The World Integrated Circuit Association (WICA) recently released its 2023 ranking of the top 100 cities in the global semiconductor industry. According to the list, the U.S. and China each have 26 cities represented, leading the rankings. South Korea, Japan, and Taiwan have 9, 9, and 5 cities listed, respectively.

Notably, Shanghai and Beijing have secured spots in the top ten, ranked fifth and ninth globally, highlighting China’s growing potential and prominence in the semiconductor industry.

In the WICA’s recently released “2023 Global Semiconductor Industry Comprehensive Competitiveness Top 100 Cities White Paper” (referred to as the white paper), the top five cities are identified as Santa Clara, Hsinchu, Seoul, San Jose, and Shanghai.

The white paper highlights that China has the largest semiconductor application market in the world, with a complete industry chain. The design and manufacturing sectors are at a mid-level globally, with a significant number of design companies and substantial growth. Additionally, China’s packaging and testing technologies have reached the forefront globally.

Reportedly, China’s semiconductor industry is poised for continued robust growth, driven by expanding demands in automotive electronics, the Internet of Things (IoT), industrial control, and new energy, supported by favorable policies and financial resources.

As per the white paper, Shanghai is home to several semiconductor giants, such as SMIC, Hua Hong Semiconductor, Unisoc, and AMEC, serving as a major hub for China’s semiconductor industry. In recent years, Shanghai’s semiconductor sector has reportedly sustained its growth, developing a complete industry chain from design and manufacturing to packaging and testing.

The white paper further notes that Beijing also hosts numerous key semiconductor companies, including Tsinghua Unigroup, SMIC, Naura, and GigaDevice. The city has gradually become a core area in the global semiconductor industry, with a well-developed industry chain covering design, manufacturing, and packaging/testing, forming a relatively complete industrial ecosystem.

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• [News] China Makes Progress in Chip Tool Self-Sufficiency, Yet Lithography Remains a Key Bottleneck
• [News] SIA Reports China’s June Semiconductor Sales Increase by Over 20% YoY

(Photo credit: SMIC)

As China keeps reducing its reliance on the global semiconductor supply chain with strong support from the authority, two major smartphone manufacturers reportedly claim to have already taped out their own 4nm mobile processors. According to the reports by Liberty Times and Commercial Times, Xiaomi and Unisoc, by using foreign IP cores from ARM and IMG, have successfully taped out domestic 4nm chips.

According to the latest data from TrendForce, Xiaomi (including Xiaomi, Redmi, and Poco) has moved past last year’s high inventory issues, achieving a total production of 41.1 million units in the first quarter and ranking third globally in market share, only after Samsung and Apple. Oppo, Transsion and Vivo are the other three Chinese smartphone brands having made it to the top six regarding global shipments.

Shanghai-based fabless chip firm Unisoc, on the other hand, is specialized in areas including 2G/3G/4G/5G, Wi-Fi, Bluetooth, TV FM, satellite communications and other related technologies, according to its website.

Citing comments from Chinese tech blogger “Oneline Technology,” the reports point out that Xiaomi’s self-developed chip has made a significant leap forward, while the performance of its 4nm chip is similar to that of Huawei’s Kirin 9000s, and is expected to be seen this year. Huawei’s Kirin 9000s is reportedly manufactured by SMIC’s 7nm.

Citing another Chinese blogger, “Fixed Focus Digital,” the reports mention that Unisoc’s 4nm chip has already taped out, achieving performance levels comparable to Qualcomm’s Snapdragon 888.

Regarding the timeline for Chinese domestically produced smartphone SoCs to reach 4nm, the reports, citing industry insiders, state that it is more likely to happen in 2026. For now, MediaTek and Qualcomm still dominate Chinese’s smartphone chip market.

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• Q1 Smartphone Production Increases Due to Low Base Last Year, Expected to Decline 5–10% in Q2, Says TrendForce

(Photo credit: Unisoc)

On August 29, 2023, Huawei quietly launched its new smartphone, the Huawei Mate 60 Pro, on its official website without the usual fanfare associated with new product releases. Unlike previous events or those held by other brands, Huawei chose to communicate with consumers solely through a letter. What intrigued the market most was the specification of the new device’s System-on-Chip (SoC). Initially, Huawei did not provide any official information about it. However, the release of this new smartphone demonstrates China’s determination to achieve semiconductor self-sufficiency.

Key Insights from TrendForce:

• Overcoming U.S. Sanctions, Huawei Makes a Comeback

In the past, Huawei secured its position as the second-largest player in the global smartphone market by leveraging the differentiating advantage of its in-house developed Kirin SoC chips. However, since May 2019, Huawei has been affected by U.S. sanctions. In September 2020, TSMC, which previously manufactured chips for Huawei, announced the cessation of production. With no supply from TSMC, Huawei’s inventory of 5G chips was depleted by the third quarter of 2022.

Unable to acquire high-end chips, Huawei’s market share in the smartphone industry saw a significant decline. The company could only source 4G chips not subject to U.S. sanctions from Qualcomm or UNISOC. It was believed that U.S. sanctions would severely impact Huawei’s smartphone supply chain and push the company into a dire situation. However, upon analyzing Huawei’s latest release, it is evident that the new smartphone not only features an in-house developed SoC chip by Huawei’s semiconductor subsidiary HiSilicon but also incorporates components and designs from various Chinese manufacturers.

• China’s Semiconductor Self-Sufficiency Continues to Strengthen, Minimal Impact on Taiwanese Supply Chain Expected

China’s pursuit of semiconductor self-sufficiency has become an inevitable outcome of industry development. Although Huawei has not provided detailed specifications for the SoC chip in the Mate 60 Pro, it is speculated that this chip likely uses SMIC’s N+2 process. Due to sanctions, SMIC has been unable to obtain essential EUV equipment. Furthermore, based on the chip’s performance benchmarking, it is comparable to Qualcomm’s flagship Snapdragon 888 chip released in 2021. This suggests that the SoC’s process technology likely falls in the range of 7-14nm, which still lags behind current advanced processes. Nevertheless, this achievement underscores China’s commitment to semiconductor self-sufficiency.

As China gains the ability to independently develop and produce chips, the question arises of whether other Chinese smartphone brands, apart from Huawei, will begin their own chip development efforts. Will this development impact Taiwanese IC design house and foundries that previously held related orders? MediaTek, for instance, primarily supplies chips to brands such as OPPO and vivo. Given that Huawei competes strongly with OPPO and vivo in the smartphone market, it is unlikely that these two brands will entrust their smartphone core SoCs to Huawei’s HiSilicon. Additionally, developing proprietary chips comes with significant costs. Therefore, under these circumstances, it is expected that OPPO and vivo will maintain their partnerships with MediaTek. MediaTek’s chip designs can also utilize TSMC’s advanced processes, giving OPPO and vivo a key competitive advantage against Huawei. Consequently, it is inferred that as long as there is a significant gap between the processes and yields of SMIC and TSMC, Taiwanese foundries will not be significantly affected.

(Photo credit: Huawei)