Ye Tianchun: Full industry chain data! Taking the path of integrated circuit inn

2024-06-07

On May 23rd, the 26th Annual Integrated Circuit Manufacturing Conference and Supply Chain Innovation Development Conference was held in Guangzhou. During the conference, Ye Tianchun, the chairman of the Integrated Circuit Branch of the China Semiconductor Industry Association, and the deputy chairman and secretary-general of the China Integrated Circuit Innovation Alliance, released a significant keynote report. Combining the latest data from the entire industry chain including electronic information manufacturing, integrated circuit design, manufacturing, packaging and testing, equipment, materials, and components, he discussed the development ideas and viewpoints of China's integrated circuit industry. In particular, the detailed industry data presented from a broader and newer perspective demonstrated the development of China's integrated circuit industry.

01

Development Status of China's Electronic Information Manufacturing Industry

Looking at the overall development of the industry, China's electronic information manufacturing industry has been growing rapidly. In 2023, the scale of China's electronic information manufacturing industry reached 21 trillion yuan, including more than 80% of notebook computers, more than 80% of digital TVs, more than 80% of set-top boxes, etc. Looking closely at the data related to integrated circuits, according to the statistics from customs, we see that the import amount of integrated circuits has dropped from 2.76 trillion yuan in 2022 to 2.46 trillion yuan in 2023. It can be said that the import amount of Chinese chip products has begun to show a downward trend, and behind this trend is the rapid growth of domestic integrated circuit products in China, with market share continuously expanding.

Advertisement

02

Development Status of China's Integrated Circuit Design Industry

Ye Tianchun believes that the real industry where products enter the market is the design industry. Originally, China's design industry has always maintained double-digit growth. In 2023, against the backdrop of global negative growth, China's design industry still maintained an 8% growth.03

Development Status of China's Integrated Circuit Manufacturing Industry

From the data of the design industry, we can see the situation of our manufacturing industry's client side. Last year, the manufacturing industry experienced a very slight growth. The reason for the difficult situation in the entire manufacturing industry is due to the explosive capacity in previous years, industry cycle, epidemic and other factors. The downturn period was forced to be extended, and the industry was in a state of selling inventory. Even in this situation, China's manufacturing industry still achieved a growth of 0.5%. However, we have also noticed that from the implementation of the national major projects in 2008 to 2023, the sales volume of our manufacturing industry has increased by 9.86 times.

The integrated circuit manufacturing industry is also continuously innovating. In terms of logic technology, the device structure is evolving from FinFET to GAA, and the back-end power supply technology, optoelectronic interconnection, and other technologies have attracted widespread attention. In terms of storage technology, DRAM continues to shrink, and the HBM technology continues to evolve (HBM3E), because the demand for high computing power has risen; new schemes for DRAM are highly concerned, such as GAA, IGZO, and non-capacitor structures, and the direction is still unclear; and SK Hynix's 321-layer NAND has been reported. For China, the storage device can see a new path of development, but the domestic logic technology is still in a state of catching up.

Looking at the overall manufacturing industry in Mainland China, which is divided into domestic-funded enterprises, Taiwan-funded enterprises, and foreign-funded enterprises (as shown in the figure above), before 2019, the proportion of domestic-funded enterprises in the manufacturing industry was relatively low. Starting from 2020, the growth has benefited from the continuous commissioning of new factories in the mainland, the release of new production capacity, and the market share has also begun to increase.

Some people have raised the question, is there an excess of capacity in our industry now? In fact, after the proportion of domestic-funded enterprises in China's local manufacturing industry increased, it only accounted for 39.3%, while foreign-funded enterprises accounted for 51.6%, and Taiwan-funded enterprises accounted for 9.1%. In summary, in the entire manufacturing sector in China, it still has the characteristics of globalization.

The proportion of domestic-funded enterprises themselves is increasing, but it is still not enough. This is not solved by building more factories, but there is a problem with our product structure. If a large number of factories are concentrated in the mid-to-low-end and have not entered the high-end market, China's future development prospects will be problematic, so the high-end is a goal that our industry strives for.

04

Development Status of China's Integrated Circuit Packaging and Testing IndustryThe development of the packaging and testing industry has been relatively stable, with a high proportion in the early years, a slight decline last year, but overall, the internal structure of the packaging and testing is becoming more rational. Now, China's packaging and testing industry is starting to develop towards high-end technology, with companies such as SMIC North, Wuhan Xinxin, and Changxin Storage joining the 2.5D interposer and hybrid bonding fields. In addition, domestic 2.5D/3D equipment continues to break through, with exposure, etching, deposition, development, stripping, electroplating, and other equipment entering the domestic mass production line, and several companies have released hybrid bonding products. Shenghe Jingwei achieved mass production of 2.5D CoWoS, helping the Ascend series of chips to achieve true domestication. In addition, Huarui Semiconductor, in conjunction with the Microelectronics Institute of the Chinese Academy of Sciences and Huadad Jiutian, jointly released an APDK for the 2.5D interposer process, promoting the collaborative design of 2.5D integrated chips and packaging.

