China’s automotive chip series (2): Development pattern of the global chip industry chain

A chip comes from scratch and needs to go through three major links: design, wafer manufacturing and packaging testing. This is also a complete chip industry chain. There is a popular metaphor in the industry that the chip design process is like the blueprint design of a building, the wafer manufacturing is the construction and construction of the house on this basis, and the packaging and testing is to change the rough house into a finely decorated house.

In this issue, we talk about the overall development of the chip industry chain.

Upstream: chip design, IP core, core tool EDA

· Chip design

In the global chip industry chain, chip design is the most innovative and value-added link. This is also a typical technology-intensive industry. The level of chip design will directly determine the function, performance and cost of the product.

At the same time, the characteristics of high technical barriers also determine the high monopoly of the chip design industry. Overall, the United States has always been a leader in the global chip design industry. According to TrendForce data, 6 of the world's top 10 chip design companies in the second quarter of 2023 are American companies: Nvidia, Qualcomm, Broadcom, AMD, Marvell Electronics (Marvell), Core Source Systems (MPS).

Secondly, Taiwan is the second largest camp in the global chip design industry, with MediaTek, Novatek, and Realtek all in the top 10 list. Whether it is technological innovation, market share or commercial capabilities, the level of these IC design companies is far ahead.

Image source: TrendForce 

Mainland China ranks third in the world in the chip design industry, with a market share of nearly 15%. Chinese local chip design companies such as Huawei HiSilicon and Weir Semiconductor have emerged, and the strength of the well-known Unisoc, Cambrian, and Horizon should not be underestimated.

As the United States continues to catch up with China's chip blockade and domestic substitution, the gap between mainland China and the world's leading technology level in chip design is constantly narrowing. Like Huawei HiSilicon, the recent "unannounced first launch" of the Mate60 series has brought about the return of Kirin 9000S chip + 5G network, which directly triggered the topic of domestic chip self-research, heralding a major breakthrough in China's chip industry chain under the US blockade. In fact, HiSilicon has ranked as the fifth largest IC design company in the world in 2018; in 2020, the design level reached 5nm, which is at the same level as Apple and Qualcomm; in the first quarter of 2020, it surpassed Qualcomm and ranked first in the Chinese mobile phone processor market First.

Another example is Xinqing Technology, a subsidiary of Geely Holding, which is one of the few companies in the world that has launched and mass-produced 7nm car-grade smart cockpit chips ("Dragon Eagle One"). It has achieved a technological breakthrough in the field of domestic high-end automotive chips and also It verifies the possibility of the domestic chip industry becoming independent.

It should be pointed out that to design a complex chip, two cores are inseparable: IP core and EDA. They are also considered the cornerstone of the semiconductor industry.

· IP core

IP core refers to the mature design of circuit modules with independent functions in the chip, which can reduce redundant design costs, reduce errors and improve chip design efficiency. According to different design IP, the semiconductor IP market can be divided into interface IP, processor IP, memory IP and other IP.

The competitive landscape of the global semiconductor IP market has always been characterized by an oligopoly. In 2022, the world's top ten IP suppliers will account for more than 80% of the market share, 8 of which are European and American manufacturers. ARM, Synopsys, and Cadence are the three global IP core giants, accounting for more than 60% of the global market share.

VeriSilicon is the only IP manufacturer in mainland China that ranks among the top ten in the world. According to data from IPnest, in the semiconductor IP industry, VeriSilicon has a market share of 2% in 2022, ranking seventh in the world. Compared with the 41.1% market share of the leading ARM, the gap is still relatively obvious.

Image source: IPnest

Last year, the United States further implemented controls on China's chip technology exports, causing ARM to cut off the supply of high-end chip design IP to China. This move further forced China to accelerate the localization of chips.

Currently, in this field, China is placing its hope on the open source RISC-V architecture to break the original IP industry structure dominated by X86 and Arm architecture. In the automotive industry, the more streamlined RISC-V instruction set has also begun to attract industry attention. In August 2023, five chip giants, NXP, Infineon, Qualcomm, Bosch, and Nordic, jointly established a RISC-V company for the automotive electronics field. It can be seen that RISC-V's entry into automotive chips is unstoppable.

