The world's largest semiconductor event is "hard to find": localization is accelerating, and the industry is recovering?

The world's largest semiconductor summit, postponed to June last year, returned to its pre-pandemic schedule this year – after three days of excitement, SEMICON / FPD China, which was larger than previous years, came to an end in Shanghai on March 22.

In the context of the localization of semiconductor technology, Ju Long, global vice president of the international semiconductor organization SEMI and president of China, revealed that this year's semiconductor event ushered in a larger proportion of domestic exhibitors, and many companies signed up but could not get booths due to limited space. Judging from the "hard to find" and popularity of the scene, the Chinese market, which has achieved contrarian growth in semiconductor equipment sales in 2023, has no lack of urgency to catch up, and the market demand will only increase.

Behind the "hard to find".

For semiconductor exhibitors at home and abroad, "one is hard to find" is still intensifying.

Lin Hai (pseudonym), the technical director of a foreign-funded semiconductor company who has participated in the exhibition for many years, told Yicai at the scene that they only got a 9-square-meter booth this year, which is only a quarter of the previous one. After some struggle, they can get an 18-square-meter booth next year. "That's the maximum area we can choose."

Another semiconductor upstream multinational company got a total of 108 square meters of booths this year, and even if the next booth is locked in the first time, the booth area will be reduced by one-third next year.

As a technology group headquartered in Germany, Steffen Metzger, a member of the management board of the Heraeus Group, came to the exhibition for the first time this year, and compared with the previous international semiconductor exhibitions in many places around the world, he was quite impressed by the scale and heat of China's semiconductor industry reflected by this event. He told Yicai that China has been one of the fastest-growing markets for Heraeus semiconductors in recent years. Good growth is also expected over the next three years. With the development of artificial intelligence and new energy technology, the semiconductor industry as a whole is still in a state of short supply.

In Lin Hai's view, with the acceleration of the localization process, the popularity of China's semiconductors has lasted for three to five years. However, independent innovation takes time, "as the demand for semiconductor localization substitution becomes more and more urgent, some local suppliers have made technological breakthroughs and substantial progress this year, especially in the fields of silicon carbide and process chips, the degree of localization has gradually improved, and local manufacturers have broken through technology, so they will want to seek a larger market share." ”

Against this backdrop, this semiconductor event not only attracts upstream and downstream of the supply chain and customers, but also attracts investors who want to seek greater certainty opportunities. Traditional industries want to get a piece of the pie, and investors in related tracks are also quite active, flocking to Shanghai to find projects and discuss trends face-to-face with industry insiders.

"There are a lot of new players in China's semiconductor industry. One of the biggest challenges for Metzger is to keep abreast of the needs and potential of the fast-growing Chinese companies and to be able to work well together in a timely manner. Just on March 21, they invested millions of euros in a Chinese start-up that supplies high-end industrial diamond materials, Semiconductor Manufacturing (Xiamen) Semiconductor Technology Co., Ltd. "This collaboration underscores Heraeus' strategic focus on the semiconductor market, which is expected to set new industry standards, accelerate the development of artificial intelligence and cloud computing, and revolutionize inverter architectures for electric vehicles." ”

Is the industry recovering?

Synchronized with the localization process is the cycle of the semiconductor industry and changes in market demand.

According to data from the World Semiconductor Trade Statistics Organization (WSTS), due to rising inflation and weak end market demand, the global semiconductor market size is expected to decline by 9.4% year-on-year in 2023, and global semiconductor sales in the first half of 2023 will decline by 19.3% year-on-year, and the structural imbalance in the semiconductor end application market is still continuing.

However, according to SEMI's forecast, the global chip industry, which has experienced a downturn, is expected to enter a recovery channel this year - SEMI data shows that global semiconductor sales are expected to decline by 11% year-on-year in 2023, about $530 billion, and are expected to grow by more than 10% in 2024 and exceed $1 trillion in 2030. Affected by weak chip demand, global semiconductor equipment sales in 2023 will be US$105.6 billion, down 1.9% year-on-year, while semiconductor equipment sales in Chinese mainland will increase by 28.3% year-on-year.

In Lin Hai's view, recovery is more like a "false proposition" for the semiconductor industry, "the market demand has always been huge, and it depends on whether it can break through technology to solve the problem". He believes that high-end chips that are difficult to break through in technology are always lacking, and upstream raw materials that can be made quickly are easy to be surplus. Although semiconductors are a high-cycle industry, in China, almost every link of the entire semiconductor supply chain is in the process of localization, making up for shortcomings and breakthroughs, so the cycles of different links come and go, and the high cyclicality of the overall industry is not obvious.

Metzger said that the development of artificial intelligence and 5G technology has brought huge market opportunities, so that the global electronics industry is always in a growth phase, even if the growth rate has slowed down in recent years, there is still a need for greater capacity to meet demand. China's new energy vehicle market has been strong, but the recovery of the consumer goods market still faces some uncertainty.

With the increasing demand for high purity and heat dissipation in chips, Heraeus is providing solutions through continuous R&D and innovation in the field of materials. Metzger pointed out that the industry as a whole is in an upward stage, and what needs to be done is to strengthen communication between industries, "semiconductor players need to work more closely together to reach a consensus in meeting the growth of market demand" to avoid blockages.

Although the localization process is accelerating and geopolitical risks are still intensifying, in the face of a real market cake, many foreign investors in the semiconductor industry continue to increase their investment in China.

In the autumn of this year, Heraeus will start construction of its Shenyang quartz plant with an investment of 600 million yuan, which will be completed and opened two years ago, doubling its production capacity. At the same time, the six-year-old Heraeus Electronics Innovation Center in Shanghai will open new facilities, and its new plant in Changshu, Jiangsu Province, will also be put into operation in the second half of this year to make up for the gap in the domestic high-end cermet substrate industry. Heraeus Electro-Chemical Materials also plans to invest in a specialty chemicals plant in the Shanghai Chemical Industry Park (SCIP) in May this year. "We will continue to expand our capacity investment in China as market demand grows. "The semiconductor industry is still on the rise for a long time, and the economic downturn will not have much impact," Metzger said.

Ju Long also believes that in the era of ubiquitous chips, the overall growth of the global semiconductor industry is unstoppable. In the future, it is expected to maintain a compound growth rate of 6%~7% per year. China is also the world's largest semiconductor market. The contrarian growth of Chinese mainland in 2023 reflects its strong demand for mature node technologies and the vitality and resilience of industrial development. For many challenges, including trade frictions, this needs to be faced by the whole world and the whole industry.