Market Intelligence & Consulting Institute http://www.marketresearch.com/Market Intelligence- v3289/ Publisher Sample Phone: 800.298.5699 (US) or +1.240.747.3093 or +1.240.747.3093 (Int'l) Hours: Monday - Thursday: 5:30am - 6:30pm EST Fridays: 5:30am - 5:30pm EST Sample Development of Chinese and Taiwanese Semiconductor Industry’s Major Sectors, 2014 and Beyond Symposium Industry Intelligence Programs Document Code: SVSYM14110501 Publication Date: November 2014 © Copyright 2014 Market Intelligence & Consulting Institute, a division of Institute for Information Industry. All rights reserved. Symposium Abstract Although Taiwan’s semiconductor industry still remains ahead of China in terms of shipment value and technology development, China has been catching up fast, with an aim to beef up the industry with a series of governmental preferential and incentive policies to attract foreign investors With massive funding and aggressive talent poaching strategies, China has brought a negative impact on Taiwan’s fabless IC design industry where IC designers are most needed Presently, China and Taiwan have competed fiercely in the mobile communications domain and thus Taiwanese companies have been looking for international cooperation chances while increasing integration and R&D capabilities for high-end products to maintain edge Other than looking into the Chinese domestic market domains with high potential (mobile communications and telematics), Taiwan’s fabless IC design houses also have been trying to tap the demand in emerging markets and domains (such as medicine, IoT and sensor) so as to reduce dependenceAvailable on China Only for Paid User As with IC manufacturing, China has been cooperating with international brands in advanced manufacturing processes in the hope of revving up its fabless IC design industry; by streamlining its IC manufacturing technologies and capacities, China aims to provide one-stop service solutions after filling the back-end packaging and testing service gap Taiwan’s IC manufacturing and packaging & testing vendors still outperform Chinese counterparts but China is expanding fast; for this reason, Taiwanese packaging and testing vendors have been accelerating its pace to advance into high-end packaging and testing services so as to obtain orders from Chinese wafer foundries one step ahead of their Chinese counterparts Industry Intelligence Programs Page 1 © 2014 Market Intelligence & Consulting Institute Symposium Contents Key Developments of the Semiconductor Industry in China and Taiwan Major Battlegrounds Between the Chinese and Taiwanese Semiconductor Industries China’s Incentive Policies for the Semiconductor Industry and Their Consequences Industry Intelligence Programs Page 2 © 2014 Market Intelligence & Consulting Institute The Chinese Semiconductor Industry Symposium Addresses More on Fabless IC Design Chinese Semiconductor Market Share Taiwanese Semiconductor Share by by Industry Sector, 2008-2013 Industry Sector, 2008-2013 100% 100% 90% 90% 24% 22% 22% 23% 23% 20% 80% 44% 44% 80% 50% 45% 50% 48% 70% 70% 60% 60% 46% 50% Available Only 50% 49% 51% 49% 50% 54% 24% Available Only for 40% 31% 31% 22% 23% 40% 32% 30% for Paid User 30% Paid User 20% 20% 32% 24% 25% 27% 29% 27% 31% 27% 28% 27% 10% 19% 10% 26% 0% 0% 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 IC Packaging and Testing IC Manufacturing IC Design IC Packaging and Testing IC Manufacturing IC Design Source: CSIA (China Semiconductor Industry Association), MIC, October 2014 The differences between the Chinese and Taiwanese semiconductor industry remain significant; with its dominance in IC manufacturing, Taiwan has relied heavily on the semiconductor industry as its major source of revenue; on contrary, China relies more on the joint ventures between international brands and Chinese local brands and packaging and testing services are major source of revenues for Chinese semiconductor industry Fuelled byAvailable the government’s preferential Only policy, Chinese for fabless Paid IC design housesUser ‘ share has been increasing and reached over 30% in 2013 Industry Intelligence Programs Page 3 © 2014 Market Intelligence & Consulting Institute Symposium Chinese Fabless IC Design Industry Grows Rapidly 2013 Chinese IC Design House Ranking Chinese vs. Taiwanese IC Design House Shipment Value and Annual Their Global Share, 2007 - 2014 Company Revenue Major Deliverables (US$ Mln) 20 USD (Billion) 25% Communications ASIC, mobile phone Hisilicon 1,355 baseband ICs, digital video decoders 16 20% Spreadtrum 1,050 Mobile phone baseband ICs 12 15% Mobile phone ICs, smart cards, Datang Semi. 396 automotive electronic ICs 8 Available Only10% 4 5% RDA Micro. 