At the close of last week, the United States Department of Commerce (DoC) officially added China's Semiconductor Manufacturing International Corporation (SMIC) to its Entity List, as it expanded the scope of American sanctions against Chinese companies. The Department's rationale behind this decision was similar to the one it had cited for adding another Chinese company, Huawei Technologies Ltd., to the list, with fears of the latest tech products manufactured using American-origin technology making their way to the Chinese military being the rationale for both additions.
Huawei's sanctions also breathed fresh air into China's attempts of developing its own chip fabrication industry, as investors in the country channeled into the sector and the corresponding valuations and costs went up. Now, with the year coming to an end, data compiled from the Chinese data repository Tianyancha by Sina Technology reveals the growth that the sector in China witnessed this year.
Roughly One-Half Of Chinese Chip Firms Based Out Of South Chinese Coastal Province Of Guangdong Reveals Data
The data reveals that as of this week, there are roughly 244,000 Chinese firms registered under the semiconductor sector. In an industry where advancements in a handful of sub-sectors, such as lithography and materials, drives innovation as a whole, the bulk (85%) of China's quarter-of-a-million firms are located in the information transmission, software and information technology services, wholesale and scientific research sectors.
This industry is also concentrated in China's Guangdong province, with 108,000 or 44.59% of all the firms located there. In terms of capital invested, a little more than one-fifth (22%) of the firms have registered capital that exceeds 10 million Chinese Yuan, or roughly $1.5 million. Another 17% have capital that ranges between 5 million Yuan and 10 million Yuan.
Inidicating the effect of the U.S. sanction, Tianyancha's data reveals that roughly a quarter of the total firms were new additions. According to the details, roughy 60,000 new companies were set up this year, for a 22% year-over-year increase, and out of all the firms in the sector, 20,000 hold patents of their own.
While its chip industry continues to grow, China still needs key manufacturing facilities dubbed foundries to efficiently churn out chips that can compete with those manufactured by the Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics' chip arm Samsung Foundry.
One such foundry, the Wuhan Hongxin Semiconductor Company (HSMC) was officially taken over by local authorities as it failed to generate the required capital for setting up its facilities. This came after the delays caused construction for HSMC's chipmaking facility in the infamous Wuhan province of China to stop, as the subcontractors responsible for construction were not paid their dues.
HSMC's former chief, Dr. Shang-yi Chiang created quite a bit of stir when he joined SMIC last week. Dr. Chiang, an important figure in the East Asian chip landscape, has worked previously at both TSMC and Samsung, and his arrival at SMIC caused the firm's co-chief executive officer Mr. Mong-song Liang to resign from his role.
Currently, some of the bottlenecks that Chinese firms such as SMIC face when catching up to their international rivals include segments such as lithography machines and chemicals required during the chip making process. TSMC and Samsung are both using Dutch firm ASML's Extreme Ultraviolet (EUV) lithography machines to manufacture their products, with American firm Intel Corporation also having incorporated the machines in its production processes. These machines use light with a much smaller wavelength over their predecessors (the ones currently available to firms such as SMIC) and therefore reduce the number of interactive steps required for printing the chip circuits, which are often as small as nanometers.
The post China Adds 60,000 New Chip Firms In 2020 For 22% Annual Growth Reveals Data by Ramish Zafar appeared first on Wccftech.
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