By Paula Doe
WaferNews Contributing Editor
Who would have thought it only a few months ago? China seems to be growing an entrepreneurial semiconductor foundry industry – thanks to the success of an aggressive drive to recruit industry talent from Taiwan.
“I’ve been around this industry since the ’80s, and people have always been saying that China would be the next big thing,” said George Burns, of Strategic Marketing Associates. “But now it finally may be.”
After a recent trip visiting fabs around China, he figures Chinese companies are investing some $880 million this year on semiconductor production, and have specific plans on track to increase that by 70%, to $1.5 billion, in 2002.
“I was really struck by the entrepreneurial energy of the new foundries in Shanghai,” Burns told WaferNews. “It was like the first time I went to Hsinchu, in Taiwan, back in ’86 and ’87, with exciting startups. This is something new that the state-owned enterprises don’t have, something that Taiwan can offer.”
Most of that investment and energy is coming from the two competing Chinese foundries that were started without government funding, Semiconductor Manufacturing International Corp. (SMIC) and Grace Semiconductor Manufacturing Corp., both now building $1.5 to $1.6 billion 0.25-micron fabs in the Pudong area of Shanghai. Both are heavily recruiting talent from Taiwan, and to a lesser degree from Singapore.
“Engineers are moving to Shanghai,” said Burns. “It’s a really significant source of capital and management, the equivalent of the Chinese return from the US to Taiwan that helped build Taiwan’s industry.”
SMIC has built a village to entice engineers and managers from Taiwan, with apartments and a K-12 international school that will teach in both English and Chinese. Grace plans to do the same, to create its own society for expatriates. Burns noted that many, perhaps most, of the engineers at these companies seem to be from Hsinchu Science-Based Industrial Park. “They see it as a big personal opportunity, a new frontier,” he said.
Both foundries do indeed appear to be using the Japanese technology reported, Grace from Oki, SMIC from Toshiba.
Burns also noted that everything that was happening seemed to be happening in Shanghai. “The difference between Beijing and Shanghai was just amazing,” he said. In Beijing, contrary to published reports, neither Huaxia Semiconductor Mfg. Corp. (HSMC) nor Beijing Sinotron (formerly known as Xunchung) has yet to actually break ground on planned new fabs. NEC also seemed to be pulling resources away from Shougang-NEC near Beijing and concentrating on Shanghai, where its joint venture Shangai Hua Hong NEC is located.
The government-funded enterprises, which will use lagging technology to produce the government plan, aren’t likely to be a big market for advanced tools. Burns noted managers at many of the fabs he visited, like Shougang and Shanghai Belling, said they were particularly interested in buying used equipment.
Shanghai Hua Hong NEC has the most aggressive plans to move to 0.18-micron next year, assuming current restrictions on the export of leading edge equipment are relaxed by then, though SMIC says it will also transition when it can.