China's Semiconductor Industry study in 2005

According to China Semiconductor Industry Association, there were about 50 wafer manufactories, 102 IC packaging and IC assembly factories, and 457 IC design houses by the end of 2004. The output value of China�s semiconductor industry was 36.4 billion Yuan (about $4.4 billion) in 2004, among which, packaging accounted for over 50%, wafer manufacturing took 30%, while IC design below 20%. The domestic market scale of China�s semiconductor industry was over $30 billion in 2004, and $22.5 billion of which were belong to 20 major manufacturers.

Packaging industry is the core part of China�s semiconductor industry. And the packaging enterprises in China mainland all serve foreign enterprises only. Most of the top 20 semiconductor suppliers established packaging bases in China mainland � either wholly owned, or co-established with overseas partners. The clients of the largest domestic packaging manufacturer are from overseas. Strictly speaking, there are very few native packaging enterprises in China.

According to China Semiconductor Industry Association, there were about 50 wafer manufactories, 102 IC packaging and IC assembly factories, and 457 IC design houses by the end of 2004. The output value of China�s semiconductor industry was 36.4 billion Yuan (about $4.4 billion) in 2004, among which, packaging accounted for over 50%, wafer manufacturing took 30%, while IC design below 20%. The domestic market scale of China�s semiconductor industry was over $30 billion in 2004, $22.5 billion of which belonged to 20 major manufacturers.

Packaging industry is the core part of China�s semiconductor industry. And the packaging enterprises in China mainland all serve foreign enterprises only. Most of the top 20 semiconductor suppliers established packaging bases in mainland China � either wholly owned, or co-established with overseas partners. The clients of the largest domestic packaging manufacturers are from overseas. Strictly speaking, there are very few native packaging enterprises in China.

Top 10 packaging plants of China mainland in 2004 are listed below, among which only Jiangsu Changjiang Electronics Technology Co., Ltd was invested by had mainland�s major investors.

Manufacturer Operating income of 2004(million yuan) Major capital source Business Major clients Location
Freescale (former Tianjin plant of Motorola) 8120 US Having IC packaging Freescale Tianjin
RF Micro Devices, Inc (RFMD) 2580 US Having IC packaging RFMD Beijing
Renesas Stone Semiconductor Beijing, RSSB 1858 Japan, China Having IC packaging Renesas Beijing
Intel 1600 US Having IC packaging Intel Shanghai
Nantong Fujitsu 1449 Japan, China Having IC packaging Fujitsu Nantong
STATS ChipPAC Ltd 780 Singapore Professional IC packaging SMIC, STMicroelectronics Shanghai
STS Microelectronics 769 Italy, France, China Having IC packaging STMicroelectronics Shenzhen
Jiangsu Changjiang Electronics Technology Co., Ltd 736 China Professional IC packaging SMIC,
Hangzhou Silan Microelectronics Jiangyin
Global Advanced Packaging Technology,GAPT 426 Taiwan Professional IC packaging Huahong NEC Shanghai
Infineon Technologies 391 Germany Having IC packaging Infineon Wuxi

China�s wafer plants can be divided into four groups: first, plants whose major investors are overseas Chinese, relying on the government�s support, whose technical people are mainly from TSMC, UMC, and Vanguard International Semiconductor Corporation (VIS). SMIC is a typical example of this kind. Second, joint ventures. Huahong and NEC co-invested to establish Huahong NEC, and Philips invested in Advanced Semiconductor Manufacturing Corporation Limited. The investments of these companies are mainly bank loans, and these companies mainly serve their foreign investors. Third, Taiwan-based or Taiwan invested companies. For instance, UMC for Hejian Technology is UMC. Once the policy allows it, Nanya, ProMOS Technologies, PSC will all invest in China mainland. Four, domestic investment. The investment capitals is mainly bank loans. The utilization rate of these companies production capacity is low, or cannot be put into production due to the lack of technology.

China�s wafer market has saturated, whose increase speed will slow down a lot after 2005. However, inspired by the preferential policies, there are still wafer plants being established (19 are under construction).