Photo source: Semiconductor Manufacturing International Corp. (SMIC), Shanghai China
China has been dominating global economic news for the past couple of weeks as its slowing economy caused jittery investors to sell stocks, resulting in major losses at the world’s premier stock markets.
On the high tech side the market for ICs in China is huge, estimated at well over $150 billion US dollars annually. Domestic IC manufacturing industry sales, however, are less than half of that total and much of it is contributed by foreign companies in China, rather than by local enterprises. Analysts suggest that China has a self-sufficiency rate of less than 10%,as well as a serious shortage of domestic manufacturing capacity and its local foundries on the whole are less than competitive when measured against their international peers in terms of technology.
The government in China aims to do something about its lack of self-sufficiency in high tech ICs. It is telling local Chinese companies and the news media that it plans to invest as much as 1 trillion yuan (US$161 billion) over 10 years to develop chips, And according to Digitimes Research, an independent business unit and the research arm of Digitimes Inc., a leading high-tech media outlet based in Taiwan, China aims to improve its self-sufficiency rate for ICs in the nation to 40% in 2020, and boost the rate further to 70% in 2025.
As the China government continues to pour capital into the local IC design industry sector, the output value of the sector will reach US$19.49 billion this year, representing a 21.2% increase from US$16.09 billion in 2014, Digitimes Research noted. The output value of China's IC design sector grew at a CAGR of 31% between 2010 and 2014.
Digitimes Research observed that the "National Semiconductor Industry Development Guidelines" and "Made in China 2025," policies published by China's State Council in June 2014 and May 2015, respectively, prescribe a major push in the development of the local IC industry. Digitimes Research notes that "Made in China 2025" clearly outlines that the nation is aiming to raise its self-sufficiency rate for ICs to 40% in 2020, and 70% in 2025.
Based on the "National Semiconductor Industry Development Guidelines," a US$19 billion national industry investment fund has been set up to help local foundries finance the build-up of advanced manufacturing processes, and also to assist local IC firms to form mergers and/or make acquisitions internationally, Digitimes Research said.