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Analysis of the market status of China's integrated circuit and subdivision industry and forecast of industry development trend in 2022

Author:彭志伟Date:2023-07-07

1. Integrated circuit market size

In terms of integrated circuit production in China, China's integrated circuit semiconductor industry with huge market demand, rich demographic dividend, stable economic growth and favorable industrial policy environment and many other advantages to achieve the rapid development, according to the data, China integrated circuit production from 77.96 billion in 2012 to 359.43 billion in 2021, the overall performance for rapid growth trend, including 2021 production growth is the highest in nearly a decade.


China's integrated circuit output and growth rate in 2012-2021

2012-2021年中国集成电路产量及增长率

 Source: National Bureau of Statistics, China Economic Industry Research Institute


In terms of the sales trend of China's integrated circuits, with the continuous growth of downstream consumer electronics and automotive electronics industries, coupled with the promotion of relevant policies, China's integrated circuit sales increased year by year in 2012. By 2021, China's integrated circuit sales reached 1045.83 billion yuan, up 18.2% in 2020.


China's IC sales and growth rate in 2012-2021

2012-2021年中国集成电路销售额及增长率

Source: China Semiconductor Industry Association, China Economic Industry Research Institute


2. Integrated circuit provincial and municipal distribution

 In terms of the regional distribution of integrated circuits in China, the output of integrated circuits in China is relatively concentrated, mainly distributed in Jiangsu, Gansu, Guangdong and Shanghai. According to the data of the Bureau of Statistics, China's Jiangsu province is the highest in 2021, reaching 118.614 billion pieces, accounting for nearly 30% of the total output.

Is concentration, the first three provinces production accounted for 65.9% of the national integrated circuit production, the top five provinces accounted for 82.4% of the national output, the top ten provinces accounted for 96.42% of the national output, the main reason is that the integrated circuit belongs to the high and new technology industry, and supporting materials and equipment enterprises, enterprise relatively concentrated can be low cost, at the same time due to the downstream mainly used in consumer electronics, etc., the coastal city economy more developed low demand is higher.


Production distribution of major IC provinces in China in 2021

2021年中国集成电路主要省份产量分布情况

Source: National Bureau of Statistics, China Economic Industry Research Institute


3. Integrated circuit market structure

In terms of the market structure of integrated circuits, integrated circuits can be divided into chip design, manufacturing and packaging testing, among which equipment materials are the most closely related to manufacturing and packaging testing, which are divided into front equipment and rear equipment, wafer materials and packaging materials. In the high-end field, the equipment and materials are in the monopoly state of the United States, Europe and Japan, and the "stuck neck" problem is prominent, which is the key breakthrough field of the current and future localization. Overall, driven by the policy, the focus of China's integrated circuit development has gradually shifted from packaging and testing to chip design. The proportion of design increased from 30.1% in 2011 to 43.21% in 2021. The proportion of manufacturing also rebounded slightly, and the proportion of packaging and testing decreased to 26.42%.


Changes in China's integrated circuit market structure from 2011 to 2021

2011-2021年中国集成电路市场结构变动情况

Source: China Semiconductor Industry Association, China Economic Industry Research Institute


4. Integrated circuit import and export

Integrated circuit import and export status, IC exports is about half of imports, as the integrated circuit overall demand continues to grow, import and export are in the growth trend, the overall ratio change is small, but the overall net imports in a steady growth, according to the data in 2021 integrated circuit export volume of 635.48 billion and 310.7 billion respectively, net imports over 324 billion pieces, accordingly, integrated circuit localization is imperative and there is still a long way to go.


Import and export quantity of integrated circuits from 2013-2021

2013-2021年中国集成电路进出口数量情况

Source: General Administration of Customs, China Economic Industry Research Institute


In terms of import and export amount, the total export amount of China's integrated circuits in 2021 was us $153.79 billion, an increase of 31.90% compared with that in 2020. In 2021, China's imports of integrated circuits totaled us $432.554 billion, an increase of 23.59% year on year in 2020. From the perspective of the average price changes, with the improvement of the domestic localization level, the price difference between the average import price and the average export price gradually decreases.


