A comprehensive comparison of the strength of the semiconductor industry chain in China and the United States (with a complete list of wafer factories)

Based on the research report "Strengthening the Global Semiconductor Supply Chain in an Uncertain Era" jointly released by the Semiconductor Industry Association (SIA) and BC G, and the list of "Global Semiconductor Fab Distribution" on Wikipedia, ASPENCORE's global analyst team conducted a comprehensive comparison of the strength of mainland China and the United States in the entire semiconductor industry chain and value chain, and listed in detail the list of wafer fabs that are operating normally in the United States and mainland China. This article mainly includes the following parts:

• A brief history of wafer manufacturing

• Global semiconductor supply chain and value chain division

• Comparison of the semiconductor supply chain strengths of China and the United States

• Future Development of Semiconductors in China and the United States

• Appendix: Geographical distribution and complete list of wafer fabs in mainland China and the United States

A brief history of global wafer manufacturing development

In 1965, when Gordon Moore published his article "The number of transistors on a chip doubles every 18 months" (this is the familiar "Moore's Law"), chips were manufactured on 1.25-inch (30 mm) wafers. At the time, it cost about $1 million to build a wafer fab. Over the past half century, chip manufacturers have been developing and manufacturing chips at the pace of Moore's Law, integrating more functions onto a single chip in the process, thereby driving the growth and popularity of computers, smartphones and other electronic products.

Over time, chipmakers began to move to larger wafer sizes because larger wafers can cut more dies, which can reduce chip costs. Starting in 2000, chipmakers began to upgrade from 200mm (8-inch) wafers to modern 300mm (12-inch) wafers. Initially, it cost about $700 million to $1.3 billion to build a 200mm fab, while it cost about $2 billion to build a 300mm fab. According to IBS data, in 2001, 18 chipmakers in the world had fabs that could process 130nm chips, which was the most advanced process at the time.

At the same time, foundry companies led by TSMC began to attract the attention of the industry. They do not design and sell their own chips, but specialize in providing chip manufacturing services for external customers. Many chip manufacturers are no longer able and willing to afford the cost of developing new processes and building advanced fabs, so they choose the fab-lite model, which is to outsource part of the chip manufacturing to foundry companies. Fabless design companies such as Qualcomm, Nvidia, and Xilinx took off with the east wind of foundry and grew into chip suppliers that are more competitive than IDM manufacturers.

With the rise of foundry, wafer manufacturing began to shift from the United States and Europe to Asia. According to reports from SIA and BCG, Taiwan has now become the leader in global wafer manufacturing capacity, accounting for 22% in 2020, followed by South Korea (21%), Japan (15%), mainland China (15%), the United States (12%) and Europe (9%).

Division of the global semiconductor supply chain and value chain

I would like to remind you that we should not be misled by the above statistics. Wafer manufacturing is only one node in the global semiconductor supply chain and value chain. Chip design, EDA/IP, and packaging and testing also play different roles. As shown in the figure below, the global semiconductor supply chain includes the following links: basic research, EDA/IP, chip design (divided into logic devices, DAO and memory), semiconductor manufacturing equipment and materials, and manufacturing (divided into front-end wafer manufacturing, back-end packaging and testing).

Global semiconductor value distribution by region (based on 2019 global semiconductor data). (Source: SIA & BCG)

Note: DAO stands for discrete, analog and other (optoelectronics and sensors); OSAT stands for outsourced assembly and test; East Asia includes Japan, South Korea and Taiwan.

As can be seen from the above figure, in the EDA/IP segment, the United States dominates (74%), while China accounts for only 3%; in wafer manufacturing, the United States accounts for 12% and China accounts for 16%; in the packaging and testing market, China accounts for 38% and the United States only 2%.

There are more than 30 types of semiconductor devices, but the industry generally divides them into three categories: logic, storage, and DAO.

