ANALYST THURSDAY – CHINA’S SEMICONDUCTOR INDUSTRY RISES AS A GLOBAL CHALLENGER

In the last few decades, the Chinese semiconductor industry has undergone a remarkable transformation, evolving from a nascent player to a formidable challenger on the global stage. This journey can be attributed to several key factors, including advancements in advanced node manufacturing, an expanding memory market, the Silicon Carbide (SiC) gold race, and strategic investments in advanced packaging capacities and manufacturing equipment.

> Electrification of China automotive park is skyrocketing, with more than 20% of vehicle produced based on BEV platform.
> Chinese players are gaining market share at the SiC wafer level, and significant capacity is planned in the coming five years, targeting more than 40% of the total capacity in 2027.
> Beijing and Shanghai are the two main regions developing SiC business. More than $1.5B has been invested into SiC in China over the last months.

> Automotive ADAS/AD processor market is rapidly growing, with a CAGR of around 20% and China is eager of it.
> Tesla FSD HW4,  Apple A17, HiSilicon 9000s, advanced computing chip are providing incredible performance with advanced nodes, China wants to stay in the game.
> In a +180B dollar processor market, either in consumer, automotive or datacenter markets, China is heavily investing to reduce its dependence on foreign semiconductor technologies.

> Combined stand-alone NAND and DRAM sales to China were worth around $138B in 2022, corresponding to around 32% of overall NAND and DRAM sales worldwide.
> Chinese players are developing and adopting hybrid bonding interconnection technology as an alternative to dimensional scaling.
> DRAM-Logic Integration: logic die and DRAM die bonded together through copper-to-copper hybrid bonding to increase chip bandwidth.

> Top ten Chinese OSATs’ total revenues grew 8% from 2021 to 2022, from $11.4B to $12.2B.
> Chinese OSATs are mainly focusing on mid-end Advanced Packaging platforms and targeting high-end technologies for the future.
> Three major OSAT memory players are working with the two Chinese memory leaders to face headwinds due to the U.S. restrictions.

> Large WFE revenue growth expected in the area where China invests: mature foundry, specialty and advanced packaging/OSATs.
> In terms of technology for >28 nm production, several WFE makers can already replace international once but production capacities are limited.