The average import and export price trend of Chinese integrated circuits from 2015 to 2021

2015-2021年中国集成电路进出口均价走势

Source: General Administration of Customs, China Economic Industry Research Institute


5. Development status of integrated circuit subdivision industry

1. Integrated circuit industry chain

The integrated circuit industry chain can be roughly divided into IC design, IC manufacturing, IC sealing and testing three main links. The integrated circuit production process starts with the circuit design. The integrated circuit design company designs the integrated circuit diagram according to the customer needs, and then entrusts the chip manufacturer to carry out the wafer processing according to the designed circuit, and then entrusts the packaging factory to carry out the integrated circuit packaging and testing, and finally sells it to the electronic machine product manufacturer.


Integrated circuit industry chain schematics

集成电路产业链简图

Source: open data collation


The production mode of semiconductor industry is divided into IDM and Fabless + Foundry. IDM integrates IC design, manufacturing and packaging testing, and belongs to the heavy asset mode, which has extremely high capital requirements for enterprises. Fabless + Foundry mode appointing wafer manufacturing production to Foundry can reduce the entry threshold of Fabless design, reduce capital investment, and help enterprises to make rapid technological breakthrough in technology.


晶圆代工产业链晶圆代工产业链

Source: open data collation

2. Integrated circuit design


The integrated circuit design business link can be divided into two parts: front-end design and back-end design. Front-end design means that after the designer gets the specific requirements, and then design the functions to meet the specific requirements from the architecture level and realize the corresponding design; enter the back end. This stage is mainly to convert the higher level description into the DFT test, and physical design. After the process and power consumption, the EDA design has been completed and the specific packaging and testing stage can be entered.


集成电路设计业务环节总体可分为前端设计和后端设计两部分。前端设计是指在设计师拿到具体需求之后,首先根据具体需求定义相关的功能模块与规格,从架构层面上设计能满足特定需求的功能,之后实现相应的设计;逻辑综合后就进入后端,这一阶段主要是将更高层级的描述转化为门级网表,之后再进行DFT测试并进行物理层面的设计,在工艺、功耗等环节签核完毕之后,EDA的设计工作基本已经完成,可以进入具体的封装与测试阶段。

Source: Core Huazhang, China Economic Industry Research Institute


China has the largest and fastest growing integrated circuit market in the world. Under the background of the continuous development of the global integrated circuit and EDA industry, China's EDA industry also ushered in the outbreak period. In 2020, the total sales of the industry was about 6.62 billion yuan, with a year-on-year growth of 19.9%, achieving continuous growth. Among them, China's independent EDA tool enterprises in the local market revenue of about 760 million yuan, a year-on-year increase of 65 percent. 2%.


Size and growth rate of EDA market in China from 2018 to 2020

2018-2020年中国EDA市场规模及增长率

Source: open data collation


With the rapid development of China's integrated circuit industry, it has gained the favor of many capital, and more and more enterprises have entered this industry. From 2011 to 2021, the number of enterprises in China's IC design industry grew rapidly, from 534 to 2,810. It is worth noting that although the overall heat of enterprises continues to rise, but the cutting-edge technology has not broken through the background, the market competition may drive the possibility of localization breakthrough.


Changes in the number of enterprises in China's IC design industry from 2011 to 2021


2011-2021年中国集成电路设计行业企业数量变动

Source: ICCAD, China Economic And Industry Research Institute


EDA is the core of chip design and production. At present, the growth rate of EDA market in China is higher than that of the world, and the localization rate is very low. In terms of competitive pattern, Synopsys in 2020, Cadence and Siemens EDA are the top three EDA suppliers in China, with a total revenue market share of 77.70%, and domestic manufacturers account for less than 15%. It is the leading EDA leader in China.


The proportion of EDA revenue market share in China in 2020

2020年中国EDA营收市场份额占比情况

Source: open data collation


Related reports: 2023-2028 In-depth Analysis of China IC Industry Market and Investment Strategy Research Report released by China Economic Industry Research Institute


3. Integrated circuit manufacturing

The single crystal bare wafer is initially processed to obtain the wafer, and then the circuit map on the light mask is etched into the wafer, and the main process is completed by the wafer foundry. It mainly includes diffusion, film growth, lithography, etching, ion injection, polishing and other processes. The corresponding equipment mainly includes diffusion furnace, oxidation furnace, CVD / PVD equipment, cleaning equipment, lithography machine, etching system, ion injection machine, polishing machine and so on. As a direct production of semiconductor production process, there are many wafer processing steps and equipment requirements are extremely high. Although China has complete production capacity, limited by high-end equipment and technology blockade, high-end products have not broken through, among which lithography, ion injection and polishing (polishing pad) and other process equipment has not been broken through in China.


