Is Hindsight 2020?

Article By : Alan Patterson

SIA's curious assertion that Chinese chipmakers have surpassed Taiwan’s is based on year-old sales data.

Less than a month ago, the Semiconductor Industry Association (SIA) reported that China’s share of global chip sales now surpasses Taiwan’s, and is closing in on that of Europe and Japan.

It was a surprise. Recent reports say Taiwan Semiconductor Manufacturing Co. (TSMC) accounts for about 53 percent of the world’s foundry production. By comparison, China’s largest chip maker, Semiconductor Manufacturing International Corp (SMIC) has so far gained a 5-percent share of the foundry business.

No chip company in China comes close to TSMC’s scale.

Perhaps the most notable part of the SIA report was its use of the word “now” in the headline. SIA was using data from 2020 as the basis for its claim. SIA does not deny the discrepancy between then and now.

“That is the most recent year for which data is available, and the article makes it clear from the start that we use 2020 data (although this point is not in the headline, as you pointed out),” an SIA spokesperson replied in an email to EE Times.

A lot of people read only headlines. The last sentence of the second paragraph in the SIA blog notes that “sales data for 2021 are not yet available”.

Last year was a tumultuous one for the global chip industry. The Chinese semiconductor industry in particular had its share of difficulties in 2021. Tsinghua Unigroup, the holding company that owns chip makers such as Yangtze Memory Technologies Co. and chip designer Unisoc (Shanghai) Technologies Co., said it would attempt a restructuring after it went insolvent. In 2021, Qualcomm of the U.S. and MediaTek of Taiwan plugged the gap created when the U.S. government effectively forced Huawei subsidiary HiSilicon out of the smartphone chip business in 2020.

It’s also worth mentioning that near the end of 2020, Chinese TSMC rival Wuhan Hongxin Semiconductor Manufacturing Company (HSMC) went bankrupt.

These events do not signal a healthy domestic industry posing a competitive threat to Taiwan, or closing in on Europe and Japan.

A note at the end of the SIA blog acknowledges its estimate of Chinese industry size differs from those of other market analysts. That much is abundantly clear.

According to data from industry watcher IC Insights, Chinese chip design and independent device manufacturer (IDM) suppliers not including foundry and packaging companies recorded about $28 billion in semiconductor sales during 2020; Taiwanese fabless and IDM semiconductor suppliers sold about $32 billion that same year. With foundries included in the IC Insights calculations, Chinese semiconductor supplier sales totaled $34 billion for 2020 while Taiwanese revenues totalled $87 billion for that year.

Supporting its claim of China’s growing dominance, the SIA blog notes the “startling”number of new Chinese manufacturers rushing into the semiconductor industry.

“Nearly 15,000 Chinese firms registered as semiconductor enterprises in 2020,” according to the report. “A large number of these new firms are fabless startups specializing in GPU, EDA, FPGA, AI computing and other higher-end chip design.”

Sales of Chinese high-end logic devices are also accelerating, with the combined revenue of China’s CPU, GPU and FPGA sectors growing at an annual rate of 128 percent to nearly $1 billion in revenue during 2020, up from a meager $60 million in 2015, according to the SIA.

Even so, it appears Taiwan’s chip sector had quite a good year in 2021, and needn’t worry too much about being overtaken by China anytime soon.

TSMC’s 2021 sales revenue of NT$1.6 trillion ($57 billion) soared 18.5 percent from 2020. SMIC will report its 2021 sales on Feb. 11. SMIC reported sales of $3.9 billion in the first three quarters of 2021, up nearly one third from the same period of 2020.

These are among the industry data points available so far this year. New reports on national rankings from industry watchers will be especially useful since so many, including SIA, are lobbying lawmakers and the Biden administration for billions of dollars in funding to revive U.S. chip manufacturing.

This article was originally published on EE Times.

Alan Patterson has worked as an electronics journalist in Asia for most of his career. In addition to EE Times, he has been a reporter and an editor for Bloomberg News and Dow Jones Newswires. He has lived for more than 30 years in Hong Kong and Taipei and has covered tech companies in the greater China region during that time.

 

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