2018 Outlook: A Vision for the Semiconductor Industry in China

After a year of exciting growth in 2017, industry leaders are being asked about their thoughts on what to watch for across the semiconductor industry in 2018. In particular, many eyes are on China, as the country continues to build up its local semiconductor ecosystem. Semiconductor Manufacturing China asked Dow’s Shuji Ding-Lee, Ph.D., Senior China Business Development Leader, to share her perspectives on the market in 2018 and the many opportunities in China.

Q: What should we watch for in China’s semiconductor industry in 2018, and how should companies respond to the changing market dynamics?

The semiconductor industry is expected to continue to grow at a healthy rate in 2018. There will be continued demand from smartphones, and other standard market drivers, augmented by an abundance of emerging applications including autonomous driving, the internet of things (IoT), high-performance computing, artificial intelligence, and technology options to support the sharing economy. At the same time, technology development for CMOS scaling is slowing down, making a shift towards heterogeneous integration.

These dynamics create a great opportunity for semiconductor industry growth in China, as it seeks to increase its semiconductor capacity and grow its local supply chain. The percent of IC consumption that is fulfilled domestically is still very small, but the domestic production volumes continue to rise, with China’s capacity increasing at a faster pace than anywhere else^[1]. Most of this production is in mature technology nodes, and the majority of the technology needs for new applications can be met through these existing technologies.

At the same time, the global technology slow-down offers a good time for many parts of the supply chain to invest in a solid foundation in China for the long-term. These companies can focus on developing their R&D talent, optimizing their processes for high-quality products, and implementing improved manufacturing practices.

Successful companies must position themselves to be both global and local. They must be global, because all players are competing on the world stage. And they must be local, because a local presence is the only way to truly understand and support local and differentiated needs. As China continues to increase its domestic IC supply, companies will be demonstrating their high-volume manufacturing, but they must simultaneously invest in technology and fab capabilities. 2018 is a year for players across the semiconductor industry to re-examine our long-term visions, focus strengths, and refine what we do.