For the second year in a row, SIA: 's share of global chip sales in mainland China surpassed that of Taiwan and approached Europe and Japan.

According to a commentary published by (SIA), an American semiconductor industry association, on January 10, 2022, the global chip sales of mainland Chinese companies are growing, mainly due to the competitive situation between China and the United States and the efforts of mainland China to promote the development of the chip industry, including government subsidies, procurement concessions and other preferential policies.

Just five years ago, semiconductor device sales in mainland China were $13 billion, accounting for only 3.8 per cent of global chip sales. However, according to the analysis of SIA, the semiconductor industry in mainland China achieved an unprecedented annual growth rate of 30.6% in 2020, with total annual sales reaching US $39.8 billion. The jump in growth helped China occupy 9 per cent of the global semiconductor market in 2020, surpassing Taiwan for the second year in a row, followed by Japan and the European Union, each with a 10 per cent market share. Sales figures for 2021 have not yet been released.

If the semiconductor development in mainland China continues to maintain a strong momentum, that is, to maintain a compound annual growth rate of 30% in the next three years, and assuming that the industrial growth rate in other countries / regions remains unchanged, by 2024, the annual revenue of the semiconductor industry in mainland China may reach US $116 billion, accounting for more than 17.4% of the global market share. This will make mainland China second only to the United States and South Korea in global market share.

The number of new companies pouring into the semiconductor industry in mainland China is also staggering. In 2020, nearly 15000 mainland Chinese enterprises were registered as semiconductor enterprises. A large number of these new companies are fabless startups that specialize in GPU, EDA, FPGA, AI computing and other high-end chip designs. Many of these companies are developing advanced chips, designing and taping equipment on cutting-edge process nodes. Sales of high-end logic devices in mainland China are also accelerating, with revenues from the mainland's CPU, GPU and FPGA divisions growing at 128 per cent a year to nearly $1 billion by 2020, up from a meagre $60 million in 2015.

Semiconductor enterprises in mainland China achieve strong growth

According to SIA's analysis, revenue in all four subsectors of China's semiconductor supply chain-fab-free, IDM, foundry and OSAT-- mainland China-recorded rapid growth last year, with annual growth rates of 36 per cent, 23 per cent, 32 per cent and 23 per cent, respectively. Leading semiconductor companies in mainland China are expected to expand domestically and globally in multiple sub-markets.

SIA analysis further shows that China's market share in the global wafer-free semiconductor sector reached 16 per cent in 2020, ranking third, second only to the US and Taiwan, up from 10 per cent in 2015. Hayes Semiconductor, owned by Huawei, the largest chip designer in mainland China, generated nearly $10 billion in revenue in 2020, thanks to China's huge consumer market and 5G market. Other Chinese fabless companies, such as Ziguang Zhanrui, a communications chip supplier, Zhaoyi Innovation, a MCU and NOR flash memory designer, Huiting Technology, a fingerprint chip company, and image sensor designers Geke Microelectronics and Howwe Technology, a US-based company acquired by China, have all reported annual growth rates of 20-40 per cent, making them the top fab companies in mainland China. In addition, in addition to supplying OEM in mainland China, Zhaoyi Innovation, Howie Technology and Huiding Technology have entered the supply chain of the top three smartphone manufacturers in the world.

At the same time, OEM of consumer electronics and household appliances in mainland China, as well as leading Internet companies, have also stepped up their expansion into the semiconductor sector by designing chips internally and investing in established semiconductor companies, and have made remarkable progress in designing advanced chips and establishing domestic supply chains in the past two years.

Chip manufacturing in mainland China continues to expand

Mainland China has also maintained strong growth in building its semiconductor manufacturing supply chain, announcing 28 new fab construction projects in 2021 with a total planned funding of US $26 billion.

In terms of chip manufacturing, the semiconductor industry in mainland China has largely suspended the development of advanced logic node manufacturing and shifted most of its funds to mature process manufacturing technologies as Huawei and others have been included in the US government's entity list. As a result of this change, from September 2020 to November 2021, Chinese mainland wafer manufacturers have increased their wafer (WPM) production capacity by nearly 500000 wafers per month on mature process nodes (> = 14nm), while only 10, 000 wafers on advanced nodes. China alone accounts for 26% of the world's wafer capacity growth. In 2021, mainland China also began commercial shipments of domestic mobile phone 19nm DDR4 DRAM devices and 64-layer 3D NAND flash memory chips. Although China's memory industry is still in its early stages of development, Chinese memory enterprises are expected to achieve a compound annual growth rate of 40-50% and be highly competitive in the next five years. In back-end production, China is a global leader in outsourced assembly, packaging and testing of (OSAT), with its three major OSAT vendors accounting for more than 35 per cent of the global market.

There are signs that the rapid growth in sales of semiconductor chips in mainland China is likely to continue, thanks in large part to the unwavering commitment of the central government and strong policy support in the face of competition between China and the United States. Although mainland China still has a long way to go to catch up with existing industry leaders-particularly in advanced node manufacturing, equipment and materials-the gap is expected to narrow over the next decade.