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TrendForce estimates that China’s production capacity of 300mm wafer will reach nearly 700,000 pieces per month by the end of 2018, a 42.2% increase from the end of 2017; the revenue from China’s entire wafer fabrication industry is expected to reach RMB 176.7 billion in 2018, an annual growth of 27.12%.
From 2016 to the end of 2017, the undergoing and planned new fabs in China totaled 28, of which 20 were for 300mm wafers and 8 were for 200mm wafers, says TrendForce. Most of these new fabs will go into operation this year. At present, players in China’s integrated circuit fabrication industry include Chinese manufacturers, foreign-funded manufacturers, and joint ventures, among which foreign-funded manufacturers and joint ventures account for almost half of the total production capacity. Foreign-funded manufacturers also enjoy absolute advantages in advanced process technology.
A great many manufacturers have been entering the market. The Chinese players, led by SMIC, are currently focusing on mass production of 28nm Poly/SiON process node. Meanwhile, they have made significant progress in increasing the revenue share of 28nm process node, accelerating the mass production of 28nm HKMG, and R&D of 14nm process node. On the other hand, foreign players like TSMC (Nanjing), United Semi (Xiamen), and GlobalFoundries (Chengdu) have also joined the competition in advanced manufacturing process technology.
As for the sector of memory chips, which has been dominated by international giants for a long time, the newcomers including Yangtze Memory Technologies Company (YMTC), Fujian Jinhua Integrated Circuit (JHICC) and Innotron will also face challenges from their international competitors regarding patents and pricing, etc.
The Chinese government has been actively developing its domestic semiconductor industry through industrial fund. TrendForce forecasts that the total investments, including the first and second phase of the “Big Fund”, capital from local authorities, etc., will approach RMB 1 trillion. The “Big Fund” has been invested to IC fabrication projects, such as SMIC, Huahong Grace, Shanghai Huali Microelectronics, YMTC, Silan Microelectronics, and Navtech, etc. Some other key projects are still in the negotiation stage.
Fabs that the “Big Fund” has invested in have less risks compared with those invested by just local funds. TrendForce points out that, for local investments, the fund that can actually be given is relatively limited, but the wafer fabrication has solid and proportionate capital requirements. In initial stages of plant construction, large-scale investments are required, coupled with potential risks of low capacity utilization.
Moreover, the power transition of local government creates uncertainties for fab projects execution. Therefore, critical challenges will remain for fab projects that are only financially supported by local funds.
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