By Greg Gao

(JW Insights) Sep 26 -- Wei Shaojun, the vice president of the China Semiconductor Industry Association (CSIA) and president of ICCAD, delivered his keynote speech at the 2023 Beijing International Microelectronics Symposium and IC WORLD Conference in Beijing on September 25, saying that China should take the lead and actively promoting the re-globalization of the semiconductor industry.

Wei pointed out that the globalization of the semiconductor industry has given rise to a globalized IC supply chain, and China has been both a beneficiary and a contributor to it.

The industry has achieved comprehensive globalization, not only in production but also in trade. For instance, a mobile communication terminal chip designed in the US is manufactured in Taiwan, packaged and tested in Malaysia, and finally be sold in China.

However, Wei pointed out that the ongoing geopolitical tension profoundly affects the global semiconductor industry, interrupting its globalization process. Some countries attempt to hinder their competitors through legislation rather than pursuing regular and constructive competition. 

China’s semiconductor industry is built upon globalization. It adopts the Fabless+Foundry+Service model, which has contributed significantly to the rapid IC development in the country over the past few decades. This model allows for a globalized and optimal allocation of resources. However, the “fragmentation” of the semiconductor field presents severe challenges to China.

As IDM model is relatively limited in China and only emerged later, the main driving force is IC design enterprises. 

Although China’s IC products’ global market share increased from less than 5% in 2004 to 13.7% in 2022, with an average annual compound growth rate of 20.6%, it remains relatively modest and primarily focuses on mid-to-low-end products, which can’t meet domestic market demand. 

Regarding foundry services, by the end of 2021, China’s existing 12-inch wafer foundry capacity was 436,000 units. The capacity before 2015 was 197,000 wafers, and 239,000 wafers were added after 2015. However, this capacity still lags significantly behind the monthly capacity demand of 1.5 million wafers from China’s integrated circuit design industry.

Despite the challenges posed by the “fragmented” process in the semiconductor industry, Wei emphasized that China’s chip industry still has promising prospects. First, China is undergoing industrial upgrading, transitioning from low value-added to high value-added, from labor-intensive to knowledge-intensive, and from the periphery to the core. 

Second, China has benefited from and contributed to economic globalization and must steadfastly uphold and lead economic globalization, safeguarding the global development of the semiconductor industry. Third, China's position in the global chip market will remain strong in the short term. China's semiconductor industry holds a significant position in the global industry. Fourth, China should aim to achieve self-sufficiency by breaking blockades and constraints, and seize opportunities brought by the current wave of intelligentization. Fifth, Maintain an open posture while simultaneously exploring new avenues and expanding new spaces are essential.

If China had played a follower role in the previous phase of semiconductor globalization, it must now take the lead in promoting the re-globalization of the IC industry in the next stage, said Wei.