Recently, IC insights, a research organization, released a report on China forecast to fall far short of its “made in China 2025” goals for IC. In this report, the company predicted that the integrated circuits produced in China will only account for 19.4% of its integrated circuit market in 2025, which is far from the goal of achieving 70% self-sufficiency rate by 2025. This report also implies that China will not achieve the goal of 70% IC self-sufficiency rate by 2025.
China has been the world’s largest consumer of integrated circuits since 2005. In view of this, the State Council of China put forward the made in China 2025 plan in may2015, in which the strategic goal of the IC industry is to achieve a self-sufficiency rate of 40% by 2020 and 70% by 2025.
In 2019, the value of the global IC market in Chinese Mainland was about US $125billion, while the value of IC manufactured in mainland China was only US $19.5 billion, so the self-sufficiency rate was 15.7%.
IC insights will release a new McClean report in 2021 — a complete analysis and forecast of the integrated circuit industry later this month. Part of the new report will study the integrated circuit market by region, and analyze and forecast China’s integrated circuit market by product type by 2025.
There should be a very clear difference between China’s IC market and China’s local IC production. As IC insights often says, although China has become the largest IC consumer since 2005, this does not mean that China’s domestic IC output will immediately increase significantly. As shown in Figure 1, it predicts that China’s IC output will account for 15.9% of its $143.4 billion IC market in 2020, up from 10.2% in 2010 10 years ago. In addition, IC insights predicts that this share will increase by 3.5 percentage points from 2020 to 19.4% by 2025 (an average annual increase of 0.7 percentage points).
Among the $22.7 billion worth of IC made in China last year, Chinese headquarters enterprises produced only $8.3 billion (36.5%), accounting for only 5.9% of China’s $143.4 billion IC market. TSMC, SK Hynix, Samsung, Intel, liandian and other foreign-funded enterprises with IC wafer factories in China have produced the rest of their products. IC insights estimates that about $2.3 billion of the $8.3 billion IC produced by domestic enterprises in China comes from IDM, and $6billion comes from pure play foundries such as SMIC.
If, as predicted by IC insights, China’s domestic IC manufacturing will rise to US $43.2 billion in 2025, China’s domestic IC output will still account for only 7.5% of the total global IC market of US $577.9 billion in 2025. Even with the substantial price increase of some IC sales of Chinese manufacturers (many Chinese IC manufacturers sell their ICs to the company’s OEM, and then sell these products to electronic system manufacturers), Chinese IC production may still account for only about 10% of the global IC market in 2025.
According to the report, at present, China’s IC output is expected to show a very strong compound growth rate from 2020 to 2025, reaching 13.7%. However, considering that China’s domestic IC output was only US $22.7 billion last year, the starting point for this growth is relatively small. In 2020, SK Hynix, Samsung, Intel, TSMC and liandian are the major foreign IC manufacturers with a large number of IC production in China.
The report points out that even though Chinese memory start-ups Changjiang storage and Hefei Changxin have new IC manufacturing capabilities, IC insights believes that foreign companies will become an important part of China’s future IC production base. Therefore, IC insights predicts that in 2025, more than 50% of China’s IC output will come from SK Hynix, Samsung, TSMC, liandian and other foreign-funded enterprises with wafer factories in China.
How do you view the prediction of IC insights?
From the IC Insights report, the so-called Chinese IC in the report refers to the IC products manufactured by Chinese local fabs, but it does not count the output value of local fabless companies!
According to the report of Professor weishaojun on iccad2020 just concluded, the sales of China’s design industry in 2020 is expected to be 381.94 billion yuan in 2020, an increase of 23.8% over the 308.49 billion yuan in 2019, and an increase of 4.1 percentage points over the 19.7% of the previous year. According to the exchange rate of 1:6.8 between us dollar and RMB, the annual sales volume is about US $56.17 billion, which is expected to account for nearly 13% of the global sales revenue of integrated circuit products. This figure is much higher than the prediction of in eyes.
Moreover, with the attention of the whole Chinese people to the IC design industry, China’s IC design industry will maintain rapid growth in the future. If the annual growth rate is 20%, China’s IC design industry will reach $139billion by 2025. According to the prediction of IC insights, China’s IC market will reach $223billion by then, which means that China’s IC self-sufficiency rate will reach 62%, which is very close to the goal of 70%. Note, This is only calculated based on the annual growth rate of 20%. In fact, the growth rate may be higher than this value. For example, the domestic IC sales in 2020 will increase by 23% compared with that in 2019! If this growth rate is followed, by 2025, the scale of China’s IC design industry will exceed US $157billion, just reaching the goal of 70% self-sufficiency rate!
Therefore, I personally believe that IC insights’ prediction is inaccurate. As long as local IC continues to maintain its current high-speed growth, it is entirely possible to achieve a 70% self-sufficiency rate by 2025!
come on. Chinese IC people!
Don’t listen to others for nothing!
Editor in charge: Tzh