China to build five 300-mm wafer fabs by 2006

By 2006, Semiconductor Manufacturing International Corp. (SMIC) could have three 300-mm fabs, while Grace Semiconductor Manufacturing Corp. is projected to break ground on a 300-mm plant in 2005, according to the research firm. And China's He Jian Technology has a 200-mm plant, which will probably be converted to 300-mm next year, according to the firm.

In 2004, China will produce 18.5 billion chips, which will account for only 22.1 percent of its domestic demand. In 2002, the country produced 9.6 billion chips, which accounted for just 21.5 percent of domestic demand, according to the research firm.

While production nearly doubled in two years, progress toward fulfilling domestic demand changed 0.6 percent, according to the firm.

China had two 6-in. fabs and one 8-in. fab in 2002. Massive building programs resulted in six 6-inch fabs and ten 8-inch fabs in 2004. Capacity increased from 197,000 equivalent 8-inch wafers per month in 2002 to 330,000 in 2004.

Unit production will double attain to nearly 40 billion units in 2006, and domestic production will finally make headway, meeting 26.6 percent of domestic demand.

The growth has some major implications for the equipment industry. "IC executives and Mainland China officials have finally awakened to the fact that the industry cannot flourish with hand-me-downs and used equipment. Much of the production equipment used in fab expansion has been tools transferred from older lines by Japanese and Taiwanese IC manufacturers," said Robert Castellano, president of The Information Network, in a statement.

"But that is changing," he said. "China's IC manufacturers are buying state-of-the-art 90-nm tools for 300-mm production for their existing facilities. Ready to erode the need for imports are SMIC's 300-mm existing fab and two more planned for 2006, GSMC's 300-mm fab scheduled for 2005, and He Jian's 200-mm fab that will probably be converted to 300-mm next year. The potential for an explosive equipment market is high."