China is trying to increase its self-sufficiency in the semiconductor industry by manufacturing more DRAM chips and investing more in the system-on-chip (SoC) segment.
For example, Changxin Memory Technologies (CXMT) is forecast to produce semiconductor chips equivalent to 40,000 wafers a month next year based on 19-nm process improvement. The company began to manufacture DRAM chips in September this year and its current monthly capacity is equivalent to 20,000 wafers. The company is planning to supply 19-nm DRAM chips for use in PCs first, in which application is easier than in servers and mobile devices.
CXMT began to develop DRAM chips three years ago and has invested 55 billion yuan in the segment of the industry so far. It is planning to catch up with Samsung Electronics and SK Hynix by developing its extreme ultraviolet lithography (EUV) technology. Tsinghua Unigroup, in the meantime, is going to invest 800 billion yuan for DRAM production for 10 years to come and the production is scheduled to start in 2021.
According to the Semiconductor Equipment and Materials International (SEMI), South Korea’s and China’s semiconductor equipment investments for this year are estimated at US$9.2 billion and US$11.7 billion, respectively. In addition, those for next year are estimated at US$11.7 billion and US$14.5 billion, respectively.
Chinese companies’ DRAM chips are likely to increase their market share based on supply within China although the products fall short of international quality standards. This is similar to the strategy of Chinese smartphone manufacturers such as Huawei and Oppo, which entered the global market after dominating their domestic market with low-quality smartphones.
In the SoC segment, Taiwanese foundries TSMC and UMC are planning to expand their manufacturing facilities in China to better meet the demand of fabless companies in China. Specifically, TSMC is going to increase its monthly production capacity on a 12-inch wafer basis from 10,000 units to 15,000 units in Nanjing by the end of this year. TSMC’s facilities in the region are currently producing microcontrollers for use in consumer electronics and smartphone application processors through 16-nm processes. In addition, TSMC is going to increase the wafer-based production volume to 20,000 units next year.
Likewise, UMC will expand its 28-nm to 40-nm processes in Xiamen for an increase in 12-inch wafer-based production from 170,000 units to 250,000 units. Given that the processes are old processes, most of the products produced there are likely to be supplied to Chinese clients.
Chinese foundry SMIC, in the meantime, recorded a capacity utilization of 97 percent in the third quarter of this year with its supply to Chinese fabless companies accounting for more than 60 percent of its total supply. 14-nm FinFET processes are currently the mainstream of the company’s processes.
The foundry facility expansion in China has to do with a rapid increase within China in the supply of SoC products such as application processors, microcontrollers and power management integrated circuits. Huawei, in particular, is leading China’s SoC industry growth by, for example, unveiling Kirin 990 as an integrated 5G processor amid U.S. restrictions.