Fram of wafer semiconductor manufacturing process and related semiconductor 

晶圆厂半导体制造流程及相关半导体设备示意图

 Source: Semiconductor Manufacturing Technology, organized by China Economic Industry Research Institute


According to Moore's Law, the number of integrated circuit transistors will double in about 18, the line width of integrated circuit will be shrinking under the continuous development of technology, and the equipment investment of integrated circuit equipment will rise exponentially. According to IBS, the equipment investment in the 5nm production line is tens of billions of dollars, more than twice that of the 16 / 14nm production line and about four times that of 28nm. At present, Samsung has officially announced the mass production of the 3nm process, and TSMC expects to show the mass production in the second half of 2022. As the technology continues to approach the limit of silicon-based physics, the future technology direction may be "double-layer stacking".


Global chart of investment per 50,000 production capacity of different process wafers

全球不同制程晶圆每5万片产能设备投资额走势图

Source: SMIC prospectus, organized by China Economic Industry Research Institute


Early pure wafer foundry accounted for the global market share of more than 10%, as the domestic technology stagnation superposition global wafer process technical difficulty continues to deepen, 2007-2014 pure wafer foundry market share continues to decline, as the domestic smic and united enterprise technology successively breakthrough 28 process, the overall market share to stable, downstream demand to promote domestic pure wafer foundry production capacity rising steadily in recent years, but limited by advanced foundry technology gap, at the same time smic entity list by the United States, domestic top wafer foundry gap in the short term growth is limited.


Trend chart of China's pure wafer foundry market share from 2002 to 2021

2002-2021年中国纯晶圆代工市场份额占比走势图

 Source: IC Insights, organized by China Economic And Industry Research Institute


Technology under the background of sustainable development, wafer process sustainable development, by the end of July 2022, samsung has announced the production of 3nm process, domestic wafer industry started late, limited by equipment and materials and related factors superposition technology blockade, our wafer foundry is still only production of 14nm process wafer, compared with the international advanced level.


Mass production progress of major global wafer foundry manufacturers in 2015-2022

2015-2022年全球主要晶圆代工企业制程量产进度

 Source: open data collation


In the field of advanced process, technology after iteration, gradually formed TSMC (Foundry mode) and samsung (IDM mode) monopoly technology, according to TSMC in 2021, according to its 5nm process share accounted for 19% of its products, domestic, domestic trade under domestic enterprise smic competition advanced process demand, but limited by the American entity list, unable to EUV lithography machine, advanced process cannot breakthrough, although currently with mature process demand continues to expand fifth than the world, but the advanced process is still the key to the rise of Chinese chip.


Wide structure ratio of TSMC wafer product line in 2020-2021

2020-2021年台积电晶圆产品线宽结构占比

 Source: open data collation

At present, among the integrated circuit wafer foundry enterprises on Chinese mainland, At present, SMIC's technology products include foundry wafer products with different technology nodes of 0.35 micron to 14 nanometers, The actual production and application is limited by many factors, such as good products, 14nm and 28nm processes account for about 15.1%, At the same time, although SMIC has a 14nm mass production level, But high-end materials and equipment are heavily dependent on imports, Such as lithography machines that rely heavily on the ASML DUV, Complete localization is a long way to go; Huahong semiconductor's overall development is relatively late, At present, the most advanced manufacturing process of 55 / 65nm accounts for 9.7%, There is a big gap.


The proportion of SMIC wafer process structure in 2021


2021年中芯国际晶圆制程结构占比

Source: Enterprise Bulletin, collated by China Economic Industry Research Institute


The proportion of Huahong semiconductor wafer process structure in 2021

2021年华虹半导体晶圆制程结构占比

Source: Enterprise Bulletin, collated by China Economic Industry Research Institute    

4, integrated circuit sealing test

As the wafer process shrinks to the physical limit, the industry begins to focus on the sealing and testing link, using advanced packaging methods 

such as inversion, 3D packaging and system-level packaging to improve the chip performance. In the future, the gold content of the sealing and testing industry will be improved, and advanced packaging technology will become the main thrust. Semiconductor testing in the downstream semiconductor manufacturing industry chain, the current domestic leading semiconductor testing company developing rapidly, extensive business coverage, product competitiveness, packaging and testing factory mainly based in Chinese mainland and Taiwan, China region, some other new sealing factory facilities base mostly set in southeast Asia such as low labor cost area. China has a relatively high global market share in the semiconductor industry.



