China has an ambitious goal to ramp up its production of semiconductors, becoming a major factor in the global supply chain with smartphones one of its key targets.
Our projections show that in 2020, 85% of China’s semiconductor consumption will be from external countries and 15% from China. US IC vendors are expected to be the major contributors, along with companies such as Samsung Electronics.
The Chinese government wants to change this pattern. Its goal is for Chinese companies to fulfill 50% of chip consumption in China by 2020 (see chart below).
To achieve this target, a number of $10 billion companies must be built to add up to the needed level of chip sales valued at $150 billion. Today, China has two semiconductor producers with revenues over a billion dollars -- HiSilicon Technologies and Spreadtrum Communications, part of Tsinghua Unigroup.
To meet its supply target, China plans to:
- Spend $100 billion between 2016 and 2020 to build up its semiconductor ecosystem. The money will help strengthen Chinese fabless companies’ competitiveness in IP and product design as well as train engineers and ensure the required number of new engineers graduate from universities. Tsinghua Unigroup and Shanghai Pudong Science and Technology Investment will participate in the work.
- Build wafer fab capacity to manufacture 1 million wafers per month by 2020. Wafer fabs will support memory and non-memory products with an emphasis on competitive process technologies. Joint ventures likely will be part of this effort.
The million-wafers-per-month goal does not include production of foreign companies in China such as Samsung in Xian, SK Hynix in Wuxi, Intel in Dalian, and Texas Instruments in Chengdu. Although the goal is ambitious, China is excellent in managing big projects such as its high-speed train system and its current production of 22 million cars per year.
Next page: Targeting smartphone sockets