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China to Fall Far Short of its "Made-in-China 2025" Goal for IC Devices

Daniel Nenni

Admin
Staff member
Domestic content percentage forecast to be about one-third of its 70% 2025 target.

IC Insights will release its May Update to the 2020 McClean Report later this month. This Update is part of a series of monthly updates to The McClean Report that will be released through November of this year. The following evaluation of China’s IC market is an excerpt from the original McClean Report released in January.

IC production in China represented 15.7% of its $125 billion IC market in 2019, up only slightly from 15.1% five years earlier in 2014. As shown in Figure 1, IC Insights forecasts that this share will increase by 5.0 percentage points to 20.7% in 2024 (one percentage point per year on average).



Figure 1
A very clear distinction should be made between China’s IC market and indigenous IC production in China. As IC Insights has oftentimes stated, although China has been the largest consuming market for ICs since 2005, it does not necessarily mean that large increases in IC production within China would immediately follow, or ever follow.

Of the $19.5 billion worth of ICs manufactured in China last year, China-headquartered companies produced only $7.6 billion (38.7%), accounting for only 6.1% of the country’s $124.6 billion IC market. TSMC, SK Hynix, Samsung, Intel, and other foreign companies that have IC wafer fabs located in China produced the rest. IC Insights estimates that of the $7.6 billion in ICs manufactured by China-based companies, about $1.8 billion was from IDMs and $5.8 billion was from foundries like SMIC.

If China-based IC manufacturing rises to $43.0 billion in 2024 as IC Insights forecasts, China-based IC production would still represent only 8.5% of the total forecasted 2024 worldwide IC market of $507.5 billion. Even after adding a significant markup to some of the Chinese foundry producers’ IC sales, China-based IC production is still likely represent only about 10% of the global IC market in 2024.

2019
Worldwide IC Market ($B)
$358.4
China IC Market ($B) $124.6

China-based IC Production ($B) $19.5
% of WW IC Market 5.4%
% of China IC Market. 15.7%

China-HQ IC Production ($B) $7.6
% of total China IC Production 38.7%
% of WW IC Market 2.1%
% of China IC Market 6.1%

Currently, IC production in China is forecast to exhibit a very strong 2019-2024 CAGR of 17%. However, considering that China-based IC production was only $19.5 billion last year, this growth is starting from a relatively small base. In 2019, SK Hynix, Samsung, Intel, and TSMC were the major foreign IC manufacturers that had significant IC production capability in China.

Even with new IC production being established by China startups YMTC and CXMT, IC Insights believes that foreign companies will be a large part of the future IC production base in China. As a result, IC Insights forecasts that at least 50% of IC production in China in 2024 will come from foreign companies such as SK Hynix, Samsung, Intel, TSMC, UMC, and Powerchip with fabs in China.

In the wake of tariffs and trade tension between China and the United States, government officials and company representatives throughout China have doubled down on their resolve to quickly and meaningfully grow the nation’s domestic IC business in order to reduce its dependence on critical IC components currently supplied by companies based in the U.S. and other countries.

In the memory IC market specifically, some headlines and reports last year proclaimed that China is “unstoppable” and will soon match the output and technology level of Samsung, SK Hynix, and Micron. When those types of claims emerge, a reality check is in order.

Consider that China’s first indigenous DRAM supplier, Changxin Memory Technologies (CXMT), only began limited production of its first DRAM products in 4Q19. This company has a few thousand employees and a capital spending budget of about $1.5 billion per year. In contrast, Micron and SK Hynix each have well over 30,000 employees and Samsung’s memory division is estimated to have over 40,000. Moreover, in 2019, the combined capital spending from Samsung, SK Hynix, and Micron was $39.7 billion. Now that’s a reality check!

While China continues to make large investments in its memory manufacturing infrastructure and has developed some clever design innovations in an attempt to avoid potential patent disputes, IC Insights remains extremely skeptical whether the country can develop a large competitive indigenous memory industry even over the next 10 years that comes anywhere close to meeting its memory IC needs.

One major issue that many observers overlook with regard to China becoming more self-reliant for its IC needs is its lack of indigenous non-memory IC technology. Currently, there are no major Chinese analog, mixed-signal, server MPU, MCU, or specialty logic IC manufacturers. Moreover, these IC product segments, which represented over half of China’s IC market last year, are dominated by well-entrenched foreign IC producers with decades of experience and thousands of employees.

While everyone is focused on China’s moves in the memory market, becoming self-reliant in non-memory IC segments poses an even more difficult problem for China. In IC Insights’ opinion, it will take decades for Chinese companies to become competitive in the non-memory IC product segments.

Currently, China is putting on a brave face with regard to its future IC industry capabilities. However, given the extremely small and undeveloped starting base of Chinese company IC production and technology today, and with increasing difficulty to purchase advanced semiconductor manufacturing equipment, IC Insights believes it is essentially impossible for China to make significant strides in becoming self-sufficient for its IC needs (memory and non-memory) within the next 5 years and probably not even within the next 10 years.

