Driven by government support, vast market and increasing R&D
spending, China, Japan, South-Korea and Taiwan together have become the semiconductor BIG4 players in Asia Pacific, holding 4 of the top 6 spots by overall semiconductor revenue and each have several global semiconductor giants. Asia Pacific is also the world's biggest market for semiconductors, accounting for 60% of global semiconductor sales, within which China alone accounts for over 30%.
The semiconductor value chain is long and involves many specialized fields: equipment, Electronic Design Automation software (EDA), Intellectual Property core (IP), Integrated Device Manufacturer (IDM and fabless), foundry and Outsourced Semiconductor Assembly & Test (OSAT). Each of the BIG4 has different strengths and plays a critical role in the global semiconductor value chain.
On the road to recovery
Lower demand, US-China trade dispute and COVID-19 have led to an accelerated decline in the global semiconductor industry. However, as the demand for optoelectronic products increases, as well as the maturity of many disruptive technologies, including AI, big data and 5G, will drive the growth of the semiconductor market. The long-term outlook for the semiconductor industry remains positive.
The emergence of MULTI MARKETS
Companies worldwide rely on Asia Pacific manufacturing now more than ever. The semiconductor "Big 4" are returning to normal, so there is hope that a disastrous supply-side hit to the global technology supply chain can be avoided. However, slackening demand for end products could further delay the recovery.
The US-China tech war is likely to prompt global semiconductor manufacturers to divide between multiple groups for production, design and sales. The COVID-19 pandemic will likely accelerate the longer-term shift of low-value added manufacturing from China to Southeast Asia. As a result, the diversification is underway for the OEM and ODM.
Resilience is key
Supply chain disruption from the COVID-19 pandemic was caused by a combination of lean production and global, multistage supply networks. Businesses should promptly consider actions that will improve supply chain network resilience. The most pressing needs are to find alternative supply sources, account for supply chain visibility and build safety reserves. In the long term, it is likely to need a combination of mapping and digitize supply chains, building strategic backup capacity and flexibility, keeping a global perspective while diversifying and "re-shoring" an option for some to achieve success.
Self-sufficiency takes time
China is expected to accelerate semiconductor import substitution, so its demand for non-imported semiconductors will grow, and it will eventually lead to an increase in domestic investment.
In terms of available capital, China has the "Big Fund", of USD 50 billion for the development of its domestic semiconductor industry, which will be leveraged in two phases. Nevertheless, it might not be big enough to provide the needed capital in the long run.
China will also need to nurture its talent pool by strengthening education and encouraging more students to major in electronics.
The technology level of Chinese companies mostly generally lags that of the global leaders. China is still a relatively small player in the global semiconductor. Particularly lacking in the mid-to high end segments, such as those for semiconductor equipment and EDA & IP. Chinese companies are increasing investment to narrow the gap in all aspects.
There is strong evidence in the forecasts and production infrastructure investment in China region, Nexteck Singapore Pte Ltd is optimistic in following the trend of our customers in strengthening our production lines in WLCSP carrier tape, cover tape and R&D team under the new scope of the BIG4 in Southeast Asia.
