China's soaring chip production capacity has attracted global attention
The rapid development of China's chip industry has attracted global attention in recent years. The latest data shows that in the 2023 quarter, the total output of chips in Chinese mainland increased by 40% year-on-year to 98.1 billion. This astonishing figure has once again sparked heated discussions about concerns about the "overcapacity" of China's chips.
In 2023, China's chip production capacity will reach 90 million wafers, accounting for nearly one-third of the global chip production capacity, ranking first in the world. The rapid rise in China's chip production capacity has had a profound impact on the global chip market, resulting in the dilemma that American chip companies have nowhere to sell their production capacity and have to cut prices significantly. However, due to the high cost performance of Chinese chips, it is still difficult for American chip companies to occupy an advantage in the price war.
Some foreign media have called China's large-scale efforts to enhance chip self-sufficiency a "suicidal attack", believing that it will pose a major impact on the US chip industry. An American expert predicts that by 2027, China's mature wafer production capacity will account for 39% of the world's total, and will become the leading force in the global chip industry.
We need to look at the situation calmly. Most of the chips produced in China are low-end products, and in 2022, Chinese chips accounted for only 5.7% of the global chip value. However, the value of chips produced by China's local chip companies has exceeded that of foreign-funded enterprises, showing the rapid development potential of China's local chip industry.
Challenges and opportunities for China's chip industry
Although China's chip industry has made great progress, there are still some gaps and deficiencies compared with the international advanced level.
In the field of chip design and manufacturing, most Chinese companies are in the middle and low end, and only a few companies such as Huawei HiSilicon and SMIC can benchmark with international leaders. From the perspective of manufacturing technology, China has finally achieved 14nm mass production, but it may take 5-10 years or more to develop to the most advanced international level such as 5nm and 3nm.
In the field of chip equipment, compared with international giants, Chinese enterprises have seriously insufficient R&D investment. Taking China Micro Semiconductor as an example, the cumulative R&D investment in three years is only 150 million US dollars, which is far lower than the annual investment of more than 1 billion US dollars by international giants. The gap in financial strength directly restricts the innovation ability of Chinese enterprises.
The shortage of talents is also a bottleneck restricting the development of China's chip industry. According to statistics, there are only about 100,000 talents engaged in chip design in Chinese mainland, while there are 500,000 in the United States. High-end chip talents are even more scarce, and it is difficult for Chinese companies to introduce them from the international market on a large scale.
Opportunities are also being born. China's huge chip market demand will provide a broad space for domestic chip companies. The continuous injection of funds and policy support from the National Fund will further stimulate the vitality of the industry. With the vigorous development of emerging fields such as 5G and artificial intelligence, the demand for chips will further expand, which will undoubtedly promote the innovation and upgrading of China's chip industry.
The future development prospects of China's chip industry
China's chip industry will continue to maintain rapid growth. According to the forecast of the Industry Research Institute, by 2025, the sales revenue of China's chip industry will exceed 1.6 trillion yuan, with an average annual compound growth rate of 16.1%.
This growth was mainly due to the continued expansion of the downstream application market. The demand for chips in emerging fields such as 5G communications, Internet of Things, artificial intelligence, and big data will become an important driving force for industrial development. Taking 5G communication as an example, it is expected that by 2025, China's 5G terminal shipments will exceed 700 million units, and the demand for chips will increase significantly.
The strong support of national policies will also give wings to China's chip industry. In recent years, the Chinese government has introduced a series of supportive policies, including the establishment of large funds, the improvement of tax incentives, and the increase of R&D investment, which have created a good development environment for chip companies.
The development of China's chip industry has not been smooth. Problems such as talent shortage and lack of core technology still restrict industrial upgrading. Cultivating high-end talents, increasing investment in basic research, and strengthening international cooperation will become the key to China's chip industry to achieve corner overtaking.
With the strong support of national policies and the continuous pull of market demand, the development prospects of China's chip industry are very bright. It is believed that through unremitting efforts, China will be able to win greater breakthroughs in this strategic emerging industry.