Work-force scaling challenges loom as China goes global
03/01/2006
Ming Xi, Novellus Asia, Shanghai, China
China’s electronics industry is moving onto the world stage with increasing momentum, due largely to strategic efforts aimed at increasing its manufacturing capability and narrowing its technology gap with Taiwan, Japan, the US, and Europe.
According to a recent report by the Organization for Economic Cooperation and Development, China overtook the US as the world’s largest exporter of information technology goods in 2004 (Fig. 1b). In semiconductors, China’s Semiconductor Manufacturing International Co. (SMIC), a foundry that produced its first chips in 2000, became the world’s third largest foundry in terms of revenue in 2004. During this period, China’s share of the global semiconductor market ballooned from 7% to over 20%. In 2005, China became the world’s largest regional IC market with a 32% jump in revenues over the previous year, though much of the demand continues to be for assembly into export products.
However, this fast-track momentum may slow due to work-force constraints. Despite China’s large work force, relatively few workers have the advanced skills to support a thriving electronics industry. Several factors compound the problem, such as a limited number of students graduating each year, a lack of adequate tools and equipment in educational institutions, and few efficient industry/university partnerships.
Lack of skilled workers
China has a long history in discrete semiconductors, but integrated circuits made in domestic fabs are a fairly recent phenomenon. As a result, an experienced local work force to support world-class semiconductor manufacturing is in its infancy. Today, most senior engineers in China’s leading fabrication facilities are expatriates from other countries, including the US. This non-indigenous work force cannot be leveraged indefinitely, and will not be able to scale.
As a result, competition for skilled engineers in China is driving up wages. Salaries in sales and technical managerial positions are rising about 10% annually. Employee turnover, a related issue, can reach 25% of a company’s total staff annually in key electronics hotbeds such as Suzhou, near Shanghai. At the same time, China’s currency, the Yuan, is under pressure for another upward revaluation that would make costs for manufacturing domestically that much more expensive.
The US National Science Foundation has estimated that first-degree science and engineering graduates in China numbered roughly 330,000 annually in 2001 (Fig. 2). Yet the research firm iSuppli Corporation, a US-based research firm, has estimated that China produces only 400 semiconductor design graduates per year. Professor Zhang Wei, who heads the Interconnect Program in the Microelectronics Center at Shanghai’s Fudan University, puts the figure slightly higher at 500, but that’s still far too small a number to support China’s large and dynamic semiconductor industry. The talent shortage and work force instability are risk factors that could limit further growth of China’s semiconductor industry.
Universities are key
Chinese universities historically have not been strong in core semiconductor manufacturing disciplines such as materials science and chemical engineering. The microelectronics engineering degree programs offered provide only the most rudimentary education in materials science. Students have no chance to work with advanced tools to familiarize themselves with leading-edge technology work.
The PRC government recognizes the skills shortage and its impact on the industry. In 2003, China implemented a plan called the National IC Talent Cultivation Base, with the aim of turning out 40,000 IC designers and 10,000 IC process technology engineers by 2011.
To achieve this, universities and institutions are rapidly expanding their faculty and lab capacities, and are seeking funding and opportunities for industry collaboration. Corporations are starting to get involved. Novellus Systems donated four 200mm Cu backend-of-line (BEOL) thin film deposition systems to Fudan U., jointly establishing an interconnect research program at Fudan’s Microelectronics Center. The equipment provides state-of-the-art Cu BEOL process capability. In the IC design area, Infineon Technologies and Cadence Design Systems are collaborating with Chinese universities on several projects.
Despite this progress, a PriceWaterhouseCoopers report suggests that China’s skilled labor shortage will limit IC design innovation through 2010, resulting in higher demand for foreign semiconductor designs [1]. Chinese companies will typically develop “me-too” designs, the report adds, while any real innovation is dependent on the extent to which returning expatriate engineers launch startups and enter research institutes.
Increased research needs
Another area that requires rapid improvement is the link between research efforts and industry. Because core semiconductor education is lacking, chip companies have been slow to establish academic research projects. According to Zhang, indigenous Chinese semiconductor companies haven’t cooperated closely enough with universities at the undergraduate level, where support is desperately needed.
In other countries, partnerships between semiconductor-related companies and academia are fostered by the Semiconductor Research Corporation (SRC) (www.src.org), a US-based international consortium. The SRC enables industry to work with universities to perform pre-competitive research. Its charter includes a core research program, student education, a mechanism to transfer technology to industry, and networking opportunities. The SRC funds ~350 research programs based at 100 universities worldwide. With only nine microelectronics labs in China, participation in an organization like the SRC would strongly aid collaboration and provide funding for research to help drive the next generation of semiconductor technology.
Deeper cooperation could also come from US and European companies linking with Chinese universities for research and training. Although hundreds of multinationals have established R&D operations in China, few have substantive links with Chinese university research departments. An exception, Zhang says, is the Novellus partnership with Fudan University.
To build the expertise needed to grow a top-tier indigenous chip industry, China must integrate core disciplines into universities along with the state-of-the-art research necessary to further the development of semiconductor science. China is on its way to becoming a major microelectronics manufacturing center. As this trend unfolds, it is essential that its microelectronics students have the knowledge, skills, and access to tools that will facilitate their future success.
Reference
- “China’s Impact on the Semiconductor Industry,” PriceWaterhouseCoopers Global Technology Center, December 2004.
Ming Xi, PhD, is chief technology officer at Novellus Asia. Novellus System Semiconductor Equipment Shanghai Co. LTD, Shanghai, China; ph 86/21-50802056; e-mail [email protected].