By Kate Yuan

(JW Insights) Jul 12 -- German electronics material company Heraeus Electronics will deepen involvement in China’s higher-end manufacturing development, said the company’s China vice president Shen Fangzhong in an interview with JW Insights at Semicon China held in Shanghai between June 29 and July 1.

“The high-end trend of the manufacturing industry in China needs full support from the upstream supply chain companies including Heraeus,” said Shen.

Headquartered in Hanau, Germany, Heraeus Electronics offers materials and solutions for semiconductor and electronics packaging.

The automotive and EV markets continue to show strong growth trends in China. "The development of AI, big data, and IoT will continue to drive up the demand for storage and computing, and the development trend of EV will remain unchanged. Heraeus will continue to deepen its involvement in the semiconductor field and seek common development," Shen said.

Shen acknowledged that although destocking in the IC industry has ended basically, factors such as the three-year pandemic and inflation in Europe have led to a decline in consumer purchasing power and weakened innovation capabilities in the consumer electronics market. As a result, the needs for smartphones, computers, PCs, and headphones remain sluggish.

But in the past two years, China's EVs have experienced explosive growth, with sales reaching 3.521 million and 6.887 million, respectively, and a penetration rate of 13.4% and 25.6%.

"The design, performance, and price of Chinese car brands have been greatly improved and have gained recognition from overseas customers. The intelligence and high configuration of Chinese cars will greatly drive the development of automotive semiconductors, including in-car infotainment systems, lighting, and ADAS."

Compared to the rapidly growing market demand, there are still bottlenecks that constrain EV technology, including battery upgrading, auto chips, restructuring of power electronic architecture, and intelligent operating systems.There are no particularly outstanding Chinese automotive parts suppliers from the perspective of the supply chain, and the top ten are mostly foreign companies. More effort is still needed in this area, said Shen.

"The vigorous development of China's high-end manufacturing industries, accelerated product iteration and intensified industry competition have driven the upgrading of China’s semiconductor industry. Upstream companies require faster response speed, more stable quality, and more localized services,” Shen added.

Heraeus Electronic firmly believes in China's future and strives for stability in the long run, Shen told JW Insights. "Although some foreign companies are leaving China, Heraeus is confident in China's development, and has invested in six large projects in China last year, the year with the largest investment amount to date.”

Last year, Heraeus’ metal ceramic substrate project was settled in Changshu of eastern China’s Jiangsu Province. It cost EUR16 million ($17.64 million) and was the first time for the company to introduce such products into the Chinese market for production. The product is mainly used in the electric driving system of EVs, providing materials and solutions for key packaging technologies for third-generation semiconductors, especially EV applications.

"China’s metal ceramic substrate supply has relied on imports previously. It has become increasingly difficult to meet Chinese clients' needs in terms of supply efficiency and cost under surging demand for upgrading of auto technology. To offer local supply has become a natural choice,” Shen added.

Heraeus also showcased several important innovative products released since last year at SEMICON China 2023. "We will continue to work with global partners to promote the goal of a green home and a low-carbon China in the future," Shen Fangzhong said, adding that Heraeus has always stuck to stable operation and will not make drastic adjustments for short-term goals, to ensure steady progress.