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Company News >> Restricted supply of upstream materials Local manufacturing advantages of semiconductors and OLED panels may be lost 26th,June,2018
                                              On June 25, 2018, details of the contents disclosed by Universal's Hsinchu shareholders' meeting once again attracted the attention of China's domestic semiconductor industry. Xu Xiulan, chairman of the board of shareholders, said that at present, the world's major silicon wafer production capacity is concentrated in the top five, the market accounted for more than 95%, the five major plants currently have no significant expansion operations, only reasonable de-bottlenecking measures, global The top five manufacturers have been booked until 2019 to 2020.

Global Crystal is the world's third-largest semiconductor silicon wafer fab. Xu Xiulan believes that the supply of semiconductor silicon wafers is still in short supply, and the global crystal production capacity will be fully loaded by next year. The orders in 2020 will be half full, and the market supply will be relatively tight. Global Crystal’s consolidated revenue last year was NT$46.2 billion, an increase of 151% year-on-year, and its net operating profit was NT$7.4 billion. In May of this year, the revenue was NT$4,779 million, an increase of 30.2% year-on-year, which was the second highest in history. The cumulative revenue for the previous May was NT$23.272 billion, an increase of 31.8% year-on-year.

In fact, news from the supply chain from late last month stated that shipments of devices such as smart audio speakers and wireless charging docks have grown too fast and demand for in-cell full-screen chips has increased, and 8-inch silicon wafers are on the market. There is a large supply gap in the material, and some upstream material suppliers have already informed the wafer manufacturers to increase the price by 20% to 30%.

Since the price increase rate is two to three times the previous two years, plus an additional one to two percent of the fabs' capacity deposits, the 8-inch wafer fabs also indicated that they must increase their chip shipments. The price and price increase will be increased by about 10 to 15% on the original basis. In addition, due to the shortage of upstream 8-inch silicon wafer materials, the chip's delivery time will be delayed by 25 days to 45 days.

Relatively speaking, 12-inch silicon wafers have no obvious time conflict due to the new wafer fab's production capacity and the newly-added capacity of silicon wafer materials. Both material supply and price are relatively flat. However, with the construction of new fabs in China, this balance may still be broken. At the same time, how to deal with the demand for the nearest supporting service of Chinese domestic manufacturers will also become a practical problem that the industry needs to solve.

After the implementation of the reform and opening-up policy of nearly 40 years, the rapid economic development in China has not only brought a huge consumer market to the world, but also accumulated a large number of production line workers for the global people's livelihood industrial manufacturing industry, and has also absorbed global The capital was injected into the Chinese market, and the parts and components of the downstream part of the consumer electronics industry chain copied the world’s largest and cheapest production capacity.

Especially in the past ten years, as China Minsheng’s manufacturing capacity continues to replicate rapidly on the components of the middle reaches of the industry chain, it has also attracted more and more global capital, placing upstream component manufacturers and material production capacity on the Chinese market. , To meet the supporting needs after the outbreak of component production capacity in the Chinese domestic market.

As the semiconductor chip industry in the key basic components of modern manufacturing, it has been the largest purchase product of the people’s livelihood manufacturing industry in China. After the successful localization of the fuselage materials, circuit boards, and display screens in the past two years, It has become the fourth largest capacity transfer target in China.

In order to meet the demand for capacity of Chinese manufacturers, many overseas foundry companies including TSMC, UMC and Global Foundries will launch new production lines in mainland China to avoid new processes after the retirement of old production lines. There is a capacity gap in production capacity replacement, and secondly, it is also possible to make full use of the supporting policies for industries in Mainland China, and to achieve low-cost and closest supporting services to downstream customers.

In addition, the onshore foundries in Mainland China, including SMIC and Huali Microelectronics, have also begun to take advantage of the low manufacturing cost and local service advantages of China's domestic manufacturing. They have successively taken orders from within the global market and become high-speed development. In the important part of the new production capacity under the market conditions, several production lines will also be put into operation within the next two years. According to industry statistics, there will be about 62 new wafer fabs between 2017-2020, of which 26 fabs will have production capacity in mainland China.

This situation is very similar to China's development of OLED display panels. According to statistics, there are about 27 OLED panel lines in operation and already under construction worldwide, including 10 in South Korea, 1 in Taiwan, and 2 in Japan. The remaining 14 are all in mainland China.

A large number of wafer fabs have been built in mainland China, which will surely provide a guarantee for the prosperity of China’s people’s livelihood manufacturing industry in the next ten years. It will also provide a good upstream core component supply guarantee, and will also promote the supporting industries related to chips in China’s mainland. Development, comprehensive guidance of China's people's livelihood, manufacturing technological progress and industrial upgrading.

However, the development status of the semiconductor chip industry in China is also similar to that encountered by OLED panels, except that the mass production technology is limited to a small number of skilled employees and engineers in the industry, and the localized supporting capacity is also in the key raw materials in the upstream. Very low, it also needs global capital and technology to fully cooperate in order to solve it effectively.

