China Market and Policy is Focus of New SEMI Microsite

China Market and Policy is Focus of New SEMI Microsite

By Jonathan Davis, Global VP of Advocacy, SEMI

SEMI Market CentralDevelopment of China’s semiconductor manufacturing ecosystem potentially represents the next wave of regional industry expansion.  With strong domestic IC demand to fuel its enormous electronic systems manufacturing sector, heavy reliance on semiconductor imports, concerns about dependence on foreign sources, and aspirations to move up the technology value chain, China is making significant and coordinated investment to establish a diverse world-class semiconductor manufacturing supply chain.

Industry participants have varied views on the latest Chinese semiconductor investment policies.  Some companies have strong concerns about the impact of state-sponsored industry policy. Some see opportunities to participate in a growing market or to take advantage of public and private equity resources. Most are looking for more information to better discern the details and trends.

To this end -- and to help navigate the unfolding China market dynamics, SEMI has launched a dedicated microsite — China Market Central at www.semi.org/marketcentral — to aggregate and present resources on the policy and market developments.

China Market Central features market data, news, analysis and recent presentations from various SEMI events to simplify the search for information and assist SEMI members in tracking the business opportunities and potential threats from the policy-driven acquisition-oriented wave of strategic investment.

China represents about one-third of the approximately $330 billion global IC market.  However, domestic production supplies only 10 present or so of its demand.  That figure is raising but not quickly enough to fundamentally alter the domestic dependence on global suppliers.

While China has had a long history of engagement in semiconductor technology and now claims an advanced technology domestic foundry, it has thus far failed to create a sizable and competitive industry.  China’s ministry-owned research facility was one of the first to produce a semiconductor device in the 1960’s and semiconductor industry support strategies were included in national 5-year plans in subsequent decades. However, the country has persistently lagged in technology development and market.

China’s new industry investment and government promotion policy calls for expansion and vertical integration of the domestic semiconductor value chain.  The Ministry of Finance, together with the Ministry of Information Industry (MII) and the National Development and Reform Commission developed the “National Guidelines for Development and Promotion of the IC Industry,” which was released by the State Council in June of 2014.

The National IC Fund aims to support the targets established in the State guidelines for achieving domestic sales revenue of 350 billion RMB by 2020 and reaching the technology level of international “tier 1” companies by 2030.

Initially, the government investment fund totals about 125 billion RMB (~$20B). Over the next decade, the State development program and supporting policies of numerous municipal governments and private equity funds potentially amount to a $100 billion stimulation across the semiconductor ecosystem.

The policy and related funds are targeting development in key areas across the industry supply chain including IC design, IC manufacturing, advanced packaging and testing, and IC equipment and materials.

Industry leaders, key government representatives, fund managers and industry analysts addressed these market trends and domestic industry aspirations at SEMICON China 2015, which recently held in Shanghai.  Some presentations are now available from the China Market Central.

View these and other analysis now and look for additional updates and information as resources come available on China Market Central: www.semi.org/marketcentral

May 5, 2015