Integrated circuit production in China is projected to nearly double between 2018 and 2023, increasing from $23.8 billion to $47 billion, according to market research firm IC Insights.
This increase — albeit from a relatively a small base — represents a compound annual growth rate (CAGR) of 15% over the five-year period, IC Insights said.
China has been the largest consumer of ICs since 2005. IC production in China accounted for 15.3% of its domestic market of $155 billion in 2018, up from $12.6% in 2013, the firm said. By 2023, IC Insights projects that IC production in China will account for 20.5% of its market total.
Recommended
The U.S., China and the Chip Industry
However, IC Insights noted, even if China's domestic IC production totals $47 billion in 2023, it would still account for only about 8.2% of the forecasted global chip market total of $571.4 billion.
China's ambitious plans to expand its domestic IC industry has resulted in massive investment by China's central government and contributed to trade tensions between the U.S. and China which last year erupted into an all-out trade war. China has said it plans to invest more than $160 billion over 10 years in boosting its domestic semiconductor production.
In 2018, the bulk of China's IC production was done by multinationals with big fabs in China — including Samsung, Intel, SK Hynix and TSMC. But over the next five years, indigenous Chinese IC firms — including SMIC, Huahong Group, YMTC and ChangXin Memory Technologies — are expected to dramatically ramp up production.
IC Insights said it expects other global electronics firms to locate chip fabs in China, including Taiwan-based Foxconn, which last year said it would build a $9 billion fab in Chinato offer foundry services and produce TV chipsets and image sensors.
The market research firm predicts that at least 50% of IC production in China in 2023 will come from foreign companies with fabs in China.