380 Communications ICs, wireless ICs AvailableSecurity Only ICs, smart meters, for optical fiber 0 0% Nari Smartchip 350 for Paid User2014 network 2007 2008 2009 2010 2011 2012 2013 (e) GalaxyCore 300 CMOS image sensor Taiwan's Fabless IC 12.2 11.3 11.6 14.0 13.5 14.1 15.7 17.5 Paid User China's Fabless IC 3.0 3.4 4.0 5.7 8.1 9.8 12.5 15.0 Rockchip 300 Application processor Taiwan's Global Share 22.7% 20.4% 21.2% 20.3% 18.2% 18.2% 18.7% 18.8% China's Global Share 5.5% 6.1% 7.2% 8.2% 10.9% 12.6% 14.9% 16.1% Silan 293 Digital audio processor IC, MCU, PMU Source: CSIA, compiled by MIC, September 2014 SDIC 291 PMU, smart card Allwinner 260 Application processor Leveraging China’s subsidization for fabless IC design, some IC design houses have been able to see a rise in market share at the cost of profits as they can use government’s subsidies to make up losses, while increasing the adoption share of China-made component at the terminal end The new no.18 document sets up a dedicated funds for semiconductor R&D that after MIIT acknowledges that the IC development is relatedAvailable to emerging industries, R&Donly funds will for be given unconditionally;Paid User companies like Rockchip, Nufront, and Allwinner have obtained funds from the government to obtain the latest IP licenses, thereby narrowing down the technology gap with international brands Industry Intelligence Programs Page 4 © 2014 Market Intelligence & Consulting Institute Taiwan Sustains Leading Position with Symposium Edge in Advanced IC Manufacturing Shipment Value of Taiwanese and Chinese Manufacturing Industry, 2007-2013 2013 Chinese IC Manufacturer Ranking Annual 35 3.6 USD (Billion) Ratio Company Revenue Deliverables ( US$ Mln) 30 3.5 SMIC 2,070 Chinese-funded wafer foundry 3.4 25 Hynix (China) 1,600 Foreign-funded Memory 3.3 Intel (Daliang) 690 Foreign-funded IDM 20 3.2 Chinese-funded IDM/Wafer CR Microelectronics 650 15 foundry/separate parts 3.1 Available only Taiwanese-funded wafer 10 TSMC (China) 585 3.0 foundry Available Chineseonly- and Japanese for-funded 5 Huahong NEC 580 for Paid User2.9 IDM/wafer foundry 0 2.8 2007 2008 2009 2010 2011 2012 2013 Xi’an XIGU Micro.Paid 260 UserChinese-funded IDM Taiwan IC Taiwanese-funded wafer 22.4 20.6 17.4 25.9 24.3 26.3 32.6 HJTC (Suzhou) 230 Manufacturing foundry China IC Sino- 6.6 6.5 5.6 7.4 7.1 8.3 9.9 210 Chinese-funded IDM Manufacturing Microelectronics Taiwan/China Ratio 3.4 3.2 3.1 3.5 3.4 3.2 3.3 ASMC 170 Chinese-funded wafer foundry Source: CSIA, compiled by MIC, October 2014 The China IC manufacturing industry still trails behind Taiwan; nevertheless, as more international brands are entering China to set up plants, the Chinese IC manufacturing industry is expected to keep on growing Taiwan’s advanced manufacturing capabilities still allow the industry to advance China by three-folds in terms of shipment value; supportedAvailable by the increasing scale only of China’s industrialfor subsidies,Paid the shipment User value gap between Taiwan and China is expected to be shortened Industry Intelligence Programs Page 5 © 2014 Market Intelligence & Consulting Institute Symposium SMIC Still Trailing Behind TSMC and UMC Process Development Roadmap of Major Chinese and Taiwanese Wafer Foundries, 2013-2015 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 TSMC 28nm 20nm 16nm UMC 40nm 28nm 14nm SMIC 40nm 28nm 14Q2 SMIC Revenue Share (by process 14Q2 UMC Revenue Share (by process 14Q2 TSMC Revenue Share (by process technology） technology) 0.25um and above technology) 0.25/0.35um 40/45nm 5% 13% 5% 0.25um and 40nm and 0.15 above below /0.18um 15% 22% 14% 0.15/0.18um 0.15/0.18um 28nm 55/65nm 13% 0.11/0.13um 90nm 40% 37% 26% 3% 7% 0.11/0.13um 13% 65nm 65nm 0.13um 90nm 31% 15% 12% 4% 90nm 40/45nm 6% 19% Source: respective companies, compiled by MIC, October 2014 Digital Logic RF e-NVM FSI CIS PMIC Others In the short turn, SMIC still focus on 40nm Available◎ ◎ Only for Paidproduct User differentiation strategy; 65nm/ 55 nm ◎ ◎ ◎ presently, 90nm technology remains mainstream while expanding its 90nm ◎ ◎ ◎ Shenzhen and Shanghai fabs Less than 0.11um ◎ ◎ ◎ ◎ ◎ ◎ SMIC capitalizes existing process technologies for differentiation, receiving selected orders from outstanding IC design houses such as bankcard ICs, CMOS image sensors and e-Flash; fully controlling the local IC design houses’ orders while concentrating on 0.11um and below process technologies Other than existing product lines, SMIC also steps towards high-end process technology to jointly invest into 12” fab in Beijing with Zhongguancun Development Group and Beijing Industrial Developing Investment Mgmt. Co. and a 12” wafer bumping fab with JCET Industry Intelligence Programs Page 6 © 2014 Market Intelligence & Consulting Institute Foreign-funded IDMs Play a Key Role in Upholding the Symposium