Opportunities and Challenges of IC Design Industry in China Under the Ban By the US

In 2019, Huawei and other manufacturers were included in the "entity list" by the United States. On May 15 this year, the U.S. Department of Commerce adopted a ban on Huawei, comprehensively limiting Huawei's wafer foundries around the world. The deficiency that the development of science and technology industry is controlled by people has been further magnified, in which it is an urgent task to improve the level of national chips and relevant technology. However, there are many difficulties in the development of chips in China.

In the semiconductor industry, the weakest link in China is the basic material research and equipment manufacturing. In addition to the technical difficulties of semiconductor equipment itself, it requires a long-term experience accumulated in the process coordination and error control between the devices in each link, which have a sharp impact on the chip function. Millions of transistors are embedded on a chip, in which nano units can be simply regarded as the size of a single transistor. According to Moore's law, as the size of transistors becomes smaller, theoretically, the performance of processors with the same size will be significantly improved, while the power consumption will be relatively reduced. For example, there are about 1000 steps of the wafer process in the integrated circuit product, at the node of 20nm technology, while under the 7nm technology, more than 1500 steps should be finished, from which we can conclude plainly that the semiconductor manufacturing industry is a highly precise system process. To some extent, the development of semiconductor technology is closely related to the overall growth of the industry.

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Domestic 5G Construction Drives the Demand for X86 Server

For the demand and shipment of servers in China, we believe that China, as the country with the fastest 5G construction, will take the lead in the construction of servers. At the same time, since the server development in China is slightly slower than overseas, the shipment of servers will be maintained on a level higher than the global growth rate before 2021, and then it will gradually keep pace with the global growth rate of servers.

Market Scale of the Wafer Foundry industry

In 2019, the global market scale of the wafer foundry is about 62.7 billion USD, accounting for about 15% of the global semiconductor market. It is estimated that the wafer foundry market will reach 79.8 billion USD with a CAGR of 4.9 percent. And the biggest proportion, from the perspective of the nanotechnology, is occupied by the range from 40-65nm.

The Domestic Wafer Foundries Continue to Develop While Its Proportion is Still Low

As an intensive industry in technology and capital, the concentration of the foundry industry has reached an unprecedented level. Since SMIC was founded in 2000, China has been catching up with semiconductor manufacturing. According to the latest report statistics, in the second quarter of 2019, the top three market share of global wafer foundry market are TSMC, Samsung, and lattice core, in which TSMC takes almost half of the global market share.

At present, China is the largest consumer market for semiconductors and integrated circuits in the world. According to the data, in 2018, the consumption volume of the chip in China exceeded the sum of America and Europe, accounting for 33 percent of the total global consumption. But there is a low self-supply rate with 90 percent of chips imported. Since 2006, integrated circuit products have become the largest imported products in China, surpassing oil. According to the customs data in 2018, the size of chips imported by China reached 312.058 billion USD.

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5G Drives the Development of Data Center which Promotes the Requirements and Demands for Servers

We believe the server will respond to the storage with a geometric multiple growth since the transmission speed brought by 5g network will need higher requirement than that of 4G, as well as a higher bandwidth stability, thus, it undoubtedly puts forward more upgrade in terms of performance. Its high performance is mainly reflected in the high-speed chip computing ability, long-term reliable operation, and strong data throughput, and others.

Domestic Wafer Factories Encounter Opportunities Under the Pressure of De Americanization

The United States frequently uses chips as chips to curb the development of China's science and technology industry, which makes the science and technology industry unable to be independent. SMIC and Huahong are important Fab factories in China, both of which is expected to have a faster growth will develop faster due to the encouragement of the market and the policies, then, it provides a good development platform for domestic-related upstream and downstream, and promotes the overall development of China 's semiconductor industry.

The output of SMIC 14nm and subsequent processes is expected to reach 9000 pieces in July and expand to 15000 pieces per month by the end of 2020. Last year, SMIC introduced a lithography machine with 7nm, which is expected to break through the technical bottleneck and provide more advanced technical support for domestic wafer manufacturing. On May 15, two state-level integrated circuit funds invested 2.3 billion USD in SMIC to expand production capacity by 5 times. Therefore, SMIC and its supply of the semiconductor equipment and materials ushers in an excellent opportunity, covering KFMIC and AMEC with the supply capacity of 7nm and 5nm process equipment and materials, and Naura and ACMR with the supply capacity of 14nm process equipment.


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Semiconductor Production Equipment

https://www.globalmarketmonitor.com/reports/470741-semiconductor-production-equipment--spe--market-report.html
Wafer Fabrication Equipment

https://www.globalmarketmonitor.com/reports/375425-semiconductor-equipment-market-report.html
Semiconductor Wafer

https://www.globalmarketmonitor.com/reports/525536-semiconductor-wafer-market-report.html


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