Industry Insights | Semiconductor manufacturing is booming, but the localization process remains arduous

With the rapid development of new-generation information industry technologies such as big data, cloud computing, the Internet of Things, and artificial intelligence, the global market demand for semiconductor materials has risen rapidly. At the same time, due to severe storms and snow in Texas in 2021, power outages in Taiwan, China, and the impact of COVID-19 on the global logistics industry, the world has fallen into a chip shortage dilemma.Major wafer fabs and packaging factories have expanded their production capacity, with expectations for rapid growth in the global semiconductor industry.

Global semiconductor sales from 2017 to 2021 increased from $412.4 billion to $555.9 billion, especially from $439 billion to $555.9 billion between 2020 and 2021, a growth rate of as high as 26.6%. The semiconductor material market grew from $46.9 billion in 2017 to $64.3 billion, with the global semiconductor industry market experiencing rapid growth.

Source: SEMI, Frost & Sullivan

Driven by national policies and technological development, the semiconductor market in China is currently experiencing rapid growth.From 2017 to 2021, China's semiconductor sales increased from $10.2 billion to $15.3 billion, while the market size of semiconductor materials in China grew from $7.6 billion to $11.9 billion.

Source: SEMI, Frost & Sullivan

In terms of proportion, from 2020 to 2021, China's semiconductor sales accounted for 2.5% and rose to 2.8%, while the semiconductor material market size increased from 16.2% to 18.6%.In 2021, the semiconductor market scale in Mainland China exceeded that of South Korea, ranking second in the world, indicating that the semiconductor market in China is developing well.

Source: SEMI, Frost & Sullivan

The manufacturing process in the semiconductor field includes wafer processing, oxidation, photolithography, etching, packaging, thin film deposition, interconnection, testing, and packaging.Each process plays a crucial role in semiconductor production, and the equipment and materials required are also at the core focus of the semiconductor industry.

Source: CNKI, Frost & Sullivan

• Wafer processing

Wafer is a thin circular slice formed by cutting single crystal cylinders made of silicon (Si) or gallium arsenide (GaAs). To extract high-purity silicon material, silicon sand is required, a special material with a silicon dioxide content as high as 95%, which is also the main raw material for manufacturing wafers. Wafer processing is the process of creating and obtaining the aforementioned wafers. The steps of wafer processing are mainly divided into three parts: ingot casting, ingot cutting, and wafer surface polishing.

• oxidation

The function of the oxidation process is to form a protective film on the wafer surface. It can protect the wafer from chemical impurities, prevent leakage current from entering the circuit, prevent diffusion during ion implantation, and prevent the wafer from slipping off during etching.

The first step in the oxidation process is to remove impurities and contaminants, which requires four steps: removing organic matter, metals, and other impurities, as well as evaporating residual moisture. After cleaning is complete, the wafer can be placed in a high-temperature environment, where oxygen or vapor flows over the wafer surface to form a silicon dioxide (i.e., 'oxide') layer. Oxygen diffuses through the oxide layer to react with silicon, forming oxide layers of varying thicknesses, which can be measured after oxidation is complete.

• photolithography

Photolithography is the process of 'printing' circuit patterns onto wafers using light. The finer the circuit pattern, the higher the integration level of the finished chip, which can only be achieved through advanced photolithography technology. Specifically, photolithography can be divided into three steps: coating photoresist, exposure, and development.

Source: CNKI, LeadLeo Research Institute

• etching

After the circuit diagram is photolithographed on the wafer, the remaining oxide film needs to be removed using etching processes to leave behind the semiconductor circuit diagram. There are mainly two methods of etching, depending on the substance used: wet etching, which involves chemical reactions with specific chemical solutions to remove the oxide film, and dry etching, which uses gases or plasma.

• Thin film deposition

A chip is a 3D structure composed of a series of active and passive circuit elements stacked together, with thin film deposition being one of the core processes in chip front-end manufacturing. Its main purpose is to deposit a functional thin film on the silicon wafer substrate. The main methods of thin film deposition in the semiconductor field include chemical vapor deposition (CVD), atomic layer deposition (ALD), and physical vapor deposition (PVD).

Source: CNKI, Frost & Sullivan

• interconnection

The conductivity of semiconductors lies between that of conductors and insulators, a characteristic that allows us to fully control electric current. Components such as transistors can be constructed through wafer-based photolithography, etching, and deposition processes, but they need to be connected together to achieve the transmission and reception of electrical power and signals. This is a very important step in building electronic components. Currently, the main interconnection processes in the industry include copper interconnection and aluminum interconnection.

• testing

The main objective of testing is to verify whether the quality of semiconductor chips meets certain standards, thereby eliminating defective products and improving the reliability of chips. In addition, products found to be defective after testing will not proceed to the packaging stage, which helps to save costs and time. At the same time, semiconductor testing is beneficial for enterprises in identifying problems occurring during production and further enhancing their own manufacturing level.

There are three common types of crystal defects:

Source: CNKI, Frost & Sullivan

• encapsulation

Semiconductor packaging is a post-processing step in semiconductor chip manufacturing and is one of the key links to realize chip functions and ensure the normal operation of device systems.On wafers that have undergone several previous processing steps, square chips of equal size are formed. Then, packaging companies obtain individual chips by cutting them. The freshly cut chips are fragile and cannot exchange electrical signals, requiring separate processing. This processing step is known as packaging, which includes forming a protective shell around the semiconductor chip and enabling it to exchange electrical signals with the outside world. The entire packaging process is divided into five steps: wafer sawing, single chip attachment, interconnection, molding, and packaging testing.

