China Leaders Affirm Semiconductor Industry Priorities
At SEMICON China, industry and government leaders in China affirmed the central role that semiconductor manufacturing will have in future China economic policy. Representatives from Semiconductor Manufacturing International Corporation (SMIC), Grace Semiconductor Manufacturing, China’s Ministry of Information Industry (MII), and other government and industry leaders all declared support for the industry and optimism for the future. Over 15,000 people attended the first day of SEMICON China, surpassing previous attendance records.
“2008 will be an important year of growth for the semiconductor industry,” said Mr. Hua Xiao, general director of China’s Department of Electronic and IT products at MII.” In outlining the key aspects of the 11th 5-year plan during the keynote session, he said that the government’s policy of supporting the convergence between information and electronics will continue, and that semiconductor manufacturing remains a high priority to close the gap between IC production and consumption.
China is the leading market for ICs in the world with approximately $124 billion in ICs consumed in 2008. Semiconductor production is only $27 billion and this imbalance is an important driver for economic development and opportunity in China. Processing technology will reach 90 nm this year and progress is being made on 65 nm.
As part of the 5-year plan, Mr. Xiao said future trends include, “a more open, more market orientated industry” will be prioritized, and will require a coordinated effort among development zones, central government, local governments, ministries, education, and global firms to realize China’s potential. All components of the semiconductor value chain are being addressed, especially the fabless sector where now over 500 design companies are developing chips for the China and global market.
More emphasis will be placed on “independent innovation” and the development the country’s intellectual property, he said. The development of local equipment and materials companies is a priority in the 5-year plan, along with increased emphasis on environmental protection. MII has also established a task force to encourage semiconductor applications in environmental protection.
Dr. William Lee, vice president sales and marketing from SMIC, delivered a keynote speech entitled ''Spotlight on China's IC Industry'' in the CEO Wafer Processing Technology Forum on the afternoon of March 18. Dr. Lee also recognized China’s preeminent position in semiconductor consumption and estimated China’s share of the world IC market will grow from 21% today to a remarkable 38% in 2010. However, exports of IC’s are too high, nearly the same as crude oil, China’s top import. The product segments that account for 70% China’s production today are memory (23%), ASIC, analog and CPUs.
Future growth of the China’s IC industry will be fueled by local China design companies which have experienced growth rates of 30-40% over the last several years. In recognizing the challenges and opportunities in China, Dr. Lee said the innovation is essential and that requires strong Chinese IP. “The semiconductor industry requires both collaboration and innovation,” he said.
Tony Chen, vice president of Grace Semiconductor, discussed China economic trends, development issues for the semiconductor industry, and challenges and opportunities for the future. Driven by enormous demand for IC s in PCs, handsets, digital set top boxes, and digital TVs, China’s foundry business is growing along with the overall market. Foundry utilization is currently at 87%, the seasonal high, but some decline is expected in the next two quarters, he said. The movement to “fab-lite” production approaches also point to a bright outlook for China’s foundries. Mr. Chen outlined the new business model for China industry, termed, “verticalization” consisting of the entire value chain- from design, production and test—operating effectively in “regional semi clusters.” Challenges for foundries will be in simultaneously accelerating scaling, functionality and product diversification. Grace is especially enthusiastic about the embedded flash market in mobile, power management and automotive applications.
Completing the full day of critical industry discussion was a CEO roundtable discussion with Grace, SMIC, Rick Wallace, CEO of KLA-Tencor, Rick Hill, chairman and CEO of Novellus, Systems, and Terry Higashi, chairman and CEO of Tokyo Electron. The lively and often humorous discussion addressed IP, technology change, the continued viability of 300 mm wafers, and sustainable development. Among the chief challenges for equipment and materials suppliers in China is the increasing dispersion of China’s production facilities across the country, making service and support more difficult to economically deliver.