China’s 2023 semiconductor industry: investments, strategy, technology, goals

November 20, 2023

China’s technological choices and investments in the semiconductor industry give clear hints on their goals.

China’s semiconductor sector is on the rise as a global contender, propelled by progress in advanced node manufacturing, a strategic foothold in the memory market, active involvement in the SiC race, a focus on advanced packaging, and substantial investments in cutting-edge manufacturing equipment.

Over the past few decades, China’s semiconductor industry has undergone a remarkable transformation, evolving from a newcomer to a global contender. This shift is attributed to advancements in advanced node manufacturing, expansion in the memory market, active participation in the Silicon Carbide (SiC) race, and strategic investments in advanced packaging and manufacturing equipment.

A pivotal driver of China’s success, as highlighted in our latest 2023 Processor Industry Report, is the significant progress in advanced node manufacturing. This involves miniaturizing semiconductor components for higher performance and energy efficiency. Chinese companies have strategically positioned themselves at the forefront of this technological wave, narrowing the gap with established players.

Recognizing the importance of keeping pace with Moore’s Law, which predicts transistor doubling every two years, China invested heavily in R&D for advanced node manufacturing. Leading companies like SMIC have made substantial strides, with the recent Huawei Mate Pro 60 featuring SMIC’s 7 nm node, signaling a comeback in the advanced node market..

The memory market has also played a crucial role, as explored in our 2023 Memory Industry Report. China strategically targeted this segment to reduce dependency on foreign suppliers. Key players, including Yangtze Memory Technologies Co. (YMTC), have invested significantly in research and development, positioning China as a potential major player in the global memory market.

China’s determination to dominate strategic semiconductor segments is evident in the Silicon Carbide (SiC) race, highlighted in our 2023 Power SiC Report. Chinese players are gaining market share, with plans for substantial capacity growth in the coming years. Companies like Cree and BYD are leading in developing SiC technologies, aiming to secure a significant share of the growing SiC market.

Advanced packaging has become a focal point, with companies like JCET emerging as key players. By integrating advanced packaging capabilities, Chinese companies deliver innovative solutions for industries like 5G, AI, and IoT, strengthening China’s position in the global semiconductor supply chain.

Despite US sanctions, China is making strides in the manufacturing equipment market, reducing reliance on foreign suppliers. This strategic move has enhanced China’s self-sufficiency and positioned it as a significant player in the global semiconductor equipment market.

In conclusion, China’s semiconductor industry’s rise is a multifaceted story, propelled by advances in manufacturing, strategic focus, and investments. As China continues to innovate and invest in these critical areas, it is poised to solidify its position and reshape the dynamics of the global semiconductor industry.