Large-scale expansion campaigns target various chips, but export controls limit the growth of the lead.

China announced a number of initiatives to promote the development of the domestic semiconductor industry, including new large-scale fab expansion activities in the foundry, gallium nitride (GaN) and silicon carbide (SiC) markets.

The country is vigorously promoting its so-called "third-generation semiconductors", which is a misnomer. The term actually refers to the two existing common types of power semiconductor devices-GaN and SiC power semiconductors. Regardless of the name, China is catching up. In addition, the country is further behind in leading logical processes. On the other hand, China continues to make rapid progress in other parts of its IC industry.

China is a complex market with many dynamics. On the one hand, China is the world's largest semiconductor consumer market. IBS CEO Handel Jones said that in 2020, China will account for 53.7% of global chip sales, or US$239.45 billion. Jones said that the global semiconductor market will reach 446.1 billion U.S. dollars in 2020, an increase of 8.34% over 2019. According to IBS data, the semiconductor market is expected to grow by 21.62% in 2021.

From a Chinese perspective, this is a big problem. For many years, the country has been importing large amounts of semiconductors from multinational suppliers, causing a huge trade deficit. According to data from IBS, in 2020, the total sales of registered chips of multinational companies in China will be US$1997 billion. According to the company, this accounts for 83.38% of China's total chip sales. The rest are Chinese chip suppliers. China also only produces a small part of its own chips.

Over the years, the country has initiated many initiatives aimed at narrowing the gap, but these efforts have not been effective. Now, China is investing 150 billion U.S. dollars in the domestic IC industry, hoping to be more self-sufficient in developing and manufacturing various types of chips. Even so, China still faces many challenges in seeking to reduce its dependence on foreign suppliers, and it may never achieve its goals.

Nevertheless, China is still expanding. According to SEMI, global chip manufacturers will start building 19 new fabs in 2021, and 10 more are under construction in 2022. According to SEMI, China and Taiwan are leading the way in new fab construction projects, each with eight. Several factories in China are under construction.

SEMI analyst Christian Dieseldorff said: “We currently have 17 Chinese-funded companies’ fabs, and they will start construction from 2021 to 2023.” Dieseldorff said that overall, the installed capacity of Chinese chip manufacturers will increase from 2020. 2.96 million wafers per month (wpm) in 2010 will increase to 3.572 million wafers in 2021.

Several major events are happening in China's semiconductor industry, including:

However, not all these efforts have been successful. The hopeful Chinese foundry HSMC recently closed down.

China's plan China has a long history in the semiconductor field. In the 1970s, several Chinese state-owned chip manufacturers appeared and developed simple transistors, but they were not competitive. It was not until the 1980s when the government began to modernize its semiconductor industry that the country began to receive attention. With the help of foreign attention, the country launched several chip companies in the 1980s and 1990s.

These companies have developed logic and storage devices, but are technologically lagging behind the West. At that time, the West imposed strict export controls on China. Multinational equipment suppliers are prohibited from shipping their most advanced systems in China.

In order to narrow the gap, China launched its most advanced foundry supplier-SMIC in 2000. Then, starting in the late 2000s, Intel, Samsung, and SK Hynix established memory factories in China, and TSMC and UMC established foundries in China.

By then, China has become a large-scale electronic product manufacturing base. Overnight, China became the world's largest chip market. At that time, China's integrated circuit industry was mature, but most of the country's chips were imported from multinational suppliers. It also produces a small number of its own chips.

In response, with billions of dollars in funding, the Chinese government announced a new plan in 2014. The goal is to accelerate China's efforts in 14nm process, memory and packaging.

Then, in 2015, China launched another initiative called "Made in China 2025". The goal is to increase the localization of parts and components in 10 areas including information technology, robotics, aerospace, shipping, railways, electric vehicles, power equipment, materials, medicine and machinery.

China is making progress in these areas. But some measures have been derailed since 2018, when the United States launched a trade war with China by imposing tariffs on Chinese-made goods. China retaliated.

