New year will be big for China chipmaking

JAN. 8–SHANGHAI–Driven by the recovery of the global semiconductor market and soaring demand from domestic electronics manufacturers, China’s semiconductor foundry industry grew rapidly in 2003, setting the stage for the country to play a bigger role in the global chip-making business in 2004 and beyond.

China’s semiconductor foundries achieved a total monthly production capacity of more than 100,000 wafers in 2003. Four Chinese foundries are now making products on 8-inch wafers, with two others planning to start in 2004. The combined capacity of these fabs will exceed 170,000 wafers per month by the end of 2004, according to iSuppli, a research marketing firm based in El Segundo, Calif.

The expansion of the global wafer industry is dominated by growth in Asia, and China is the fastest rising country in the region. China’s share of worldwide wafer capacity will grow to 9% in 2007, up from 4% in 2003, iSuppli predicts.

The major factor behind the rise of China’s foundries is the unfolding recovery in the worldwide semiconductor industry. Following estimated growth of 13.9% in 2003, global semiconductor revenue will rise to $208.8 billion in 2004, up 17% from $178.4 billion in 2003, according to iSuppli.

Meanwhile, the amount of semiconductor manufacturing that integrated device manufacturers (IDMs) outsource to foundry providers will continue to rise in 2004. iSuppli predicts the worldwide foundry business will swell to $14 billion in 2004, up 22% from 2003.

Chinese foundries still cannot compete effectively with their leading international competitors, either in production volume or manufacturing technology. However, the immense potential domestic market is a major enticement for IDMs to outsource portions of their
manufacturing to Chinese foundries.

China’s foundry growth in 2004 will be propelled by orders for chips used in mobile phones, PCs and automotive electronics. Production of all these products is booming in China.

Growth in China’s foundry market in 2004 is being led by the country’s major 8-inch wafer manufacturers, all of which plan to increase their production capacity this year.

Semiconductor Manufacturing International (Shanghai) Corporation (SMIC) operates three 8-inch fabs in Shanghai that have a combined production capacity of 60,000 wafers per month. SMIC expects production capacity at its Shanghai facilities to reach 85,000 wafers per month by the fourth quarter.

In December, SMIC acquired Motorola’s 8-inch fab in Tianjin. SMIC intends to transfer its older CMOS technology to the Motorola fab, while focusing its Fab 1 and Fab 2 facilities in Shanghai on advanced technologies


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