Chinese IC growth seen on equipment horizon

Electronic News, Nov 14, 1994

Beijing - Recent events indicate that the long-anticipated growth of semiconductor manufacturing in the People's Republic of China may finally be on the horizon, according to a representative of IC production equipment manufacturers.

More than 30 companies recently attended a three-day conference in China on manufacturing technology sponsored by Semiconductor Equipment & Materials International and China Electronics Corp. (CEC).

Visiting Canadian Prime Minister Jean Chretin also announced a new Chinese-Canadian joint venture to build an $82 million fabrication facility. Canada's Northern Telecom and Shanghai Philips have joined with China's Ministry of Electronics in the venture, which will produce linewidths as small as 0.8- to 1.0-micron on six-inch wafers.

"This significant announcement came at a time when our member companies have been looking for signs that the long-anticipated rapid growth of semiconductor manufacturing in the People's Republic is finally on the horizon," said Tom Reed, SEMI vice president.

U.S. companies participating in the conference viewed China as a growth opportunity but varied on when they thought that opportunity would turn profits.

"I think it will be at least three to five years before equipment companies realize major profits in China," said Laurence Dulmage, Varian product manager.

"Our long-term goal is to be come a major supplier in China. Our short-term goal is basically to get into the market wherever possible... We are very interested in investing time and effort in China because we see the potential rewards ahead," said Robert A. Haack of the Matheson Electronic Products Group.

Robert T. Vanda, GaSonics International's director of Asian sales, forecast that his company would have engineers working in China before the end of the decade.

Applied Materials, KLA Instruments, Tokyo Electron Ltd., ESEC and Alphasem also participated in the conference, a SEMI spokesman said.

According to CEC figures, China has allocated $240 million to semiconductor technology between 1990 and 1996, which some believe has mostly been spent, and it is not yet known how much will be allocated for the next development phase, the spokesman said.

A recently established Chinese-Japanese joint venture opening officially later this month, Shougang-NEC, will produce 1.2 micron linewidths on six-inch wafers. In general however, China's other IC facilities, such as Phillips and Belling in Shanghai and Huajing in Wuxi, are fabricating down to 2 microns on four- and five-inch wafers, according to SEMI.

In July, a Dataquest analyst told equipment manufacturers attending Semicon/West that they would be disappointed if they were counting on substantial sales to China in the near term.

Jingsheng Huang said Chinese government ministries, such as the Ministry of Electronics, are taking the short-term view with investments in quick-return areas such as real estate rather than long-term investments, such as semiconductor fabs.

Funds are allocated to the ministries, the analyst said, with virtually no control or oversight on how the money is spent.