A year later, the United States included Huawei and its internal chip unit HiSilicon’s "Entity List." The United States prevents multinational companies and foundries from selling cutting-edge chips to Huawei and HiSilicon.

Tensions in the area have escalated. This in turn prompted China to accelerate the pace of domestic semiconductors, hoping to be more self-sufficient.

At the same time, China has set its sights on other areas, such as pure electric vehicles (BEV). According to TrendForce's data, Tesla is the world's largest BEV supplier, but China has the largest share of the total BEV share.

In 2020, China proposed "Road 2.0", which is the electric vehicle industry plan by 2035. Reduce the average power consumption of new pure electric vehicles to 12.0 kWh/100 kilometers; and increase NEV (new electric vehicle) sales to 20% of total new vehicle sales,” said Phoebe Yin, Jake Levine and analysts of Covington, a public policy organization Ashwin Kaja said.

Earlier this year, China announced its fifth 14-year plan covering the period from 2021 to 2025. According to IDC, China is developing a variety of technologies, including seven key areas:

Covington said that China also hopes to enter or expand into multiple areas, including design tools, semiconductor equipment and materials, advanced memory, and GaN and SiC.

Foundry frustrated China is also continuing to expand its foundry industry. Foundries use process technologies at different nodes to make chips for others. Process technology is the recipe used to manufacture a given chip in a fab. Nodes refer to the design rules of the process.

The mature process involves logic nodes of 28 nanometers and above, and the key building block is the planar transistor. Below 28nm, the chip is built using finFET.

At the same time, China's foundry industry is divided into two categories, domestic and transnational. On the cross-border front, Powerchip, TSMC and UMC have been operating fabs in China for many years.

In its newer Nanjing plant, TSMC is accelerating the 16-nanometer finFET process and plans to expand its 28-nanometer technology. In Xiamen, UMC’s fab is manufacturing 40nm/28nm.

China's domestic foundries include ASMC, China Resources Micro, Hua Hong Group, San'an Integrated Circuit and SMIC. Hua Hong Group includes three suppliers-Hua Hong Hongli, Hua Hong Semiconductor and Shanghai Huali.

There are several reasons why China wants to become a foundry company. First, it wants to make more chips. Second, China's foundries not only have to produce chips for multinational manufacturers, but also hope to serve more and more domestic IC design companies that are developing cutting-edge chips. Third, China hopes to manufacture leading designs in domestic OEMs.

"Five years ago, China did have trouble making complex chips. Huawei or HiSilicon could do it. VeriSilicon is doing some interesting things. But they are the exception," said Jones of IBS. "Now, we may have 10 or 12 companies in China that can design on 5nm and switch to 3nm next year or later."

The country’s foundries have achieved some success. According to TrendForce's data, the two suppliers-SMIC and Hua Hong-are the fifth and sixth-largest foundries in global sales, respectively. TSMC still ranks first, followed by Samsung, UMC and GlobalFoundries.

Figure 1: The top 10 foundries in terms of sales in the second quarter of 2021. SMIC and Hua Hong have consolidated their positions in the foundry competition. Source: TrendForce

However, China may not be able to achieve its goals. According to IC Insights, it hopes to produce 70% of the chips by 2025. According to IC Insights, China produced 15.9% of chips in 2020, and it is estimated that only 19.4% will be produced by 2025.

The country is still lagging behind in terms of process technology. SMIC’s most advanced technology involves 14nm process and R&D of 7nm. In contrast, TSMC and Samsung are accelerating 5nm, of which 3nm is planned to be launched in 2022.

Therefore, for leading craftsmanship, Chinese design companies must rely on multinational foundries, which is a pain point for the government. Nevertheless, due to the huge demand for chips based on mature technology, the country's foundries are booming.

