Significant Milestone: China’s Chip Industry Achieves Another Breakthrough—The Domestic Production Rate of 12‑inch Silicon Wafers Is No Longer Zero!

　　

 

　　In the era of mobile internet, smartphones have become one of the essential items for individuals. As many people know, a high‑quality smartphone absolutely requires a powerful processor chip. Manufacturers such as TSMC, Intel, and Samsung are capable of producing (or contract‑manufacturing) chips, but without the supply of silicon wafers from upstream raw material suppliers, even TSMC, Intel, and Samsung—no matter how advanced their manufacturing processes may be—simply cannot begin production.

　　Silicon wafers serve as the substrates used in the production of semiconductor chips and are the most critical raw material in the semiconductor industry. At present, silicon-based semiconductor materials are the most widely produced and most extensively used semiconductor materials. According to data released by SEMI, in 2017, more than 95% of global semiconductor devices and over 99% of integrated circuits utilized single-crystal silicon as their substrate material, while compound semiconductors accounted for less than 5% of the market. SEMI also predicts that in 2019, silicon wafers will represent the largest share—37.29%—of total global sales of semiconductor manufacturing materials. It is worth noting that, in addition to silicon wafers, semiconductor manufacturing materials also include electronic gases, photomasks, photoresist‑related chemicals, polishing materials, photoresists, wet-process chemicals, and sputtering targets, among other materials.

　　Silicon with a purity of 95%–99% is referred to as industrial silicon. Silica found in sand and ore can be purified to produce silicon with a purity exceeding 98%; further purification of high‑purity silicon yields ultra‑pure polycrystalline silicon with a purity ranging from 99.9999999% to 99.999999999%.

　　Silicon wafers are available in a variety of standard sizes, including 2 inches (50 mm), 3 inches (75 mm), 4 inches (100 mm), 6 inches (150 mm), 8 inches (200 mm), and 12 inches (300 mm). The larger the diameter of a silicon wafer, the more chips can be manufactured on each wafer, thereby reducing the cost per chip. Based on manufacturing processes, silicon wafers are primarily categorized into polished wafers, epitaxial wafers, and SOI wafers. Polished wafers are produced by cutting, grinding, and polishing single-crystal silicon ingots. Epitaxial wafers are formed through epitaxial growth on polished wafers, while SOI wafers are created by subjecting polished wafers to processes such as oxidation, bonding, or ion implantation.

　　

 

　　At present, China’s supply of semiconductor silicon wafers is heavily reliant on imports, and the pace of domestic production has fallen far behind, with a clearly visible gap compared to the world’s most advanced standards. In the silicon wafer market, Shanghai Silicon Industry Group (referred to as “Huxi Industry”)—the leading silicon wafer manufacturer in mainland China—holds only a 2.2% share of the global semiconductor silicon wafer market. Even more noteworthy is that the semiconductor silicon wafer market has been increasingly consolidating around a handful of top-tier manufacturers in recent years, with Japan alone accounting for more than 50% of the market share.

　　From 2016 to 2018, the market share of five major manufacturers—Japan’s Shin-Etsu Chemical, Japan’s SUMCO, Germany’s Siltronic, Taiwan’s GlobalWafers, and South Korea’s SK Siltron—rose from 85% to 93%. Among them, Shin-Etsu Chemical held a 28.5% market share, SUMCO accounted for 25.2%, Germany’s Siltronic captured 14.7%, Taiwan’s GlobalWafers secured 14%, and South Korea’s SK Siltron achieved a market share of 10.5%.

　　

 

　　Fortunately, the silicon wafer market has already garnered the attention of the state. The underlying reason is that although the global silicon wafer market is relatively small in overall size, it is critically important: should silicon wafers fail to be supplied as usual, it could bring the entire semiconductor industry chain to a standstill.

　　As one of the largest semiconductor silicon wafer manufacturers in China, Shanghai Silicon Industry successfully listed on the STAR Market on April 20. Within a single day, the company’s stock price surged from its issue price of 3.89 yuan to 10.91 yuan, soaring over 180%, with its latest market capitalization reaching 27.1 billion yuan.

