Status quo analysis & Suggestions From China’s semiconductor self-sufficiency is imminent
The following is the Status quo analysis & Suggestions From China’s semiconductor self-sufficiency is imminent recommended by recordtrend.com. And this article belongs to the classification: Strategy Analytics, Intelligent hardware.
Due to the restrictions on purchasing some semiconductors from outside and the inability to purchase key semiconductor equipment, the self-sufficiency of China’s semiconductors has become a new priority.
The report examines the current situation of China’s semiconductor self-sufficiency and puts forward some suggestions.
01. Executive summary
The current shortage of semiconductors shows that chips are the key to national economic growth and security. As a result, governments all over the world allocate special funds to the semiconductor industry and promulgate incentive measures to meet the demand of domestic self-sufficiency.
By the middle of 2023, China can and will double domestic semiconductor production to at least 30% of its demand. Many believe that this is the minimum threshold for self-reliance.
Focusing on 28 nm and above process chip capacity will help Chinese semiconductor companies to meet most of the domestic market demand.
With the development of China’s own photoresist, the production of process chips of 7 nm and below will be completed in a few years.
China should act cautiously and avoid additional sanctions as far as possible
China should carefully assess how to subsidize the domestic semiconductor industry to avoid violating WTO regulations.
China should guard against accusations of infringement of intellectual property rights, especially those related to semiconductor equipment.
China needs more engineers and scientists with experience in semiconductor equipment, but it should avoid taking radical measures to attract talents from the United States, Japan and other countries.
China’s semiconductor equipment companies should aim at domestic and foreign customers at the same time, obtain customer feedback and accelerate development.
Note: in this report, strategy analytics avoids making statements on controversial issues between Chinese and American governments. Our analysis is limited to the trade situation and how China can achieve semiconductor self-sufficiency.
02. Analysis
Due to the limitation of purchasing some semiconductors from outside and the inability to purchase key semiconductor equipment, self-sufficiency of semiconductors has become a new priority for China
Banning Huawei from purchasing chip and wafer manufacturing services from OEM factories that use us made equipment and software is only a step in the escalation of the trade war.
The United States continues to include 169 Chinese enterprises in the so-called “entity list”, restricting the sale of products and technologies originating in the United States to these Chinese companies without special export licenses issued by the United States government.
♢ WTO rules prohibit member states from using export bans or restrictions other than tariffs, taxes or other charges (see WTO GATT 1994 – clause XI : 1 )。
♢ in order to evade the rules of the WTO, the United States claims that exporting certain products and technologies to Chinese enterprises on the list of entities will bring the risk of being used for military purposes and pose a threat to the security of the United States.
This situation prompted the Chinese government to take decisive action to identify and replace risky semiconductors and suppliers. In addition, efforts to achieve self-sufficiency have been widely supported by Chinese private enterprises.
Semiconductor trade sanctions have had a devastating impact on global semiconductor supply, resulting in the current shortage. Ironically, this has led to a rise in semiconductor prices, with many semiconductor companies selling strongly in 2020; As a result, some us analysts believe that the sanctions on Chinese companies have not affected semiconductor sales.
In the long run, sanctions seem counterproductive. Chinese enterprises now have a strong incentive to cooperate and strive to achieve self-reliance. The US government’s trade sanctions against China seem unlikely to successfully offset China’s growing demand for chips. Not coincidentally, the business of domestic semiconductor equipment suppliers in China is booming.
Due to the loss of Chinese customers, the sales volume of semiconductor and semiconductor equipment companies in the United States may be reduced by 25% to 30%, and 100000 or more jobs may be lost, which will weaken the leading position of the United States in the semiconductor field and lead to the price rise of consumer electronics products in the United States and other countries. In addition, China provides the United States with important raw materials such as rare earths for semiconductors and electronic components, which the United States may not be able to obtain due to China’s retaliation.
2.1 advantages and disadvantages of China Semiconductor
WSTS (World Semiconductor Trade Statistics) estimates that the global semiconductor market will reach about 440 billion US dollars in 2020. According to the General Administration of customs, In 2020, China’s total imports of semiconductors will be $310 billion, accounting for about 70% of the global scale. At the same time, China’s domestic production meets about 15% of demand. Most of China’s semiconductor industry experts say that China’s domestic production must meet at least 30% of the demand to hedge against the risk of future supply disruption.
What does China need to do to provide at least 30% of domestic semiconductor demand?
As stated in the previous report “global and national investment plan stimulated by semiconductor shortage” released by strategy analytics, semiconductor self-sufficiency is a grand goal, and countries need to solve the shortcomings of their semiconductor industry through targeted investment. For China, design software and semiconductor equipment, especially lithography, seem to be the two most important short boards. We will elaborate on this issue in the second half of this report.
