Mainland China’s wafer foundry market demand will recover in 2024

Today, China’s high-end semiconductor think tank Xinmo Research released the 2024 China Semiconductor Market and Industry Outlook Report.

The report predicts that in 2024, the chip industry in mainland China (note: the article only covers data from mainland China) will turn from a cyclical trough to growth, with an increase of 12%; it is expected that in 2024, mainland China’s wafer foundry market demand will generally recover to improve, with an increase of 9 %; Mainland China’s semiconductor equipment is expected to continue to grow in 2024, with an increase of 9.6%.

Specifically, in terms of the chip industry, the agency predicts that chip sales revenue in mainland China will increase by 12% in 2024, reaching US$61.4 billion.

From the perspective of China’s application market, the revenue of each application market in China will grow to varying degrees in 2024. Among them, the report predicts that the automotive-related IGBT chips and modules/SiC chips and modules, power ICs, MCUs, discrete devices and other chip markets will maintain growth. It is expected that China’s automotive chip revenue will increase by 21% in 2024, reaching US$8.6 billion; It is expected that photovoltaic cell output will grow at a rapid rate of 35% in 2024, and China’s industrial electronic chip revenue will increase by 19% in 2024, reaching US$11.1 billion; in 2024, mobile phone-related CIS, radio frequency front-end chips, power IC, discrete devices, wireless The demand and price of connectivity and other chips have recovered to a certain extent.

Mainland China’s communication chip market revenue is expected to increase by 8% in 2024, reaching US$16.6 billion; the total revenue of China’s consumer electronics-related IGBT modules, MCUs, power ICs, discrete devices, wireless connection and other chips is expected to increase in 2024 7%, reaching US$12.9 billion.

In addition, the report also predicts that PC production in mainland China will decline by 8% in 2024. However, driven by commercial and innovative markets such as data centers and servers, China’s computing market chip revenue is expected to increase by 5% in 2024, reaching 8.6 billion. Dollar.

In terms of the foundry industry, Xinmo Research predicts that the foundry market in mainland China will grow by 9% in 2024, reaching US$12.4 billion. Take the top two wafer foundry leaders in mainland China, SMIC and Shanghai Huahong Grace, as examples.

In 2024, as new energy vehicles and wind and solar storage maintain growth, and mobile phones and consumer electronics resume positive growth, only the PC market is not optimistic. The demand from mainland China’s chip design industry will usher in a new growth cycle. Driven by the growth of mainland China’s chip design industry, the wafer foundry industry will also resume growth. Since SMIC accounts for a large proportion of revenue in fields such as mobile phones and consumer electronics, quarterly revenue in 2024 is expected to rebound.

Since Shanghai Huahong Grace accounts for a large proportion of revenue in fields such as new energy vehicles and industry, although there are unfavorable factors such as slowing growth in these two fields and intensifying market competition due to the continued expansion of international and domestic power device production capacity, The penetration rate of domestic chips continues to increase, and quarterly revenue in the second half of 2024 is expected to return to positive growth.

“As major end markets resume growth, demand for chips increases, which in turn increases the capacity utilization rate of mainland China’s wafer foundry.

It is expected that in the wafer foundry industry in mainland China in 2024, the capacity utilization rate of 8-inch wafer fabs will increase to 90%, and the capacity utilization rate of 12-inch wafer fabs will increase to 78%. Looking at the capacity expansion of wafer foundry in mainland China, under the influence of the recovery of the terminal industry in 2024, the wafer foundry industry in mainland China is expected to increase its 12-inch production capacity by approximately 135,000 wafers per month in 2024. The new production capacity mainly comes from 12 inches and is concentrated in Shanghai and Guangdong. “Xinmo Research believes.

In terms of the equipment industry, the global equipment market will fall back to US$112.8 billion in 2023, a decrease of 4.5%; the report predicts a slight increase of 2% in 2024 to US$115 billion.

The reason is that on the one hand, the leading international wafer fabs plan to build more advanced process production lines; on the other hand, as the capacity utilization rate of the foundry market gradually comes out of the trough, the attitude of major global and domestic wafer fabs in expanding production will turn positive.

Data show that the scale of the semiconductor equipment market in mainland China will reach a record high of US$34.2 billion in 2023, an increase of 8%, and the global share will reach 30.3%; the report predicts that the scale of the semiconductor equipment market in mainland China will reach US$37.5 billion in 2024, an increase of 9.6%.

Xinmo Research believes that while the equipment market in other parts of the world has stagnated or even declined, the Chinese mainland market has become the main growth engine of the global semiconductor equipment market. On the one hand, the Chinese market share in the revenue of major equipment manufacturers has increased significantly; on the other hand, the revenue of domestic equipment manufacturers has increased significantly, and they mainly supply the domestic market.

The expansion momentum of domestic leading wafer fabs such as SMIC, Huahong, Changcun, and Changxin is still rapid. SMIC announced in its third quarter financial report of 2023 that it will increase its capital expenditure in 2023 to US$7.5 billion (mid-2022). Core International’s annual report stated that capital expenditures in 2023 will be roughly the same as in 2022 (approximately US$6.4 billion), an increase of 17.2%. Affected by the international environment, it is expected that mainland’s leading wafer fabs will be more active in expanding production in 2024.

In 2023, the overall revenue of domestic semiconductor equipment companies will increase by more than 17.6%, reaching 4 billion U.S. dollars, and the equipment localization rate will reach 11.7%; Xinmo Research predicts that the revenue of mainland China equipment manufacturers will further increase to 5.1 billion U.S. dollars in 2024, with the localization rate Reached 13.6%. Under the general trend of domestic substitution, domestic equipment manufacturers will accelerate their expansion from point breakthroughs to vertical and horizontal dimensions, and the equipment industry will enter a new stage of comprehensive and rapid development.