Take another look at China's semiconductor manufacturing.
China and the United States are both highly involved in the semiconductor manufacturing industry. wafer prober This is due to China's prominent position as the largest chip market in the global economy, and its potential to establish a self-sufficient internal system for semiconductor production in the future, ensuring industrial chain security. Additionally, the US government utilizes its technological edge and international brand influence to prioritize four-party cooperation and increase its dominance over global industrial chains and local investments, ultimately limiting China's growth opportunities.
However, practically speaking, there are notable differences between the two sides. probe test The decline of the US manufacturing industry has resulted in some outdated facilities within the domestic manufacturing industry. Despite recent efforts to bring back manufacturing to the US and positive data reflecting this progress, the semiconductor and wafer manufacturing industry requires a multitude of supporting facilities and enterprises that cannot be established or relocated overnight. Additionally, certain domestic infrastructure projects have encountered obstacles such as local government restrictions and union protests. Although foreign companies may desire to establish factories in the US, they face challenges such as high costs, restrictive policies, and limited access to necessary equipment, materials, and labor. Furthermore, foreign companies often face unfair treatment from local suppliers who prioritize American companies over them.
Contrary to this, China is likely to become self-sufficient in larger conventional chips, wafer probing which is determined by the current market demand for semiconductors and China's semiconductor manufacturing technology.
During the Internet of Things era, the semiconductor industry will enter a crucial turning point around 2025 when 5G technology is widely applied and sensors are increasingly used. Emerging technologies do not require the most advanced 5 nm and 10 nm chips at this major inflection point, but traditional chips of 28 nm and above (especially 90 nm and above) are lacking.
According to Sumco, a global supplier of large-scale process chips, 300 mm wafers will be sold out by 2026. Although these large-scale [300mm wafer] chips cannot be used in high-end applications, such as processors in smartphones or AI chips for self-driving cars, they are still very important for most electronics in the long tail and downstream industries.
At present, China's mainland wafer fab capacity is in a transitional phase, moving from 8 inches to 12 inches. Local logistics equipment manufacturers have successfully implemented multiple links and can now supply equipment in batches for the 28nm production line. Companies such as NAURA are also venturing into the 14nm production line by providing verification and small batch supplies of equipment like silicon etching machines and cleaning machines. The current progress in process development at SMIC International Society, the largest traditional wafer foundry service provider in China, is focused on the 14nm process. This is mainly taking place at its holding company SMIC South for safe production, while continuous research and development efforts are underway for the 7nm process (according to foreign media reports, SMIC has secretly released and begun mass production of its 7nm process node known as N+2). It is likely that Smic Environment chose not to mention this in their earnings report due to concerns about potential repercussions from the US.
SMIC's 7nm to 14nm technology has a huge opportunity in this area, compared to the most advanced 12-nanometer foundry chips in the U.S. or Europe.
In addition, there are new developments in the semiconductor market that domestic manufacturers should take into consideration. Since the first half of 2022, there has been a structural differentiation in the industry chain. This has resulted in two main situations: firstly, downstream general and consumer electronics chip prices have noticeably increased. However, on the other hand, there is a shortage of automotive chips and major manufacturers are facing delivery pressure. As a result of these recent changes, end customers are expected to place a surge of orders. However, if the downward trend in the consumer electronics sector persists for an extended period of time, it may impact the demand for traditional industries that rely on semiconductors downstream. This could prove disastrous for domestic semiconductor manufacturers if it coincides with the completion of expansion projects during their latest round of planning cycles.
