Microsystem and semiconductor commercialisation in China

by

Doug Sparks, CTO, Hanking Electronics

China has seen unprecedented growth in microsystem and semiconductor infrastructure in the past decade. This is due to the rise of its automotive and consumer markets and export of smart phones, tablets, drones and other microsystem and semiconductor enabled products. Historically, more than 90 percent of microelectromechanical systems (MEMS) devices such as accelerometers, gyroscopes, pressure sensors and radio frequency (RF) filters have been imported into China for product assembly. Virtually all the MEMS wafers are fabricated outside of the country and imported as wafers, chips or packaged devices. According to customs data, China imported semiconductor and MEMS chips worth US$304 billion in 2019, down 2.6 percent on a yearly basis1. Moreover, the State Council of China has declared that the country aims to increase its self-sufficiency rate of chips to 70 percent from the 30 percent level realised in 2019. This type of semiconductor manufacturing goal and the government funds associated with it have been ongoing for more than a decade.

Wafer fabs are being built in China at an amazing rate, and there are more than 75 fabs in the country at last count. These include state-of-the-art, 200 mm MEMS and 300 mm integrated circuit (IC) fabs. Samsung, TSMC (Taiwan Semiconductor Manufacturing Company) and Intel NAND (the Intel flash memory business purchased by SK Hynix last year2) have built 300 mm memory and foundry wafer fabs in China. Hanking Electronics, SITRI (Shanghai Industrial Research Institute) and Silex Microsystems have built 200 mm MEMS or microsystem wafer fabs in China. Hanking Electronics’ wafer fab is shown in figure 1. Large Chinese IC wafer foundries include Hua Hong Semiconductor, Huali Microelectronics and SMIC (Semiconductor Manufacturing International Corporation).

However, it takes more than buildings to commercialise microsystems. The ecosystem required to support semiconductor and MEMS manufacturing is illustrated in figure 2. Growing this support system takes time and investment in facilities, materials and people. While 150 and 200 mm MEMS and IC fabs can be funded with under $1 billion of investment, a modern 300 mm, <15 nm linewidth, memory fab requires between $15–20 billion, access to leading-edge fab equipment and a host of experienced semiconductor professionals in design, wafer processing, operations and facilities support. Even with government seed money and private investors, there are many pitfalls to raising the tens of billions of dollars required to fully fund such a fab in a timely manner and it may not be a success3. 

Starting up 75 wafer fabs requires a lot of semiconductor process equipment. Initially, all of the fab tools in China were imported. However, as the demand for tools increased over the last decade, many EU and US OEMs decided to locate maintenance and spare part warehouses in China. Some, such as US-based Applied Materials, have built equipment manufacturing facilities in the country. The high capital costs associated with fab tools prompted the central government to support wafer equipment start-ups in China. The table below gives an idea of the breadth of semiconductor equipment that Chinese suppliers are now offering.

Etching systems, deposition systems, photolithography steppers, photolithography tracks and polishing systems are all being made in China. The same can be said for silicon and glass wafers. Chinese companies such as Shenyang Silicon Technology and Sigmui sell 150–300 mm epitaxial silicon-on-insulator (SOI) substrates to complementary semi-oxide-semiconductor (CMOS) fabs and cavity SOI wafers to MEMS fabs.

MEMS manufacturing presents several barriers to entry, namely:

  • MEMS processes and designs for different devices are often unique, unlike CMOS technology.
  • MEMS foundries may not have the process and design intellectual property (IP) needed for the types of devices a designer or customer requires.
  • A low-power, CMOS application-specific integrated circuit (ASIC) must be coupled with the MEMS chips for mobile consumer applications.
  • Package stress affects MEMS sensors more than a CMOS chip, requiring specialised knowledge.
  • Unique, active final calibration and tests, which may include acoustics, flow stimulation, motion and pressure, are required.
  • The R&D cycle can be decades long for a new MEMS device technology.

Over 80 MEMS-focused companies have been started in China in the last two decades4. They are manufacturing gas, flow, IR, magnetic, motion, pressure and temperature sensors, film bulk acoustic resonators (FBARs), microphones, RF switches, and optical and microfluidic products. Few of these companies have built their own wafer fabs, deciding to use foundries instead.

The historical microsystem wafer fab capability in China can be broken down into the following four stages/timeframes:

Stage 1 (1990s): Universities and government institutes housed 100 and 150 mm MEMS wafer fabs that allowed for the research and training of the semiconductor workforce as well as the incubation of start-ups.

Stage 2 (2000–2010): Some of the start-ups progressed to using larger commercial foundries, primarily outside of China. Accelerometers, microphones and pressure and flow sensors were manufactured by companies such as AAC Technologies, Goertek, MEMSIC and MiraMEMS. These companies operated under a fab-light organisation structure, as shown in figure 3, in which MEMS and CMOS wafers were outsourced to a foundry, generally outside of China. The final assembly, test and calibration steps were performed in China.

Stage 3 (2010–2015): The 150 and 200 mm CMOS IC wafer fabs in China began to develop CMOS surface micromachining capabilities using sacrificial etching on oxide layers. SMIC, the largest IC foundry company in China, offered this process in their 200 mm fabs. This stage used older CMOS fabs for MEMS and was limited to materials that are compatible with CMOS wafer processing.