Leo Pang, Chief Product Officer of D2S, said: "Today's semiconductor manufacturing is different from the past when only leading fabs could make money." The automotive industry and IoT applications are stuck on mature nodes, such as 28nm and larger nodes. "

Nevertheless, China has made considerable progress in a short period of time. In 2001, SMIC began production of its first wafer fab-a 200 mm, 0.25 micron factory. Over time, SMIC has developed several new fabs and processes.

By 2014, the company has developed the most advanced technology in China, the 28nm process. In contrast, TSMC launched 28nm in 2011. Later, GlobalFoundries, Samsung and UMC launched 28nm.

Today, 28nm is still a big business, and all foundries are continuing to expand their fab capacity. Some suppliers are accelerating 22nm, which is an extension of 28nm. Jason Wang, Co-President of UMC, said: "The revenue of 28nm technology continues to grow, and the participation of 22nm business has led to more and more customers tapping in the wireless, display and IoT markets."

At the same time, several foundries continue to pursue leading advantages, but there are also some challenges. At 28nm/22nm and above, the chip still uses planar transistors. Below 20 nanometers, planar transistors will lose power.

This is why Intel switched to 22nm finFETs in 2011. In 2014, GlobalFoundries, Samsung and TSMC switched to 16nm/14nm finFETs. FinFETs are faster than planar transistors, have lower power consumption, and at 16/14nm, their leakage current is much lower. But they are also more difficult to manufacture and more costly.

In order to catch up, SMIC started to develop 14nm finFET process in 2015. It launched this technology in 2019, a few years behind its competitors.

However, it did not give up. Recently, SMIC taped out its so-called 7nm or "N+1" technology. Gartner analyst Samuel Wang said: “The process has not yet seen mass production and yield improvement.” “SMIC’s N+1 is not a 7nm process. It can be considered as 8nm.”

From there, SMIC was in trouble, unable to handle chips exceeding N+1. Recently, the United States prevented SMIC from acquiring ASML's extreme ultraviolet (EUV) lithography scanner, which is used to develop chips of 7nm and above. Without EUV, SMIC would not be able to develop chips other than N+1, thus hindering China's efforts to develop leading processes.

Last year, the United States also included SMIC on the "Entity List", making it difficult to obtain other advanced equipment. So far, the United States has not relaxed its restrictions on SMIC, which means that the company will fall further behind.

"The gap is widening," Wang said. "After what they call N+1 or 8nm, SMIC can no longer do anything. They will not have a real 7nm or 6nm. In terms of advanced technology, they will be even more behind. I would say six years or even longer. ."

However, there is a silver lining. "In terms of revenue, SMIC has done a good job," Wang said. "At 28nm and above, there is sufficient demand. SMIC's fab utilization rate exceeds 100%. Although they are restricted in developing advanced technologies, they are still growing."

In addition, SMIC and other Chinese chip makers continue to build fabs, albeit with more mature processes. According to SEMI's "World Fab Forecast Report", the following are some of China's current and future fab projects:

Hua Hong owns three 200mm wafer fabs and is expanding its first 300mm fab. Focusing on mature processes, Hua Hong's fabs are full. "Almost all market segments have strong demand-especially MCU, power management IC, IGBT, super junction, CIS, logic and RF," said Tang Junjun, President of Hua Hong.

Shanghai Huali has two wafer fabs, which are already full. The company has 28 nanometer capabilities and plans to launch 14 nanometers before the end of the year. At the same time, Huawei plans to build a fab, although its plan is still uncertain. Not all fab projects in China will succeed. In addition, there are other problems.

"China does not get EUV scanners, so they can't get into the leading position. But this is not a problem for them to build a new fab," said Pang of D2S. "But first, they need to gain market share and train talents based on local needs. Once they have both, they can gradually expand outside the domestic market."

Power semiconductors are advancing China is also advancing vigorously in a new market segment-power semiconductors. Power semiconductors are used to control and convert electricity in systems, and are used in automobiles, computers, and industrial products.

Power semiconductors are specialized transistors that allow current to flow in the "on" state and stop in the "off" state. They increase efficiency and minimize energy loss in the system. After decades of use, power devices have become more and more important.