　　Founded in December 2015, Hubei Silicon Industry is primarily engaged in the R&D, production, and sales of semiconductor silicon wafers. It is widely recognized within the industry as China’s largest silicon wafer manufacturer, boasting a leading position in both 12‑inch and SOI semiconductor silicon wafer technologies. Hubei Silicon Industry was the first company in mainland China to achieve large‑scale sales of 12‑inch silicon wafers, thereby breaking the near‑zero domestic production rate for 12‑inch silicon wafers in China.

　　Huxi Industry is a holding‑type enterprise that owns three controlled subsidiaries: Shanghai Xinsheng, Xin’ao Technology, and Okmetic. It is also one of the major shareholders of Soitec, a French semiconductor materials company. Huxi Industry holds a 98.50% equity stake in Shanghai Xinsheng, an 89.19% shareholding in Xin’ao Technology, and indirectly owns 100% of Okmetic’s equity.

　　

 

　　

 

　　

 

　　Shanghai Xinsheng was founded in June 2014 and serves as the primary entity responsible for China’s first 12‑inch large silicon wafer project. It is also currently the only silicon wafer company to have received national support for a major project, undertaking one of the core initiatives under the National 02 Special Project: the “300mm Silicon Wafers for 40–28nm Integrated Circuit Manufacturing” program. Founded in 2001, Xinao Technology has built China’s first SOI production line and has become a leading SOI material production base in China—as well as one of the few global suppliers capable of mass‑producing SOI materials. Today, more than 90% of Xinao’s products are sold to markets including the United States, Japan, Europe, Russia, South Korea, Taiwan, China, and Singapore. Okmetic was established in 1985 and is headquartered in Finland; it is a long‑standing silicon wafer manufacturer whose main products include polished wafers and SOI silicon wafers, used in the development and production of MEMS, sensors, analog circuits, and discrete semiconductor devices. Soitec, a French company, is a world‑leading supplier of SOI silicon wafers and other engineered substrates, with SOITEC’s SOI silicon wafers accounting for over 80% of the global market share.

　　According to the prospectus released by Hu Silicon Industry in April 2019, Shanghai Guosheng (Group) Co., Ltd. (hereinafter referred to as “Guosheng Group”), which is under the Shanghai State-owned Assets Supervision and Administration Commission, and China National Integrated Circuit Industry Investment Fund Co., Ltd. (hereinafter referred to as “National Big Fund”) are the company’s joint largest shareholders, each holding a 30.48% stake. Following this issuance, Guosheng Group and the National Big Fund remain the company’s joint largest shareholders, each holding a 22.86% stake, with the two “national team” shareholders collectively holding more than 40% of the shares.

　　

 

　　According to a report by the Huaxia Happiness Industry Research Institute and Pinli Fund, in 2019, China’s demand for 6-inch semiconductor silicon wafers was 20 million units per year, for 8-inch wafers it was 12 million units per year, and for 12-inch wafers it was 7.5 million units per year. Furthermore, based on an analysis of China’s semiconductor manufacturing production lines from 2018 to 2019, and taking into account current production capacity, planned future capacity, and investment levels, the demand for large 12-inch silicon wafers from manufacturers was approximately 600,000 units per month in 2019, equivalent to 7.2 million units per year; by 2023, demand is expected to reach about 5 million units per month, or 60 million units per year.

　　In June 2019, the domestic production rate for 6-inch silicon wafers exceeded 50%, while the domestic production rate for 8-inch silicon wafers stood at 10%, and the domestic production rate for 12-inch silicon wafers was less than 1%. Moreover, most domestically produced 12-inch silicon wafers used in Chinese fabs were test and control wafers, with only a small number being sold as qualified wafers. In its prospectus, Hu Silicon Industry explicitly stated that “the domestic production rate for 300mm silicon wafers had previously been virtually zero.”

　　Over the past few years, numerous major investments have been launched, most of which are focused on 12‑inch silicon wafers. In addition to this recent IPO by Hu Si Industry, which raised 1.75 billion yuan for the second phase of its 12‑inch silicon wafer technology R&D and industrialization project, several other large-scale projects under Hu Si Industry—including Shanghai Xinsheng, Zhonghuan Shares, Xinxin Integrated, and SMIC Wafer—have also been steadily brought online.