Stage 4 (2015–2020): Larger 150 and 200 mm MEMS wafer fabs were constructed in China. MEMSRight built a 150 mm wafer fab first, then SITRI built a 200 mm prototyping wafer fab, and Hanking Electronics and Silex Microsystems built 200 mm wafer fabs for high-volume manufacturing.

Now all aspects of high-volume microsystem manufacturing can be found in China, from CMOS and MEMS wafer fabrication to packaging and test.

High-volume manufacturing of microsystems and semiconductors in 75 fabs demands the education of a huge workforce. China is famous for graduating more engineers each year than any other country in the world, graduating four times the number of engineers as the US. There are more than 100 MEMS and sensor graduate programs and institutes distributed across China, as illustrated in figure 4. However, these programs could not keep up with the recent explosion of wafer fab construction. Companies such as Intel, Samsung, SK Hynix and TSMC brought experienced fab operations and engineering personnel into China to support their wafer fabs. In 2020, the Nanjing Jichengdianlu Institute, a wafer fab-oriented school, was established to help meet the need for 100,000 wafer fab designers, engineers, operators and maintenance personnel5.

Like a CMOS IC fab, once a MEMS foundry is constructed, the equipment, processes and design rules must be added to make the facility competitive. Intellectual property is a key part of infrastructure that can take a great deal of time to generate. Patent licensing is one way to speed up this part of the development process. This has been undertaken at fabless design firms, fabs and foundries by several Chinese companies, including Hanking Electronics, MiraMEMS, QST and SMIC through patent licensing and acquisition4,6.

Fab equipment, experienced personnel and wafer processes can also be obtained in a merger or acquisition. By legally acquiring the IP needed to fabricate MEMS devices and insuring protection of customers’ process flows and designs, a MEMS foundry can grow internationally. A large number of acquisitions by Chinese companies took place in 2014–2016. For example, the foundries LFoundry and Silex Microsystems were acquired in 2015 and 2016, respectively. Wafer supplier Okmetic was bought by the National Silicon Industry Group in 2015. OmniVision Technologies, a manufacturer of CMOS imaging sensors (CIS), was acquired in 2015 by Hua Capital. Several deals were blocked for national security reasons, such as the acquisitions of Fairchild and Micron. By 2017, the acquisition of semiconductor-related companies by China was essentially stopped.

In 2018, the STAR Market, officially known as the Shanghai Stock Exchange Science and Technology Innovation Board, was conceived for the purpose of supporting advanced technology and innovative enterprises that align with China’s national strategies. The STAR Market allows companies to obtain a higher degree of market recognition in raising capital, but they must hold core or breakthrough technologies to be listed. In July 2019, the first set of companies launched initial public offerings (IPOs) on the STAR Market7.

The STAR has been touted as Shanghai’s equivalent to America’s Nasdaq Stock Market due to its focus on fast growing technology start-up companies. By the middle of 2020, it had become Asia’s most valuable stock market, valued at more than $400 billion. Several Chinese companies previously delisted from US stock exchanges to be listed on the STAR Market and attracted more capital. The type of companies currently on the STAR Market include alternative energy, biotech, chip design, information technology (IT), new materials and semiconductor start-ups. There is less regulation associated with the STAR Market than other exchanges because it is registration based, but there are still companies that fail to complete the IPO process.

There are now more than 175 companies listed on the STAR market. The list below shows some of the companies that are in the semiconductor, sensing and IoT market space. The market value of these Chinese tech companies grew dramatically in 2020 as trade tensions and government funding of technology infrastructure increased. As an example, after delisting from the New York Stock Exchange (NYSE) and listing on the STAR Market, SMIC, China’s largest IC wafer foundry, saw its valuation soar past that of rival TSMC. Although, by the end of 2020, this runup in share price had moderated to some extent.

In summary, the microsystem ecosystem in China has developed quickly in the last decade due to market and government forces. More than 75 wafer fabs have been built in China, with wafer diameters ranging from 100 to 300 mm. Almost the complete IC fab infrastructure and associated wafer, chemical and equipment network are now found in China, minimising its reliance on outside firms for all but the most advanced, leading edge <15 nm semiconductor technologies. This growth has taken place thanks to government funding, private and corporate investors, acquisitions and the STAR Market.

References1Liubing, C. (2020). Self-sufficiency rate of China’s chip industry to reach 70% [press release]. August 8. China Daily. Available at: https://bit.ly/3oOzgTn

2Coughlin, T. (2020). Intel sells its NAND flash business to SK Hynix [press release]. October 20. Forbes.Available at: http://bit.ly/39zhOf2

3Guoping, L. Wei, H. (2020). Chief executive quits troubled $18.5bn Chinese chipmaker. November 19. Asia Nikkei.Available at: https://s.nikkei.com/3sze1XV

4Blumenthal, R. (2017). MEMS sensors and the supply chain: Improving time to market. MEMS Manufacturing 2017, Biltmore Hotel and Suites, California, US, August 2–3.

5Yang, S. (2020). China launches first ‘chip school’ as talent shortage facing semiconductor industry [press release]. October 23. Taiwan News.Available at: http://bit.ly/3sywAeK

6Wang, D. (2017). To be a differentiated MEMS sensor player in the IoT world. MEMS World Summit 2017, Grand Kempinski Hotel, Shanghai, China, May 24–25.

7Cheng, E. (2019). China kicks off new Shanghai tech board as it tests new ways to improve volatile stock market [press release]. July 22. CNBC.Available at: http://cnb.cx/38SAO9l