CAMBRIDGE, UK A recent research by SEMI indicates China is committed to narrow the gap between its IC production and consumption, leading to doubling the country's global equipment and materials market in ten years.
Given the size of the gap and the current policy actions by both national and provincial governments, this means a growing equipment and material purchasing over the next decade.
In addition, new equipment purchasing by multinational chip companies with fabs or packaging and test plants in China will increasingly be made in-country by Chinese RD and process engineering staffs.
Since China surpassed Japan and the US in 2007 to become the world's largest consumer of ICs, China policy makers have increasingly voiced concerns about the “chip gap” between supply and demand. In 2008, China consumed approximately one-quarter of the world's ICs, yet manufactured only $5.6 billion in chips, enough to support only 8 percent of their domestic requirements.
By 2011, the China IC market will grow to $85 billion with domestic production expected to reach $8.2 billion, about 10 percent (iSupply, IC Insights, CSIA). By 2013, China's share of the global chip market will reach 35%.
In the past, in markets such as computers, mobile phones, and automobiles, such an imbalance between supply and demand has prompted increased investments in local production capacity.
While some observers expected China's economy to slow following the Beijing Olympics, or become increasingly susceptible to global economic shocks, the Chinese economy continues to growth at robust rates. The International Monetary Fund projects China's GDP to rise 8.5 percent in 2009, despite the global recession, and growing at 9 percent in 2010.
The Chinese government unveiled a 4-trillion-yuan (US$586 billion) stimulus package in November 2008, with the funds to be distributed through 2010. In addition to investments in the macro economy, the Chinese government also remains the biggest investor in the semiconductor industry in China.
In the past five years, the China government influenced the investment of about $7 billion in new fabs. In the next five years, local government will likely continue to be the significant co-investor in strategic IC Fab projects throughout the country. Going forward, the central government may also invest up to $30 billion on semiconductor (semiconductor equipment and material are included), also software and high-end chip hardware industry by 2020.
The national government is investing in various VLSI equipment and materials research projects totaling $2.6 billion. In 2009, there were 54 projects involving process technology, equipment, materials, parts and other semiconductor manufacturing research funded by the government.
Focus areas included 90nm production, 65nm pilot line manufacturing, and 45nm technology, as well as other front-end and back-end manufacturing research through 2012. The National Science and Development Plan 2008-2020 will continue to focus on core electronics research, including software and increasingly high-end chip hardware.
The commitment to closing the chip gap will make the China equipment and materials market increasingly more important for global suppliers.
According to the SEMI World Fab Forecast, total spending on front end fabs (construction and equipping) in China will grow by about 67 percent in 2010 to over $2 billion. This includes new, used equipment and any self-made equipment purchased at over 20 fabs.
Installed capacity is expected to grow by about 10 percent to over 1.5 Million wafers per month, about 10 percent of all worldwide capacity in 2010. In 2011, the equipment is expected to reach $2.56 billion, according to SEMI 2009 Consensus Forecast.
In materials, China is projected to spend $3.75 billion in 2010, up 15 percent from 2009, surpassing Europe and nearly approaching the levels of US spending (SEMI 2009 Consensus Forecast).
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