[News] Overview of China’s Semiconductor Equipment Industry

2024-02-17 Semiconductors editor

According to TrendForce’s compilation and analysis of various industry data and the recent financial reports of major representative companies, it appears that China’s local equipment industry can cover the various stages required in semiconductor manufacturing processes (excluding lithography machines).

Overall, locally produced equipment in China shows relatively high localization rates in processes such as photoresist stripping, cleaning, and etching. In recent years, there has been significant progress in processes like CMP, thermal processing, and deposition. However, in equipment related to measurement, coating and developing, lithography, and ion implantation, the Chinese equipment manufacturers still face challenges.

As per SEMI data, the semiconductor equipment market, including wafer processing, fab facilities, and mask/reticle equipment, is projected to decline by 3.7% to USD 90.6 billion in 2023. Looking ahead, semiconductor manufacturing equipment is expected to rebound in 2024, driven by both front-end and back-end market demands. Sales are forecasted to reach a new high of USD 124 billion in 2025.

The growth in the equipment market is closely tied to the extensive expansion of foundries. It is reported that approximately 70%-80% of the capital expenditure for fab expansion is allocated to the purchase of semiconductor equipment.

According to statistics from TrendForce, China currently operates 44 fabs (25 of which are 12-inch fabs, 4 are 6-inch fabs, and 15 are 8-inch fabs/lines).

Additionally, there are 22 fabs under construction (15 of which are 12-inch fabs, and 8 are 8-inch fabs). Furthermore, companies including SMIC, Nexchip, and Silan Micro are planning to construct 10 additional fabs (9 of which are 12-inch fabs, and 1 is an 8-inch fab). Overall, China is expected to establish 32 large-scale fabs focused entirely on mature processes by the end of 2024.

Per TrendForce’s data, from 2023 to 2027, the global mature process (28nm and above) and advanced process (16nm and below) capacities are expected to maintain a ratio of approximately 7:3.

Due to policies promoting localization and subsidies, China has shown the most proactive expansion progress. It is estimated that the proportion of mature process capacity in China will increase from 29% in this year to 33% by 2027, with SMIC, Hua Hong Group, and Nexchip being the most active in expanding production.

Despite rapid development in China’s equipment industry in recent years, Chinese semiconductor manufacturers still have room to catch up compared to international giants like Applied Materials, Tokyo Electron, Lam Research, ASML, and KLA Corporation, which boast billion-dollar scales and diverse high-end product lines.

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