China has great strength in electronic product assembly. With Huawei’s success, China, as an emerging chip design center, has attracted worldwide attention. China also has advantages in packaging, testing and wafer cleaning.
China’s advantage is a good start, but to achieve self-sufficiency, China needs to have strength in all aspects, from semiconductor production to electronic system manufacturing, as shown in Figure 1.
Figure 1 note blue: production of final electronics. The simplification of the above production steps does not include the professional fields or details of laws, regulations, standardization, certification and customer acceptance testing under each step.
The supply chain of semiconductor industry has been globalized and spread all over the world, but the key part of the supply chain is concentrated in a few different countries and regions, and usually not in Chinese mainland:
The United States and Japan have most of the equipment production and chip design. Semiconductor manufacturing requires very professional and expensive equipment.
Most of the chip manufacturing is done in Taiwan and South Korea.
Most semiconductor packages and tests are carried out in Korea, Taiwan and Malaysia, but Chinese mainland also has advantages in this regard. Changdian technology ranks third in the field of packaging and testing, with a market share of about 17%. Other major packaging and testing companies in China include xinyichang and Granda.
two point two China’s Fabs
China is on the road to self-sufficiency, and most of the goals can be achieved by focusing on mature process nodes of 28 nm and above.
Apart from South Korea and Taiwan, most countries and regions lack the basic semiconductor manufacturing capacity of complete self-reliance, and so does China. China is ahead of the United States in terms of manufacturing capacity and should be able to obtain higher capacity soon.
China has more semiconductor Fabs than any other country. According to PricewaterhouseCoopers, there were 293 semiconductor Fabs in China in 2018:
There are 10 important OEM factories in China
SMIC is the largest manufacturer in China, which can produce more than 500000 pieces (equivalent to 200 mm) of integrated circuit semiconductor wafers per month.
♢ 2020 In 2005, SMIC ranked fifth in sales volume, next only to the pure generation factories, such as TSMC, Samsung foundry, grofonder and Lianhua electronics.
Other Chinese pure acting factories include Huahong group and Hejian technology. China also has OEM factories for LED, III-V compound semiconductors and special equipment.
Some IDM (independent equipment manufacturers) in China, such as Changxin storage and Tsinghua Ziguang, also provide OEM services
♢ Changxin store in two thousand and nineteen China’s first batch of DRAM (dynamic random access) memory chip.
♢ Tsinghua Ziguang has five major subsidiaries: Changjiang storage (memory chip), Xinhua Group 3 (Digital IC), Ziguang zhanrui (cellular phone chip), Ziguang Guowei (smart card chip) and Ziguang cloud (cloud computing chip).
Many multinational companies have built Fabs in Chinese mainland. The contractual details of ownership vary, but many of them may eventually be wholly owned by Chinese domestic enterprises in the future:
♢ TSMC, Lianhua electronics, grofonder, Texas Instruments, micron technology, Intel, NXP semiconductor, SK Hynix and others have built factories in China.
According to media reports, there are about 20 million people in China thirty A new fab is under construction or planning.
Most of China’s semiconductor manufacturing capacity is more than 28 nanometer and more mature process nodes (feature size). Mature process nodes are usually used for professional equipment, such as power management IC, image sensor and led, rather than mainstream CMOS。 But this is not necessarily the case globally:
More than two-thirds of existing global semiconductor Fabs produce forty Nm and above.
TSMC in two thousand and nineteen According to the annual report, 28 Nm is the most popular process node and the third largest revenue source of the company.
In 2020, the global semiconductor sales will be 440 billion US dollars, of which the sales of 7 nm and below products will be about 28 billion US dollars, accounting for 6.4% of the market share (source: strategy Analytics). Most of the cutting-edge chips are used as baseband and application processors of mobile phones.
STMicroelectronics, Infineon, Panasonic, Renesas, Toshiba, NXP, Ti, ROM, Mitsubishi, adeno, Chaowei, Samsung and many other well-known companies produce standard CMOS and BiCMOS products between 40 nm and 180 nm.
SMIC focuses on CMOS, has just started mass production of 14 nm FinFET chips, and plans to increase production. SMIC, Huawei, IMEC and Qualcomm invested in a joint venture in China a few years ago to develop 14 nm FinFET chips, and now they are making achievements in SMIC.