"We must use technology to protect the environment. One solution is hybrid and electric vehicles, where power electronics is the key," said Gary Zhong, head of Infineon's Greater China Vehicle Sports Department. "Considering the general trend of automotive electrification and digitalization, we expect the demand for power semiconductors, such as IGBTs and SiC MOSFETs, to grow rapidly."

Today's power semiconductor market is dominated by silicon-based devices, including power MOSFETs, super junction power MOSFETs, and insulated gate bipolar transistors (IGBTs).

Power MOSFETs are used in low voltage, 10 to 500 volt applications, such as adapters and power supplies. Super junction MOSFETs are used in 500 to 900 volt applications. IGBT is a leading mid-range power device used in 1.2 kV to 6.6 kV systems.

IGBTs and MOSFETs are widely used, but they have also reached their limits. This is why more and more suppliers are developing power devices based on two wide band gap technologies (GaN and SiC). Both GaN and SiC-based power devices are smaller and more efficient than silicon, but they are also more expensive.

Several Chinese companies are developing and manufacturing various types of power semiconductors. Nevertheless, domestic system manufacturers must still import most of these equipment from multinational companies.

On the one hand, technologies like GaN are difficult to develop. "Silicon carbide is harder," said Jones of IBS. "So Chinese auto companies are purchasing from foreign companies."

Looking to the future, the country hopes to develop and manufacture more of its own semi-finished products. According to SEMI data, by 2023, China is expected to become a global leader in power and compound semiconductor fab capacity.

The country hopes to promote vigorously in all areas, including mature products such as power MOSFETs. According to Yole Développement, several domestic MOSFET suppliers have emerged, including China Resources Micro, Jilin Sino and Silan. Yole analyst Milan Rosina (Milan Rosina) said: "Therefore, it is not surprising that Chinese companies invest in manufacturing capabilities."

China is expanding in other ways. In 2017, NXP sold its standard product business called Nexperia to a Chinese consortium. In 2019, Wingtech Holdings, a Chinese telecommunications company, will hold discrete device and MOSFET supplier Nexperia. Nexperia is now a subsidiary of Wingtech and is still headquartered in the Netherlands.

Nexperia has fabs in Germany and the United Kingdom In early 2021, Wingtech announced plans to build a 300mm power semiconductor fab in Shanghai. The US$1.85 billion fab will be put into production in 2022.

After these events, Nexperia acquired Newport Wafer Fab (NWF), a supplier of power semiconductor foundries in the UK. "Nexperia's interest in Newport lies in mass production of 8-inch discrete power MOSFETs," said Charles Smit, Nexperia's general counsel. "Xingang will also enhance the company's ability to supply qualified automotive products."

The transaction is under scrutiny by the British government, but it is unlikely to block this move. NWF is approaching bankruptcy proceedings.

At the same time, NWF is also developing SiC, a technology that China is very interested in. The same is true for GaN. According to TrendForce's data, in 2020, China has invested in 25 projects in the SiC and GaN fields at a cost of 10.9 billion US dollars. According to TrendForce's data, in these figures, China has about 14 6-inch SiC wafer production lines. HDSC, Sanan IC, Tankeblue, etc. all have SiC production lines in China. Not all projects will be successful.

At the same time, Sanan IC provides foundry services for compound semiconductor devices (GaN, SiC), power electronics and optoelectronics. Recently, the Changsha manufacturing base of Sanan IC opened China's first vertically integrated SiC factory.

Mrinal Das, Director of Technical Marketing and Sales of Sanan Integrated Circuits, said: “Our Changsha factory integrates a complete assembly and test facility on the front and back ends, which can produce high-volume discrete and power module packages. “We opened our Changsha One in one year. The project is currently moving towards 15,000 150mm SiC wafers per month. "

Like multinational suppliers, Chinese local silicon carbide suppliers have also set their sights on multiple markets. "The booming electric vehicle market in China and the world is motivating all SiC suppliers to expand their manufacturing capabilities," Das said. "The significant growth in sales in the electric vehicle market is driving an accelerated decline in the price of SiC devices, thereby increasing its adoption rate in other growing markets such as photovoltaic string inverters, energy storage, UPS and motor drives."