• Logic devices are digital chips that process "0" and "1" and are the building blocks for computing and processing in all devices, accounting for about 42% of the entire semiconductor value chain. The logic category mainly includes: microprocessors (such as CPUs, GPUs, and APs), microcontrollers (MCUs), general-purpose logic devices (such as FPGAs), and connectivity devices (such as WiFi and Bluetooth chips).

• Memory chips are used to store data and code information, mainly DRAM and NAND, accounting for about 26% of the entire semiconductor value chain. DRAM can only temporarily store data and program code information, and the storage capacity is generally large; NAND is commonly known as flash memory, which can store data and code for a long time even if the power is off. Mobile phone SD cards and computer SSD solid-state drives all use this type of memory chip.

• DAO stands for discrete devices, analog devices, and other categories of devices (such as optoelectronic devices and sensors), accounting for about 32% of the entire semiconductor value chain. Diodes and transistors are discrete devices; analog devices include power management chips, signal chains, and RF devices; although other categories of devices account for a small proportion, they cannot be ignored (computers and electronic devices cannot work without one device), such as sensors, which are becoming increasingly important in emerging Internet of Things applications.

If global semiconductors are segmented into these three categories, the overall sales volume is divided into the following categories by application: smartphones account for 26%; consumer electronics account for 10%; PCs account for 19%; ICT infrastructure equipment accounts for 24%; industrial control accounts for 10%; and automobiles account for 10%.

Global semiconductor sales share by application. (Source: SIA & BCG)

Taking the DAO category as an example, the value in smartphones and consumer electronics accounts for about one-third, while in industrial and automotive applications it accounts for as much as 60%.

Comparison of the strength of the semiconductor industry chain between China and the United States

The research and development, design and production of semiconductor products are extraordinarily complex and globalized, and can be roughly divided into four main stages: basic research, design, wafer manufacturing, packaging and testing. In addition, chip design also requires EDA tools and various IP cores, while chip production requires semiconductor production equipment and various special materials. From the application market of semiconductor devices, the United States and China each account for about 1/4 of the global semiconductor consumption, and both as semiconductor consumers and creators, they have a significant weight. Below we will make a comprehensive comparison of the semiconductor industry chain strength of the United States and mainland China (excluding Taiwan) from six aspects.

• basic research

• EDA/IP

• Chip Design

• Wafer manufacturing

• Manufacturing equipment and materials

• Package Test

basic research

Basic research in semiconductors is mainly about the research of basic semiconductor materials and chemical processes, and is the driving force for the design and manufacture of semiconductor devices to achieve technological breakthroughs and commercialization. It takes about 10 to 15 years for a research result to reach the commercialization stage. For example, it took nearly four decades for Extreme Ultra-Violet (EUV) technology to go from the initial concept to the implementation stage in the wafer fab. Although there is no specific data statistics, basic research generally accounts for about 15-20% of the total semiconductor R&D investment. For example, the United States has maintained a level of 16-19% for many years.

The breakdown of overall U.S. semiconductor R&D investment in 2018. (Source: SIA)

As shown in the figure above, the overall R&D investment in semiconductors in the United States in 2018 was $580 billion, of which basic research accounted for 17%, applied research accounted for 20%, and product development accounted for 63%. In terms of funding sources, 42% of basic research came from the federal government, 29% from companies, and 29% from universities and other non-profit organizations. Although the overall proportion of government-funded research funds is not high, the technological breakthroughs achieved have a significant impact on the development of the semiconductor industry. For example, the Microwave and Millimeter Wave Integrated Circuit (MIMIC) project funded by the U.S. Department of Defense in the late 1980s developed gallium arsenide (GaAs) transistors. RF devices based on this material and structure make wireless connections between smartphones and cellular communication towers possible.

Over the past 40 years, the proportion of U.S. corporate investment in semiconductor research and development to GDP has increased almost 10 times, while the government's investment in semiconductors has not increased.