　　At its 2019 earnings conference, leading domestic silicon wafer manufacturer Zhonghuan Co., Ltd. announced that its total planned production capacity for 8-inch silicon wafers is 1.05 million pieces per month. The Tianjin plant is currently operating at full capacity, while two production lines at the Wuxi plant completed acceptance testing and entered commercial production in September 2019. Among these, the Tianjin facility has reached its designed capacity of 300,000 pieces per month, and the Yixing facility, with a capacity of 120,000 pieces per month, has also achieved full production; Yixing continues to bring in new equipment for commissioning and ramp-up. The total planned production capacity for 12-inch silicon wafers is 620,000 pieces per month. The Tianjin facility, with a capacity of 20,000 pieces per month, began production in the first quarter of 2019 and has already started shipping samples to customers worldwide, while the Wuxi plant is expected to begin production in 2020.

　　Since the second quarter of 2017, Shanghai Xinsheng’s 300mm large silicon wafer project has been conducting certification for positive wafers supplied to chip foundry companies such as SMIC. In 2017, the company began selling products including dummy wafers, carrier wafers, and test wafers. Shanghai Xinsheng’s current large silicon wafer production capacity has reached 50,000 to 60,000 wafers per month, and it is continuously expanding its production capacity.

　　At the end of 2019, Qiu Ciyun, CEO of Shanghai Xinsheng, announced that Shanghai Xinsheng had more than 30 customers both domestically and internationally. Its 12‑inch large silicon wafers had already passed verification for 3D NAND memory, and the cumulative shipments of silicon wafers had exceeded 1 million pieces. Qiu Ciyun stated that Shanghai Xinsheng was the only domestic company to have achieved mass production of 12‑inch large silicon wafers; the cumulative shipments of silicon wafers had surpassed 1 million pieces; the cumulative shipments of finished devices had exceeded 75,000 units; the company served more than 30 customers at home and abroad, and its 12‑inch large silicon wafers had been certified for 3D NAND memory.

　　Shanghai Xinsheng’s goal is to become an international silicon wafer supplier in China. It currently has a production capacity of 150,000 wafers per month, and the second phase, with a capacity of 300,000 wafers per month, is already in the equipment installation stage; the existing plant site can accommodate 600,000 wafers, while the expanded site has the potential to support a production capacity of up to 1 million wafers per month.

　　Other players include: SMIC’s 12‑inch large silicon wafers rolled off the production line in December 2019; Xuzhou Xinjing Semiconductor’s 12‑inch large silicon wafer crystal growth production line entered trial production in December 2019 and has since successively shipped test samples to numerous customers in China and Germany, among other regions; on December 30, 2019, at 12:00 p.m., Hangzhou Zhongxin Wafer successfully completed the production of semiconductor silicon polished wafers, with a monthly production capacity reaching 30,000 wafers once mass production begins; the Zhongjing Jiaxing project, which is slated to produce 4.8 million 12‑inch large silicon wafers annually, is scheduled to begin trial production of its first production line by the end of 2020.

　　It is worth noting that in the silicon wafer sector—especially for large silicon wafers—China started relatively late and has a weak technological foundation. As such, whether it’s the 12‑inch silicon wafer project of Hubei Silicon Industry (Shanghai Xinsheng), which has already achieved mass production, or the various production lines currently under construction and those in the ramp-up phase, they are all still only at the very beginning of China’s journey toward self‑sufficiency in large silicon wafers. The road ahead remains long and arduous, requiring continuous effort, perseverance, and sustained investment.

　　Today, the second phase of the large-scale fund—now exceeding 200 billion yuan in size—is progressing smoothly, with investments increasingly tilted toward areas such as design, materials, and equipment. Large silicon wafers will undoubtedly become one of the key focus areas. Driven by robust market demand and guided by top‑level planning, the silicon wafer industry, which has been sowing seeds far and wide, is finally poised to reap the rewards of its efforts.