BEV is a big market. In the first batch of BEVs, IGBTs were used in traction inverters to provide traction for the motors to propel the vehicle. BEV also integrates other chips.

This situation began to change in 2017, when Tesla began to use STMicroelectronics SiC power devices in the traction inverters in its Model 3 BEV. Silicon carbide is more efficient than IGBT, but it is also more expensive.

All car manufacturers now integrate or evaluate SiC for power inverters in their new BEVs. Silicon carbide devices are also used in DC-DC converters and on-board chargers in BEVs. "As the requirements for fast charging and autonomous driving continue to increase, vehicles need high-voltage platforms. Silicon carbide MOSFETs contribute to the future of the system by providing longer distances, more compact sizes, and better overall system costs. "Infineon's Zhong said.

Nevertheless, multinational companies have not stagnated. Many companies have established business in China or set up joint ventures with domestic suppliers. For example, China's Zhenghai Group and Japan's Roma recently signed an agreement to establish a joint venture in China. The joint venture will develop silicon carbide (SiC) power modules. Roma has also formed other alliances in China.

"In various applications such as solar power generation systems, industrial equipment, servers, and base stations, the adoption of silicon carbide power devices has accelerated. It is expected that they will be increasingly used in electric vehicles in the future," Rohm Advanced Sales Director Travis Moench said. "The new joint venture will also provide our customers with more choices. We expect the new company's power module development will promote the installation of SiC power devices in China's promising new energy vehicles, and will play a role in other application research. Important role."

In addition to SiC, China is also interested in GaN, which is a III-V material used in LEDs, power semiconductors, and radio frequencies. GaN power semiconductors are taking off in several markets, such as fast chargers. The fast charger based on GaN devices is a small adapter that can charge smart phones and laptops faster than traditional chargers.

"For power conversion, the first market where GaN is booming is the fast charger field," said Stephen Oliver, vice president of corporate marketing at Navitas, a US GaN power semiconductor supplier. "The charger market favors small-sized, lightweight products. If you are considering a 65-watt charger (using GaN) that can be used for laptops or mobile phones, the BOM cost of GaN is about 15% higher than that of silicon. But it is three times smaller. Lighter, charging three times faster for the same size."

Fast chargers are popular accessories for Chinese smartphone manufacturers. Recently, Xiaomi launched a smart phone and an independent 55-watt fast charger based on nano-micro GaN power devices.

Multinational companies dominate the GaN power device market, but China's Innoscience is gaining momentum. Several Chinese companies are also building new GaN wafer fabs. "TrendForce's data shows that as of 1H21, China has installed about 7 GaN-on-Si wafer production lines, and currently at least 4 GaN power device production lines are under construction, also in China." Research company. Not all projects will be successful.

Figure 2: The market share of GaN power device suppliers shows that China's Innoscience is surpassing multinational GaN suppliers. Source: TrendForce

Conclusion There are other efforts. For example, Chinese memory manufacturers have been producing 3D NAND and DRAM, but with mixed success.

All in all, China is advancing at full speed in the semifinals. Although it will not be self-sufficient anytime soon, it will continue to shake the market.

Geopolitical considerations are an important factor in all of this. From the perspective of the Chinese, they already think that any Taiwanese is actually a Chinese, just as they think of many ancient Chinese royal treasures and cultural relics in Taiwan.

Very accurate explanation. Realistic and simple absorption. thank you very much. simple

".. According to IBS CEO Handel Jones, China accounts for 53.7% of global chip sales, or $239.45 billion...." In their statement of China's semiconductor consumption, Chinese officials are accustomed to using electronics Chips assembled out of the system (mainly imported to China) are included. Does the US IBS estimate China's semiconductor chip consumption in the same way?

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