconductor raw materials as well, with silicon, germanium, gallium and indium seeing the largest increase, according to a report by the Korea Eximbank Overseas Economic Research Institute on September 24 cited by Business Korea.

Despite the efforts to diversify supply chains, the report highlights the growing reliance of South Korea on China for critical semiconductor raw materials. For instance, the importance of silicon, a vital component in silicon wafer production, has been increasing, as the country’s reliance on China for the ingredient rose from 68.8% to 75.4% in 2022, the report states.

Meanwhile, South Korea’s reliance on rare earths, which are used in semiconductor abrasives, is also said to be on the rise, the report notes. The reliance on tungsten, crucial for semiconductor metal wiring, experienced a slight increase as well.

It is worth noting that since August of last year, the Chinese government has imposed export restrictions on critical minerals, including germanium and gallium, as a counteract to U.S. export sanctions. According to the U.S. Geological Survey, China produces 98% of the world’s gallium and 60% of germanium.

Even before the sanction, there is a significant rise in South Korea’s dependence on China for these critical minerals. Business Korea notes that the country’s dependence on germanium, which is frequently used in next-gen compound semiconductors, surged by 17.4 percentage points to 74.3% in 2022.

In addition, reliance on gallium and indium increased by 20.5 percentage points to 46.7%, according to the report.

Under the scenario of China’s export restrictions on key minerals, which were implemented in August and December of last year, the local production by major Chinese companies has not significantly declined, the report notes.

For instance, Samsung’ NAND flash facility in Xi’an, China, has increased its share for the company’s total NAND capacity during the past few years, from 29% in 2021 to 37% in 2023, with expectations to reach 40% this year, according to the report.

Read more

• [News] China’s Gallium and Germanium Export Restrictions Risk Chip Production Shortages
• [News] Chip War Escalates: China to Enforce State Ownership of All Rare Earth Materials in October

(Photo credit: Samsung)

Recently, China’s National Integrated Circuit Industry Investment Fund Phase II (referred to as the ““Big Fund” Phase II”) has made frequent investment, successively acquiring stakes in the wafer manufacturing company Chongqing Xinlian Microelectronics Co., Ltd. (referred to as “XLMEC”) and the new silicon wafer enterprise Taiyuan Jinke Silicon Material Technology Co., Ltd. (referred to as “Jinke Silicon Material”).

“Big Fund” Phase II give priority to investing in semiconductor equipment and materials industries, with an emphasis on the upstream industrial chain covering film equipment, testing equipment, as well as materials like photoresists and masks.

According to statistics from Wechat Account Global Semiconductor, the “Big Fund” Phase II has initiated several investment over the past half year, involving companies such as IC design company Joywell Semi, EDA tool development startup Amedac, semiconductor equipment company SMIF, ceramic material developer Genori, EDA tool company Nine Cube, IP supplier KNL, JCET Auto Electronics (Shanghai) and CMOS millimeter-wave radar SoC chip company Calterah.

• “Big Fund” Phase II Invested Fab XLMEC with CNY 2.1 Billion

Recently, according to the latest information from QCC, Chongqing XLMEC has undergone several industrial and commercial changes. Notably, “Big Fund” Phase II has been added as a new shareholder, with a committed investment amounting to CNY 2.155 billion, representing a stake of 24.77% in XLMEC.

XLMEC’s business scope includes integrated circuit design, integrated circuit manufacturing, integrated circuit chip and product manufacturing, integrated circuit chip design and services, and semiconductor device-specific equipment manufacturing.

The company is positioned as a leading specialty process wafer fabrication plant in the western region of China, with the goal of becoming an advanced automotive-grade chip manufacturing company. As a fully state-owned company, it undertakes a project of building a 12-inch advanced specialty integrated circuit process line.

The first phase of the project plans for a capacity of 20,000 wafers, dedicated to becoming a significant strategic backup for the national integrated circuit industry in the west of China, ensuring the security of the integrated circuit supply chain.

Located in the Xiyong Microelectronics Industrial Park in Chongqing, XLMEC is counted as a focal project jointly developed by the Chongqing and High-tech Zone governments as part of the “33618” modern manufacturing cluster system and a key project for the transformation and upgrading of Chongqing’s high-end manufacturing and integrated circuit industries.

As a major project initiated by the Chongqing Municipal Government, it has a total investment exceeding several billion yuan, focusing on the R&D and production of 55-28nm technology nodes, with a planned total capacity of 40,000 wafers per month, of which the first phase capacity is 20,000 wafers per month.

• “Big Fund” Phase II Jointly Established a Silicon Material Company in Taiyuan Shanxi

As per Tianyancha, Jinke Silicon Material was established on July 15 with a registered capital of CNY 5.5 billion. It is jointly held by “Big Fund” Phase II, Taiyuan Jinke Semiconductor Technology Co., Ltd. (referred to as “Taiyuan Jinke Semiconductor”), and Taiyuan Fenshui Capital Management Co., Ltd, with a business scope including the manufacturing of semiconductor discrete devices, electronic special materials, other electronic devices, and integrated circuits.

In terms of equity structure, “Big Fund” Phase II holds 27.27%, Taiyuan Jinke Semiconductor 50.91%, and Taiyuan Fenshui Capital Management 21.82%. It is understood that Taiyuan Jinke Semiconductor is a wholly-owned subsidiary of Shanghai ZINGSEMI, which is itself wholly owned by National Silicon Industry Group (NSIG).

