By Clark Tseng, Dan Tracy, and Gavin Wang, SEMI
With 20, and possibly more, new fab projects underway or announced in China since 2016, spending on fab equipment will surge to $10 billion or more, annually, by 2018 and to even higher levels in the following two years. As a result, China is projected to be the top spending region for fab equipment in 2019 and 2020. Robert Maire, of Semiconductor Advisors LLC, observed this trend at the recent SEMI Industry Strategy Symposium in Half Moon Bay, Calif: “China will move up from being a second tier player in semiconductors — likely to surpass Korea and Taiwan in spending.” Not only will China emerge as the largest spending market for fab equipment, the spending level will likely approach record, all-time levels for annual spending in a single region.
The driver behind this investment growth is changing. Prior to 2017, investments by overseas multinational companies, such as Samsung, SK Hynix, and Intel have led spending on fab equipment. These companies, and others like TSMC, UMC, and GlobalFoundries, will continue to invest in China − though China companies will invest increasingly more and drive much of the spending growth through 2020. Domestic foundries such as SMIC and HuaHong group will increase their spending, along with the China memory makers, going forward. The China-headquartered companies will dominate spending in 2019 and 2020.
Of the 20 more fab projects, SEMI is tracking up to 16 potential 300mm fabs to be constructed or beginning to ramp up throughout the forecast, with the investment targeted for the memory and foundry sectors. From 2017 onwards, leading foundries will account for a majority of fab equipment spending for their respective 300mm fabs. This new wave of investment will contribute to China spending through 2020.
On the memory side, other than the established Korean players, China companies such as YMTC (XMC) in Wuhan, Tsinghua Unigroup’s Nanjing fab, and as well as memory projects in Hefei and Fujian are all geared toward supplying NAND Flash and DRAM in China. Technology readiness and human capital availability, however, remain challenging for these new players. 3D NAND may be a “better bet” due to its stronger growth potential in addition to its relatively early technology stage. That will better justify the high investment in building new fabs. DRAM, on the other hand, could face a significant uphill battle as market growth slows, further technology shrinks become more difficult, and the challenge in competing with market incumbents with already depreciated DRAM fabs.
On the foundry side, China is no stranger to this market. Both SMIC and Hua Hong group are well-established players in the global foundry market. Their future expansion plan will cover both mature and leading-edge processes. For instance, SMIC will build a leading-edge 14nm fab in Shanghai and set up a new 300mm fab in Shenzhen offering 65nm/90nm capabilities. Hua Hong group has just started Hua Li’s Fab 2 project aiming at 28nm process, while expanding its existing 200mm fabs. Overseas foundries have rather different approaches in China. While TSMC is building a wholly-owned 16nm fab in Nanjing, UMC and Powerchip chose to team up with Chinese partners. Regardless of the setup, both China and overseas foundries are seeing great opportunities in the rapid growth of the China semiconductor market and fledgling China fabless communities. Although there are looming concerns about oversupply in the longer term, the growth momentum of the China market is here to stay.
Potential New 300mm Fab Projects in China
The above projects will propel wafer fab equipment spending in China to potentially record high annual spending levels in the next two to three years. China will become the largest market for wafer fab equipment, thus representing an important market opportunity for companies providing equipment, materials, services, critical systems and more.
Don’t miss SEMICON China 2017, the leading exhibition for China's semiconductor industry, which will be held on March 14-16, at the Shanghai International Expo Center. SEMICON China 2017 serves as a great platform for exhibitors and visitors to explore the entire electronics manufacturing supply chain in China. Key events and programs around investment activities and the supply chain include:
- Grand Opening Ceremony
- Tech Investment Forum
- Build China's IC Ecosystem - Advanced Manufacturing, Assembly & Test
- Build China's IC Ecosystem - Equipment and Material
Please visit www.semiconchina.org for more details about programs and events during SEMICON China 2017!
To learn more about the China semiconductor market, visit our China Central information hub.
February 14, 2017