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2019

07/01

Current Situation of Integrated Circuit Industry in China

What is the position of China's IC industry in the world? In what areas and regions are integrated circuits stronger?

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On December 24, 2015, in Dongguan, Guangdong Province, workers are marking the motherboard of mobile phones. The core of the chip is integrated circuit. Huawei is limited in the field of chips, which reflects the plight of Chinese integrated circuits being "stuck" by the United States. Picture/Visual China


In recent months, Huawei has been under pressure from the United States, with chips being the most affected area.


The core of the chip is integrated circuit (IC). Huawei is limited in the field of chips, which reflects the plight of Chinese integrated circuits being "stuck" by the United States. However, in recent years, the integrated circuit industry has been positioned as a leading and pillar industry in China's economic development. From relying entirely on imports to the growing scale of the industry, the industry has been advancing bravely and achieved rapid development.


So, what is the position of China's IC industry in the world? In what areas and regions are integrated circuits stronger? Through multi-dimensional and bird's-eye view analysis at the industry, enterprise and regional levels, this paper shows you the overall position of IC industry as well as the three sub-areas of design, manufacturing and sealing.


Which is the largest IC market in the world?


In terms of scale, China and the United States are well-deserved large integrated circuit countries. In 2018, the sales of integrated circuits in the Asia-Pacific region were about 237.6 billion US dollars, accounting for 60.34% of the global market, which is the largest integrated circuit market in the world. Among them, China and the United States have become the two largest consumer markets of semiconductors in the world, accounting for 33% and 22% respectively (see Figure 1).

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In 2018, the scale of China's integrated circuit market was 158.4 billion US dollars, an increase of 20% over the same period last year. Among them, the total amount of imported integrated circuits is 2.06 trillion yuan, an increase of 19.8%, making it the largest importer of integrated circuits in the world.


Development of Integrated Circuits in China


In the past 19 years of the 21st century, China's IC industry has developed rapidly, with a compound annual growth rate of 25%, much higher than the global growth rate of 7.6% (see Figure 2). Even in 2018, sales revenue of China's integrated circuit industry reached 653.2 billion yuan, an increase of 20.7%.

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Among them, IC design, manufacturing and sealing test stand side by side. IC design is 25.19 billion yuan, accounting for 38.6%; IC manufacturing is 181.82 billion yuan, accounting for 27.8%; IC sealing is 23.39 billion yuan, accounting for 33.6% (see figure 3).

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From a nationwide perspective, China's integrated circuit industry shows a highly centralized feature. The sales revenue of Top30 is 264.92 billion yuan, up 19.4% year on year. Among them, the Yangtze River Delta region accounts for 47.7% of the total income, with 16.2% in the Bohai Rim, 19% in the Pearl River Delta region and 17.1% in the central and western regions (see Figure 4).

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Industry Structure of IC Industry Chain


As the core industry chain of semiconductor industry, the global IC market share is as high as 83%. Due to the complexity of technology, the industrial structure of integrated circuits is highly specialized, and the market division mode tends to be refined and professional, forming three major industries: design, manufacturing, packaging and testing (see Figure 5).

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1. IC Design Industry with "Obvious Head"


Low-end (market) access threshold in IC design is low, and it is the most competitive field of IC in domestic cities. However, due to the heavy dependence on high-quality professionals, the IC design industry as a whole is highly concentrated, and the phenomenon of "head" enterprises is obvious. In 2018, among the top 10 IC design enterprises in China, Shenzhen has four, and Huawei is ranked No. 1 and No. 3 in terms of technology, with top 10 accounting for 62%. The remaining IC design enterprises are mainly concentrated in Beijing and Shanghai.

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In addition to obvious regional agglomeration, IC design industry is highly concentrated in Top10 cities, accounting for 90% of the total, especially in Shenzhen, Shanghai and Beijing, accounting for nearly 70%.

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2. Relatively Balanced IC Manufacturing Industry

Compared with IC design industry, the concentration of IC manufacturing industry in China is relatively high. Among them, there are 50 in the Yangtze River Delta, accounting for 47.2%, and 61.4% of production capacity (equivalent to 8 inches), 23 in Beijing-Tianjin-Bohai Rim, accounting for 21.7% and 10.4% of production capacity, 16 in the Pearl River Delta, accounting for 15.1% and 9.5% of production capacity, and 17 in the central and Western regions, accounting for 16% and 18.7% of production capacity.


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According to the income and regional distribution of Top10 enterprises, the IC manufacturing industry in China is highly concentrated in a few key cities, such as Shanghai, Xi'an and Wuxi.

Among them, there are 3 enterprises in Top10 in Shanghai, accounting for 34% of Top's income; 2 in Xi'an, accounting for 29% of its income; and 2 in Wuxi, accounting for 25% of its income.

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3. IC Sealing Industry of "Big Evergrande"

In 2017, there were 96 IC packaging and testing enterprises in China. Among them, there are 53 Enterprises in the Yangtze River Delta, accounting for 55% of the total number of sealed enterprises. Seven IC sealing and testing enterprises in Top10 are located in the Yangtze River Delta (see Table 3).

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According to the income and regional distribution of Top10 enterprises, the IC sealing industry in China is also highly concentrated in a few cities. Among them, there are two in Wuxi, accounting for 33.3%; one in Nantong, accounting for 23.4%; three in Shanghai, accounting for 11%; and one in Beijing, accounting for 10.6%.


Regional Structure of Integrated Circuit Industry


Generally speaking, the development of integrated circuit industry in China is relatively concentrated in the eastern region, namely the Yangtze River Delta, the Pearl River Delta and the Bohai Sea around Beijing, Tianjin and China.

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Regionally, the IC industry chain in the Yangtze River Delta region is relatively balanced, covering three major links of IC design, manufacturing and sealing. Among them, Shanghai and Wuxi are the representatives to form a relatively complete industrial chain. The IC design industry in the Pearl River Delta region is relatively developed, and Shenzhen is the representative, which has unparalleled leading advantages. At present, IC manufacturing and sealing links are positively laid out, and the closed-loop industry chain is actively constructed. IC industry chain in Beijing-Tianjin-Bohai Rim region has unique advantages in IC design, which is relatively balanced as a whole, but the scale needs to be improved. The IC manufacturing industry in the central and western regions has prominent advantages, such as Xi'an, Wuhan and Chengdu, but lags behind in IC design and sealing test.


In terms of sub-cities, Shanghai and Wuxi rank first in the comprehensive strength of IC industry, and the industrial chain is relatively complete and advantageous; Beijing, Shenzhen, Xi'an and Suzhou rank second, with relatively complete industrial chain and prominent advantageous industries; Nanjing, Wuhan, Hefei, Dalian, Hangzhou and Chengdu rank third, with relatively complete industrial chain layout. Advantage industries are relatively prominent.