Report Details: The 2020 McClean Report
Additional details on IC market trends are provided in the 2020 edition of The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry. A subscription to The McClean Report includes free monthly updates from March through November (including the 200+ page Mid-Year Update), and free access to subscriber-only webinars throughout the year. An individual user license to The McClean Report is priced at $4,990 and includes an Internet access password. A multi-user worldwide corporate license is available for $7,990.

PDF Version of This Bulletin
A PDF version of this Research Bulletin can be downloaded from our website at http://www.icinsights.com/news/bulletins/
 

Arthur Hanson

Active member
China has many critical choices to make this year and in this world of almost instantaneous news there are fewer and fewer secrets. One hundred countries feel they are liable for how they handled the early stages of the coronavirus outbreak. They have the opportunity to join the world community and prosper, but their actions will speak to their true intentions and how the world reacts. I hope they are able to step up to the table for their opportunity to prosper by becoming a trusted member of the world community are far greater than choosing conflict or subterfuges. The world is watching closely and waiting, the choice is theirs and theirs alone.
 
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Godfree Roberts

New member
China has many critical choices to make this year and in this world of almost instantaneous news there are fewer and fewer secrets. One hundred countries feel they are liable for how they handled the early stages of the coronavirus outbreak. They have the opportunity to join the world community and prosper, but their actions will speak to their true intentions and how the world reacts. I hope they are able to step up to the table for their opportunity to prosper by becoming a trusted member of the world community are far greater than choosing conflict or subterfuges. The world is watching closely and waiting, the choice is theirs and theirs alone.
Francis Collins, director of the US National Institutes of Health, said the virus might have been spreading quietly in humans for years, or even decades, without causing a detectable outbreak. https://www.scmp.com/news/china/sci...ogen-could-have-been-spreading-humans-decades.

Patient Zero Video:

French doctors believe they may have treated coronavirus patients last fall.
Video:
In what would mark a massive shift in the timeline of coronavirus spread, French researchers believe there is evidence coronavirus may have been in Europe as early as November 2019. X-rays obtained exclusively by NBC News show two patients with symptoms in their lungs consistent with the novel coronavirus dated Nov. 16 and Nov. 18, months before COVID-19 was believed to be spreading in the country. Researchers from Colmar, France, announced the X-rays last week and are working to confirm whether the patients had coronavirus. https://www.sciencedirect.com/science/article/pii/S0924857920301643
The study comes in conjunction with a study by other French scientists who discovered last week that a coronavirus patient had been treated in the country in December. The doctors from the Groupe Hospitalier Paris Seine in Saint-Denis said a sample taken from a 42-year-old fishmonger admitted to the emergency room on Dec. 27 had tested positive for the coronavirus. https://www.nbcnews.com/news/world/new-evidence-race-find-france-s-covid-19-patient-zero-n1207871


CNN host Chris Cuomo said he believes there will be revelations showing the novel coronavirus was spreading in the United States as early as October. “The kids now anecdotally, Cristina believes, that at least two of them have had it in the last few months. Why? We don’t know, but atypically long-duration sinus, fever, lethargy. I think we’re going to learn that coronavirus has been in this country since, like, October, that there have been cases,” Cuomo said. “And as you guys both know, and I hear all the time from all over the country, how many people do you hear saying, ‘I think I had it, I had this and this, I lost my sense of smell and this and that, but I never got tested’? Those cases are, like, abounding all over the country,” he added. https://www.washingtonexaminer.com/...coronavirus-was-spreading-in-us-since-october.

Belleville, NJ, Mayor Michael Melham said he has tested positive for coronavirus antibodies, adding that he believes he was sick with the virus in November — more than a month before doctors in China first reported cases of the new disease. Melham said he was sick toward the end of November and suffered from chills, hallucinations and a "skyrocketing temperature" after he left the League of Municipalities Conference in Atlantic City.Melham said it was the sickest he had ever been in his adult life. He did not take a flu test and said he did not travel overseas. Melham said he later suspected he had contracted the coronavirus in November but dismissed the notion because the earliest cases in the United States weren't reported until January. His November illness is what prompted Melham to ask his doctor for the blood test. He got the results Wednesday.The mayor said it is entirely possible he was exposed to the coronavirus later and was asymptomatic, but felt it was "highly, highly unlikely.The antibody in my blood is older as opposed to the more recent one showing you just finished fighting it off," Melham said.Melham believes he could potentially be an early, undetected case of the coronavirus.

Coronavirus was in Florida before we knew it: A Miami Herald analysis shows state health officials have documented at least 170 COVID-19 patients reporting symptoms between Dec. 31, 2019, and Feb. 29. https://www.tampabay.com/news/health/2020/05/05/coranavirus-was-in-florida-before-we-knew-it/

Anders Tegnell, Sweden’s chief epidemiologist, said coronavirus may have been circulating in the country since November https://www.ft.com/content/aba67162-9129-41b9-b82b-d61a890e6589

Dr. Junya Fukushima (Gastroenterologist, University of Tsukuba). From fb, "In August 2019, the new coronavirus COVID-19 had invaded and spread in Japan." In Japan, this year's infection is the second wave. A large-scale antibody test is desirable in the future. #covid19.
 
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