The Dynamics of the China Semiconductor Industry

Paul McClellan and I are at the SEMI Industry Strategy Symposium this week in Half Moon Bay. Honestly there is too much to blog about here so I will have to pick the topics most interesting to me. The full capacity audience is also impressive. SEMI provides a list of attendees on their website which reads like “Who’s Who” of the semiconductor industry, myself included. I may not be a “Who’s Who” yet but according to LinkedIn my profile is one of the most searched, so I have that going for me.

One of the best presentations today was by Dr. Simon Yang of XMC in regards to the dynamics of the Chinese semiconductor industry. It was not canned, it was very real and full of experiences, observations, and opinions which is much more interesting to watch of course.

XMC is China’s leading 300MM semiconductor manufacturing company. It was founded in 2006 in Wuhan, China and first began production in 2008. XMC provides its professional foundry service offerings to leading electronics companies worldwide. XMC focuses on developing specific customized solutions with its partners. Among its key area of expertise are memory and sensor manufacturing solutions. XMC is a recognized leader in NOR Flash memory production and BSI technology. XMC focuses on developing deep partnership and providing partners with tailored technology solutions to drive more innovation in the market.

The Chinese government has been trying to bring semiconductor manufacturing to China for the past 25 years with very little success. The first China fab was a 6” established in 1990. An 8” fab was added in 1996. SMIC was established in 2000. 12” fabs were then added in 2006 and 2010. Unfortunately semiconductor demand in China has by far outweighed the ability to manufacture them. Currently China imports more than 50% of the world wide semiconductor supply while manufacturing less than 10%. Even worse, wafer manufacturing in China is less than 2.5% of the world wide production and is only at mature nodes (40nm and above).

Simon quite honestly suggested that China manufacturing is much better at chasing slow versus fast moving technologies. Space travel and high speed transportation are two examples he gave. Another way to look at it is that with an advanced wafer manufacturing project you need to “do what you do not know how to do.” China is much more comfortable doing what they know how to do.

Today semiconductor technology moves at lighting speed to satisfy the mobile SoC demand which drags along many more applications behind it. I do not see that changing anytime soon so this is a defining point for any country planning to make semiconductors part of their national agenda. For China it is not just satisfying internal semiconductor demand or national pride. In my opinion it is all about security. Electronics begin with semiconductors and so does the security of EVERY product that contains a semiconductor device, absolutely.

Think about it, your smartphone knows your every move, your thoughts and secrets. Inside are billions of transistors that are “touched” by thousands of people. So how do you guarantee that all of those transistors are for good and not evil?