According to data from the Organization for Economic Cooperation and Development (OECD), China's overall R&D investment ranked second in the world in 2018, only 5% lower than the United States, but the investment in basic research accounted for only 5-6%, and basic research in the semiconductor field was even lower. China's new five-year plan lists basic research as a key investment area, with a target ratio of 11% of GDP in 2021. Semiconductors will also be given a top priority and receive relatively abundant resource investment.

EDA/IP

Although EDA and IP account for a small proportion of the global semiconductor supply chain, they are very important in the value chain and can be called the "crown jewel" of semiconductors. The three EDA giants (Synopsys, Cadence, and Mentor acquired by Siemens) are all American companies, and they also develop and provide various IPs. Arm, the leader in the IP market, is very likely to be acquired by Nvidia of the United States and become an American company. According to reports from SIA and BCG, the United States occupies 74% of the EDA/IP field, while China only has 3%. Although China's EDA industry has HuaDa JiuTian, ​​Prologic Electronics, and emerging EDA start-ups, its overall strength is still far from that of the United States. In terms of IP, only VeriSilicon and Imagination (a British company with Chinese background) occupy a certain share in the global market.

Chip Design

Chip design is a typical talent and intelligence intensive industry. The global chip design R&D investment accounts for 53% of the entire semiconductor R&D, which is the largest part. The R&D investment of fabless design companies generally accounts for 12-20% of their revenue, and some advanced process system-level chips account for a higher proportion of R&D. In the logic chip design market, the United States accounts for 67%, while China accounts for almost zero. In terms of memory, the United States accounts for 29% and China accounts for 7%. The rise of memory manufacturers such as Yangtze Memory, Wuhan Xinxin and Hefei Changxin will help increase China's share in this field. In terms of DAO, the United States accounts for 37% and China accounts for 7%. TI and ADI in the United States have long occupied the leading position in the global analog chip market, and it is difficult for China or other countries to shake it in the short term. China's competitiveness in power management devices is gradually increasing, and companies such as Shengbang Micro and SiRuiPu have also emerged in the analog field, but the overall revenue and technical strength cannot be compared with the United States.

Wafer manufacturing

The wafer manufacturing link accounts for 13% of the entire semiconductor industry in terms of R&D, but capital investment accounts for 64%, which is a typical capital-intensive industry. Depending on the complexity of the chip product, the wafer manufacturing process involves 400-1400 process steps. The total investment of TSMC and Samsung's planned new 5nm process wafer fabs is close to US$20 billion. Such a huge investment has deterred many countries and companies. You should know that the cost of building a most advanced aircraft carrier is only US$13 billion, while the cost of building a new nuclear power plant is only US$4-8 billion. The most advanced process wafer foundry manufacturers such as TSMC and Samsung have annual capital expenditures accounting for 30-40% of their revenue. 100% of 7nm process and more advanced wafer fabs are in East Asia, all in the hands of TSMC and Samsung.

Global semiconductor manufacturing share forecast from 1990 to 2030. (Source: SIA)

In terms of overall manufacturing capacity, the United States accounts for 12% of the world's total, while China accounts for 16%. According to SIA statistics and forecasts, the United States accounted for 37% of the world's wafer manufacturing capacity in 1990, but has now fallen to 12%. If this trend continues, by 2030, the United States' semiconductor manufacturing capacity will only account for 10% of the world's total capacity. During the same period, China's capacity has been rising, from nearly zero in 1990 to 3% in 2000, to 16% today, and is expected to reach 24% by 2030. In view of this grim reality, the US government has begun to allocate funds to strongly support American companies and foreign companies to build wafer fabs in the United States. At the same time, China's growth in wafer manufacturing, especially the production of processes below 14nm, has been curbed through means such as technology export restrictions.

