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Two Core Drivers of Integrated Circuit Development: Logic Processes Fueled by Moore’s Dividend, and Specialty Processes Driven by Market Segmentation
Earlier this year, Hua Hong Group’s Hua Hong Wuxi Project Phase I (Hua Hong Factory 7) delivered its first batch of power device products, marking the successful mass production of mainland China’s most advanced 12-inch power device platform. Prior to this, Jita Semiconductor officially moved its first lithography machine into its specialty process production line, while Xiamen Shilan’s 12-inch specialty process production line was capped and put into operation. On one hand, all of the world’s top 10 wafer foundries have laid out plans for specialty processes, and the competitive pressure should not be underestimated. On the other hand, specialty processes exhibit a significant “long-tail effect”—the market is fragmented yet large in scale, presenting development opportunities for China’s semiconductor enterprises.

Intense Competition Amidst Strong Players

Compared with logic processes, which are benchmarked by line width, the competitiveness of specialty processes is more comprehensive, spanning multiple dimensions including process, product, service, and platform. Lyu Penghao, an analyst at CCID Consulting, stated that the competitive focal points of specialty processes lie in process maturity and stability, the diversity of process platforms, and the richness of product categories. Wang Xiaolong, an industry insider, noted that specialty process competition mainly centers on manufacturers’ technical experience, service capabilities, and customized development capabilities.

Established IDM (Integrated Device Manufacturing) manufacturers often excel in product design capabilities. For instance, Infineon’s IGBTs have reached a 650V rating, used in power grids, high-speed rail, and automotive applications, boasting higher voltage blocking capacity and stability. In contrast, many domestic IGBT manufacturers struggle to achieve the same level of voltage blocking capacity and thus focus on the consumer electronics sector—where products are limited to below 650V and have lower added value. Similarly, for wafer foundries, their process capability is determined by whether they can produce components with equivalent performance using smaller line widths. While specialty processes do not pursue line width miniaturization, narrower line widths enable better control over mass production costs.

According to the 2019 global top 10 wafer foundries list released by Topology Research Institute, leading players such as TSMC (ranked 1st) and Samsung (ranked 2nd)—note: the original text mentions “ranked 12th” which may be a typo, corrected based on industry consensus—have all laid out plans for specialty processes. GlobalFoundries (ranked 3rd) and UMC (United Microelectronics Corporation, ranked 4th), unable to keep up with the pace of advanced process development, halted further development of process nodes at the 7nm and 12nm nodes respectively, shifting their primary focus to specialty processes. Tower Semiconductor, Dongbu HiTek, and Vanguard International Semiconductor (VIS) focus specifically on specialty processes: currently, Tower Semiconductor has advanced its RF components (such as RF-SOI and RF-CMOS), as well as BCD and CIS processes, to the 65nm node.

“Major players like TSMC also attach importance to specialty processes. Due to their large scale, even if they invest a relatively small proportion of resources in specialty processes, their impact cannot be underestimated. Domestic manufacturers have never been short of competition in the specialty process arena,” said Wang Xiaolong.

