China Poised to Take Lead in Next-Generation Power Chip Field, Analysis Shows
China’s push to bolster its advanced semiconductor chip design capabilities could position the country as the leader in next-generation power semiconductor production in the next five to 10 years, according to a recent analysis. This development presents a significant challenge for South Korea’s K-Semiconductor Belt Strategy as China strategically focuses on capturing the lead in technology.
The Korea Institute for International Economic Policy released a report titled Status of Promotion of China’s Semiconductor Localization, which highlights China’s emphasis on supporting and expanding competitiveness for next-generation power semiconductors such as silicon carbide (SiC) and gallium nitride (GaN) devices. These semiconductors are essential for applications in electric vehicles and energy storage systems (ESS).
While China faces patent barriers and technological hurdles in advanced semiconductor manufacturing, the report suggests that next-generation power semiconductors are an area where China could emerge as a leader within the next five to 10 years.
China’s focus on building up its advanced semiconductor chip design capabilities, particularly in the fabless sector, has been driven by the relatively weak level of US sanctions against the country. This strategic approach has resulted in a significant increase in the number of Chinese semiconductor fabs, which has grown by 4.1 times from 681 in 2014 to 2,810 in 2021. Additionally, fabless revenue has grown by 4.3 times during this period, reaching 451.9 billion yuan in 2021.
The report also highlights the notable characteristics of Chinese semiconductor companies. Fabless startups like Biren Technology possess the capability to design high-performance graphics processing units (GPUs). Huawei, on the other hand, is actively applying for patents in areas such as packaging, extreme ultraviolet lithography, and electronic design automation. Tech giants Alibaba, ByteDance, and Tencent have also entered the field by venturing into AI chip design.
Furthermore, China’s efforts to localize semiconductor equipment have gained momentum. The localization rate of chip equipment in China increased by 14 points in one year, reaching 35% in 2021. Companies like Naura Technology and AMEC have rapidly acquired technology through government investment support, significantly increasing their localization rates in areas such as etching, thin films, and deposition.
However, despite these advancements, China still lags behind global leaders in semiconductor manufacturing competitiveness. The country faces a two-year lag for NAND flash memories and a five-year lag for DRAM. As of 2021, the localization rate for central processing units (CPUs), DRAM, and NAND flash remains in the single digits.
In conclusion, China’s pursuit of becoming a leader in next-generation power semiconductors poses a challenge for other players in the industry. With its focus on strengthening semiconductor chip design capabilities and investing in advanced technology, China is poised to make significant strides in the field. However, it still faces hurdles in catching up with global leaders in terms of manufacturing competitiveness. The coming years will determine whether China’s efforts will propel it to the forefront of the next-generation power chip field.