Integrated circuit sealing and testing process

集成电路封测流程

Source: open data collation


During the IC packaging test, the main processes include seven main processes, including back thinning, wafer cutting, patch, lead fitting, molding, tendon cutting / molding and final test. These main processes can be subdivided into specific processes, and different specific processes require different semiconductor equipment to meet the different requirements of IC packaging and testing. Compared with IC manufacturing, IC sealing and testing process is relatively simple, and the requirements for process environment and equipment are far lower than those of IC manufacturing. China has a relatively high global market share in the semiconductor industry.


Main equipment of the sealing and testing process

封测工序主要设备

Source: open data collation

The domestic closed testing industry has entered the world's first echelon. The technical content of sealing and testing is relatively low, and domestic enterprises are the first to enter the integrated circuit industry as the entry point. In recent years, domestic sealing and testing enterprises have gained good industrial competitiveness through epitaxial expansion, and their technical strength and sales scale have entered the world's first echelon. Under the general trend of chip manufacturing capacity transfer to the mainland, the mainland closed and testing enterprises close, seizing the share of Taiwan, China, the United States, Japan and South Korea.data display. In 2021, China's integrated circuit sealing and testing market accounted for 26%, and the market size was about 276.3 billion yuan, an increase of 10.08% over 2020.


Sales and growth rate of ICcircuits in China from 2015 to 2021

2015-2021年中国集成电路封测销售额及增长率

Source: China Semiconductor Industry Association, China Economic Industry Research Institute


6. Development trend of integrated circuits in China

1. Continuous improvement of technical requirements

The number of transistors integrated on one chip is increasing, from the 1960s to one transistor to more than 10 billion. The higher the circuit integration, the ability to challenge semiconductor manufacturing processes to improve process technology at acceptable cost to produce advanced large-scale IC chips. To achieve this goal, the semiconductor industry has become highly standardized, with most manufacturers using similar manufacturing processes and equipment. The key to success in market development is the company's ability to launch the right product at the right time. The key size decreased from 1um in 1988 to 3nm in 2022, with a decrease of 99.7%. From this point of view, the difficulty of integrated circuit manufacturing is gradually increasing, and the acceleration of the difficulty increase is also increasing.


Development trend of the number of integrated circuit transistors


集成电路晶体管个数发展趋势

Source: open data collation


2, industrial volume and price rise, high-end demand expansion


 The booming development of emerging fields such as 5G, artificial intelligence, the Internet of Things, cloud computing and intelligent vehicles has brought incremental space to the demand for integrated circuits. Advanced process chip manufacturing puts forward higher requirements for process accuracy, which needs to adopt multiple graphics processes. The materials and production process steps required for the same chip production are far greater than the mature manufacturing process in the past. Due to the increase of technical difficulty and complexity, the unit price of integrated circuit is further increased.

Different from the general consumer applications, the car regulation chip car certification is difficult, the certification process is long. Chip into the vehicle field, must be strong anti-interference ability, adapt to high temperature, humidity, vibration, electromagnetic radiation and other complex working environment.

Car standard level chip requirements and standards are higher


车规级芯片要求和标准较高

Source: open data collation


3. The whole industrial chain of domestic IC is upgraded simultaneously


 On August 3,2022, the White House said in a statement that US President Joe Biden formally signed the Chip and Science Act on August 9 to directly subsidize and motivate the US semiconductor industry. The bill can be legislated after the president formally signed it. The subsidies are worth about $86.7 billion to attract the semiconductor industry, with an estimated $200 billion in the future, while banning companies that receive federal incentives from expanding or building new advanced semiconductor capacity in certain countries that pose a threat to U. S. national security. In terms of purpose, the United States is trying to attract semiconductor companies to set up factories in the United States through investment subsidies, while also trying to prevent semiconductor companies from increasing production in China by restricting subsidy eligibility.

From the point of past sanctions, the United States set up the "entity list" integrated circuit design and manufacturing field two leading off the global market, and the integrated circuit industry as a whole more globalization, domestic equipment and materials is still cannot meet the high-end chip design and manufacturing, lead to two leading though technology cannot production or expansion, limit the advanced process breakthrough in our country. In the short and medium term, the possibility of improvement in China-US relations is low. As the breakthrough of high-end integrated circuits will be limited to the influence of the United States and the overall domestic economic environment with increasingly strong demand for industrial upgrading, the localization of the whole industrial chain of high-end integrated circuits is the only way to make breakthroughs in the field of integrated circuits.

 

The main content of the Chip and Science Act

美国《芯片与科学法案》主要内容



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