China

One of the surprising side effects that came out of the COVID-19 pandemic is the acceleration of the digital transformation of global economies, which has driven a structural shift and propelled the already mature semiconductor industry to record highs.

Vacuum pumps, pressure gauges, and vacuum valves combined make up the biggest expense on the bill of materials for semiconductor OEMs. The semiconductor industry consumed almost $2.7 billion worth of vacuum subsystems in 2020, with over 60% supplied by vendors based in Europe.

In 2020, the global semiconductor materials market expanded 5% to reach $55.3 billion in revenue to set a new industry record. The momentum in growth is expected to continue throughout 2021 despite the lingering pandemic.

The global semiconductor industry is on track to register a rare three consecutive years of record highs in fab equipment spending with a 16% increase in 2020 followed by forecast gains of 15.5% this year and 12% in 2022, SEMI highlighted in its quarterly World Fab Forecast report.

Region’s Fab Capacity Expansion Picks up PaceUnwavering in its drive to build a strong, self-sufficient semiconductor supply chain, China plans more new fab projects than any other region in the world from 2017 to 2020, and its expansion of fab capacity recently picked up pace on the strength of new foundry and memory projects from both domestic and foreign companies, according to SEMI’s 2018 China Semiconductor Silicon Wafer Outlook report. China’s installed fab capacity is forecast to grow at a 12 percent CAGR from 2.3 million wafers per month (wpm) in 2015 to 4 million wpm in 2020, faster than all other regions.Well known for its semiconductor packaging prowess, China in recent years shifted its focus to front-end semiconductor fabs and a few key material markets. In 2018, the region’s surge in fab investment thrust it past Taiwan as the second largest capital equipment market in the world, behind only Korea. However, China’s semiconductor manufacturing growth faces strong headwinds. Chief among them is the tight supply of silicon wafers over the past two years due in large part to the sector oligopoly’s firm control of global production, with the top five wafer manufacturers accounting for over 90 percent of market revenue. In response, China’s central and local governments has made the development of its domestic silicon wafer supply chain a key initiative, funding multiple silicon wafer manufacturing projects.According to the 2018 China Semiconductor Silicon Wafer Outlook report, many of China’s domestic silicon suppliers capably provide wafers 150mm in size and smaller. And the while the region lags peers in 200m and 300mm processing technology and capacity, strong domestic demand and favorable policies have fueled progress in 200mm and 300mm silicon manufacturing with some Chinese suppliers having reached key large-diameter manufacturing milestones.However, it will take these new suppliers several years before they can meet capacity and yield requirements of the larger-diameter silicon wafer market. Company plans and announcements indicate that by the end of 2020, total silicon supply capacity in China will reach 1.3 million wpm for 200mm, possibly leading to a slight oversupply, and 750,000 wpm for 300mm.China’s equipment suppliers, particularly crystal furnace vendors, are also investing in the development of 300mm wafer manufacturing, and domestic tool suppliers have developed most of the necessary tools for wafer manufacturing, except for inspection.While China’s silicon wafer suppliers continue to lag international peers in manufacturing capabilities, the region’s silicon manufacturing ecosystem is maturing and becoming better integrated. The sector’s growth is driven and accelerated by significant domestic market demand and favorable policies.About the China Semiconductor Silicon Wafer OutlookSEMI’s 2018 China Semiconductor Silicon Wafer Outlook is a comprehensive research report with a Microsoft Excel® workbook containing in-depth analysis of China’s silicon wafer manufacturing ecosystem as it relates to the global semiconductor wafer industry. The report covers the latest developments in China’s silicon wafer supply chain, including details on the rise of China’s silicon manufacturing, polysilicon, and silicon wafer-related equipment companies. The report also examines policies, funding and their implications for China’s silicon wafer supply chain.Clark Tseng is director in Industry Research and Statistics at SEMI.

Tracking toward even stronger growth than forecast last year, 200mm fabs worldwide are gearing up to add more than 600,000 wafers per month from 2017 through 2022, an 11 percent growth rate that will lead to a new high of 6 million wafers per month by the end of 2022, according to the SEMI Industry Research and Statistics group in its fourth update of the Global 200mm Fab Outlook report. See chart below. All told, 56 older and newer facilities will add capacity, with the MEMS, power, logic and foundry segments contributing the most. To help meet rising demand, new fabs are under construction. Only six facilities plan to reduce capacity. The global 200mm fab count will increase from the 2017 level of the 194 fabs covered in the report to 203 by 2022. See chart. During the five-year forecast period, China, at 44 percent, is expected to account for the greatest growth, followed by Southeast Asia (19 percent), Taiwan (10 percent) and the Americas (8 percent). However, with strong demand for new 200mm fab equipment, the used 200mm fab equipment market has pretty much dried up. What’s more, the availability of key tools and spare parts has become a primary concern for many device makers. These headwinds notwithstanding, many companies remain bullish with plans to add more capacity. The forecast growth of 600,000 wafers per month may ultimately be a conservative estimate. SEMI’s Global 200mm Fab Outlook report lists more than 300 facilities and lines managed by more than 150 companies, providing details on product type, investment, technology and capacity plans by companies and fabs. The fourth update of the Global 200mm Fab Outlook report covers data and predictions from 2011 through the end of 2022, including milestones, detailed investments by quarter, product types, technology nodes and capacities down to fab and project level. Click here for the Global 200mm Fab Outlook Sample Report. Learn more about other SEMI fab databases at www.semi.org/en/MarketInfo/FabDatabase. Christian G. Dieseldorff is director of Industry Research and Statistics, SEMI, Milpitas, California.

