- China’s IC industry market is developing rapidly
Although the integrated circuit industry in mainland China started late, after nearly 20 years of rapid development, China’s integrated circuit industry has grown from nothing, from weak to strong, and has occupied a pivotal position in the global integrated circuit market. According to statistics from the China Semiconductor Industry Association, the overall sales of China’s integrated circuit industry from 2010 to 2019 have shown an overall growth trend, from 144.015 billion yuan in 2010 to 756.23 billion yuan in 2019. This is mainly due to the Internet of Things, smart cars, high-tech energy vehicles, smart terminal manufacturing, new-generation mobile communications and other downstream market demand-driven.
In 2020, China’s integrated circuit industry continued to maintain double-digit growth, with annual sales reaching 884.8 billion yuan, an increase of 17% over 2019. Among them, the sales of the design industry reached 377.84 billion yuan, a year-on-year increase of 23.3%, and it was still the fastest growing industry in the three industries, accounting for 42.7% of the overall industry; the sales of the manufacturing industry was 256.01 billion yuan, an increase of 19.1% year-on-year, accounting for The ratio was 28.9%; the sales of the packaging and testing industry was 250.95 billion yuan, a year-on-year increase of 6.8%, accounting for 28.4%.
- The market size of China’s integrated circuit packaging industry exceeded 250 billion yuan in 2020
In the development of China’s integrated circuit industry, although the packaging and testing industry does not develop as rapidly as the design and chip manufacturing industries, it has also maintained a momentum of steady growth. Especially in recent years, with the rapid growth of China’s local packaging and testing companies and the large-scale transfer of packaging and testing capabilities from foreign semiconductor companies to the country, China’s integrated circuit packaging and testing industry is full of vitality. From 2011 to 2019, the sales revenue of China’s integrated circuit packaging and testing industry showed a volatile growth. By the end of 2020, the sales revenue of China’s integrated circuit packaging and testing industry reached 250.95 billion yuan, a year-on-year increase of 6.8%.
- The competitive landscape of China’s integrated circuit packaging market: three pillars stand together
At present, the global packaging and testing industry is mainly concentrated in the Asia-Pacific region (mainly including Taiwan, South Korea, and mainland China). The output value of the packaging and testing industry in Taiwan ranks first in the world. The packaging and testing industry in Mainland China started late, but it has developed the fastest.
China’s integrated circuit packaging and testing industry clearly presents a tripartite pattern of wholly foreign-owned, Sino-foreign joint ventures and domestic capital. From the perspective of production and sales scale, most of China’s domestic IC packaging and testing companies are wholly-owned or holding companies established in China by foreign semiconductor companies. Generally speaking, domestic companies of China are still in a relatively weak position in the industry.
The manufacturing plants set up by international semiconductor companies in China have all their products sold back to their parent companies, so they are basically out of touch with the Chinese market and will not form direct competition with domestic-funded packaging and testing companies. Competition in the Chinese market is mainly concentrated between domestic-funded and domestic-funded holding companies, and business connections between domestic and foreign companies are weak.
- The technical level of China’s integrated circuit packaging and testing industry: some have reached the international advanced level
With the support of China’s major national science and technology project “Very-large-scale integrated circuit manufacturing equipment and complete processes”, the localization of packaging and testing equipment has also been rapidly promoted, and some companies have reached the international advanced level in high-end packaging technology.
On the basis of advancing advanced packaging technologies such as Bumping, Flip-chip, TSV and stacking chip packaging technologies (3D-2.5D) more mature, China’s domestic advanced packaging and testing enterprises represented by JCET Group, Tongfu Microelectronics, and Huatian Technology (HT-Tech) continue to increase the production capacity of BGA, PGA, WLP, CSP, MCM, SiP and other advanced packaging forms.
In terms of chip packaging equipment, Shanghai Micro Electronics Equipment (Group) Co., Ltd. (SMEE)’s 500 series stepper projection lithography machine has accounted for more than 80% of the domestic market share.
In addition, Tongfu Microelectronics took the lead in achieving mass production of 7nm FC products, and HT-Tech developed a 0.25mm ultra-thin fingerprint packaging process to achieve mass production of 4G PAs for radio frequency products.
- Prospect of China’s integrated circuit packaging industry
Leading global wafer manufacturing companies are gradually building factories and expanding production in China, which will bring unlimited space to Chinese packaging and testing companies. In addition, the continued strong demand for the Internet of Things, various smart terminals, automotive electronics, industrial control, wearable devices, and smart home appliances has brought strong impetus to the development of integrated circuits. This provides unlimited possibilities for China’s packaging and testing industry.
Based on the above factors and the market scale and year-on-year growth rate of the integrated circuit packaging industry in the first three quarters of 2020, China’s IC packaging market will continue to maintain rapid growth, with market share expected to exceed RMB 400 billion by 2026 and a CAGR of around 10% during 2020-2026.