Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
EE Times-Asia > Manufacturing/Packaging

Half of China's fab ventures will fail, predicts SEMI

Posted: 12 Jul 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Semiconductor Equipment and Materials International? SEMI? wafer fab? chip? foundry?

More than half of China's chip makers with wafer fabs are projected to fail despite soaring demand for ICs in that nation, according to an analyst from the Semiconductor Equipment and Materials International (SEMI) trade group.

Over the last several years, a growing number of new and emerging semiconductor manufacturers have built fabs or announced plans to construct chip plants in China. Although China's chip demand continues to grow, many observers have predicted a fab shakeout in the nation. In fact, half of those ventures are projected to fail, because many Chinese-based fab hopefuls lack partners and the manufacturing expertise to compete in the semiconductor market, said Samuel Ni, manager of market research at SEMI China (Shanghai), part of SEMI.

"Less than 50 percent will succeedit could be only 40 percent [that will succeed]," Ni said.

Still, a number of new fab companies in China are entering the market. Recently, for example, startup IC Spectrum Co. Ltd. inked a deal with Toshiba Corp. for the transfer of 0.35n manufacturing process technology, so that it can begin foundry work. The process will be used in the company's 200mm wafer fab currently under construction in Kunshan, northwest of Shanghai.

Others are consolidating. Acting on behalf of China Resources Logic Ltd, Citigroup Global Markets Asia Ltd. recently offered $113.5 million to acquire the remaining shares of loss-ridden, silicon foundry provider CSMC Technologies Corp. of China.

And others are in limbo, including Nanotech Inc., a foundry backed by Intel Corp., according to the SEMI analyst. What's more, the well-connected but loss-making Chinese foundry Grace Semiconductor Mfg Corp. has been seeking to delay or avoid repayment of $680 million in loans.

At present, there are more than 30 fabs in China, including older plants, according to SEMI. There are some 8-to-9 200mm fabs operating in China and only one 300mm plant in the nation, which is owned by Chinese silicon foundry provider Semiconductor Mfg International Corp., according to SEMI.

The Information Network, a market research firm, has reported that at least 43 fabs were scheduled to be built in China between 2004 and 2008. At least a dozen local governments are keen to lure chip operations to their backyards, and the creation of several more 200mm, as well as a handful of additional 300mm wafer fabs, was a theme of China's recently approved 11th five-year plan, the central planning document that guides policy in the Communist country.

At the same time, China's growing chip consumption continues to outpace its domestic fab production by a wide margin, according to The Information Network. And the supply-demand gap appears to be widening. China's IC demand grew 32 percent to $45 billion in 2005, but internal chip production reached only $9 billion despite ongoing massive semiconductor fab construction in that nation, according to the research firm.

- Mark LaPedus
EE Times

Article Comments - Half of China's fab ventures will fa...
*? You can enter [0] more charecters.
*Verify code:


Visit Asia Webinars to learn about the latest in technology and get practical design tips.

Back to Top