05

Development of China's Integrated Circuit Equipment Industry

The growth of the equipment industry in recent years can be described as inspiring.

In 2008, the sales of China's integrated circuit equipment industry was only 1.7 billion yuan, and after fifteen years, this number has increased by 41.6 times. Especially after 2018, the equipment industry has ushered in a period of rapid growth, maintaining a growth of 34.92% last year, and this growth trend will continue. Next year may still be a higher or even higher growth rate.

This also clearly reflects that when China's manufacturing supply chain began to be restricted and imports were restricted, domestic equipment manufacturers seized the opportunity, filled the market vacuum, and supported the development of the entire industry.

Looking at the specific data, in 2023, the global semiconductor sales are still in a down cycle, and the total revenue of the five main international equipment companies decreased by 0.99% year-on-year, totaling 93.5 billion yuan. The overall growth rate of the 14 representative equipment manufacturers in China reached 35%, far higher than that of international companies. The revenue curve of equipment companies conforms to the semiconductor "M" cycle law, has experienced an up and down cycle, and currently, the consumer end is restarting the replenishment, and the revenue of storage manufacturers is strong, predicting that the equipment market will enter a recovery in 2024. While growing rapidly, it is still necessary to pay attention to the gap between domestic equipment companies.

Compared with international companies, there is still a significant gap in the scale and R&D investment of domestic equipment companies. From 2017 to 2023Q3, the cumulative R&D investment of international representative manufacturers (5 companies) was 56.9 billion US dollars, accounting for 12.52% of the total revenue. From 2017 to 2023Q3, the cumulative R&D investment of domestic representative manufacturers (14 companies) was 3.8 billion US dollars, accounting for 21% of the total revenue, higher than the international industry. From 2017 to 3Q2023, the total revenue of international companies was about 25 times that of domestic companies, and the total R&D investment of international companies was about 15 times that of domestic companies.

In the next stage of China's supply chain, in order to make our products go high-end and go deep and thorough, a lot of things need to be done in technological innovation. The strength of Chinese companies is limited and requires support from all sectors of society. If we can continue the current rapid growth and improve our strength, we will become more and more confident. Chinese domestic equipment companies can support the development of the entire industry in a relatively harsh environment, which gives us hope and confidence.Development of China's Integrated Circuit Materials Industry

The development of the materials industry has been relatively stable, and the statistics here include pan-semiconductor materials. From 2008 to 2023, the growth of China's integrated circuit materials industry increased by 9.64 times.

Ye Tianchun introduced some concerns about the materials industry that society cares about:

1. In 2023, the sales revenue of semiconductor materials products was 70.4 billion yuan, and the listed companies reached 33.

2. The material variety coverage rate for 12-inch 45-28 nanometer process materials exceeded 70%; the material variety coverage rate for advanced storage process materials exceeded 75%. Among them, the large silicon wafer products have made a comprehensive breakthrough, achieving full coverage of the main processes of domestic FAB factories, and photolithography has made breakthrough progress. The market share of I-line glue exceeded 20%; the market share of KrF glue reached 10%, and some varieties of ArF thousand-style glue began to be applied in batches. Immersion glue began to be applied in small batches. Sputtering targets have achieved full supply to domestic FAB factories, and some products have an international market share of more than 40%. Domestic enterprises have become the main suppliers of CMP polishing materials, special electronic gases, and process chemicals.

3. Packaging materials have also made significant progress. The main materials for traditional packaging have been supplied independently; advanced packaging materials such as DAF film, bonding glue, debonding materials, thinning film, and CPU packaging TIM1 have been supplied in small batches; packaging photolithography and PSPI are in the process of verification and iteration.

When the manufacturing industry develops in a place, its supply chain, especially materials, must first be localized, which is an inevitable trend to reduce costs and increase efficiency. The new international situation has many restrictions on China's industrial development, but it has brought new market space for domestic Chinese material enterprises. The original competitors have exited the market, and we have entered. In the future, material enterprises also need to go deep, go through, and go high-end.

07

Development of China's Integrated Circuit Components IndustryIn previous reports, there was no statistical data on components, but now everyone is paying unprecedented attention to them. This is because components are consumable in the manufacturing and operation process of equipment. The scale of China's component market is growing, with a compound annual growth rate of 26% over the past six years; more importantly, the revenue of domestic component companies is also increasing, with a compound annual growth rate of 65% over the past six years, which is a very fast growth rate.

Ye Tianchun mentioned that special thanks should be given to China's manufacturing industry. They have the patience to invest resources and energy to help the supply chain grow and promote the common development of the industry. In the past few years, our components were few and weak, but they have suddenly developed.

This is the foundation of China's industry. Industry is the potential of opto-mechanical automation and other things in industry that have been unearthed. Components have gradually caught up, equipment has caught up, and materials have caught up. In recent years, China's integrated circuit industry has withstood heavy pressure, and ultimately relies on the foundation of China's industry. We have the most complete range of industries in the world, supporting the integrated circuit industry, and the integrated circuit industry is also supporting the future development of China's industry towards the high-end. This is a very good virtuous cycle.