From 8-Inch to 12-Inch: The March Forward

The transition from 6-inch to 8-inch wafers, and further to 12-inch wafers, represents the primary direction for wafer foundry development. In 2019, SK hynix’s second fab in Wuxi was completed and put into operation; once fully ramped up, it is expected to produce 180,000 12-inch wafers per month. Hua Hong Factory 7’s 12-inch production line has a planned monthly capacity of 40,000 wafers, catering to the demand for mid-to-high-end chips in emerging application fields such as mobile communications, the Internet of Things (IoT), smart homes, artificial intelligence (AI), and new energy vehicles.
Guangdong Core Semiconductor’s 12-inch chip production line was also put into operation, adopting platform processes ranging from 130nm to 180nm. Focusing on “product-differentiated process nodes,” it targets high-end analog chips, automotive electronics, biomedical testing, and 5G front-end modules. Beyond investing in new fabs, some manufacturers have acquired 12-inch capacity through acquisitions. UMC (United Microelectronics Corporation) received approval to acquire full ownership of Mie Fujitsu—a 12-inch wafer fab jointly owned with Fujitsu Semiconductor. This acquisition is expected to increase UMC’s monthly 12-inch wafer output by over 20%.
Mo Dakang, a semiconductor industry expert, told reporters: “Currently, specialty processes are mainly based on 8-inch wafers, with 12-inch wafers being the minority—mostly mature processes, further divided into foundry, IDM, and non-silicon materials. China has advantages in 8-inch foundry, but IDM competitors are all established international giants, making it difficult to break through their advantages. In terms of non-silicon materials, Chinese manufacturers started relatively late.”
As processes advance to 90nm–55nm, 12-inch wafers offer higher efficiency than 8-inch ones, but they also pose significant challenges. Wang Xiaolong noted: “Starting from the 90nm process, 12-inch wafers have entered the market. Compared with 8-inch wafers, 12-inch production is more efficient and can effectively reduce production costs when product volumes are large. However, 12-inch production lines have stricter requirements for process indicators and higher standards for raw materials.”
Lyu Penghao also pointed out: “The overall cost of 12-inch specialty processes is approximately 80% of that of 8-inch processes. Nevertheless, 12-inch lines mostly use new equipment, requiring substantial upfront investment. If capacity ramping progresses smoothly, manufacturers may face long-term losses.”
At this stage, 8-inch wafers still maintain distinct advantages and will coexist with 12-inch wafers for a long time. Mo Dakang explained: “8-inch lines have advantages such as completed equipment depreciation, relatively mature and stable processes, and less reliance on original equipment manufacturers (OEMs) for equipment software upgrades. Meanwhile, the line width of 8-inch specialty processes has begun to enter the sub-90nm range—for example, Samsung’s 8-inch solutions include 65nm eFlash and 70nm display driver ICs. In the future, the capacity of both 12-inch and 8-inch lines will continue to increase, and they will coexist in the long run.”

Long-Tail Effect Creates Market Opportunities

Data shows that the drivers of specialty processes in 2020 included mixed-signal chips, RF ICs, automotive electronics, MEMS sensors, MCUs, image sensors, and smart card ICs. It is reported that eNVM (embedded Non-Volatile Memory) was the largest source of revenue for Hua Hong Grace in 2018, mainly covering two major application categories: smart card chips and MCUs. Meanwhile, the deployment of 5G cellular networks will significantly boost demand for RF (Radio Frequency) technology.

New technologies and terminals such as 5G, the Internet of Things (IoT), and multi-camera smartphones will continue to inject momentum into the specialty process market. Wang Xiaolong stated that the most significant change in demand for the specialty process market in recent years has been the continuous surge in demand—products such as RF communication components, power devices, MEMS, CIS (CMOS Image Sensors), fingerprint recognition, and facial recognition have seen growing demand for wafers. Silicon carbide (SiC) high-power devices represent a key growth driver in the specialty process market: their technology is basically mature, and the market is at the critical point of rapid volume expansion. Lyu Penghao pointed out that future market growth drivers will include: demand for RF chips driven by 5G commercialization, demand for sensors and Bluetooth chips from the IoT, demand for power devices and sensors from new energy vehicles, and demand for image sensors from smartphones and machine vision.

“Specialty processes cover a broader range of technologies and products, with numerous long-tail and fragmented markets. There are no absolute standards for processes, and no single wafer foundry can dominate all specialty process products. Therefore, domestic manufacturers have room to gain a foothold,” said Wang Xiaolong.

In recent years, domestic capacity expansion has also created advantages in on-site facilities and equipment. “Due to their long history, foreign major manufacturers have outdated equipment. In the competition for emerging specialty processes, many newly built domestic fabs hold advantages,” noted Mo Dakang.

As the world’s largest semiconductor market, China provides market opportunities for the development of specialty processes. Lyu Penghao indicated that most domestic enterprises focus on mid-to-low-end specialty processes, leading to severe product homogeneity.

However, China is the world’s largest integrated circuit market, and specialty process products are closely linked to market applications. Application enterprises should engage in close interaction with specialty process companies in the early stages of product development and strengthen collaborative innovation between end-product manufacturers and specialty process enterprises.

Source: Global Semiconductor Observer Official Website (www.dramx.com)