China at the moment has as many as 30 semiconductor fabs under construction - the most ambitious investment plan the global semiconductor industry has ever seen. China's memory industry was originally meant to be a key growth driver, but it has lost momentum after the US ban on exports to China-based DRAM maker JHICC. On the other hand, China's wafer foundry sector continues seeing expansions with at least 13 local fabs eyeing business opportunities in the sector.
Of the existing foundry houses in China, SMIC's capacity is the largest, followed by Shanghai Huahong Grace Semiconductor Manufacturing and then Taiwan-based TSMC. However, SMIC's business focus is on the 28nm node, which is a very competitive market segment that offers low profits. However, SMIC has recently obtained a US$10 billion fund for it to invest in 14nm process development. SMIC is now aiming to have its 14nm process begin mass production by the end of 2019 in a bid to break free from the fierce competition in the 28nm segment.
TSMC's 200mm fab in Shanghai was not a major production facility for the maker. But the establishment of a new 16nm fab in Nanjing in 2018 helped advance China's semiconductor process. And TSMC's revenues from its China production are expected to grow from 2018's US$950 million to US$1.8 billion in 2023.
TSMC originally planned to expand its Nanjing factory with new 7nm capacity, but may switch the expansion plan to a 12nm node due to the US-China trade tensions.
(Note: This is part of a series of articles by Digitimes president Colley Hwang on the latest developments of the IT industry in the wake of the US-China trade war.)