- 19 March 2005 -

China will be great equipment market

Applied Materials is forecasting that some 30 wafer fabs are to be built in China over the next three years - using 0.25µm and 0.13µm process technologies. It could mean a lot of money over the long term for equipment makers, although Applied itself may loose out through lack of US export financing.

AMAT's president David Wang bases predictions on China's determination to make more of the chips it consumes. In 2004 its semiconductor market was $24bn. Local fabs provided less than 25% of the market.

By 2008, Wang says China will only be able to meet about 35% of its needs when consumption would be at $65bn. Assuming $300bn for the entire world in semiconductor revenue,

China alone will consume over 20% of the world's production and need more fabs. IDC has estimated China's market at only $45bn by 2008.

China is already the second largest IC marketand may oust Japan and the US to take number one position. This increase is on the back of fast-growing, low-cost electronics systems assembly business mainly for export.

In 2004, China produced $170bn in electronics equipment, 11% of its GDP, By 2008, the estimate is nearly $300bn, or 13% of GDP.

Wang reports the growth in China-based fabs would be driven by foreign and domestic investment. Taiwanese have been some of the biggest backers, with Semiconductor Manufacturing International Corp, Taiwan Semiconductor Manufacturing Co. Ltd and Hejian Technologies all having Taiwanese management or money. Promos Technologies and Powerchip Semiconductor are also committed to building fabs.