Manufacturing equipment and materials

The semiconductor manufacturing process uses more than 50 different types of complex wafer handling and testing equipment. Lithography tools represent one of the largest capital expenditures for wafer manufacturers and determine the level of sophistication of chips that a fab can produce. Advanced lithography equipment, especially those using extreme ultraviolet (EUV) technology, is necessary to produce chips at 7 nanometers and below, and a single EUV machine costs as much as $150 million. Developing and manufacturing this advanced, high-precision manufacturing equipment requires significant investment in research and development. Semiconductor equipment manufacturers typically spend 10-15% of their revenue on technology and product research and development. The overall level of research and development for semiconductor equipment manufacturers is 9%, accounting for about 11% of the value of the entire semiconductor industry.

In the field of semiconductor manufacturing equipment, the United States accounts for 41%, represented by LAM (Lam Research), AMAT (Applied Materials) and KLA (KLA-Tian Semiconductor). China accounts for only 5%, represented by SMIC and NAURA. China's largest foundry, SMIC, has been obstructed by the US government in purchasing ASML EUV lithography machines, causing China's R&D and production of advanced processes below 14nm to lag behind.

In addition, semiconductor manufacturing also relies on specialized materials to process and handle wafers. The semiconductor manufacturing process involves up to 300 different materials, many of which require advanced technology and equipment to produce. For example, the purity of polysilicon ingots used to make wafers must be 1,000 times that of solar panels. The world's 300mm silicon wafers are mainly provided by five suppliers, mainly from Japan, South Korea, Germany and Taiwan. Only Shanghai Xinsheng Semiconductor can provide it in mainland China.

In the global semiconductor manufacturing materials market, the United States accounts for 11%, while China accounts for 13%.

Package Test

Packaging and testing belong to the back-end process of chip manufacturing, which mainly involves cutting the wafers completed by the wafer factory into bare chips, packaging and testing them, and finally outputting the finished chips to the chip design company. Packaging and testing manufacturers also need to invest a lot of special equipment, which generally accounts for 15% of their revenue. Although the capital and R&D investment of the back-end factory is not greater than that of the front-end wafer factory, advanced packaging technology also requires advanced equipment and process support, such as the system-in-package (SiP) process that can integrate multiple bare chips.

Packaging and testing factories are mainly concentrated in mainland China and Taiwan, and there are also some new packaging and testing factory facilities in Southeast Asia. In this field, China accounts for 38%, while the United States only accounts for 2%.

U.S. Semiconductor Manufacturing Revitalization Plan

According to rough statistics from ASPENCORE analysts, there are currently 94 wafer fabs in the United States, mainly located in Austin and Dallas, Texas, Oregon, Arizona, New Mexico, California, Massachusetts and New York. American companies with wafer fabs include Intel, TI, ADI, ON Semiconductor, GlobalFoundries, Micron, Microship, Qorvo and Skyworks. In addition, international manufacturers such as TSMC, Samsung, NXP, Infineon, Renesas, Rohm and Jetta Semiconductor also operate their own wafer fabs in the United States.

However, the US semiconductor leaders Intel and GlobalFoundries have clearly fallen behind TSMC and Samsung in the advanced process competition. Coupled with the rise of Chinese semiconductors in recent years, the US government has felt tremendous pressure. Recently, the US Congress passed a $52 billion semiconductor subsidy proposal, which will greatly promote the production and research and development of US semiconductors within five years. The proposal includes $39 billion in semiconductor production and research and development funds, as well as $10.5 billion in project implementation funds, mainly for the National Semiconductor Technology Center, the National Advanced Packaging Manufacturing Project and other research and development projects.

The US government's special funds are expected to leverage a total of $150 billion in government, corporate and venture capital into the US semiconductor industry. Recently, Intel, TSMC and Samsung have all announced plans to build new advanced process fabs in the United States.

China's semiconductor development plan

According to data released by the Core Thought Research Institute, the total revenue of local wafer foundries in mainland China in 2020 was 46.3 billion yuan, an increase of 6.6 billion yuan from 2019. Excluding the 1.8 billion yuan revenue of Shaoxing SMIC, Guangdong Xin Semiconductor and Ningbo SMIC, the revenue of the original seven major foundries increased by 4.8 billion yuan.