Following through on his 2016 campaign promise, President Trump is implementing trade policies that buck conventional wisdom in Washington, D.C. and among U.S. businesses. Stiff tariffs and the dismantling of longstanding trade agreements – cornerstones of these new actions – will ripple through the semiconductor industry with particularly damaging effect. China, a chief target of criticism from President Trump, has again found itself in the crosshairs of the administration, with trade tensions rising to a fever pitch.The Trump Administration has long criticized China for what it considers unfair trade practices, often homing in on intellectual property. In August 2017, the Office of the U.S. Trade Representative (USTR), charged with developing and recommending U.S trade policy to the president, launched a Section 301 investigation into whether China’s practice of forced technology transfer has discriminated against U.S. firms. As the probe continues, it is becoming increasingly clear that the United States will impose tariffs on China based on its current findings. Reports suggest that the tariffs could come soon, hitting a range of products from consumer electronics to toys. Other measures could include tightening restrictions on the trade of dual-use goods – those with both commercial and military applications – curbing Chinese investment in the United States, and imposing strict limits on the number of visas issued to Chinese citizens. With China a major and intensifying force in the semiconductor supply chain, raising tariffs hangs like the Sword of Damocles over the U.S. and global economies. A tariff-ignited trade war with China could stifle innovation, undermine the long-term health of the semiconductor industry, and lead to unintended consequences such as higher consumer prices, lower productivity, job losses and, on a global scale, a brake on economic growth. Other recently announced U.S. trade actions could also cloud the future for semiconductor companies. The Trump administration, based on two separate Section 232 investigations claiming that overproduction of both steel and aluminum are a threat to U.S. national security, recently levied a series of tariffs and quotas on every country except Canada and Mexico. While these tariffs have yet to take effect, the mere prospect has angered U.S. trading partners – most notably Korea, the European Union and China. Several countries have threatened retaliatory action and others have taken their case to the World Trade Organization. Trade is oxygen to the semiconductor industry, which grew by nearly 30 percent last year and is expected to be valued at an estimated $1 trillion by 2030. Make no mistake: SEMI fully supports efforts to buttress intellectual property protections. However, the Trump administration’s unfolding trade policy could antagonize U.S. trade partners. For its part, SEMI is weighing in with USTR on these issues, underscoring the critical importance of trade to the semiconductor industry as we educate policymakers on trade barriers to industry growth and encourage unobstructed cross-border commerce to advance semiconductors and the emerging technologies they enable. On behalf of our members, we continue our work to increase global market access and lessen the regulatory burden on global trade. If you are interested in more information on trade, or how to be involved in SEMI’s public policy program, please contact Jay Chittooran, Public Policy Manager, at [email protected].

By Clark Tseng, Industry Research Statistics Group, SEMI China’s ambitious plans to build a world-class semiconductor manufacturing supply chain domestically certainly has the industry’s attention. With over a dozen new 300mm fab announcements lately from Foundries, DRAM, 3D NAND, and as well as CMOS image sensor companies (either from international semiconductor makers or from indigenous players), China has launched a huge investment in wafer fab capacity that is expected to ramp in the next five years. While advanced 300mm fab investment attracts most of the attention and resources, China does not skimp on the more “matured” 200mm fabs. China will have the most new 200mm fab projects and capacity additions in the next few years compared to other regions. According to SEMI’s latest 200mm Fab Outlook report, China currently has about 700,000 wafers per month (wpm) installed fab capacity, and this is forecasted to surpass 900,000 wpm by the end of 2021, or over 28 percent growth in five years. By then, China’s 200mm capacity is expected to surpass America, Japan, and Taiwan, and be second only to Europe. A further examination of China’s new 200mm fab projects shows a wide diversity in products. Beyond the usual 200mm foundry investment led by SMIC and Hua Hong Semiconductor, an increasing number of new projects are focusing on analog, power, and MEMS applications. According to SEMI’s latest 200mm fab Outlook report, China will add eight new 200mm volume fabs between 2016-2021: two for foundries, two for analog, two for MEMS, one for power, and one for logic. In the meantime, China is not limiting itself to adding wafer capacity. It is also developing material and equipment capabilities around 200mm wafer manufacturing. A number of silicon wafer suppliers are emerging in China targeting 200mm and smaller wafer markets. On the equipment side, the 200mm tool availability remains the biggest challenge for the industry in adding more 200mm capacity; some projects have been postponed because of it. China equipment suppliers are expected to take the opportunity to develop the tool sets needed to satisfy the upcoming demand for these fabs. China’s 200mm capacity will evolve to make more than “legacy” products, e.g., smart card, Analog IC, and Discrete IC. These manufacturers will become more versatile advancing into MCU, PMIC, CIS, fingerprints sensor, power, MEMS, and other devices. With the rise of China’s electronic OEMs and automakers, these 200mm fabs will play an even more important role supporting various manufacturing ecosystems in China. For more information, visit https://discover.semi.org/global-200mm-fab-outlook-registration.html