cryptocurrency

IC design has emerged as the largest semiconductor sector in China, with 2017 revenues of $31.9 billion generated by about 1,380 companies. At the same time, China’s fabless segment has risen to third in global rankings with about one-tenth of worldwide sales.Most of China’s fabless segment produces the logic chips that are key to defense, telecommunications, finance and other industries important to the region’s national security interests and its independence from U.S. and other international suppliers. Investment in fabless logic continues to be the top priority in China’s Phase 2 investment. In mobile, China made meaningful progress through HiSilicon and Spreadtrum, both fabless design houses.In 2017, HiSilicon and UNISOC (formerly Spreadtrum), China’s two largest domestic IC design companies, were ranked in the global top 10 of fabless companies, though most Chinese IC design companies are small, with revenues under $1 million. Working with domestic smartphone makers, both companies have carved out a strong presence in logic and, in particular, the communications and application processors that power data centers and Internet of Things (IoT).Despite their rapid rise, China’s AI accelerators and cryptocurrency ASIC suppliers have yet to appear in China’s top 10. However, we expect their aggressive roadmaps and early adoption of leading-edge process technologies to propel them into the top 10 in the near future. As illustrated in the figure below, an examination of the competitiveness of China’s semiconductor segments reveals that the close proximity of China’s fabless companies to the region’s electronic systems makers plays to their advantage, though access to IP and leading-edge process technologies is a barrier to their growth in the near term. A key barrier to China’s foundries is their limited ability to develop leading-edge process technologies and strategic relationships with top international fabless companies. Most leading international fabless companies rely on customer-owned tooling (COT) and design tools for design. As the approach takes time to develop, it will not support China’s aggressive goal and timeline to independently meet domestic IC demand. Instead, China has been disciplined in executing its strategy to acquire valuable IP and leading-edge technologies by aggressively partnering with international fabless design leaders and pursuing deals with market leaders and laggards. The initial entry point for Chinese fabless companies was the low-margin consumer applications dominated by Chinese suppliers, giving them considerable control over demand. In addition, Chinese companies have aggressively hired top talent from abroad and grown the skills of its engineering workforce to sustain innovation. China will likely free itself from its reliance on non-Chinese developed manufacturing process technology and EDA design tools.China’s semiconductor design growth, concentrated in the Pearl River Delta (see figure below), is fueled by national and local investment programs. SEMI August 2018 The Pearl River Delta, which includes Xiamen, Quanzhou and Shenzhen, is establishing itself as China’s IC design, system and application hub. Domestic and international companies are eligible for investment provided they are established or investing in one of the four regionshat are home to various sectors of the electronics and semiconductor supply chain. Access to large investment funds, coupled with China’s infrastructure build-out, is a strong supporting force to drive the growth of top-tier domestic fabless companies. For its part, the Phase 2 of China’s National Investment Fund targets investments of RMB 150 - 200 billion ($23 billion - $30 billion) in IC design. The growing domestic consumer base and infrastructure investment will drive opportunities for China’s fabless companies over the next decade.To learn more about the latest development on China IC Industry, and get a sample of the China IC Ecosystem Report, visit http://www.semi.org/en/china-ic-ecosystem-report.China IC Ecosystem Report covers the rise of China’s IC industry, national and local government policies, public and private funding, and their implications for China's IC supply chain. The report also compares key domestic companies and their international peers segment by segment.Eugenia Liu is a senior product marketing manager at SEMI. Shanshan Du is chief analyst and program director at SEMI China.

Outsourced Semiconductor Assembly and Test (OSAT) service providers experienced strong growth in 2017, but will this growth continue? In the last few years, OSAT growth has been driven by shipments for packages found in smartphones, but this market is slowing. What will replace it? Growth in power devices is strong and electronic content in vehicles is increasing. Will OSATs participate in this growth? Many OSATs have plants dedicated to automotive package assembly and will see continued growth. Growing demand for connectivity everywhere, called IoT, is generating large amounts of data, creating the need for more servers and datacenters. The adoption of Artificial Intelligence (AI) across a broad range of applications is driving demand for high-performance packages, but will this assembly take place at the OSATs or foundries? In the third and fourth quarters of 2017, growth in cryptocurrency provided unanticipated revenue for a number of OSATs. Given that the most well-known crypto mining companies and the biggest mining pools are all based in China, several OSATs, including major Taiwanese and Chinese service providers, experienced revenue growth in 2017 directly attributed to the assembly of ASICs in flip chip scale packages (FC-CSPs) and GPUs in flip chip ball grid arrays (FC-BGAs) for the cryptocurrency market. However, the first and second quarter of this year has seen decreased demand for GPUs and ASICs for this application. The assembly of packages for cryptocurrency slowed considerably in the first half of the year and therefore can’t be counted on to add as much to the revenue base as in the previous year. Going into the latter half of the year, the demand for Crypto ASICs is expected to pick up as new generation of 7nm chips will drive new investment and replacement cycle while crypto-mining GPU will see a further decline. Three of the top 10 OSATs, Jiangsu Changjiang Electronics Technology (JCET), Tianshui Huatian Technology (Huatian), and Tongfu Microelectronics (TFME), are based in China. China’s share of the top 10 OSATs’ revenue increased from slightly less than 23 percent in 2016 to more than 25 percent in 2017, and this trend is expected to continue. Crypto-related packaging and test business has certainly contributed a big portion of the share gain. Major OSATs such as TFME and Tianshui Huatian plan expansion in their plants and they expect to fill this added capacity in a broad range of packages. Huatian’s new Nanjing plant will include assembly for memory packages. TFME plans to set up a plant in Xiamen, Fujian Province to provide bumping, wafer level packaging, and system-in-packaging (SiP) services. Tracking the capabilities of OSATs is increasingly important. SEMI and TechSearch International have introduced a new Worldwide OSAT Manufacturing Site Database that provides listings of OSAT facility locations and package and test options in each factory. This database indicates the specific packages offered at each location. Finding plants that offer automotive qualified assembly is also possible with the database. Companies that offer bumping and wafer level packaging are identified. Over 120 companies and 300 facilities are tracked in this database covering both OSAT packaging and test facilities. For additional information about this informative database, please visit https://discover.semi.org/osat-database-registration.html E. Jan Vardaman is president of TechSearch International, Inc., and Clark Tseng is director of Industry Research and Statistics at SEMI.