Taking the OLED material field as an example, after China's domestic OLED production capacity is fully released, China will become the second largest OLED panel production base in the world. However, in the field of OLED materials, the production of OLED monomer terminal materials and organic material technologies are controlled overseas. The company's hands. At present, OLED monomer terminal manufacturers are mainly Korean, Japanese, German and U.S. manufacturers, including South Korea’s Samsung SDI, LG Chemicals, Deshan Metals, Doosan, Idemitsu Kosan, Fort Valley Chemicals, UDC of USA, and Merck of Germany. At present, Chinese domestic companies are mainly engaged in the production of OLED intermediates and monomer crude products. The suppliers of OLED intermediates and monomer crude products in China mainly include Wanrun, Xi'an Ruilian, Huiyang Huicheng, Beijing Agrilea, and Jilin Austria. Lai Tak, etc., among which Wanrun, Xiangyang Huicheng and Xi'an Ruilian have achieved mass production and entered the overseas OLED material supply chain, which has been recognized by OLED monomer manufacturers.

However, in the field of OLED monomer production, the main threshold for material companies in China to restrict new enterprises is the patent of sublimation materials. Most of the current mainstream organic material technologies are owned by overseas companies, and overseas companies have patented these technologies. In other words, if material companies or OLED panel manufacturers in China want to quickly acquire the relevant mass production technology and production capacity layout, they will need to cooperate with these overseas OLED monomer patents and mass production technology holding companies. Can be effectively resolved.

In fact, the development of semiconductor chips in China has also encountered similar problems with OLEDs. According to statistics, currently China's domestic foundry production capacity ranks second in the world, and its market share in 2017 is nearly 15%. After the new production capacity in mainland China starts to output, the foundry production capacity will account for a global share. Will increase quickly.

In fact, in addition to the 26 newly-built wafer fabs mentioned above, there are currently more than 50 wafer production lines in mainland China, which are located in Beijing, Shanghai, Tianjin, Xi’an, Xiamen, Hefei, and other cities. It is relatively low-end production capacity, and the output and efficiency are not as high as the 8-inch and 12-inch wafer fabs built in the later period. In the future, with the continuous production of 12-inch fab production lines including SMIC, Huali Microelectronics, TSMC, Lianxin, Jinghe, AOS, Dekoma, and Ziguang, mass production will be started, together with Dcoma and SMIC After the international, Silan Micro, and Silex's capacity expansion in the 8-inch wafer fab is completed, China’s domestic foundry production capacity accounts for a global share, which will surely increase significantly on the existing basis.

However, a large number of wafer fabs have been built up in China. However, as the core material of semiconductor chips, China's domestic industry is not only poorly equipped, but also encounters the same difficulties in technology, equipment sources, process patents, and mass production experience. Among them, silicon wafers and silicon-based materials, which account for the largest percentage of wafers, are taken as an example. The proportion of semiconductor wafers is approximately 36%. However, the source of manufacturing equipment for high-end materials and production materials is basically the supply of overseas companies.

The production process of silicon wafers is very complicated. From silica to silicon wafers, many processes such as purification, casting, pulling, cutting, polishing and cleaning are required. In general, silicon wafers have been purified through three steps of silica to produce semiconductor grade silicon with a purity of 99.9999999%, and now 12-inch wafer fabs with advanced processes have already exceeded the decimal point.

After purification of the silica, the silicon ingot of appropriate diameter is produced through a casting and pulling process, and finally the silicon wafer is prepared for downstream production after being cut, polished, cleaned, and passed through the quality inspection process. During this period, no matter what the processing environment, processing equipment, or auxiliary materials, etc., can not have any pollution on the silica material, affecting the purity of silicon.

Currently, global silicon and silicon-based materials are mainly supplied by Shin-Etsu Chemicals of Japan, SUMCO of Japan, Global Wafers of Taiwan, Siltronic of Germany, and LG Silitron of South Korea. Their total production capacity accounts for more than 95% of the world's total, and they have no customers at all. In addition, the silicon and silicon-based materials produced by other manufacturers, except for the five manufacturers, are basically used in the production of test wafers in fabs, and they are basically not used in normal mass production.

In fact, the relative backwardness of China’s domestic and upstream industries in the manufacturing industry chain of people’s livelihood led to a late start of the Chinese materials industry and was limited by technology, funds, and talents. The overall performance of China’s domestic material industry was relatively low, and enterprises Small scale, low technical level, and scattered industrial layout.

Therefore, these newly built fabs in China are to develop healthily. A healthy and abundant upstream material supporting industry chain is indispensable. China's domestic development of the semiconductor industry is also the same as the development of OLED panels in the industry. If you want to rapidly acquire related mass production technologies and production capacities, you need to have overseas material patents and mass production technology holding companies and related mass production equipment. The maintenance of enterprises and other in-depth cooperation can be effectively resolved by introducing capital, talent, technology, and management.

Otherwise, China's domestic component production capacity may come up, but the final localization cost and the nearest supporting service advantage are easily eroded by the supporting cost of upstream raw materials, and it is difficult to achieve the goal of global high-quality production supporting services. It will even lead to a total loss in related industries in China.

Therefore, only on the basis of the full cooperation with overseas companies, Chinese domestic enterprises may have obtained mass production technology, and have actually gained a certain amount of production experience and industry technology precipitation, and may have the opportunity to solve similar semiconductors. The original innovative problems of new advanced devices such as chips and OLED panels, and the realizing of localization of the upstream materials have accomplished the global advanced production capacity supporting services.

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