Domestic Consumption Outstrips Semiconductor Production in China Despite Rapid Expansion

Skyrocketing consumption of ICs in Mainland China is outpacing growth in domestically made ICs, despite huge expansion programs, according to the report “Mainland China’s Semiconductor and Equipment Markets: A Complete Analysis Of The Technical, Economic, and Political Issues,” recently published by The Information Network.

China's IC industry is expanding rapidly. In 2004, Mainland China will produce 18.5 billion chips, which will account for 22.1% domestic demand. Most high-end products used in computers and mobile phones had to be imported. In 2002, the country produced 9.6 billion chips, which accounted for just 21.5% of domestic demand. While production nearly doubled in two years, progress toward fulfilling domestic demand changed 0.6%.

China had two 6-inch fabs and one 8-inch fab in 2002. Massive building programs resulted in six 6-inch fabs and ten 8-inch fabs in 2004. Capacity increased from 197,000 equivalent 8-inch wafers per month in 2002 to 330,000 in 2004.

Unit production will double attain to nearly 40 billion units in 2006, and domestic production will finally make headway, meeting 26.6% of domestic demand.

“IC executives and Mainland China officials have finally awakened to the fact that the industry cannot flourish with hand-me-downs and used equipment. Much of the production equipment used in fab expansion has been tools transferred from older lines by Japanese and Taiwanese IC manufacturers”, says Dr. Robert Castellano, President of The Information Network. “IC production had been limited to 180nm on 200mm wafers. But that is changing. China’s IC manufacturers are buying state-of-the-art 90nm tools for 300mm production for their existing facilities. Ready to erode the need for imports are SMIC’s 300mm existing fab and two more planned for 2006, GSMC’s 300mm fab scheduled for 2005, and He Jian’s 200mm fab that will probably be converted to 300mm next year. The potential for an explosive equipment market is high.”

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