As electronic devices continue to shrink in size while their performance continues to improve, and at the same time, Moore's Law has slowed down since the 7nm process node. Currently, traditional packaging technology is beginning to struggle to meet some of these needs, which has led to increased attention to the value of the packaging industry.Currently, semiconductor packaging technology is developing towards miniaturization, integration, and low power consumption. Advanced packaging with higher added value will be increasingly applied.

A notable feature of the semiconductor equipment industry is the high degree of market monopoly by overseas giants in many sectors.

Due to the early start of development and advanced technology, equipment enterprises have gradually grown into international giants in their respective fields, such as ASML, Applied Materials, Tokyo Electron, Fanlin Semiconductor, etc. Although there is still a certain gap in overall equipment technology level between China and international leaders, outstanding representative manufacturers have emerged in multiple sub-fields.

Thin film deposition equipment, etching equipment, and lithography equipment are the three core devices in semiconductor manufacturing.

In the field of thin-film deposition equipment, the localization rate in China is currently low, mainly relying on imports. There is a huge potential for substitution in the future. Currently, leading domestic companies include Northern Huachuang, Topjoy Technology, and SEMCO.

In the field of etching equipment, the global etching equipment market has a high degree of industry concentration, with domestic manufacturers in the catching-up phase and a relatively low global market share. Currently, domestic etching equipment companies include SEMTEK Microelectronics Corporation, North China Advanced Technology Co., Ltd., and Yitang Semiconductor.

The lithography machine is relatively a product field with the most technological sophistication among semiconductor devices and is also a particularly critical manufacturing equipment in wafer production processes. Currently, the global market is mainly dominated by three companies: ASML, Canon, and Nikon. The representative enterprise in China that has made significant progress in the field of lithography machines is Shanghai Microelectronics.

In addition, in the field of semiconductor cleaning equipment, domestic companies such as Shengmei Shanghai, CorePower Microelectronics, and North China Advanced Technology Group Co., Ltd. are active. In terms of degreasing machines, domestic manufacturers now have strong market competitiveness in the global market, with Yitang Semiconductor, Tais Semiconductor, and North China Advanced Technology Group Co., Ltd. each occupying a certain share in the international market. In CMP (Chemical Mechanical Polishing), domestic manufacturers now have a certain level of substitution capability, with products from companies such as Huahai Qingke and CETC 45th Research Institute having been introduced into actual production.

In terms of semiconductor materials, the main semiconductor manufacturing materials currently include silicon wafers, electronic gases, photoresists, CMP (chemical mechanical polishing) materials, and so on.

In terms of silicon wafers, international giants currently occupy an absolute leading market share in the silicon wafer market, but domestic enterprises are seizing the market by continuously expanding production. Domestic silicon wafer production enterprises include Hysium Industry, Zhonghuan Co., Ltd., and Shengong Co., Ltd.

In the field of electronic gases, the main domestic enterprises currently include Yak Technology, Jinhong Gas, Nanda Optoelectronics, and Huata Gas. Special gases that can be mass-produced are still mainly concentrated in process steps such as cleaning, etching, and photolithography of integrated circuits. Only a few varieties of gases for doping and deposition processes have made breakthroughs.

Photolithography resist is a core consumable in the lithography process, determining the precision and yield of the circuit pattern. Technologically speaking, semiconductor photolithography resist has high barriers, which have created a monopolistic landscape. Semiconductor photolithography resist is one of the materials with the lowest domestic rate, with the market mainly occupied by Japanese and American manufacturers. The field of semiconductor photolithography resist in China is still in its infancy, with a huge gap in technology compared to foreign companies. Currently, domestic photolithography resist manufacturers include Hua Mao Technology, Tongcheng New Materials, Jingrui Electric Materials, etc.

CMP (Chemical Mechanical Polishing) is a process that achieves global wafer flattening through the synergistic action of chemical and mechanical etching of polishing materials. Its core consumables focus on polishing solutions and pads. In terms of market share, due to the high process barriers and certification difficulties associated with CMP (Chemical Mechanical Polishing) materials, the industry pattern is relatively concentrated, mainly monopolized by manufacturers from the United States and Japan.

For the rest of the materials, such as polishing solutions, Anji Technology's product technology has approached the international highest level; in terms of polishing pads, Dinglong Co., Ltd. has passed the verification of the entire manufacturing process (ILD/SIT/W/Cu/GKMG) for 28nm products and has received orders.

Against the backdrop of tense Sino-US relations and global chip shortages, the demand for domestic substitution of semiconductor equipment and materials in China is urgent. Currently, compared to European and American countries, China is lagging behind in semiconductor manufacturing development, with most materials and equipment relying on imports, indicating that the task of domesticizing semiconductor manufacturing remains arduous and long overdue.

However, with the rapid development in recent years, domestic companies such as Shanghai Microelectronics, Northern Huachuang, and Yitang Semiconductor have emerged. The proportion of domestic equipment and materials in China's semiconductor manufacturing industry is increasing. With strong national promotion and continuous efforts by enterprises, the gap between China and European and American countries in the semiconductor manufacturing field is gradually narrowing, and China's autonomy in semiconductor manufacturing is gradually improving.