·EDA

The full name of EDA is Electronic Design Automation, which is electronic design automation software. It refers to the use of computer-aided design (CAD, etc.) software to complete the functional design, synthesis, verification, and physical design (including layout, wiring, layout, and design of very large-scale integrated circuit chips) The design method of processes such as rule checking, etc. is known as the "mother of chips". If a chip design company is compared to a building architect, then EDA tools are the "brushes" that can render complex architectural drawings quickly and with high quality.

Similar to the IP core market structure, the EDA industry has a high market concentration. Synopsys, Cadence and Siemens EDA (formerly known as Mentor Graphics) are now "three-thirds of the world". They not only occupy more than 70% of the global market share, but also capture nearly 8% of the market share. China market share.

Data source: Jiwei Consulting; Drawing: Gasgoo

The EDA products of the three international giants can already support 2nm advanced technology. The main local suppliers are Huada Jiutian, Guanglun Electronics, Guangli Microelectronics, etc. Currently, most domestic EDA can only support 28nm, 40nm, etc., and 14nm is not particularly popular. In terms of high-end EDA software, local companies are currently unable to achieve replacement, but they can already provide full-process mature process analog chip design EDA tools, and some digital chip design EDA tools are comparable to the international leading level. The current continuous improvement in China's chip self-production rate will greatly help cultivate local EDA software manufacturers.

Midstream: wafer manufacturing 

After the chip design is completed, it comes to the wafer manufacturing process, which involves wafer processing, cleaning, heat treatment, photolithography, etching, thin film deposition, interconnection, etc. This also involves the wafer foundry we often talk about. .

As a bridge between upstream chip design and downstream applications, the manufacturing link is not only the key to "stuck", but also the most expensive place. Just one factory requires tens or tens of billions of real money investment.

The global chip foundry industry is dominated by Taiwan, China. Among the world's top 10 wafer foundries, Taiwan alone accounts for 4, including TSMC, UMC, Power Semiconductor Manufacturing Co., Ltd. and World Advanced Manufacturing. Among them, TSMC’s dominance is unshakable, with more than half of the global market share and a yield rate of over 90%.

In the mainland, there are Semiconductor Manufacturing International Corp. and Hua Hong Semiconductor. The two companies are firmly among the top ten foundries in the world and are known as the "wafer foundry duo" in the mainland. In addition, Jinghe’s integration strength is also relatively excellent, ranking among the top 10 in the world many times.

Image source: TrendForce

As the fifth largest wafer foundry leader in the world and the largest in mainland China, SMIC is also the first pure wafer foundry company in mainland China to provide 28nm advanced technology. Its process covers 0.35μm~14nm, covering many fields such as smartphones, smart homes, consumer electronics, and the automotive industry.

Hua Hong Semiconductor is the second largest wafer foundry in mainland China and the sixth largest in the world. It focuses on the field of specialty processes. The process technology mainly covers 1μm to 65/55nm. Not long ago, it also created the largest IPO of the year on the Science and Technology Innovation Board. Huahong is not only the largest MCU manufacturing foundry in mainland China, but also the largest power IC foundry in the world. It also has 8-inch and 12-inch power device foundry capabilities. As the new energy vehicle market is growing rapidly, Huahong's automotive business is also rising.

When talking about wafer foundry, we have to talk about the process node, that is, the transistor size. The smaller the process node, the higher the chip integration, which means the chip has stronger performance and lower power consumption. At present, the world's most advanced process node has broken through to 3nm. TSMC and Samsung are the only two foundries in the world that have reached this step first, and both are developing 2nm processes, with mass production planned around 2025.

In comparison, mainland China has a large gap in this regard, but it is also accelerating to catch up. According to official disclosures, SMIC has established 14nm FinFET technology in advanced processes, which also represents the most advanced process level in mainland China. However, under the current international situation, due to the high reliance on overseas suppliers such as the United States, Europe and Japan for equipment and auxiliary materials, SMIC's 14nm chip project has been "off the shelf" and may be seeking new technological breakthroughs.