On June 11, NSIG announced its plan to invest in the capacity upgrade project for 300mm silicon wafers used in integrated circuits, with a total expected investment of about CNY 13.2 billion. It is learned that this investment will be implemented in two parts: the Taiyuan project and the Shanghai project, with the former expected to involve a total investment of about CNY 9.1 billion.

The implementing entity for the Taiyuan project is Jinke Silicon Material, which was co-founded by three parties: ZINGSEMI or its subsidiary (intended investment of CNY 2.8 billion), the “Big Fund” Phase II (intended investment of CNY 1.5 billion), and Taiyuan Fenshui Capital Management or its subsidiary (intended investment of CNY 1.2 billion), with a total joint investment of CNY 5.5 billion.

Upon its establishment, Jinke Silicon Material will primarily engage in the 300mm semiconductor silicon wafer business, implementing the capacity upgrade Taiyuan project for 300mm silicon wafers used in integrated circuits.

This project is scheduled to achieve a total capacity of 600,000 wafers per month for crystal pulling (including heavily doped wafers) and 200,000 wafers per month for slicing, grinding, and polishing (including heavily doped wafers). It will also promote the continuous upgrade and iteration of 300mm silicon wafer technology to meet the process requirements of various technical nodes in Chinese market.

Read more

• [News] China’s Big Fund Phase Three Commences, Injecting 344 Billion RMB into Semiconductor Industry Growth
• [News] Big Fund II Infuses HLMC with an Additional USD 1 Billion, Potentially Eyeing on More Advanced Processes

(Photo credit: XLMEC)

Leveraging the superior conversion efficiency of N-type cells, the rise of cost-effective TOPCon cell technology in 2022 has seen N-type cell technology rapidly expand, inviting many solar industry participants into the competition. Currently, PERC cell technology (for producing P-type cells) stands as the market’s mainstay. However, with the step-by-step realization of large-scale N-type cell capacities, there looms a risk that a substantial part of PERC cell technology capacities may be phased out within the forthcoming two to three years. Concurrently, based on TrendForce’s analysis, as N-type cell capacities incrementally come online, there might be a sporadic shortage of high-quality silicon materials and wafers tailored for N-type cells. This could further establish a noticeable price disparity between N-type silicon and wafers, and their P-type counterparts.

Silicon supply remains abundant, but the price gap between P-type and N-type continues to widen

By 2023’s end, it is projected that the total production capacity of polysilicon will reach 2.072 million tons, an increase of 68.6% YoY. The actual output of silicon materials is expected to be about 1.483 million tons, sufficient to support over 600 GW of solar panel consumption (given a silicon consumption rate of 0.245 tons/GW). This aligns with an annual installation demand of approximately 370-390 GW, indicating a clear oversupply of silicon. As the market leans towards N-type cell technology, P-type silicon may face oversupply, causing its price to drop faster. Conversely, robust demand and limited output for N-type silicon might create periodic shortages, stabilizing its price. For silicon firms, N-type silicon offers better profitability.

Surging demand for N-type cell slices drives silicon wafer makers to swiftly pivot

By the end of 2023, silicon wafer production capacity is projected to reach approximately 921.6 GW, reflecting a 64.2% year-on-year growth. Driven by the increasing demand for N-type cell wafers, silicon wafer manufacturers are rapidly transitioning to N-type production and ramping up their output. With the inclusion of rectangular silicon wafers occupying a portion of this capacity, certain dimensions of P-type wafers might experience short-term supply shortages, potentially failing to meet immediate demands. If the N-type cell rollout falls short of expectations, there remains a risk of N-type wafer oversupply. Additionally, amid intensified industry competition and considering factors such as technological prowess, availability of high-purity quartz sand, and consistent supply of top-quality silicon wafers, leading companies like Longi and CMC are set to further elevate their competitive edge.

N-cell capacity deployment sees delays; PERC tech likely to remain dominant this year

The projected total wafer capacity by 2023’s end is estimated to reach around 1,172 GW, marking a 106% increase year-on-year. The majority of this newly added capacity is attributed to N-type TOPCon cell technology. By the end of the year, N-type wafer capacity is expected to reach 676 GW, accounting for 57.7% of the total. However, TrendForce has observed some delays in the actual deployment of N-type cell capacity. Given the existing price difference between N-P type wafers, PERC technology is anticipated to retain its leading position in the market this year, although the penetration rate of TOPCon cells will accelerate.

China expected to hold 80–85% of global solar panel capacity in 2023

Estimations for 2023 indicate that the worldwide solar panel capacity could reach an astounding 1,034 GW, marking a 64.7% increase year-on-year. Of this, approximately 335.4 GW represents newly added capacity, predominantly driven by Chinese enterprises. With Western countries and India progressively launching policies supporting local manufacturing, a growing number of Chinese firms are contemplating setting up production capacities overseas to sidestep trade barriers. TrendForce reports leading Chinese solar panel manufacturers like Longi, JinkoSolar, JA Solar, and TrinaSolar have successively expanded their operations to areas including the US, Europe, and the Middle East. Given the matured technology and cost-effective production of Chinese manufacturers and considering the nascent state of the solar supply chains overseas and the elevated costs of expansion, it remains challenging for enterprises from other regions to join the competition. As such, TrendForce believes that the global competitive landscape for solar panels won’t see any marked changes in the near term, maintaining China’s dominant position with an anticipated 80-85% capacity share in 2023.