08

China's Development Strategy for Integrated Circuits

After analyzing the development of each link in the integrated circuit industry chain, Ye Tianchun proposed his thoughts on the development strategy of China's integrated circuits.

Starting from 2018, after being "strangled," autonomous control has become increasingly important. Later, we realized that it is not enough to be autonomously controllable and domesticated. We must be self-reliant and strong, and we must develop together. A lot of "short board" work has been done, and national special projects have been supported to make up for materials, components, and equipment... Make up for the short board and do a good job of defense.

Looking back, the original measures taken were tactical and emergency measures, but overall, China needs to establish its own position in the existing globalized system, gradually find its own position in the entire industry chain, but our own industry has not yet stood firm. China's latecomer advantage is to run fast and take fewer detours, but the disadvantage is path dependence.

The world is also considering this issue. It is definitely necessary to innovate in product architecture. When we go to 2 nanometers, 3 nanometers, we must innovate in architecture. We should consider architectural innovation before 7 nanometers, which is also the reason why three-dimensional system packaging has been popular in recent years. When pioneers face process difficulties, the urgency of latecomers is more urgent than other regions in the world, so chiplet has been "hot" in response.

"Path dependence" is the biggest "strangle point" restricting China's integrated circuits from moving towards the high-end, forcing the industry to carry out path innovation and form new tracks. From a strategic point of view, on the traditional technical path, China's advanced process development of integrated circuits has encountered a comprehensive "surround, chase, and block," and if a new track cannot be opened, there is a risk of returning to the middle and low end in 3-5 years.In the years to come, when Moore's Law can no longer proceed and we approach the physical limits, we must think of other paths. This compels China to start considering new paths in advance and to find new tracks, which is the current situation of our industry.

The entire industry, industry associations, and innovation alliances have all proposed globalization in the past three years, to open up new tracks, to create new ecosystems, and to promote re-globalization. This is a major task for the Chinese integrated circuit industry for the next 10 to 20 years.

Our strategic goal is to establish an internal circulation and guide a dual circulation. By utilizing the Belt and Road open cooperation policy, we are not overturning the global system; we want to maintain the global system and reshape the circulation system under the premise of globalized interests.

Our strategic task is first on the traditional track. We must tackle the difficulties in advanced processes, move mature processes towards high-end, and focus on forging the strengths in the supply chain to control the autonomous development rights of the supply chain. This does not mean giving up on the traditional track and "turning a corner" to change the road. It means that we must also do the main battlefield and strategically coordinate to open up new battlefields.

On the traditional path, we cannot just think that advanced processes are high-end, and mature processes are mid to low-end. Any process node of integrated circuits has high, mid, and low-end products. Even if our process has advanced to 14 nanometers or 7 nanometers, if the product performance is not good, it is still a low-end product. Therefore, the focus cannot only be on the advanced, high-end products under the mature processes of 14 nanometers, 28 nanometers, and above are also very important, with their own distinctive products and distinctive innovations, so as to grasp the initiative in development.

Secondly, it is about path innovation and changing tracks. We need to break away from the path dependence of technology and industry, and strategically coordinate the old and new tracks to form a new main track with distinctive development, establish asymmetric advantages and strategic balancing capabilities, and gain the initiative in development. The path dependence we need to break away from is not only the dependence on technical skills but also the need for new industrial models and new products.

Finally, it is about application innovation, focusing on products, and driving application innovation with industry application solutions to form a new chip product system and standards, guiding the formation of a new international and domestic dual circulation.

It is not only the current electronic information industry that needs the development of integrated circuits, but also the support of multiple industries such as automobiles, home appliances, and industry. Therefore, we should focus on applications and products, drive with industry application solutions, and not just simply replace, but innovate systematically. Based on existing manufacturing capabilities, first alleviate the pressure on integrated circuit chips through systematic solutions, and then jointly create a new ecosystem. With such standards and solutions, a true dual circulation can be formed.

Finally, Ye Tianchun also mentioned several misconceptions about "path innovation" in the current industry. 1. The misconception that path innovation is to replace the traditional track and start a new main track; 2. "Disruptive innovation" is just a concept, lacking an industrial perspective and ignoring the industrial system; 3. Three-dimensional system packaging is separated from product design and architectural innovation, falling into a closed-door car; 4. The focus cannot only be on the so-called "advanced processes," neglecting the distinctive innovations of mature processes; 5. The entire industry chain has not yet gotten rid of the "simple replacement" thinking, etc.

The Chinese integrated circuit industry has developed from "being able to withstand" to "how to develop towards high-end," and from its own perspective, it is necessary to accumulate small victories into big victories, from small product innovations to large system architecture innovations, and then to ecological innovation, which requires the accumulation of the entire industry.

Leave a comment

Submit