In what is seen as a symbol of China’s “semiconductor rise,” SMIC ascended to third place in the global foundry (semiconductor manufacturing services) market in the first quarter of this year, trailing behind Taiwan’s TSMC and South Korea’s Samsung Electronics. This marks the first time a Chinese foundry has entered the global top three, largely due to sweeping up orders from Chinese electronics companies like Huawei.
According to industry sources on May 13, SMIC reported first-quarter revenues of US$1.75 billion, positioning it behind TSMC at US$18.5 billion and an estimated US$3.5 billion for Samsung Electronics. Taiwan’s UMC and GlobalFoundries from the United States followed, with revenues of US$1.708 billion and US$1.549 billion, respectively. SMIC was the only one among these top five to see an increase in sales compared to the fourth quarter of last year.
SMIC’s surge is attributed to “U.S. semiconductor regulations against China.” Around 2020, SMIC began developing a 7-nanometer (nm) process, but faced pressure from the U.S. urging Dutch company ASML not to export its Extreme Ultraviolet (EUV) lithography equipment to China. Without ASML’s EUV, the advanced processing technology was unattainable.
However, SMIC CEO Liang Meng Song, a former executive at TSMC and Samsung Electronics, took a gamble by developing a 7-nm process using Deep Ultraviolet (DUV), the predecessor technology to EUV. Successful development was achieved in 2022 with substantial covert support from the Chinese government. It is known that using DUV for the 7-nm process is more than four times more expensive than using EUV due to the need to repeat certain processes multiple times because of differences in light wavelength and performance issues.
Despite the high costs, SMIC has been supplying application processors (APs) developed with this technology to Huawei smartphones since last year. The Kirin 9010 application processor (AP) used in Huawei’s recently unveiled Pura 70 smartphone was also manufactured using SMIC’s 7-nm process. Additionally, it has been reported that SMIC successfully developed a 5-nm process without EUV equipment.
SMIC’s progress is expected to significantly pressure South Korean foundry companies. Samsung Electronics, for example, is intensifying its business in 7-nm and 5-nm processes, targeting Chinese fabless companies developing high-performance computing (HPC) chips and autonomous driving chips. With SMIC now also offering chips in these processes, there could be a downward pressure on prices, especially considering the trend of “patriotic consumption” in China, which may result in a significant loss of Chinese customers for South Korean companies.
Other companies like DB Hitek and SK hynix system IC are also feeling the heat. These firms, which primarily focus on traditional processes for 200 mm (8-inch) wafers or processes above 10 nm, are seeing SMIC building up its performance. The Chinese foundry firms, backed by government support and engaging in aggressive pricing strategies, add to the challenges.
An industry insider noted, “The collaboration where Huawei designs the chips and SMIC manufactures them is making China’s ‘semiconductor independence’ increasingly tangible. Other Chinese companies like CXMT are also stepping up, teaming up with Huawei and SMIC in developing High Bandwidth Memory (HBM), effectively nibbling away at South Korea’s semiconductor territory in a ‘Team China’ fashion.”
www.businesskorea.co.kr
According to industry sources on May 13, SMIC reported first-quarter revenues of US$1.75 billion, positioning it behind TSMC at US$18.5 billion and an estimated US$3.5 billion for Samsung Electronics. Taiwan’s UMC and GlobalFoundries from the United States followed, with revenues of US$1.708 billion and US$1.549 billion, respectively. SMIC was the only one among these top five to see an increase in sales compared to the fourth quarter of last year.
SMIC’s surge is attributed to “U.S. semiconductor regulations against China.” Around 2020, SMIC began developing a 7-nanometer (nm) process, but faced pressure from the U.S. urging Dutch company ASML not to export its Extreme Ultraviolet (EUV) lithography equipment to China. Without ASML’s EUV, the advanced processing technology was unattainable.
However, SMIC CEO Liang Meng Song, a former executive at TSMC and Samsung Electronics, took a gamble by developing a 7-nm process using Deep Ultraviolet (DUV), the predecessor technology to EUV. Successful development was achieved in 2022 with substantial covert support from the Chinese government. It is known that using DUV for the 7-nm process is more than four times more expensive than using EUV due to the need to repeat certain processes multiple times because of differences in light wavelength and performance issues.
Despite the high costs, SMIC has been supplying application processors (APs) developed with this technology to Huawei smartphones since last year. The Kirin 9010 application processor (AP) used in Huawei’s recently unveiled Pura 70 smartphone was also manufactured using SMIC’s 7-nm process. Additionally, it has been reported that SMIC successfully developed a 5-nm process without EUV equipment.
SMIC’s progress is expected to significantly pressure South Korean foundry companies. Samsung Electronics, for example, is intensifying its business in 7-nm and 5-nm processes, targeting Chinese fabless companies developing high-performance computing (HPC) chips and autonomous driving chips. With SMIC now also offering chips in these processes, there could be a downward pressure on prices, especially considering the trend of “patriotic consumption” in China, which may result in a significant loss of Chinese customers for South Korean companies.
Other companies like DB Hitek and SK hynix system IC are also feeling the heat. These firms, which primarily focus on traditional processes for 200 mm (8-inch) wafers or processes above 10 nm, are seeing SMIC building up its performance. The Chinese foundry firms, backed by government support and engaging in aggressive pricing strategies, add to the challenges.
An industry insider noted, “The collaboration where Huawei designs the chips and SMIC manufactures them is making China’s ‘semiconductor independence’ increasingly tangible. Other Chinese companies like CXMT are also stepping up, teaming up with Huawei and SMIC in developing High Bandwidth Memory (HBM), effectively nibbling away at South Korea’s semiconductor territory in a ‘Team China’ fashion.”
China’s SMIC Surprisingly Ranks Third in Global Foundry Market, Following TSMC, Samsung Electronics
In what is seen as a symbol of China’s “semiconductor rise,” SMIC ascended to third place in the global foundry (semiconductor manufacturing services) market i
www.businesskorea.co.kr
