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Prosperous years ahead for China IC market

Posted: 30 Jan 2013 ?? ?Print Version ?Bookmark and Share

Keywords:IC market?

The growth of China's semiconductor market will stay on target over the next four years at a faster rate than the rest of the industry, IC Insights forecasts in its latest McClean Report.

The Chinese IC market will have a 2012-2017 compound annual growth rate (CAGR) of 13 per cent, five points higher than the 8% CAGR forecast for the total IC market during this same time period, to reach over $100 billion for the first time in 2014 and almost $150 billion in 2017.

China IC market

Figure 1: In 2017, China is expected to represent 38% of the worldwide IC market up from 23% ten years earlier in 2007.

A very clear distinction should be made between the IC market in China and indigenous IC production in China. As IC Insights has oftentimes stated, although China has been the largest consuming country for ICs since 2005, it does not necessarily mean that large increases in IC production within China will immediately, or ever, follow.

China IC market

Figure 2: IC production in China represented only 11.2% of its $81 billion IC market in 2012.

In 2012, SK Hynix, TSMC, and Intel were the only foreign IC manufacturers that had significant IC production in China. In fact, SK Hynix's China fab had the most capacity of any of its fabs in 2012. Last year, Intel continued to ramp-up its 300mm fab in Dalian, China (it started production in late October 2010), which is expected to give a noticeable boost to the China-based IC production figures over the next few years (the fab currently has an installed capacity of 30,000 300mm wafers per month with a maximum capacity of 52,000 wafers per month).

In early January of 2012, it was reported that Samsung gained approval from the South Korean government to construct a 300mm IC fabrication facility to produce NAND flash memory in in Xian, China. Samsung started construction of the fab in September of 2012 with production set to begin in the first half of 2014. The company expects to invest $2.3 billion in the first phase of the fab with $7.0 billion budgeted in total. This facility is targeting NAND flash production using 10-19nm feature sizes. (See Samsung starts construction on its China Fab.)

Historically, the lack of consistent intellectual property protection has been a major deterrent for foreign firms seeking to establish state-of-the-art IC fabrication facilities in China.

IC Insights believes that the future size of the IC production base in China is more dependent upon whether foreign companies continue to locate, or re-locate, IC fabs in China than on the success of indigenous Chinese IC firms.

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