Whistling a somber tune as he strides through echoing halls, Richard Chang (
The chief of Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路) -- a US$1.5 billion foundry symbolizing China's aspirations to become a global chip powerhouse -- lives in company quarters, sports a cheap digital watch and wears a plain plastic name tag.
Chang's unassuming ways belie the hype surrounding the country's chip sector. China is touted as the market of the future, but many analysts say its chip makers still have a long way to go before they can approach the sophistication of Japan or Taiwan.
"China's market is huge, but regarding profits in this business, there are plenty of uncertainties," Chang said in an interview at his factory in Shanghai's eastern financial district, built on what used to be vegetable farmland.
Since construction of their factories began to much fanfare in 2000, SMIC and cross-town rival Grace Semiconductor Manufacturing Corp (
Industry experts say SMIC and other domestic operators may initially have trouble securing long-term clients used to Taiwan foundries, and that they could incur high labor costs because of a lack of expert local engineers.
"I think they'll rack up incredible losses in DRAM," a senior executive at a China-based chipmaker told reporters. "They're building production lines, but they have no customers."
SMIC, hoping to prove them wrong, aims for monthly capacity of 40,000 wafers by June, from 32,000 now, making it the country's largest operation. That should shoot to 85,000 wafers by next year.
But Taiwan Semiconductor Manufacturing Corp (TSMC,
"Because China has a huge domestic economy, it can sustain growth in chip demand for very long," said Chang, who set up his first foundry in Taiwan in the early 1980s.
Semiconductor demand in China is likely to grow an average of 16 percent a year and hit US$46.7 billion in 2007, technology research group Gartner estimates.
The country, which uses up to 8 percent of the chips made worldwide, imports more than 80 percent of its chips, signalling huge potential for domestic production to replace that.
Experts say there's no denying the promise, but talk about the inflated expectations inherent in China's ambition to mould itself into a global chip powerhouse.
The industry has come a long way.
David Wang (
It really needed just 500 workers, Wang said. The state firm's schools, hospitals and movie theaters employed the rest.
"The quantum leap in the semiconductor industry really happened back in 1999," Wang said.
SMIC has since become a barometer for the burgeoning chip industry. It has forged deals with Germany's Infineon Technologies AG and Japan's Elpida Memory Inc, and is gunning for a listing sometime late this year or early next year.
"A listing this year might be challenging," Chang conceded.
SMIC has not disclosed its shareholder structure, but Taiwanese investors are believed to hold a significant stake.
It also has financial backing from Goldman Sachs and Shanghai Industrial Holdings.
Now for the bad news. China still lacks many elements essential elements to drive its chip industry -- mass capacity, a viable design industry and a critical mass of the companies that supply the equipment to convert the silicon wafers into chips.
Without those suppliers, global giants like Intel Corp are unlikely to start making chips there.
Most domestic players now make simple chips for appliances and remote controls.
But things could change. TSMC is seeking final approval to set up a US$900-million plant in China, which would be a milestone for the country's chip industry.
"We believe that by 2006, 2008, China will play a significant role on a worldwide basis," said Edward Braun, chief of US chip equipment maker Veeco Instruments Inc.
"We're in the first or second year of a 10-year development cycle," he said. "We need to be patient and allow growth."
Chang says there is another daunting challenge.
"Inertia in government is huge. It's hard to get it moving," said Chang, former boss of Worldwide Semiconductor Manufacturing Corp (
"Top leaders are clear what needs to be done, but a lot of lower officials haven't caught up yet," he said.
NEW IDENTITY: Known for its software, India has expanded into hardware, with its semiconductor industry growing from US$38bn in 2023 to US$45bn to US$50bn India on Saturday inaugurated its first semiconductor assembly and test facility, a milestone in the government’s push to reduce dependence on foreign chipmakers and stake a claim in a sector dominated by China. Indian Prime Minister Narendra Modi opened US firm Micron Technology Inc’s semiconductor assembly, test and packaging unit in his home state of Gujarat, hailing the “dawn of a new era” for India’s technology ambitions. “When young Indians look back in the future, they will see this decade as the turning point in our tech future,” Modi told the event, which was broadcast on his YouTube channel. The plant would convert
Nanya Technology Corp (南亞科技) yesterday said the DRAM supply crunch could extend through 2028, as the artificial intelligence (AI) boom has led the world’s major memory makers to dramatically reduce production of standard DRAM and allocate a significant portion of their capacity for high-bandwidth memory (HBM) chips. The most severe supply constraints would stretch to the first half of next year due to “very limited” increases in new DRAM capacity worldwide, Nanya Technology president Lee Pei-ing (李培瑛) told a news briefing. The company plans to increase monthly 12-inch wafer capacity to 20,000 in the first half of 2028 after a
Property transactions in the nation’s six special municipalities plunged last month, as a lengthy Lunar New Year holiday combined with ongoing credit tightening dampened housing market activity, data compiled by local land administration offices released on Monday showed. The six cities recorded a total of 10,480 property transfers last month, down 42.5 percent from January and marking the second-lowest monthly level on record, the data showed. “The sharp drop largely reflected seasonal factors and tighter credit conditions,” Evertrust Rehouse Co (永慶房屋) deputy research manager Chen Chin-ping (陳金萍) said. The nine-day Lunar New Year holiday fell in February this year, reducing
New vehicle sales in Taiwan plunged about 37 percent sequentially last month as the long Lunar New Year holiday and 228 Peace Memorial Day holiday cut short the number of working days, along with the lingering uncertainty over import tax cuts on US vehicles, market researcher U-Car said in a report yesterday. New car sales last month totaled 22,043, slumping from 35,073 units in January and down 19.89 percent from 37,515 in February last year, U-Car data showed. Sales of imported luxury cars, led by Mercedes-Benz, plummeted about 45 percent to 3,109 units last month from 5,663 units in the previous month,
RSS