At the same time, the leading foundry TSMC and Samsung LSI produce cutting-edge chips with sizes as small as 7 nm and 5 nm. As production costs fall and more chip companies design new chips on these process nodes, these nodes will become more and more popular in the next few years.
two point three Semiconductor bottleneck
There are more and more software suppliers and equipment manufacturers in China. They are trying to provide all the requirements for fabs to manufacture finished semiconductors.
Nowadays, due to trade sanctions, China can not obtain advanced EDA software, which limits the new chips that can be designed in China, and the lack of domestic photoresist makes the production of chips with 28 nm and below face risks.
2.3.1 EDA
Huawei and other companies on the U.S. entity list are not available due to recent sanctions EDA Software technical support and software update. Synopsys、Cadence、Ansys and Siemens EDA Wait for American companies to lead EDA Software market. License fees for such software are thousands of dollars per seat per year, and designing new integrated circuits requires a valid license
Some Chinese companies provide EDA software.
Huada Jiutian was founded in 2009. Its customers include SMIC international, as well as some foreign leading semiconductor enterprises and foundry.
Three start-ups, xinhuazhang, Hejian and full core smart manufacturing, have recently received funding to help China become self-sufficient by providing additional EDA capabilities.
2.3.2 Lithography technology
As stated in the previous report of strategy analytics, “China’s self sufficiency in key 28 nm CMOS process nodes: the plan can succeed”, lithography plays a key role in semiconductor manufacturing.
Generally, the cost of each photoresist is about US $50 million, accounting for 25% to 30% of the equipment cost of the wafer factory.
Lithography usually takes about 50% of the semiconductor manufacturing time, so the lithography machine is very important to determine the output and cost of each wafer.
ASML, Nikon and Canon lead the photoresist market, among which ASML is the leader It’s the most advanced. These machines use wavelengths of 193 nm（DUV Or deep UV lithography) is used as a powerful light source 28 nm Chip, 13.5 nm (EUV) Or extreme ultraviolet lithography) for 5 nm And below.
Shanghai microelectronics equipment Co., Ltd. (Smee) has provided a 600 / 20 flagship lithography scanner, which can produce as low as 100% using 193 nm DUV argon fluoride (ARF) laser and immersion lithography machine 90 nm The chip of the node.
According to media reports, the company is expected to be in China two thousand and twenty-one In Q4, it can be produced twenty-eight Design of nm Node Chip DUV Machines. The machine will also be used ArF Laser. The machine will not use any parts or technology from US companies.
According to an article published by Robert Castellano on Seeking Alpha, the new machine from Shanghai microelectronics is equivalent to ASML’s 1980i. By adding multiple patterns, one version of the machine will be able to produce chips as low as 7 nm using DUV, equivalent to ASML’s 2000i machine.
SMIC and Huahong currently use ASML In the future, SMIC international and Huahong’s 7Nm and 5nm chips will also use Shanghai microelectronics equipment.
US sanctions and China’s drive for self-reliance put ASML in a dilemma. The company hopes to continue to sell its EUV equipment to China, but sales to China have been blocked by a US ban. In addition, ASML is also facing increasingly fierce competition from Nikon in terms of DUV equipment. The United States has taken action to prevent the sale of DUV and EUV equipment to China.
Although Dutch based ASML can ignore us sanctions against China, doing so publicly could hurt its sales.
On the other hand, if ASML abides by the US sanctions, its sales will also be damaged, and the company may lose its position in China, the world’s largest photoresist market, forever.
ASML mainly hopes that Chinese customers will be more willing to buy ASML market proven machines than new equipment of Shanghai microelectronics, and ASML will be able to successfully obtain export license.
Other lithography manufacturers in China include Han’s laser, which focuses on larger nodes LED And discrete device machines, as well as the Institute of optoelectronic technology of the Chinese Academy of Sciences, which has developed the ability to produce Low cost of 22 nm chip DUV machine
2.3.3 Other semiconductor equipment
Many other Chinese semiconductor equipment companies are only a few years old, but they already have devices that can produce node chips of 28 nm and below. The outstanding achievements include:
The plasma etching system of AMEC is used by TSMC for 5 nm production and Changjiang storage NAND Memory. By the end of 2018, the company had shipped more than 150 MOCVD epitaxial machines.
CETC electronic equipment group is a wholly-owned company under China Electronics Technology Group Co., Ltd. The company has developed a full range of ion implanters, ranging from high energy to medium and high current machines, suitable for the production of low to high current ion implanters Various chips of 28 nm node.
Huachuang in the North positioned itself as applied Materials The same one-stop supplier. North Huachuang is particularly strong in etching, deposition, wafer cleaning and thermal annealing equipment.
China has more than 47 different types of wafer cleaning and preparation equipment suppliers.
