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2019

07/11

Shackles and Opportunities of Chip Market in China

The domestic IC market is huge, but its self-sufficiency is insufficient.

With the rapid development of low and middle-end products, breakthroughs have been achieved in subdividing areas, and the core is still subject to people.


Chips are an industry with a long cycle, ranging from R&D, product landing to mass production and market entry, in a short period of 3 or 5 years, and in a long period of more than 10 years.


Whether it is the "909 Project" in the 1990s, the outbreak of the integrated circuit industry in Zhangjiang, Shanghai, after 2000, or the determination and strategic plan of the state to vigorously develop integrated circuits in recent years, every generation of chips are ambitious and hesitant. However, up to now, the road of China's chip industry is still long.

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This article will analyze the current situation and future trend of domestic chip market in China.


Chip Market Scale in China


According to the World Semiconductor Trade Association (WSTS), China and the Americas (mainly the United States) have become the two largest consumer markets of semiconductor in the world in 2018, accounting for 32% and 22% respectively, followed by Europe and Japan.


Regional Distribution of Integrated Circuit Industry in China


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 accounted 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.

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According to the data released by China Semiconductor Association, the sales of integrated circuit industry in China in 2018 amounted to 653.2 billion yuan, an increase of 20.7% over the previous year. Although it has such a huge market, due to the long chain of chip industry, each link has a lot of technical difficulties, resulting in the weak self-sufficiency of chips in China, up to 2018, the self-sufficiency rate is about 15%. In most links of the whole industrial chain, there is a huge gap between us and the international advanced technology, which is also an important reason for the lack of self-sufficiency.


Overview of sales and growth rate of integrated circuit industry in China in the past ten years (2009-2018):

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From 009 to 2018, the self-sufficiency rate of chips made in China can be summarized as follows:

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Among them, the sales volume of design industry is 251.93 billion yuan, accounting for 38%; the sales volume of manufacturing industry is 181.82 billion yuan, accounting for 28% in 2018, from 23% in 2012 to 28% in 2018; the sales volume of packaging and testing industry is 219.39 billion yuan, accounting for 34% in 2018, from 42% in 2012, and the industry structure is gradually optimizing.( The industry considers that the proportion of IC design, manufacturing and packaging is 3:4:3.

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It can be seen that chips are mainly designed and sealed in China's chip industry, and the manufacturing field is still relatively weak.




Development Dilemma of Chip Industry in China




As for the predicament, it is chips manufacturing in the middle of the industrial chain. Wafer manufacturing is a large-scale economy with the characteristics of large investment and slow return. There is a big gap between China and the international technology level, and there is a natural threshold for its development.


Compared with the design industry in the chip industry chain, wafer manufacturing sector has been neglected due to high capital expenditure and long return cycle, resulting in a continuous decline in market share and a widening gap with the international advanced level.


To paraphrase a netizen, that is, "some parts of China that can be solved by wisdom are not too bad, and the things that can be accumulated and precipitated are still facing a big gap."


Future Trend of Chip Market in China


As the largest market in the global chip industry, driven by the emerging industries, China's integrated circuit industry will maintain growth. It is expected that by 2022, China's integrated circuit industry sales will exceed 1.5 trillion yuan.

Nowadays, the arrival of 5G and Internet of Things is regarded as a new outlet by various industries. The domestic chip industry began to appear a kind of anxiety, layout of chip companies for many years, hoping to seize this outlet, in order to shorten the gap with the giants.

In the next few years, the emerging industries such as 5G, Internet of Things, AI, big data, industrial robots and smart wear will be the main driving forces to bring new opportunities to China's chip industry.