Chinese integrated circuit industry sees steady growth

The Chinese integrated circuit industry will enter a new development stage by tapping the domestic market more and seeking deeper integration with other strategic emerging industries, industry experts said.

Liu Dai, rotating chairman of China Semiconductor Industry Association, said at the 2019 China Semiconductor Packaging and Test Seminar held in Wuxi in East China's Jiangsu province that the Chinese IC industry has registered steady growth over the past few years as its scale and competitiveness increased.

Statistics from the association showed that the Chinese IC industry's total sales revenue surged 20.7 percent year-on-year to reach 653.2 billion yuan ($91.7 billion) in 2018, while the global IC industry's annual growth rate last year contracted by 13.7 percent.

The packaging companies specifically reported total sales revenue of 196.6 billion yuan last year, up 8.2 percent from a year earlier, the association said. These companies make wafers into independent computer chips.

Up to 33.6 percent of Chinese IC companies specialize in packaging. This ratio, which is in line with the global average, indicated that the structure of the Chinese IC industry is being optimized, said Liu.

But he also pointed out that only 20 percent of the domestic demand for IC products and services have been met by the Chinese IC companies. More effort can be made to cater to booming domestic demand, which in turn will become another growth engine for the Chinese IC companies, he said.

Ye Tianchun, director of the Institute of Microelectronics at the Chinese Academy of Sciences, agreed that the packaging sector of the IC industry is the area where China has taken the lead worldwide, as three Chinese packaging companies entered the latest world top 10 list compiled by market consultancy Gartner.

Ye suggested that Chinese IC packaging companies build closer ties with their users such as by participating in the design of new products. Only in this way can companies move up the value chain and increase their gross profit. Their parts production as well as research and development in new materials should be improved, he said.

"There should be a number of Chinese packaging companies throughout the supply chain whose market value comes in at multi-billion dollars each, so China can truly take the upper hand in the packaging sector," he said.

Ding Wenwu, president of the National IC Industry Development Fund Co Ltd, said the integration of different industries is the right path to take for the Chinese IC industry.

As China has been making strides in the development of 5G, artificial intelligence, internet of cars, big data and cloud computing, Chinese IC companies should team up with firms specializing in these emerging industries to take advantage of their opportunities.