Sammy semiconductor has strong strength in CMP (chemical mechanical planarization) and cleaning equipment.
More than ten companies in China provide testing, analysis, metrology, silicon substrate growth, wafer marking and wafer processing equipment.
03. Inspiration and suggestions
With China’s efforts to develop domestic semiconductor equipment, by 2024, China will be able to double its domestic semiconductor production to meet at least 30% of its demand. Many see this as the minimum threshold for self-reliance.
Focusing on the production capacity of 28 nm and above chips will help Chinese semiconductor companies meet most of China’s semiconductor demand. Shanghai microelectronics should start shipping 28 nm photoresists this year, which will help ease capacity constraints in China.
SMIC is already producing 14 nm chips and will expand its capacity as early as 2022 with more DUV lithography machines from ASML, Nikon or Shanghai microelectronics.
In the next one to two years, China’s electronic system manufacturers will have to accept the chips provided by domestic suppliers which are lower than the leading level. Until the domestic 7 nm DUV lithography machine comes into the market, it may also be provided by Shanghai microelectronics first.
For the production of 5 nm and below chips, it may take several years for domestic EUV machines or machines using alternative lithography technology to enter the market.
China should carefully assess how to subsidize the domestic semiconductor industry:
WTO rules usually allow government subsidies, but EU rules usually consider subsidies illegal.
If a country supports the export of semiconductors at a price lower than the domestic price to increase market share, it is considered dumping. If it can be proved that it has caused damage to suppliers of other countries, the WTO will allow countries that buy chips from China to impose anti-dumping measures such as tariffs on China.
As countries implement subsidies and other incentives for the semiconductor industry, the world may enter a new competition, which is a competition to see who can invest the most in local semiconductor development. In such an environment, strategy analytics believes that only by spending wisely can countries hope for greater success.
Enterprises in China should guard against intellectual property disputes, especially those related to semiconductor equipment
China now has a perfect patent system, which is the envy of the rest of the world in many ways. Under China’s patent system, infringement of the patents of non Chinese companies, not to mention those of local companies, may lead to serious financial losses.
If there are credible accusations of intellectual property infringement against Chinese companies, additional sanctions will be imposed, which could further disrupt everyone’s semiconductor supply, not just China.
The good news for China’s efforts in lithography is that ASML / Cymer Some of Nikon’s first immersion lithography patents will expire in the next two years.
China needs more engineers and scientists with semiconductor equipment experience to narrow the gap with established suppliers. Georgetown University’s Center for security and emerging technologies believes that speeding up the relaxation of license exemption and faster processing of license applications, allowing semiconductor equipment and parts to enter China, will help Chinese citizens working in the United States to stay in the United States.
If China is seen as too aggressive in acquiring talent, it will lead to strong opposition from the United States and other countries, and may lead to tougher sanctions.
China’s semiconductor equipment companies should aim at domestic and foreign customers at the same time and speed up their development. Semiconductor manufacturers always tend to buy equipment from reliable suppliers, and mature equipment companies have close relationship with the world’s leading semiconductor manufacturers and can get product feedback from them. Chinese equipment suppliers may no longer need to break through this existing advantage when selling in China, but overseas sales will still provide valuable information to assist the development of semiconductor equipment.
Many of the recommendations in this report also apply to the United States, the European Union, South Korea, India and other countries interested in self-sufficiency. Each country should examine its advantages and disadvantages in the whole semiconductor supply chain, and give priority to the most serious defects, taking into account its semiconductor demand and goals. China seems to be doing quite well in this regard.
From: strategy analytics
Read more: SIA: the total sales of China’s semiconductors will reach more than 150 billion US dollars in 2019 sanctions against Huawei: harm to the telecom industry, global semiconductor industry and US economy? Semiconductor dependence: the world depends on China China relies on the world Intel: net profit of 4q19 is 6.9 billion US dollars, a year-on-year increase of 33% AMD: net profit of 4q19 is 170 million US dollars, a year-on-year increase IHS Markit: Sales of Samsung Semiconductor in Q1 in 2018 is 18.607 billion US dollars, ranking first Samsung: top executives’ interpretation of 1q20 financial report: top priority is to control risks, respond to demand recovery Samsung Electronics: net profit of 1q20 is 3.9 billion US dollars, a year-on-year decrease of 3.15% Samsung Electronics: 1q21 net profit of US $6.4 billion, up 46.2% year on year semiconductor industry association: global semiconductor sales of US $83.1 billion in Q1 2015, up 6% mic: global semiconductor market is expected to decline by 1% in 2016 international semiconductor technology development roadmap 2015 welcome to semiconductor 2.0 era
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