China will produce one in five of the chips it uses in 2026, says analyst

Well short of planned 70 percent domestic capacity


China’s integrated circuit (IC) production has failed to keep pace with its appetite for silicon, with market research firm IC Insights predicting the nation will produce only one in five ICs it uses in 2026.

That figure is an increase from 2021's one in six, and reflects eight percent compound annual growth rate from 2021 to 2026. But it means China will miss its own targets for locally-made-and-consumed silicon.

“Although China has been the largest consuming country for ICs since 2005, it does not necessarily mean that large increases in IC production within China would immediately follow, or ever follow” said the firm in a bulletin on Wednesday.

While $31.2 billion worth of ICs were made in China in 2021, only $12.3 billion were made by companies headquartered in the Middle Kingdom – approximately $2.7 from integrated device manufacturers and $9.6 billion form pure-play foundries like SMIC.

The other $18.9 billion of chips came from foreign companies with wafer fabs in China, including TSMC, SK Hynix, Samsung, Intel, and UMC.

The $58.2 billion worth of chips predicted to come from China in 2026, makes up 8.1 percent of the total projected worldwide market of $717.7 billion. IC Insights predicts China will consume $274 billion worth of kit, a whopping 38 percent of the worldwide consumption.

In October 2020, Beijing set a goal to be self sufficient in tech by 2035 and homegrow 70 percent of domestic total semiconductor needs by 2025, a number well ahead of IC Insight’s prediction of 21.2 percent by 2026.

Semiconductor self-sufficiency is increasingly important for the Middle Kingdom given current US sanctions, which limit the country’s access to the gear it needs.

The prediction that China will use 38 percent of worldwide chips in 2026 represents a very modest five-year growth in global market share.

In 2021, 36.5 percent of the world’s chips, $186.5 billion out of $510.5, were used by China. ®

Broader topics


Other stories you might like

  • Intel withholds Ohio fab ceremony over US chip subsidies inaction
    $20b factory construction start date unchanged – but the x86 giant is not happy

    Intel has found a new way to voice its displeasure over Congress' inability to pass $52 billion in subsidies to expand US semiconductor manufacturing: withholding a planned groundbreaking ceremony for its $20 billion fab mega-site in Ohio that stands to benefit from the federal funding.

    The Wall Street Journal reported that Intel was tentatively scheduled to hold a groundbreaking ceremony for the Ohio manufacturing site with state and federal bigwigs on July 22. But, in an email seen by the newspaper, the x86 giant told officials Wednesday it was indefinitely delaying the festivities "due in part to uncertainty around" the stalled Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act.

    That proposed law authorizes the aforementioned subsidies for Intel and others, and so its delay is holding back funding for the chipmakers.

    Continue reading
  • Big Tech begs Congress to pass $52bn chip subsidies bill
    This silicon business ain't cheap, you know, say execs at Alphabet, Amazon, Microsoft, Nvidia etc

    Big Tech in America has had enough of Congress' inability to pass pending legislation that includes tens of billions of dollars in subsidies to boost semiconductor manufacturing and R&D in the country.

    In a letter [PDF] sent to Senate and House leaders Wednesday, the CEOs of Alphabet, Amazon, Dell, IBM, Microsoft, Salesforce, VMware, and dozens of other tech and tech-adjacent companies urged the two chambers of Congress to reach consensus on a long-stalled bill they believe will make the US more competitive against China and other countries.

    "The rest of the world is not waiting for the US to act. Our global competitors are investing in their industry, their workers, and their economies, and it is imperative that Congress act to enhance US competitiveness," said the letter.

    Continue reading
  • Intel to sell Massachusetts R&D site, once home to its only New England fab
    End of another era as former DEC facility faces demolition

    As Intel gets ready to build fabs in Arizona and Ohio, the x86 giant is planning to offload a 149-acre historic research and development site in Massachusetts that was once home to the company's only chip manufacturing plant in New England.

    An Intel spokesperson confirmed on Wednesday to The Register it plans to sell the property. The company expects to transfer the site to a new owner, a real-estate developer, next summer, whereupon it'll be torn down completely.

    The site is located at 75 Reed Rd in Hudson, Massachusetts, between Boston and Worcester. It has been home to more than 800 R&D employees, according to Intel. The spokesperson told us the US giant will move its Hudson employees to a facility it's leasing in Harvard, Massachusetts, about 13 miles away.

    Continue reading

Biting the hand that feeds IT © 1998–2022