Your Market Analysis: China is changing the world's cleanroom industry
04/01/2005
By Robert W. McIlvaine, President, McIlvaine Company
The cleanroom industry has always been dynamic. The rate of change may now be accelerating thanks to activity in China. Over the next decade, China will become the largest consumer of cleanroom products as well as one of the largest suppliers.
China currently holds 14 percent of the worldwide semiconductor market and is expected to achieve a compound annual growth rate of more than 20 percent through 2008. The gap between China’s chip consumption and production is huge. Chinese production of ICs last year was only $2.4 billion-less than 1.5 percent of the value of worldwide IC production-while consumption was over $30 billion.
It is estimated that production will rise to $14-15 billion in 2010 but will still represent only 5 percent of worldwide chip production in 2010, and will still represent only 15 to 20 percent of China’s forecast market for ICs in 2010.
No one event signals the Chinese emergence more than the acquisition of the IBM personal computing business. IBM has reached a definitive agreement to sell its Personal Computing Division to Lenovo Group Ltd. of Beijing for $1.75 billion.
Lenovo, until recently known as Legend Group Ltd., will have combined annual PC revenue of approximately $12 billion and volume of 11.9 million units, based on 2003 figures-a fourfold increase in Lenovo’s current PC business. It will be the third largest PC supplier in the world.
Mature markets in the U.S., Europe, and Asia-Pacific will add 150 million new PCs to the world market by 2010. More significant growth will come from emerging markets, where 566 million new PCs will be in use by 2010, up from 75 million in 2003. China will have 178 million new PC users.
A number of wafer fabrication facilities are in construction in China. STMicroelectronics and Hynix Semiconductor are building a DRAM and flash memory fab in Wuxi City in China’s Jiangsu Province. The two companies have a joint venture with the intention of setting up both 200- and 300-mm production lines.
Motorola is investing $90 million in a new research facility in Beijing, China, as part of its long-term plans to grow its share of the mobile cell phone market
National Semiconductor Corp. in the fall of 2004 opened its first manufacturing plant in China, an assembly and test facility in Suzhou Industrial Park outside Shanghai. The half-million square-foot plant allows National to expand its capacity beyond existing assembly and test plants in Malaysia and Singapore.
TSMC is completing an 8-inch wafer plant in Songjiang, in greater Shanghai.
CH2M IDC China was awarded a Greenfield design/construction project by Tianjin Zhong Huan Semiconductor. The project will include a production facility, office building, Central Utility Building and machine shop. The initial facility will be 355,080 sq. ft. with a potential expansion program of 530,000 additional square feet. The facility’s first phase will include a mixture of front-end and back-end operations.
Philips Semiconductor, a division of Eindhoven, Netherlands-based Royal Philips Electronics, is investing $1 billion in a new IC assembly and test plant in eastern China
Intel invested more than $200 million in a new semiconductor-chip facility in central China in the city of Chengdu, Sichuan Province.
The flat panel display (FPD) industry is a fast growing market for the cleanroom industry. Revenue will double from $70 billion to $140 billion with a 15 percent annual growth rate in the next five years.
China will be the region with strongest growth due to the fact that China is the world’s biggest TV and cell phone market. The replacement of existing TV and rising of DTV will constitute a major drive force for China’s FPD industry.
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By 2008, China will have more than 300,000 people working in cleanrooms. This includes not only the cleanrooms of user industries but also the cleanrooms of suppliers such as glove and garment manufacturers. This will place China close behind the U.S. and ahead of Japan in the top 10 list (see Table 1). The number of cleanroom employees will exceed those in all of western Europe.
China is becoming increasingly important to the filter industry both as a supplier and purchaser. A number of Chinese companies are selling microglass fiber in competition with Johns Manville and Lauscha. The activated carbon, which is impregnated into filters to remove odors and noxious gases, is supplied by Calgon Carbon and Norit or one of the many Chinese companies offering this product. A number of U.S. companies such as Camfil Farr, AAF, Donaldson and BHA have set up filter manufacturing operations in China. They are being followed by roll-goods suppliers like Andrew (Southern Felt) and Lantor.
Donaldson now has twice as many workers in China-2,500-as the 1,100 it has in Bloomington, Minnesota. In Wuxi, 800,000 filters are produced each day.
Hollingsworth & Vose has formed a new subsidiary company and is establishing a manufacturing site close to Shanghai. The first manufacturing line to be installed will produce engine filtration media and technical specialty products for H&V’s customers in the Asia Pacific region. Processes will also be added to support H&V’s broader market participation in the region, including high-efficiency filtration, battery separator and industrial specialty products.
China began developing a big cleanroom supply industry in the mid 1990s. Many companies formed at that time have grown into major suppliers with both domestic and foreign sales.
 By 2008, China will have more than 300,000 people working in cleanrooms. Source: DSM/Eye Integrated |
X&Y Industrial Co., Ltd. was founded in 1996 with the head office and factory located in Shenzhen. It specializes in manufacturing and selling cleanroom and antistatic products, and ESD PVC flooring. Products are exported to the U.S., Europe and Southeast Asia.
Shenzen Selen Science and Technology was founded in 1993. Selen specializes in developing, manufacturing and marketing hi-tech antistatic and cleanroom products and has become one of the largest manufacturers/one-stop suppliers in the ESD and cleanroom industry in China. Annual production of cleanroom uniforms exceeds 1 million sets annually. ESD shoes output is 500,000 pairs annually.
Top Glove is now the largest natural rubber glove manufacturer in the world. Since its inception in Malaysia in 1991, Top Glove has built ten plants including two in China. Twelve billion gloves are produced each year. The goal this year is sixteen billion.
Suzhou Hesan Ultra-Clean Products Factory sells ESD Gloves and has sales of US$5 million - US$10 million.
Allfun (China) Glove Co. is a leading cleanroom glove manufacturer with sales of US$20 million - US$40 million.
Because of its future position as the largest market for cleanrooms and its status in production of cleanroom consumables, China will be at the forefront of changes in the industry. The fact that most technical people in China are not conversant in English is one of the biggest challenges to those doing business in the country. Other issues such as treatment of intellectual property are also significant but are likely to be resolved.
One of the biggest barriers has been overcome now that offshore suppliers can build plants in China and control their own destinies in the country. So it is likely that the other issues will eventually be resolved as well. III
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Robert McIlvaineis president and founder of the McIlvaine Company, Northfield, Ill. The company first published “Cleanrooms: World Markets” in 1984 and has since continued to publish market and technical information for the cleanroom industry.