According to rough statistics from ASPENCORE's "Electronic Engineering Times" analyst team, there are currently 75 wafer fabs located in mainland China and 83 wafer fabs in Taiwan.

Since the 1980s, the Chinese government has introduced a series of policies to support the development of the semiconductor industry, including the 908 and 909 projects, Document No. 18 of the State Council, the National Major 01 Project, the 02 Project, the "National Integrated Circuit Industry Development Promotion Outline", the 13th Five-Year Plan, and the establishment of the National Integrated Circuit Phase I and II Funds.

The 14th Five-Year Plan's support for the semiconductor industry is mainly reflected in the following aspects:

• Advanced process . Accelerate the development of advanced processes and promote the large-scale mass production of 14nm, 7nm and even more advanced manufacturing processes. At present, China is still in a catching-up state in advanced processes. Strong market demand and capital promotion will promote the steady progress of the processes of Chinese local wafer manufacturers. Chinese local wafer manufacturers include professional wafer foundry manufacturers such as SMIC, China Resources Microelectronics, Huahong Semiconductor, and IDM manufacturers such as Silan Microelectronics, Wuhan Changcun and Hefei Changxin. In addition, international manufacturers also have many wafer fabs in China, such as Intel, Infineon, etc. In recent years, TSMC (Nanjing), Samsung (Xi'an) and SK Hynix (Wuxi) have also built advanced wafer fabs, which has led to the improvement of relevant domestic technical talents, equipment and materials.

• High-end IC design and advanced packaging . The 14th Five-Year Plan will focus on supporting and guiding memory chips, embedded MPUs, DSPs, APs, analog chips, and high-end power devices, and will be committed to solving bottleneck problems in these key areas. In addition, advanced packaging of logic chips and packaging of power devices will be the focus of efforts.

• Key equipment and materials . In the semiconductor special equipment market, international giants have a high market share, especially in lithography machines, testing equipment, ion implantation equipment, etc., where they have a monopoly, and they have taken intellectual property protection measures in most technical fields. Therefore, the technical barriers in the semiconductor special equipment industry are very high. At present, North Huachuang, the largest semiconductor equipment company in China in terms of revenue, accounts for less than 1% of the global equipment share, and localization is urgent; more than 95% of the photoresist market is also in the hands of overseas manufacturers. The 14th Five-Year Plan will provide special support for some key "neck" equipment and materials, such as lithography machines, large silicon wafers, photoresists, etc.

• The third generation of semiconductors . The domestic and foreign SiC industry chain mainly includes upstream SiC wafers and epitaxy → intermediate power device manufacturing (including the three links of traditional IC design → manufacturing → packaging) → downstream industrial control, new energy vehicles, photovoltaic wind power and other applications. At present, the upstream wafers are basically monopolized by American manufacturers such as CREE and II-VI. Domestically, SiC wafer manufacturers Shandong Tianyue and Tianke Heda can already supply 2-inch to 6-inch single crystal substrates; SiC epitaxial wafers include Xiamen Hantian Tiancheng and Dongguan Tianyu, which can produce 2-inch to 6-inch SiC epitaxial wafers. The gap between the third generation of semiconductors at home and abroad is relatively small, and many excellent companies have emerged in the domestic industry chain from upstream to downstream. The third generation of semiconductors is written into the 14th Five-Year Plan. It is expected that domestic manufacturers in this field will be in a state of vigorous development in the next five years.

Appendix: Distribution chart of wafer fabs in the United States and mainland China.

Domestic wafer fab distribution map of China and the United States (produced by ASPENCORE Electronic Engineering Album)

Distribution map of wafer factories in the United States (produced by ASPENCORE Electronic Engineering Album)

China wafer fab distribution map (produced by ASPENCORE Electronic Engineering Journal)

Global high-tech companies' wafer fab competition (Produced by Electronic Engineering Times)

Competition among wafer fabs around the world (Produced by Electronic Engineering Times)